Chapter 11 Setting Product Strategy

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. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-2

Product Levels Core Benefit: The service or benefit the consumer is really buying. Basic Product: Marketers are turning the core benefit into a basic product. Expected Product: A set of attributes and conditions buyers normally expect when they purchase the product. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-3

Augmented Product: Attributes that exceed customer expectations. Potential Product: Attributes that encompasses all the possible augmentations and transformations the product might undergo in the future. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-4

Product Classification Schemes Durability: Durable OR Non-Durable Tangibility: Tangible OR Intangible Use: Consumer OR Industrial Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-5

Durability and Tangibility Nondurable goods Durable goods Services Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-6

Consumer Goods Classification Convenience: Staple/Impulse/Emergency Shopping: Homogeneous/Heterogeneous Specialty Unsought Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-7

Industrial Goods Classification Materials and parts: Goods that enter the manufacturer’s product completely. Ex: Cotton, wheat, vegetables, small motors etc. Capital items: Long lasting goods that facilitate developing or managing the finished product. Ex: factory, generator, elevator etc. Supplies/business services: Short-term goods and services that facilitate developing or managing the finished product. Ex: paint, window cleaning, legal consultation etc. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-8

Product Differentiation Product form Features Customization Performance Quality Conformance Quality Durability Reliability Repairability Style Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-9

Service Differentiation Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-10

Design It refers to the totality of features that affect how a products looks, feels, and functions to a customers. A well-designed product is pleasant to look at and easy to open, install, use, repair, and dispose of. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-11

The Product Hierarchy Need Family: The core need that underlies the existence of a product family. Ex: Communication. Product Family: All the product classes that can satisfy a core need with reasonable effectiveness. Ex: Technology and Income. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-12

The Product Hierarchy (cont…) Product Class: A group of products within the product family recognized as having a certain functional coherence, also known as product category. Ex: Communication devices. Product Line: A group of products within a product class that are closely related because they perform a similar function, are sold to the customer groups, are marketed through the same outlets or channels, or fall within given price ranges. Ex: Tab, Land/Cell Phone, Desktop, Laptop etc. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-13

The Product Hierarchy (cont..) Product Type: A group of items within a product line that share one of several possible forms of the product. Ex: Smart phone. Item: A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. Ex: Samsung Galaxy S6 Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-14

Product Systems and Mixes A product system is a group of diverse but related items that function in a compatible manner. A product mix is a set of all products and items a particular seller offers for sale. A product mix consists of various product lines. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-15

Product Mix: Width, Length, Depth, Consistency Width: How many different product lines Length: Total number of items in the mix/line Depth: How many variants of each product in the line Consistency: how closely related different product lines in terms of production requirement, distribution channels etc. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-16

Product Line Length: Line Stretching Down-Market Stretch Up-Market Stretch Two-Way Stretch Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-17

Product-Mix Pricing Product-line pricing Optional-feature pricing Captive-product pricing Two-part pricing By-product pricing Product-bundling pricing Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-18

Co-Branding Co-Branding (Dual Branding/Brand Bundling) occurs when 2 or more well-known brands are combined into a joint product and marketed together in some fashion. Same company co-branding Joint-venture co-branding Retail co-branding Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-19

Ingredient Branding When materials, components or parts that are necessarily contained within other branded products. Example: Carl Zeiss lenses in Nokia mobile phones or in Sony Digital cameras. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-20

What is the Fifth P? Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-21

Factors Contributing to the Emphasis on Packaging Self-service Consumer affluence Company/brand image Innovation opportunity Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-22

Packaging Objectives Identify the brand Convey descriptive and persuasive information Facilitate product transportation and protection Assist at-home storage Aid product consumption Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-23

Labeling Label is a simple tag or elaborately designed graphic that is part of the package. Labels help to identify, describe and promote the product. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-24

Warranties and Guarantees Warranties are formal statements of expected product performance by the manufacturer. Products under warranty can be repaired, replaced or refunded within a specific time period. Guarantees are formal assurance that a certain condition will be fulfilled, specially in case of product quality. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 12-25