Chapter 13 - Product Strategy

At the Heart of a great brand is a great product

Product should be absolutely good, if product isn’t good, only through mkt
program it can’t be a brand. Through promotion, we can make people buy for the
first time but if the product performance isn’t good, people won’t buy it for the
second time.

Improving product quality should be number 1 priority for the firms.

Service: Intangible, no ownership. It can’t be bought & sold through third party.
Quality control is the most important aspect in service marketing. Service varies a
lot by service provider, depends on where/how/when the service is provided.
In service marketing, quality control is important – service varies by situation,
provider, and time, but for product it doesn’t happen)
Eg.-Can’t provide good lecture as feeling sick.

Experience: 1 step ahead of service. Doing something beyond product or service

mkt.
- Starbucks / Krispy Kreme experience

Products and services are getting commoditized. So companies are trying to

improve customer experience through creating new touchpoint & interacts with
consumers. Companies need to sell experience, not only product or service.
"Commoditize" refers to a process in which a product is essentially deemed
identical to the same class of offering presented by a rival company.

Consumer Goods – For personal use

Industrial Goods – For business use

The product is at the heart of marketing activities.

Consumer Goods:

1. Convenience Goods – frequently purchased, unit price low, available, no

bargaining
i)staples-essentials (food item) ii) Impulse-on-spot decision (coke) iii)
Emergency- (medicine)
Firm should go for ATL – above the line (mass marketing)
2. Shopping Goods – Unit price high, bought less frequently, consumers judge
quality, price & so many things while buying (sofa, tv)
3. Specialty Goods – Goods have special appeal to certain people/ loyal to the
product (Cars)
BTL – Below the line (More selective/concentrated)
4. Unsought Goods – Aware/not aware of the product. Not willing to buy.
Selling strategy
These 4 types of consumer products all have different characteristics and involve a
different consumer purchasing behavior. Thus, the types of consumer products differ in
the way consumers buy them and, for that reason, in the way they should be marketed.

Marketing Types of Consumer Products

consideration Convenience Shopping Speciality Unsought
Strong brand
Frequent Less frequent
preference and
purchase, little purchase, much Little product
loyalty, special
Customer buying effort (planning, effort (planning awareness and
purchase effort,
behaviour comparison), low and comparison of knowledge or little
little comparison
customer brands on price, interest
of brands, low
involvement quality, style etc.)
price sensitivity
Price Low price Higher price High price Varies
Widespread Exclusive
Selective
distribution, distribution in
Distribution distribution, fewer Varies
convenient only one or a few
outlets
locations outlets
More carefully Aggressive
Advertising and
Promotion Mass promotion targeted advertising and
personal selling
promotion personal selling
Luxury goods
Toothpaste, Life insurance or
Television, (e.g. Rolex
Examples magazines, pre-planned funeral
furniture, clothing watch), designer
laundry detergent service
clothing

Strategy for convenience goods – make them available anywhere consumers might look
for them. Consumers don’t have a lot of loyalty to convenience brands so if they’re not
readily available, consumers substitute pretty readily.

Shopping Goods: Service and warranty work are often important considerations as well.
Examples are – Furniture, clothing. Readymade Garments, shoes, sarees, major appliances.
Shopping goods are durable in nature. They are purchased less frequently and are of high unit
value. A shopping good may not be purchased for a considerable period after the decision to buy
the product is made.

Chief characteristics are:

(1) Durable Nature

(2) High Unit price

(3) Comparison in selection

(4) Gap between decision to buy and actual buy

(5) Persuasive Effects of salesmen/Retailers.

Specialty Products
Specialty goods are those considered unique by the buyer, who will go to great lengths to get
them.

From the perspective of consumers, specialty goods are so unique that they will go to great lengths to
seek out and purchase them. Almost without exception, price is not a principle factor affecting the sales
of specialty goods. Although these products may be custom-made (e.g. a hairpiece) or one-of-a-kind
(e.g. a statue), it is also possible that the marketer has been very successful in differentiating the product
in the mind of the consumer.

In general, it is desirable for marketers to lift their product from the shopping to the specialty class and
keep it there. With the exception of price-cutting, the entire range of marketing activities are required to
accomplish this goal.

Converting Unsought Goods to Sought Goods

until they were advertised extensively in innovative ways.
When marketing an unsought good, you'll want to focus on reminding consumers of the
existence of your product, and convincing consumers

A brand must be different.

Style & Design:

Style – only aesthetic benefit
Design – both functional & aesthetic benefit. Design is much bigger than style.

Most of the product have become commodity & can’t be differentiated. They can be
differentiated only by style and design. That’s why these are tremendously important to
the marketer.

"Commoditize" refers to a process in which a product is essentially deemed

identical to the same class of offering presented by a rival company.
Great design can do a lot to improve your marketing efforts, and it does more than just help
your content stand out and look good. Using the right design can help influence more
conversions and, ultimately, attract potential customers and improve your ROI.

As we enter into a new golden age of design, good design has never been more important to the success
of a business. Consumer awareness of good design is at an all-time high, thanks to companies like Apple,
Target, and Starbucks, who make design a top priority.
Oher entities:
Organization marketing: DU lost brand equity. DU need to do organization marketing so
that target market thinks that DU getting revitalized

Person MKT: Bad person needs to be involved in person marketing to change people
attitude.

Place MKT: the same

Idea mkt: all MKT activities consists of idea marketing

Product & Brand Relationship

Product hierarchy : not important

Product system & mixes

Product system is a group of diverse but related products. If one is missing the product
will not work.

Eg- desktop computer,

Product mix: Product mix and product portfolio is the same. Product mix consists of all
the product lines & items.

Product lines & every line may have couple of items. Product mix is the combination of
all the lines & items a seller offers in the market.

Length: Length of a product line- if detergent has 8 items

length of product mix – total number of items in all the lines

An item may have different variant

Width/breathe of product mix – how many diff product line a company has . p&g – 5

Consistency: how much is 1 line related to other lines in terms of product

characteristics, target market, channel of distribution/communications, price range
eg- bashundhara – product line _ EW property dev. Later on- tissue paper, bashudhara
lp gas
there’s no relations.

Depth of item – how many variant a single item has

unilever has 3 item in beauty soap – lux, dove, lifebuoy

Lux got 3 variant. Depth of Lux is 3.

Toyota sedan – product line – allon, axio – variant

Product line analysis: some items are profitable, some items are no good. It’s
responsibility of the marketer to analyze every item in terms of sales, profit & market
profile.

Item x – huge sales, less profit

y- less sales, pore profit

Based on the analysis which item to grow, which item to maintain, which item to
harvest, which item to divest
Lux – dozens of product but lux is the market leader

Product Map: competitive position and market opportunity

Product Line Length: not static, it changes

lever brothers BD ltd. now – unilever

Lux, lifebuoy & Rexona/Dove

Rexona dropped and Dove introduced

Toyota introduced Lexus/camry/crown at the upper end

Crosssellling- one product XXX with another product

Line Stretching: Lengthen. / introducing new item beyond existing product range
Stretching downward

Stretching upward

Stretching both ways

Mum water – 330ml bottle (stretching downward). If 20 ltr- stretching upward

only had 500ml, 1ltr, 5/10ltr.

Mum decided to introduce 400ml – line filling

Product mix pricing strategy

Setting set of prices for a range of products, setting price in all the items in all the lines

For a range of product line & items – pricing strategy is difficult

eg. - main dish price is very low, price of beverage is high – overall profitable –
no/nominal profit for main dish, 500% profit on beverage . low price main dish attract
customers in the restaurant.

The company tries to set price on all the items in order to maximize the profit for the
whole company. It’s a very challenging because of interrelationship between demand &
cost. Cost & competitiveness is also a challenges for a particular product
Products being part of it are all interrelated, their prices being in conjunction with each other.
Therefore, the strategy for setting a product’s price often has to be changed when the product is part of
a product mix. Then. the company looks for a set of prices that will maximize profits on the total product
mix, instead of on the individual product. Since the various products in the mix have related demand
and costs, but face different degrees of competition, pricing is difficult. Therefore, we will have a close
look at the five major product mix pricing strategies (or situations).

you see that setting the prices for a product becomes harder when it is part of a product mix – because
all products and their prices must be interrelated. But with these product mix pricing strategies, you are
on the right track.

Product line pricing – pricing of different items in a single product line

lux, lifebuoy, dove (price for 2 item high, 1 low) colors of motorbikes – silver color price
is high.
high price not necessarily reflect high cost of production

Optional product pricing – not setting the price for the main product, rather the optional
feature
navigation system / heating system – car (has to go for study, customer preference)

By-product pricing – not setting for the price for main product, rather the by-product
(when the production of main product results in some other products-these other
product are called by product).

Timber- saw dust (saw dust called the by-product)

tar (Octane/Petrol)
by making profit in captive product, one can cut the price of the main product

Captive product pricing – setting price for the captive product (captive product used
with main product). Main product can’t be used without the captive product.

Fountain pen and ink. Razor and blade

Low price for the main product and high price for the captive product

Risk – if price for the captive product is too high some competitors can come forward
and one may lose the market

Two part pricing – telephone / per call cost

Product bundling – one or two product set together and setting a price
absolute bundling -
mixed bundling – part selling

Co-branding : strategy of bringing two or more brands

same company co-branding
joint venture: Suzuki-maruti
multi sponsor : high tech product sponsored by apple, ibm, Motorola
retail value is sponsored by two or more
ingredient branding-NSU : brand teachers, student, facilities (if ingredient is branded,
automatically main brand will be branded) – intel inside

Requirements: ingredients must matter/superior. Distinctive logo, push-pull strategy

Warranty –warranty is written, enforceable by law

Guarantee - oral, not enforceable by law