Transcript What is a Product?

LECTURE-10
Setting Product Strategy
Chapter Questions
• What are the characteristics of products and
how do marketers classify products?
• How can companies differentiate products?
• How can a company build and manage its
product mix and product lines?
• How can companies combine products to
create strong co-brands or ingredient brands?
• How can companies use packaging, labeling,
warranties, and guarantees as marketing
tools?
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.
Five Product Levels
Five Product Levels
• Core benefit
• The service or benefit the customer is really buying e.g.
A hotel guest is buying “rest & sleep”
• Basic product
• e.g. A bed, bathroom, towels, desk, dresser & closet
• Expected product
• e.g. A clean bed, fresh towels, working lamps &
quietness
Five Product Levels…
• Augmented product
• Exceeds customer expectations
• Potential product
• Offering might undergo in the future
Product Classification Schemes
• Durability
• Tangibility
• Use
Durability and Tangibility
• Non-durable goods
• Tangible goods normally consumed in one or a few
uses e.g. soft drinks & soap etc.
• Durable goods
• Tangible goods that normally survive many uses
e.g. Refrigerators, machine tools & clothing etc.
• Services
• Intangible, inseparable, variable & perishable
products e.g. Legal services, appliance repairing &
hair cuts etc.
Consumer Goods Classification
• Convenience
• Purchase frequently, immediately & with minimum of efforts e.g.
soft drinks, newspapers & soaps etc.
• Shopping
• Consumer compares on such bases suitability, quality, price &
style e.g. Furniture, clothing & appliances etc.
• Specialty
• Have unique characteristics & need special purchasing efforts e.g.
Car, Stereo components & Photographic equipments etc.
• Unsought
• Consumer doesn't know about or does not normally think of
buying e.g. Life insurance, encyclopedias & reference books etc.
Industrial Goods Classification
• Materials and parts
• Raw materials
• Manufactured Materials
• Capital items
• Component Materials e.g. Iron, Yarn, Cement,
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Wires etc.
Component Parts e.g. Small motors, Tires,
Castings etc.
• Supplies/business services
• Maintenance & repair items
• Operating Supplies
Product Differentiation
• Product form e.g. Size, shape & physical structure
• Features e.g. Basic functions of the product.
• Customization
• Making product as per the requirements of an
individual.
• Performance
• e.g. Level at which the product's primary
characteristics operate.
• Conformance Quality
• e.g. Degree to which all the produced units are
identical & meet the promised specifications.
Product Differentiation…
• Durability
• A measure of the product’s expected operating life
under natural or stressful conditions.
• Reliability
• A measure of the probability that a product will not
malfunction or fail within a specified time period.
• Repairability
• A measure of the ease of fixing a product when it
malfunctions or fails.
• Style
• Describes the product’s look & feel to the buyer.
Service Differentiation
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Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
The Product Hierarchy
Item
State life
Product type
Term life insurance
Product line
Life insurance
Product class Financial instruments
Product family Saving & income
Need family Security
Product Systems and Mixes
• Product system
• A group of diverse but related items that function in a
compatible manner.
• Product mix or Product assortment
• Set of all products & items a seller offer for sale.
• Width
• Refers to how many different product lines the
company carries.
Product Systems and Mixes…
• Length
• Refers to the total number of items in the product mix.
• Depth
• Refers to how many variants are offered of each
product in the line.
• Consistency
• Refers to how closely related the various product
lines are in end use.
Product Line Analysis
• Core product
• Items that produce high sales volume & heavily promoted but
with low margins e.g. Basic laptop computers.
• Staples
• Items with lower sales volume & no promotion e.g. Faster CPU
or Bigger memories.
• Specialties
• Items with lower sales volume but that might be highly promoted
e.g. Digital movie making equipment.
• Convenience items
• Sell in high volume but receive less promotion e.g. Carrying
cases & accessories.
Line Stretching
• Down-market stretch
• A company positioned in the middle market may want
to introduce a lower-priced line.
• Up-market stretch
• Companies may wish to enter the high end of the
market to achieve more growth.
• Two-way stretch
• Companies serving the middle market might decide
to switch their line in both directions.
Product-Mix Pricing
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Product-line pricing
Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
What is the Fifth P?
Packaging, sometimes called the 5th P, is all the
activities of designing and producing the
container for a product.
Factors Contributing to the Emphasis on
Packaging
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Self-service
Consumer affluence
Company/brand image
Innovation opportunity
Packaging Objectives
• Identify the brand
• Convey descriptive and persuasive
information
• Facilitate product transportation and
protection
• Assist at-home storage
• Aid product consumption
Functions of Labels
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Identifies
Grades
Describes
Promotes
Bibliography
 Marketing Management – A South Asian Perspective
by Philip Kotler, Kevin Lane Keller, Abraham Koshy &
Mithileshwar Jha, 13th Edition, Published by Pearson
Education, Inc.
 Strategic Marketing Management – Meeting The
Global Marketing Challenges by Carol H. Anderson &
Julian W. Vincze Published by Houghton Mifflin Company.
 Principles of Advertising & IMC by Tom Duncan 2nd
Edition, Published by McGraw-Hill Irwin.
 Principles of Marketing by Philip Kotler & Gary Armstrong
Thirteenth Edition, Published by Prentice Hall
"What lies behind us, and what lies
before us are small matters compared to
what lies within us."
Ralph Waldo Emerson
The End…