Product Concepts

Objectives
To Understand the Concept of a Product To Understand How to Classify Products To Become Familiar With the Concepts of Product Item, Product Line, and Product Mix and Understand How They Are Connected To Become Familiar With the Product Adoption Process To Understand Why Some Products Fail and Some Products Succeed

What s a Product?
Good Service

Idea

Product
A product is anything that can be offered to the market to satisfy a want or need Levels
Core benefit that the customer is really buying
In a hotel, customer is buying rest and sleep

Basic product through which the core benefit is delivered to the consumer
A room, bed, bathroom, desk, closet

Product
Expected product the set of attributes that the consumers expect as obvious along with the product (otherwise dissatisfaction)
Clean bed, pillow, fresh towel, soap, lamp, fan etc.

Augmented product attributes / features that exceed consumer expectation which leads to happiness of the consumer
TV with cable, good interior design & dcor, good food etc.
Cost benefit trade off Today s augment tomorrow s expected Easy to copy

Product
Potential product all possible augmentation and transformation that the product may go through in future which leads to customer delight
Bar inside the room, fruit bowl, computer facilities etc.

Classifying Products

Consumer vs. Business

Consumer Products

Convenience
Staples, impulse, emergency

Consumer Products

Shopping
Homogenous Heterogeneous

Consumer Products

Specialty

Consumer Products

Unsought

Business Products

Installations Accessory Equipment

Business Products

Raw Materials Component Parts

Business Products

Process Materials Supplies

Business Products

Business Services

Product Line & Product Mix

Product Item

Product Line & Product Mix

Product Line
LAMPS Table Ceiling Track Desk

Selected Acme Furniture Co. Products

Product Line & Product Mix

Product Mix
Product Line 1 LAMPS Table Ceiling Track Desk Product Line 2 TABLES Kitchen Dining Room End Coffee Outdoor Conference Computer Product Line 3 CHAIRS Dining Room Living Room Bedroom Outdoor Desk

Selected Acme Furniture Co. Products

Product Line & Product Mix

Length of Product line
Product Line 1 LAMPS Table Ceiling Track Desk Product Line 2 TABLES Kitchen Dining Room End Coffee Outdoor Conference Computer Product Line 3 CHAIRS Dining Room Living Room Bedroom Outdoor Desk

Selected Acme Furniture Co. Products

Product Line & Product Mix

Width of Product Mix
Product Line 1
LAMPS Table Ceiling Track Desk

Product Line 2
TABLES Kitchen Dining Room End Coffee Outdoor Conference Computer

Product Line 3
CHAIRS Dining Room Living Room Bedroom Outdoor Desk

Selected Acme Furniture Co. Products

Product line Analysis

Understand each product line s market profile and performance
Sales and profit Market profile
Identification of significant product attributes of each product in the different product lines Identification of competition in the market (different levels) for each product Comparison of the positioning theme against the various competitors against the backdrop of the characteristics of the target markets

Product related decisions

The profiling and analysis of performance leads to some decision making by the product / brand managers
Optimal product line length Line modernization Line featuring Line pruning etc.

Optimal Product line length

Line stretching (up market ~ down market)
Downward Upward Two way

Line Filling
Self cannibalization JND (just noticeable difference)

Markets for a hotel chain

Quality

Economy High
Price

Standard Good

Superior
Top Executives

Above Average Average Low

Vacationers

Middle Managers Salespeople

Other Product line decisions

Line modernization
Style Design etc.

Line featuring
Which product items to be used as show piece to attract consumers for the whole product range

Line pruning (removal of deadwoods)

Brand Decisions
A name, term, sign, symbol, design or combination of them, intended to identify the goods and services of one seller or group of sellers and differentiate them from competitors Seller s promise to deliver a specific set of features, benefits and services constantly to the buyers

Brand Decisions
A brand communicates the following six levels of meanings
Attributes Benefits Values Culture Personality User

Brand Decisions
To brand or not to brand Brand sponsor decision
Manufacturer brand (HLL, Bajaj etc.) Distributor brand (private brand) (Shopper Stop) Licensed brand (Parker, Levi etc.)

Brand Decisions
Brand name decisions
Individual name (Lux, Liril etc.) Blanket family name (Amul products, Godrej product lines etc.) Separate family names (TISCO, TELCO, TCS etc.) Company Individual name (Bajaj Chetak, Bajaj Super etc.)

Brand Decisions
Brand strategy decisions
Line extension Brand extension Multi-branding New brands Co-brands

Brand Decisions
Brand repositioning decision
Brand should be repositioned Brand should not be repositioned

Packaging
Packaging includes the activities of designing and producing the containers for the products Levels
Primary
Bottle containing the shampoo

Secondary
The cardboard box containing the bottles

Tertiary
Shipping package

Packaging
Factors influencing the growing use of packaging in marketing
Self- service Consumer affluence Company and brand image Innovation opportunity

Labeling
May be a simple tag or complex graphics May carry only the brand name or a lot of other information May be voluntary or enforced by law Functions
Identification Gradation Description Promotion

Adoption Process
Awareness Interest Evaluation Trial Adoption

Adoption Process
Product Adopter Categories

100% of eventual adopters

Adoption Process
Product Adopter Categories
2.5% Innovators

Adoption Process
Product Adopter Categories
2.5% Innovators 13.5% Early Adopters

Adoption Process
Product Adopter Categories
2.5% Innovators 13.5% Early Adopters

34% Early Majority

Adoption Process
Product Adopter Categories
2.5% Innovators 13.5% Early Adopters

34% Late Majority

34% Early Majority

Adoption Process
Product Adopter Categories
2.5% Innovators 16% Laggards 13.5% Early Adopters

34% Late Majority

34% Early Majority

Why Some Products Fail and Others Succeed

80 to 90% Fail. Why?
Failure to Meet Customer Needs Poor Timing Market Conditions Ineffective or Inconsistent Branding Technical or Design Problems Overestimation of Market Size Poor Promotion Insufficient Distribution

The Emerging Marketing Environment

Increased competition Proliferation of brands and Product categories Increased choice to the consumer Transformation from a Seller s Market to a Buyer s Market

 Total Product Concept Servicization of Products and Productization of Services Differentiation-Both Tangible and Intangible Vectors of Differentiation

 The more commoditised the market the more branding matters. Anything can be branded.

 HP,Motorola ,Intel What is an opportunity can only be decided if there is a strategy. Otherwise, there is no way to tell what genuinely advances the organisation towards its desired results, and what is diversion and splintering of resources.-- P.F.Drucker

The Sustainable Competitive Advantage

The Way You Compete Product Strategy Positioning Strategy Manufacturing Strategy Distribution Strategy

Basis of Competition Assets and Competencies

SCA

Where You Compete Product-Market Selection

Whom You Compete Against Competitor Selection

Product Strategy Vision Product Platform Strategy

Product-Line Strategy

New Product Development

Product Strategy Process Structure

Product Platform
Product Platform is a set of subsystems and interfaces that form a common structure from which a stream of derivative products can be efficiently developed and produced Product Platforms Must be Managed, Rejuvenated. Managing the Journey up the Value CurveThe case of Indian Firms

 Strategic window concept Strategic inflection point

OK, YOU SHOULD NOW . . .

Understand the Concept of a Product Understand How to Classify Products Be Familiar With the Concepts of Product Item, Product Line, and Product Mix and Understand How They Are Connected Understand the Concept of Product Life Cycle and Its Impact on Marketing Strategies Be Familiar With the Product Adoption Process Understand Why Some Products Fail and Some Products Succeed

Thank You