Marketing Management

Setting product strategy

THE MEANING OF “PRODUCT”
 A product may be a good, service,
place, person, or idea.
 A product is a set of tangible and
intangible attributes, which include
packaging, color, price, quality, and
brand, plus the services and
reputation of the seller.
 Components of the
Market Offering

Value-based prices

Attractiveness of
the market offering

Product features Services mix

and quality and quality
Five Product Levels

Product Levels: The Customer Value Hierarchy

 Core benefit: It is the fundamental level. It is the service or
benefit the customer is really buying.
 Basic product: the marketer has to turn the core benefit
into a basic product.
 Expected product: a set of attributes and conditions
buyers normally expect when they purchase this product.
 Augmented product: That exceeds the customers
expectations.
 Potential product:: It encompasses all the possible
augmentations and transformations the product or offering
might undergo in the future. Here is where companies are
searching for new ways to satisfy customers and distinguish
their offer.
Augmented Product
In developing countries brand positioning and competition
takes place at this level. Differentiation arises on the basis
of product augmentation also leads the marketer to look
at the users total consumption system (the way the user
perform the tasks of getting and using products and
related services)
Product Augmentation Strategy:
1. Each augmentation adds cost
2. Augmented benefits soon become expected benefits and
necessary point-of-parity, this means that competitors will
have to search for other features and benefits.
3. As companies raise the price of their augmented product
some competitors offer a “stripped-down” version at a
much lower price.
Five Product Levels

Potential product
Augmented product
Expected product
Basic product
Core benefit
Product Classification Schemes

 Durability
 Tangibility
 Use (consumer or industrial)
 Durability and Tangibility
1. Nondurable goods: are tangible goods consumed in one or few
uses like coke and soap, because these goods are consumed
quickly and purchased frequently, the best strategy is to make
them available in many locations, charge only a small mark-up and
advertise heavily to induce trail and build preference.
2. Durable goods: they are tangible goods that normally survive
many uses: refrigerator, machine tools and clothing. Durable goods
normally require more personal selling and service, command a
high margin and require more seller guarantees.
3. Services: they are intangible, inseparable, variable and perishable
products. As a result they normally require more quality control,
supplier credibility and adaptability, like haircuts, legal advice and
appliance repairs.
Consumer Goods Classification
The vast array of goods consumers buy can be classified on the basis of shopping habits.
 Convenience goods: consumer usually purchases frequently, immediately and with a
minimum of effort like tobacco products, soap and newspapers. it can be further divided
into staple (goods consumer purchases on a regular basis) Impulse goods (are
purchased without any planning and search effort) Emergency goods (are purchased
when the need is urgent)
 Shopping goods: are goods that the consumer in the process of selection and
purchase characteristically compares on such bases as suitability, quality, price and
style. Further divided into Homogenous shopping goods (are similar in quality but
different enough in price to justify shopping comparisons) Heterogeneous shopping
goods (differ in product features and services that may be more important then price.
The seller of heterogeneous shopping goods carries a wide assortment to satisfy
individual tastes and must have well trained salespeople to inform and advise
customers)
 Specialty: has unique characteristics or brand identification for which a sufficient
number of buyers are willing to make a special purchasing effort. Specialty goods do not
involve making comparisons; buyer invest time only to reach dealers carrying the
wanted product.
 Unsought goods: are those the consumer does not know about or normally think of
buying. Unsought goods require advertising and personal selling support.
Consumer-Goods Classification
Convenience Products
Buy frequently & immediately
> Low priced
> Many purchase locations
> Includes:
• Staple goods
• Impulse goods
• Emergency goods
Specialty Products
Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
Shopping Products
Buy less frequently
> Gather product information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Unsought Products
New innovations
> Products consumers don’t
want to think about.
>Require much advertising &
personal selling
Industrial Goods Classification

 Materials and parts: are goods that enter the

manufacturer’s product completely. They fall into two
parts raw materials and manufactured materials and
parts. Raw material can be of farm products and
natural products.
 Capital items: installations and equipments.
 Supplies/business services: operating suppliers,
maintenance and repair items, maintenance and repair
services and business advisory services.
Product Differentiation
 Product form: the size, shape or physical structure of a product.
 Features: they supplement its basic functions
 Performance Quality: is the level at which the products primary
characteristics operate. most products are established at one of our
performance levels: low, average, high or superior.
 Conformance Quality: buyers expect that the product to have a high
conformance quality which is the degree to which all the produced
units are identical and meet the promised specifications.
 Durability: a measure of the product’s expected operating life under
natural or stressful conditions, is a valued attribute to some products.
 Reliability: It is the measure of the probability that a product will not
malfunction or fail within a specific time period.
 Reparability: it is the measure of the ease of fixing a product when it
malfunction or fails.
 Style: Describes the product’s look and feel to the buyer.
 Design: it is the totality of features that affect how a product looks and
functions in terms of consumer requirements.
Services Differentiation
 Ordering ease: refers to how easy it is fot the customers
to place an order with the company.
 Delivery: refers 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.
 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 and repair: describes the service program
for helping customers keep purchased products in good
working order.
The Product Hierarchy

 Need family: the core need that underlies the existence of a product
family. example: security
 Product family: all the product classes that can satisfy a core need
with reasonable effectiveness. Example: savings and income
 Product class: a group of products within the product family
recognized as having a certain functional coherence. Also known as
product category. Example: financial instruments
 Product line: a group of products that are closely related because
they perform a similar function are sold to the same customer
groups, are marketed through the same outlets or channels or fall
within given price ranges
 Product type: a group of items within a product line that share one
of the 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
 Product Systems and Mixes
 Product system: it is group of diverse but related items that
function in a compatible manner.
 Product mix: also called product assortment is a set of all products
and items a particular seller offers for sale product mix consist of
various product lines. A company’s product mix has a certain width,
length, depth and consistency.
 Width: the width of the product mix refers to how many different
product lines the company carries.
 Length: the length of the product mix refers to the total number of
items in the mix.
 Depth: the depth of a product mix refers to how many variants are
offered to each product in the line.
 Consistency: the consistency of the product mix refers to how
closely related the various product line are in the end use, production
requirements, distribution channels or some other way.
 Product Mix
 The product mix is the set of all products offered
for sale by a company.
 A product line is a broad group of products,
intended for similar uses and having similar
characteristics.
 A product mix has following dimensions:
 Width - number of different product lines
 Length - total number of items within the lines
 Depth - the variety of sizes, colors, and models
offered within each product.
 Consistency –close relationship of product lines.
 BREADTH/WIDTH
(DIFFERENT LINES)

Detergents Toothpaste Soaps

E PTH ENT
D R TM E) Tide Gleem Camay
S O IN
(AS IN A L
H
W IT Dash Crest Safeguard

Bold Oil of Olay

Each in various Each in various Each in various

sizes and prices sizes and prices sizes and prices

P&G Product Mix

Branding

Term Definition
Name, term, sign, symbol, design or
combination used to identify and
Brand differentiate a company’s products from
competitors.

The element of the brand that can be

Brand Name vocalized.

The element of the brand that cannot

Brand Mark be vocalized.

A brand or part of a brand this is

Trademark registered with the US Patent and
Trademark office.
The Importance of Branding

For Consumers For Marketers

• Quality Assurance • Differentiates Product

from Competitors
• Reduce
Search/Selection Time • Build Brand Identity
• Known Quantity • Improve Marketing
Communications
• Prestige Effectiveness
Brand Relationships

Brand Brand Brand Brand

Awareness Image Loyalty Equity
 Brand Strategies

Product Category
Existing New
Brand Name

Existing
Line Brand
Extension Extension

New
Multibrands New
Brands
Branding Strategies

Family
Family&&
Individual
IndividualBrand
Brand Individual
Name IndividualBrand
Brand
NameStrategy
Strategy Name
Name

Product
ProductMix
Mix
Branding Family
FamilyBrand
Brandfor
for
Branding Product
Strategies
Strategies ProductTypes
Types

Family
FamilyBrand
Brand Company
CompanyName
Name
Name
NameStrategy
Strategy
Packaging: The 5th P

All the activities of designing and producing

the container for a product.
 Why Package Crucial as a Marketing
Tool

 Self-service
 Consumer affluence
 Company & brand image
 Opportunity for innovation
Functions of Packaging

Protecting

Facilitating
Disposal Storage

Facilitating
Promoting Consumption
Functions of Labels

 Identifies
 Grades
 Describes
 Promotes
Labels

Promote
Promote

Describe
Describe

Identify
Identify