Chapter 11

Setting the Product Strategy

by

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 Product

Anything that can be offered to a market to

satisfy a want or need.

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 The Product and the Product Mix

Product Components
of the Market Offering
Physical goods
Services
Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas
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 The Product Characteristics and Classification
Product levels
Customer Value Hierarchy
Five Product Levels
Core benefit (Hotel; Rest &
Sleep)
Basic product (Hotel Room with
bed, bathroom, towels, desk, dresser
and closet)
Expected product (Hotel guests
expect clean bed, fresh towels,
working and quietness)
Augmented product (May be
overwhelmed if a guest found fresh
flower in his room after returning
from shopping comparing to
competitor)
Potential Product
All augmentation and transformation
a product must undergo in future.
Card based security system at hotel 14-4
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 The Product Characteristics and Classification
Product classifications
Durability and Tangibility Classification:
Nondurable goods (Soap; Consumed quickly and purchased
frequently.mark up should be low and advertise to induce trial)
Durable goods (Refrigerators, clothing that needs more personal
selling and higher margin and guarantee)
Services (Intangible; require more quality control, credibility and
adaptability)

Consumer-Goods Classification:
Convenience goods
Staples: Regular basis; rice, toothpaste.etc.
Impulse goods: Without planning; Candy, Magazine
Emergency goods: Need is urgent; Umbrella

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The Product Characteristics and Classification
Consumer-Goods Classification:
Shopping goods (In the process of selection and purchase,
characteristically compares on quality, price and style)furniture,
clothing, used car.and major appliance
Homogeneous
shopping goods: Similar in quality and different enough in
price
Heterogeneous
shopping goods: Product features and services are more
important that price
Specialty goods: (Special characteristics or brand for which
buyers are willing to make a special purchasing effort). Mercedes
Car, Photographic equipment
Unsought goods: Does not know or does not normally think
of buying.Life Insurance, grave, KAFONs stuff.advertising
and personal selling is required to sell them.
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The Product Characteristics and Classification
Industrial-Goods Classification
Materials and parts: Raw materialsMfg Materials
Farm products: Wheat, Rice
Natural products: Fish, Crude Petroleum
Component materials: Cement, wire
Component parts: Small motor, tires, castings
Capital items: Facilitate developing or managing finished
product.
Installations: Buildings, heavy equipments
Equipment: Hand tool, office equipment (Computer and desk)

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The Product Characteristics and Classification

Supplies and business services (Short-term goods and

service that facilitate developing the finished products)
Maintenance and
repair items (Paint, nails and brooms)
Operating supplies (lubricants, coal, writing paper, pencil)
Maintenance and
repair services (window cleaning, and repairing service)
Business advisory
services (Legal and management consulting)

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 The Product Differentiation
Product Differentiation
Form: The size or shape of the product
Feature: Feature bundles or packages
Performance Quality: Low quality low cost and high
performance high price
Conformance Quality: Porsche is designed to
accelerate to 60 miles per hour within seconds
Durability: Long lasting or not
Reliability: Japanese or Chinese
Reparability: Japanese Laptop.reinstallation facility
Style: Montblanc Pens.Apple Computer
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 The Service Differentiation
Service Differentiation
Ordering Ease: Tele-medicine service of hospital,
online banking
Delivery: Pizza with speed.eyeglass made in an hour
(QRS)
Installation: If complex product, installation is true
selling point
Customer Training : Digital X-Ray equipment and
customer training
Maintenance and Repair: Online or telephone based
maintenance support
Customer Consulting: City Cell Zoom
Ultra.Introducers discount.
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 Product and Brand Relationships
Product hierarchy
Need family (Hunger)
Product family (Food)
Product class (Cereal Food)
Product line (Rice, Flakes)
Product type (Flavored rice)
Item (Pran Chinigura Rice )

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 Product System and Mixes
Product mix (Product assortment):
Set of all products and items a particular seller offers for sale.
Northwestern University, there are separate academic deans for medical
school, law school, business school and so on
Product mix has a certain:
Width (Different product lines the company carries)
Length (Length of line)
Depth (Variants are offered of each product in the line, Tide
comes with mountain spring and regular)
Consistency: How closely related the various product lines are
in the end user, production requirement and distribution channels
(P&G product lines are consistent and consumer goods are going
through same distribution channel)
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 Table 12.1. Product-Mix Width and Product-Line Length for
Proctor& Gamble Products
Product-Mix Width
Disposable Paper
Detergents Toothpaste Bar Soap Diapers Tissue
Ivory Snow Gleem (1952) Ivory Pampers Charmin
(1930) (1879) (1961) (1928)
Crest (1955)
PRODUCT- Dreft Kirks Luvs Puffs
LINE (1933) (1885) (1976) (1960)
LENGTH
Tide Lava Banner
(1946) (1893) (1982)

Cheer Camay Summit

(1950) (1926) (1992)

See text for complete table 14-13

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 Product and Brand Relationships
Product-line Analysis
Sales and Profit
Four types of product classes that yields different gross
margin, depending on sales volume and promotion:
Core product (Produces high sales volume and low
margin)
Staples (Basic Ingredient): CPU, Large Memories,
low volume, no promotion and high margin
Specialties: Low sales volume but high promotion;
Installation may needed.Special Software
Convenience items: Sell high volume but less
promotion; Monitor, printers and software

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 Product and Brand Relationships
Market profile

Figure 12.4: Product Map for a Paper-Product Line 14-15

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 Product and Brand Relationship
Product-line length
Line Stretching
Downmarket Stretch
The company may notice strong growth opportunities as
mass retailers (Wal-Mart) attract a growing number of
shoppers with value-price goods
SONY
CORPORATION
The company may wish to tie up lower-end competitors, if
attacked by lower end competitors.
The company may find that the middle market is
stagnating or declining
Upmarket Stretch: High end market for more growth,
higher margin or to position full line mfg. TOYOTA LEXUS
Two-Way Stretch: Middle market company may try to
stretch their line in both directions

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 Product and Brand Relationship
Line Filling
Just-noticeable difference (The company has high ended
car.low ended carintroduced SPORTS CAR)

Line Modernization, featuring, and pruning

(Microsoft introducing new advanced software)

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 Product and Brand Relationship
Product-Mix Pricing
Product-line pricing: Price for low quality, average and
high quality items in the product linefor dressitems etc.

Optional feature pricing: Optional products and

associated price. Fog light for car, extended warranty

Two Part Pricing: Fixed plus variable. Telephone bill

By-Product Pricing: Legs of muttonand pricing

Product Bundle Pricing: Bundle price should be cheaper

than loose one.Shampoo and conditioner bundle

Captive Product Pricing: Diabetic machinerazor.

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 Product and Brand Relationship
Co-Branding and Ingredient Branding
Co-Branding: Product are often combined with products from
other companies in various ways.

Same company co-branding: Amul Milk and Butter

Joint venture co-branding: CitiBank Visa Cardor Bic

Camera Visa Card

Multiple Sponsor Co-branding: Intel, Lenovo, Microsoft

Ingredient Branding: Special case of co-branding for parts

availability. Carl Zesis for Sony Camera.

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Packaging, Labeling, Warranties and Guarantees
Packaging and Labeling
Packaging
Package
Primary Package (Cologne comes in a bottle)
Secondary Package (Cardboard box)
Shipping Package (Contains 10 box in one big pack)
Factors which have contributed to the growing use of
packaging as a marketing tool
Self-Service (See the cover we by books)
Consumer affluence (better package means dependability and
prestige)
Company and brand image (company or brand)
Innovation opportunity (easy to open or easy to carry)

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Packaging, Labeling, Warranties and Guarantees
Labeling
Functions
Identification (identify the product or brand)
Grading (grade of the product)
Description (describe)
Promote (through attractive graphics)
Warranties and Guarantees
Products under warranty can be returned to the
manufactured or designated repair center for repair,
replacement or refund.
Guarantee reduces buyers perceived risk.
Unconditional Guarantee (Money back guarantee if not satisfied
which is suitable for new products)
Attribute Guarantee (FedEx International delivery within 3
days)
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