2Hierarchy of Product Competition Generic Competition – Trade-offs between customer expenditure to different problems that require a solutionClass Competition – Different approaches to providing customer solutions to a common problem
3Hierarchy of Product Competition (cont) Form Competition – Products perceived as addressing a problem in a similar way by providing comparable benefitsBrand Competition – Products from an identified supplier that offers a particular value-proposition, set of options, and distribution system.
4Levels of Product Knowledge Product ClassProduct FormBrandModel/FeatureCoffeeGroundInstantFolgersMaxwell House1-pound can8-ounce jarAutosSedanSports CarSports SedanFord TaurusMazda MiataBMWStation wagon, Air & power steeringLeather seats, Air & 5 speedsModel 325e, Air & Automatic Trans
5Levels of Product Knowledge Product ClassProduct FormBrandModel/FeatureBeerImportedLightLow alcoholHeinekenCoors LiteSharpsDarkKegs12-ounce cansPensBallpointFelt tipBicPilot$0.79 model, regular tip$0.99 model, extra-fine tip
6PRODUCT LIFE CYCLE STAGES OF THE DECISIONS PROCESS FOR INSTANT COFFEE 18-16-14-12-MILLIONS OF POUNDS1-8-6-4-2-|||||||||||194819519521954195619581961962196419661968
7Product Life Cycle Characteristics Introduction Growth Maturity DeclineSales Low Fast Slow DeclineGrowth GrowthProfitsCash FlowCustomerDescriptionNumber of Competitors
9Types of Product Knowledge 1. Bundle of Attributes - Tangible (concrete) or intangible (abstract) characteristics of the productNike running shoesArch supportTread design$89.95Lacing pattern
10Types of Product Knowledge 2. Bundle of Benefits - Consequences or outcomes when purchasing and using products & services (Functional, Psychosocial)Nike running shoesLong-wearingStabilize heelRunfaster
12Types of Product Knowledge 3. Value Satisfaction - Cognitive representations of important broad life goals that consumers are trying to achieveBe physically fitHave good healthLive a long lifeNike running shoes
13The Means-End ChainA means-end chain is a knowledge structure that connects consumers’ meanings about product attributes, consequences, and values.The means-end chain provides a more complete understanding of consumers’ product knowledge.
15Means-End Chain Example: Gillette Sensor Razor CONSEQUENCESFUNCTIONAL PSYCHOSOCIALATTRIBUTESVALUESSpring suspension for twin bladesBe well groomedBeattractiveClose shaveRelaxed Not stressedLubricating stripSmooth, soft shaveBe comfortable
16Consumers’ Product Involvement The perceived importance or personal relevance of an object, event, or activityInvolvement with a product or brand has both cognitive and affective aspects
17Components of Involvement 1. Importance and risk (the perceived importance of the product and the consequences of a bad purchase)1, 2, 3, 142. Probability of making a bad purchase3. Pleasure value of the product category4, 5, 6, 74. Sign value of self identify11, 12, 13, 15, 168, 9, 10
18Involvement Profiles of French Consumers (100 = average)Negative Pleasure SignConsequences Mispurchase Value ValueDetergentsDressesTV SetsVacuum CleanersChampagneYogurtFacial Soap