1. Setting Product Strategy
LECTURE-10
Setting Product Strategy

2. Chapter Questions
What are the characteristics of products and how do marketers classify products?
How can companies differentiate products?
How can a company build and manage its product mix and product lines?
How can companies combine products to create strong co-brands or ingredient brands?
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?

3. What is a Product?
A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

4. Five Product Levels

5. Five Product Levels Core benefit Basic product Expected product
The service or benefit the customer is really buying e.g. A hotel guest is buying “rest & sleep”
Basic product
e.g. A bed, bathroom, towels, desk, dresser & closet
Expected product
e.g. A clean bed, fresh towels, working lamps & quietness

6. Five Product Levels… Augmented product Potential product
Exceeds customer expectations
Potential product
Offering might undergo in the future

7. Product Classification Schemes
Durability
Tangibility
Use

8. Durability and Tangibility
Non-durable goods
Tangible goods normally consumed in one or a few uses e.g. soft drinks & soap etc.
Durable goods
Tangible goods that normally survive many uses e.g. Refrigerators, machine tools & clothing etc.
Services
Intangible, inseparable, variable & perishable products e.g. Legal services, appliance repairing & hair cuts etc.

9. Consumer Goods Classification
Convenience
Purchase frequently, immediately & with minimum of efforts e.g. soft drinks, newspapers & soaps etc.
Shopping
Consumer compares on such bases suitability, quality, price & style e.g. Furniture, clothing & appliances etc.
Specialty
Have unique characteristics & need special purchasing efforts e.g. Car, Stereo components & Photographic equipments etc.
Unsought
Consumer doesn't know about or does not normally think of buying e.g. Life insurance, encyclopedias & reference books etc.

10. Industrial Goods Classification
Materials and parts
Raw materials
Manufactured Materials
Capital items
Component Materials e.g. Iron, Yarn, Cement, Wires etc.
Component Parts e.g. Small motors, Tires, Castings etc.
Supplies/business services
Maintenance & repair items
Operating Supplies

11. Product Differentiation
Product form e.g. Size, shape & physical structure
Features e.g. Basic functions of the product.
Customization
Making product as per the requirements of an individual.
Performance
e.g. Level at which the product's primary characteristics operate.
Conformance Quality
e.g. Degree to which all the produced units are identical & meet the promised specifications.

12. Product Differentiation…
Durability
A measure of the product’s expected operating life under natural or stressful conditions.
Reliability
A measure of the probability that a product will not malfunction or fail within a specified time period.
Repairability
A measure of the ease of fixing a product when it malfunctions or fails.
Style
Describes the product’s look & feel to the buyer.

13. Service Differentiation
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns

14. The Product Hierarchy Item Product type Product line
State life
Product type
Term life insurance
Product line
Life insurance
Product class Financial instruments
Product family Saving & income
Need family Security

15. Product Systems and Mixes
A group of diverse but related items that function in a compatible manner.
Product mix or Product assortment
Set of all products & items a seller offer for sale.
Width
Refers to how many different product lines the company carries.

16. Product Systems and Mixes…
Length
Refers to the total number of items in the product mix.
Depth
Refers to how many variants are offered of each product in the line.
Consistency
Refers to how closely related the various product lines are in end use.

17. Product Line Analysis Core product Staples Specialties
Items that produce high sales volume & heavily promoted but with low margins e.g. Basic laptop computers.
Staples
Items with lower sales volume & no promotion e.g. Faster CPU or Bigger memories.
Specialties
Items with lower sales volume but that might be highly promoted e.g. Digital movie making equipment.
Convenience items
Sell in high volume but receive less promotion e.g. Carrying cases & accessories.

18. Line Stretching Down-market stretch Up-market stretch Two-way stretch
A company positioned in the middle market may want to introduce a lower-priced line.
Up-market stretch
Companies may wish to enter the high end of the market to achieve more growth.
Two-way stretch
Companies serving the middle market might decide to switch their line in both directions.

19. Product-Mix Pricing Product-line pricing Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing

20. What is the Fifth P?
Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product.

21. Factors Contributing to the Emphasis on Packaging
Self-service
Consumer affluence
Company/brand image
Innovation opportunity

22. Packaging Objectives Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at-home storage
Aid product consumption

23. Functions of Labels
Identifies
Grades
Describes
Promotes

24. Bibliography Marketing Management – A South Asian Perspective
by Philip Kotler, Kevin Lane Keller, Abraham Koshy &
Mithileshwar Jha, 13th Edition, Published by Pearson
Education, Inc.
Strategic Marketing Management – Meeting The
Global Marketing Challenges by Carol H. Anderson &
Julian W. Vincze Published by Houghton Mifflin Company.
Principles of Advertising & IMC by Tom Duncan 2nd
Edition, Published by McGraw-Hill Irwin.
Principles of Marketing by Philip Kotler & Gary Armstrong
Thirteenth Edition, Published by Prentice Hall

25. "What lies behind us, and what lies before us are small matters compared to what lies within us." Ralph Waldo Emerson The End…