1. Setting Product Strategy
Chapter 12
Setting Product Strategy

2. Objectives  Identify the various characteristics of products.
 Learn how companies build and manage product lines and mixes.
 Understand how companies make better brand decisions.
 Comprehend how packaging and labeling can be used as marketing tools.
 Warranties & guarantees can offer further assurance to consumers.

3. The Product Product is a key element in the market offering.
Is the first and the most important element of the marketing mix.
Product strategy calls for making coordinated decisions on product mixes, product lines, product brands, packaging and labeling.
Who should ultimately design the product?
The customer of course.
The customer will Judge the offering by three basic elements:
Product features and quality.
Services mix and quality.
Price.

4. What is a Product ?
The product is any thing that can be offered to market to satisfy a want or a need.

5. What is a Product? A Product can be Information Places Goods
Organizations
A Product can be
Properties
Services
Experiences
Events
Persons
Ideas

6. According to Kotler there are 5 levels
The Product Levels
Potential Product
Augmented product
Expected product
Basic Product
Core benefit
According to Kotler there are 5 levels

7. The Product and Product Mix
The customer value hierarchy:
 Core benefit
The service or benefit the customer is really buying.
 Basic product
The marketer has to turn the core benefit into basic product.
 Expected product
A set of attributes and conditions buyers normally expect when they purchase the products.
 Augmented product
The product exceeds customer expectation.
 Potential product
All possible augmentations and transformations the product or offering might undergo in the future.

8. According to Armestrock There are 3 levels
The Product Levels
Augmented product
Installation
Quality
Packing
Actual product
After sale services
Delivery
And
Credit
Core Benefit
Brand Name
Feature
Style
Core benefit
Warranty
According to Armestrock There are 3 levels

9. Product Classification
1. Durability and Tangibility.
2. Consumer Goods.
3. Industrial Goods.

10. Product Classification
1. Durability and tangibility
Nondurable goods
Tangible
Rapidly consumed in one or a few uses.
Example: Milk - Soap
Durable goods
Lasts a long time
Example: Oven – electronics
Services
Intangible
Example: Appliance repairs, Transportation Services

11. 2. Consumer Goods Classifications
Classified by shopping habits
 Convenience goods
 Shopping goods
 Specialty goods
 Unsought goods

12. 2. Consumer Goods Classifications

13. 2. Consumer Goods Classification
2.1 Convenience goods :
 Staples Goods:
Goods consumers purchase on a regular basis (Toothpast).
 Impulse Goods:
Purchased without any planning or search efforts (Magazines).
 Emergency Goods:
Are purchased when a need is urgent (umbrellas during a rainstorm).

14. 2. Consumer Goods Classification
2.2 Shopping goods :
The bases are the suitability quality, price and style
 Homogeneous shopping goods:
Are similar quality but different enough in price to justify shopping
comparisons.
 Heterogeneous shopping goods:
Offer in product features & services that maybe more important than
price.

15. Shopping Goods Convenience Goods
Comparative Between Convenience & Shopping Goods
Shopping Goods
Convenience Goods
Limit Distribution
Convenience Distribution
High Price
Reasonable Price
Low life cycle
High life cycle
Needs planning or search efforts
Purchased without planning or search efforts
Selective distribution policy
Intensive distribution policy

16. 3. Industrial goods Classifications
Are goods that enter the manufactures product completely
3.1 Materials and parts
 Farm products ( Wheat, Cotton, Fruits …)
 Natural products (Fish, Crude petroleum …)
 Component materials (Iron, cement, wires…)
 Component parts ( Small motors, tires …)
3.2 Capital items
 Installations (Factories, offices)
 Equipment (drill presses, personal computer, elevators).
3.3 Supplies and business services
 Maintenance and repair (paint, window cleaning, copier repair…)
 Advisory services (Legal, management consulting, advertising)

17. Industrial goods classification

18. Product Differentiation
Many products can be differentiated in form (Size, shape, physical structure of a product.
Form
The company should consider how many people want each feature, how much it would take to introduce each feature, and think of feature bundles or packages.
Feature
Performance quality
Most products are established at one of four performance levels: Low, average, high or superior.
A measure of the product's expected operating life under natural or stressful conditions, is a valued attribute for certain products.
Durability

19. Product Differentiation
Measure of the probability that a product will not fail within a specified time period.
Reliability
Style
Describe the product's look and feel to the buyer.
Conformance Quality
Is the degree to which all the produced units are identical and meet the promised specifications
Is a measure of the ease of fixing a product when it malfunction or fails.
Repairability

20. Services Differentiation:
Ordering ease: refers to how easy it is for the customer to place an order with the company.
Delivery: to how well the product or service is delivered to the customer.
Installation: refers to the work done to make a product operational in its planned location.

21. Services Differentiation:
Customer training: refers to training the customer’s employees to use the vendor’s equipment properly and efficiently.
Customer consulting: refers to data, information systems, and advice services that the seller offers to buyers.
Maintenance & repair: describes the service program for helping customers keep purchased products in good working order.

22. The Product Hierarchy:
Need family
The core need that underlies the existence of a product family (Security).
Product family
All the product classes that can satisfy a core need with reasonable effectiveness (Saving, income)
Product class
A group of products within the product family recognized as having a certain functional coherence (financial instruments)
Product line
A group of products within a product class that are closely related because they perform a similar function.
Product type
A group of items within a product line that share one of several possible forms of the product.
Item.
A distinct unit within a brand or product line distinguishable by size, price, appearance or some other attribute.

23. Product mix
The set of all products and items that a particular seller offers for sale.
 A Product mix consists of various product lines.
Product mix dimensions::
The Width: Number of product lines.
The Length: Total number of items in mix.
The Depth: How many variants are offered of each product in the line.
Consistency: Degree to which product lines are related.
(Production requirements, distribution channels)

24. Product mix Product Line 4 Line 3 Line 2 Line 1 Sweets Snakes
Soft Drinks
Coffee
Mars
Pizza In
Tang
Nescafe
kinder
Burger
Coca Cola
Bream
Twix
Kentucky
Meranda
Sanca
Width = 4
Depth L1 = 3
Length = 12
The
Depth
The Width

25. Product-Line Decisions
Product-Line Analysis
Product line managers need to know the sales and profit items in their lines in order to determine which items to built, maintain, harvest and divest.

26. Product-Line Analysis

27. Market Profile  Product line managers need to look at market profile.
 The manager must review how the line is positioned against competitor’s lines.
 The product map is useful for designing product line marketing strategy & identifies market segments.

28. Market Profile
Product Map for a Paper-product Line

29. Product Line Length
A company lengthen its product line in two ways:
1. Line stretching: involves the question of whether a particular line should be extended:
 Down market: it introduces a lower priced line for any three reasons:
1- The company may notice strong growth opportunities in the down market.
2- To tie up lower end competitors who might other wise try to move up market.
3- The middle market is declining.

30. - Upward stretch: Enter the high end of market for more growth , higher margins.
- The two way stretch: The line in both direction
2- Line filling: A product line can be lengthened by adding more items within the present rang like reaching for incremental profits, trying to satisfy dealers,

31. - Line modernizations: whether the line needs a new look .
In rapidly changing product markets , modernization is continuous.
A major issue is timing improvements , so they do not appear too early ( damaging sales of the current line ) or too late ( after the competition has established a strong reputation for more advanced equipment).

32. - Line pruning : How to delete and remove weaker items from the line,

33. Product mix pricing
 There are six situation involving product mix pricing:
1) Product line pricing:
Companies normally develop product lines rather than single products and
introduce price steps.
2) Optional feature pricing:
Many companies offer optional products, features and service a long with their main product.
3) Captive product pricing:
Some products require the use of ancillary or captive products.

34. 4) Two part pricing product:
Service firms often engage in two-part pricing consisting of
affixed fee plus variable usage fee.
5) By-product pricing:
The production of certain goods-meats, petroleum products
often results in by-products.
6) Product bundling:
Sellers often bundle products and features.

35. Mixed Bundling
The seller offers goods both individually and in bundles.
 When offering a mixed bundle, the seller normally charges less for the bundle than if the items were purchased separately.

36. Brand Decision The AMA definition of a brand:
“A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.”

37. Brand Decisions Brands can convey six levels of meaning: Attributes
A brand bring to mind certain attributes.
Benefits
Attributes must be translated in to functional & emotional benefits
Values
The brand say something about the product (Mercedes-Safety)
Culture
It may represent a certain culture (Mercedes- German)
Personality
It project a certain personality
User
It suggests the kind of consumer who buys or use the product.

38. Brand Decision
Companies need to develop brand policies for the individual product items in their lines.
- They must decide whether to brand at all , whether to use family or individual brand names, whether to extend the brand name to new products , and whether to create multiple brands.

39. Brand Decision
In developing marketing strategy for individual product, the seller has to confront the branding decision.
Branding is a major issue in product strategy.
Developing branded product requires a great deal of long term investment spending especially for advertising, promotion, and packaging.
Companies need to develop brand polices for individual product items in their lines.

40. Co-Branding & Ingredient Branding
It called dual branding or brand bundling, in which two or more well known existing brands are combined into a joint product or marketed together in some fashion.

41. Integrated Branding:
Is a special case of co-branding.
It involves creating brand equity for materials, components or parts that are necessarily contained within other branded products.

42. Packaging and Labeling
Is all the activities of designing and producing the container for a product.

43. Packaging includes: The primary package The secondary package
The shipping package
Packaging has become as marketing tool, well designed packages can create convenience & promotional value.

44. The factors that help in increasing using packaging as a marketing tool:
1- Self service: The package must perform many of the sales tasks: attract attention, describe the product features, create consumer confidence and make a favorable impression.
2- Consumer affluence: Consumers are willing to pay a little more per the convenience appearance, dependability and prestige of better packages.

45. 3- company and brand Image: Packages contribute to instant recognition of the company or brand.
4- Innovation opportunity: Innovative packaging can bring large benefits to consumes and profits to producers.( easy to carry , easy to open , easy to pour and close).

46. Developing an effective package:
Determine the packaging concept
Determine key package elements
Testing:
Engineering tests
Visual tests
Dealer tests
Consumer tests

47. After Packaging is designed it must be tested
Engineering Tests:
Conducted to ensure that the package stand up under normal conditions.
Visual Tests:
To ensure that the scrip is legible & the colors harmonious.
Dealer tests:
To ensure that dealers find the packages attractive & easy to handle.
Customer tests:
To ensure favorable consumer response.

48. Labeling
The label may be a simple tag attached to the product or an elaborately designed graphic that is part of the package.

49. Legal restrictions impact packaging for many products.
Labeling functions:
 Identifies the product or brand
 May identify product grade
 May describe the product
 May promote the product
Legal restrictions impact packaging for many products.

50. Warranties & guarantees
are formal statements of expected product performance by the manufacturer.
Guarantees are most effective in two situations:
The company or the product is not well know.
The product's quality is superior to the
competition.

51. Warranties and guarantiees
Guarantees
1- Reduce the buyer perceived risk.
2- Suggest that the product is of high quality.
3- Company and its service performance are dependable.
4- Enables the company to charge a higher price than a competitor who is not offering an equivalent guarantee.