Framework for Marketing Management International Edition 10 Setting Product Strategy 1

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? © 2012 Pearson Education 10-2

Chapter Questions  How can companies use packaging, labeling, warranties, and guarantees as marketing tools?  What strategies are appropriate for new product development and through the product life cycle? © 2012 Pearson Education 10-3

© 2012 Pearson Education 10-4 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.

Figure 10.1 Five Product Levels © 2012 Pearson Education 10-5

© 2012 Pearson Education 10-6 Product Classification Schemes Durability Tangibility Use

© 2012 Pearson Education 10-7 Durability and Tangibility Nondurable goods Durable goods Services

© 2012 Pearson Education 10-8 Consumer Goods Classification Convenience Shopping Specialty Unsought

© 2012 Pearson Education 10-9 Industrial Goods Classification  Materials and parts  Capital items  Supplies/business services

Product Differentiation  Product form  Features  Customization  Performance  Conformance  Durability  Reliability  Repairability  Style © 2012 Pearson Education 10-10

© 2012 Pearson Education Service Differentiation  Ordering ease  Delivery  Installation  Customer training  Customer consulting  Maintenance and repair  Returns

Design © 2012 Pearson Education 10-12

© 2012 Pearson Education Line Stretching Down-Market Stretch Up-Market Stretch Two-Way Stretch

© 2012 Pearson Education Product-Mix Pricing  Product-line pricing  Optional-feature pricing  Captive-product pricing  Two-part pricing  By-product pricing  Product-bundling pricing

Ingredient Branding © 2012 Pearson Education 10-15

© 2012 Pearson Education What is the Fifth P? Packaging, sometimes called the 5 th P, is all the activities of designing and producing the container for a product.

© 2012 Pearson Education Factors Contributing to the Emphasis on Packaging  Self-service  Consumer affluence  Company/brand image  Innovation opportunity

© 2012 Pearson Education Packaging Objectives  Identify the brand  Convey descriptive and persuasive information  Facilitate product transportation and protection  Assist at-home storage  Aid product consumption

Functions of Labels © 2012 Pearson Education 10-19

Figure 10.2 New-Product Development Decision Process © 2012 Pearson Education 10-20

© 2012 Pearson Education Ways to Find Great New Ideas  Run informal sessions with customers  Allow time off for technical people to putter on pet projects  Make customer brainstorming a part of plant tours  Survey your customers  Undertake “fly on the wall” research to customers

© 2012 Pearson Education More Ways to Find Great Ideas  Use iterative rounds with customers  Set up a keyword search to scan trade publications  Treat trade shows as intelligence missions  Have employees visit supplier labs  Set up an idea vault

© 2012 Pearson Education Drawing Ideas from Customers  Observe customers using product  Ask customers about problems with products  Ask customers about their dream products  Use a customer advisory board or a brand community of enthusiasts to discuss product

Demand-First Innovation and Growth (DIG) Framework © 2012 Pearson Education Demand Landscape Opportunity Space Strategic Blueprint

© 2012 Pearson Education Idea Generation: Creativity Techniques  Attribute listing  Forced relationships  Morphological analysis  Reverse assumption analysis  New contexts  Mind mapping

Figure 10.3 Product and Brand Positioning © 2012 Pearson Education 10-26

© 2012 Pearson Education Concept Testing  Communicability and believability  Need level  Gap level  Perceived value  Purchase intention  User targets, purchase occasions, purchasing frequency

© 2012 Pearson Education Prototype Testing  Alpha testing  Beta testing  Rank-order method  Paired-comparison method  Monadic-rating method  Market testing

Consumer Goods Market Testing  Sales-Wave Research  Simulated Test Marketing  Controlled Test Marketing  Test Markets © 2012 Pearson Education 10-29

© 2012 Pearson Education Test Market Decisions  How many test cities?  Which cities?  Length of test?  What information to collect?  What action to take?

© 2012 Pearson Education What is Adoption? Adoption is an individual’s decision to become a regular user of a product.

© 2012 Pearson Education Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption

Figure 10.4 Adopter Categorization on the Basis of Relative time of Adoption © 2012 Pearson Education 10-33

For Review  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? © 2012 Pearson Education 10-34

Also For Review  How can companies use packaging, labeling, warranties, and guarantees as marketing tools?  What strategies are appropriate for new product development and through the product life cycle? © 2012 Pearson Education 10-35