CHAPTER 6

PRODUCT STRATEGY
 Product: is a good or Price: is the amount of
service that satisfies the money customers
wants of a company’s must pay to obtain
target market. the product.

PRODUCT Marketing PRICE

Mix (4Ps)

Promotion: is defined as Place: includes

the activities that company activities
communicate the merits that make a
PROMOTION PLACE product available
of the product and
persuade target to target
customers to buy it. consumers.
4Ps (seller’s mind-set) (buyer’s mind-set) 4Cs

Customers are buying value

Businesses sell products and solutions to problems
PRODUCT CUSTOMER VALUE

Customer refers to the total

Price costs of obtaining, using,
and disposing of a product
PRICE CUSTOMER COSTS

Activities that make a product

Easy to buying
available to target consumers.
PLACE CONVENIENCE

Consumers want two-way

Eg. 30 second
communication and
commercials on
relationships with
television and/or radio
businesses
PROMOTION COMMUNICATION
 How did you know about a certain singer?
(For example: Adele)

Her songs: Hello, Someone like you,

Chasing pavements,…

The product is usually the first and most basic marketing consideration.
  Products, Services, and Experiences

 Levels of Product and Services

 Product and Service Classifications

CONTENTS  Product and Service Decisions

 Branding Strategy

 New-Product Development Strategy

 Product Life-Cycle Strategies

1. Products, Services and Experiences
PRODUCT
Anything that can be offered to a market for
attention, acquisition, use, or consumption that might
satisfy a want or need.
For example:
 Tangible objects: cars, computers, or cell phones.
Services, events, persons, places, organizations,
ideas, or a mixture of these: a trip to Las Vegas,
E*Trade online investment services, and advice
PRODUCT
from your family doctor.
1. Products, Services and Experiences

SERVICE (a form of product)

An activity, benefit, or satisfaction offered for sale
that is essentially intangible and
does not result in the ownership of anything.
For example: banking, hotel services, airline travel,
retail, wireless communication, and homerepair
services.
SERVICE
1. Products, Services and Experiences
NATURE AND CHARACTERISTICS OF A SERVICE

SERVICE
1. Products, Services and Experiences

“We realized a long time ago that what you make

people feel is just as important as what you make.”
(BMW)

Companies that market experiences realize that

customers are really buying much more than just
products and services. They are buying what those
offers will dofor them.
EXPERIENCES
 1. Products, Services and Experiences
For example:
Disney has long manufactured dreams and memories
through its movies and theme parks.

EXPERIENCES
 1. Products, Services and Experiences

For example:
Nike has long declared,
“It’s not so much the shoes
but where they take you.”

EXPERIENCES
 1. Products, Services and Experiences

For example:
The Olive Garden knows
that it’s selling more than
just Italian food; it’s
selling a complete dining
experience.
EXPERIENCES
2. THREE LEVELS OF PRODUCT
 CORE CUSTOMER VALUE
Eg. People who buy a iPhone are buying
more than a cell phone, an e-mail device,
or a personal organizer. They are buying
freedom and on-the-go connectivity to
people and resources.
 ACTUAL PRODUCT
Eg. iPhone is an actual product.
 AUGMENTED PRODUCT
Eg. When consumers buy a BlackBerry, the
company and its dealers also might give
buyers a warranty on parts and
workmanship, instructions on how to use
the device, quick repair services when
needed.
 3. PRODUCT AND SERVICE CLASSIFICATIONS
CONSUMER PRODUCTS INDUSTRIAL PRODUCTS
products and services bought those purchased for further
by final consumers for processing or for use in
personal consumption. conducting a business.

convenience products shopping products materials and parts capital items

specialty products unsought products supplies and services

 3. PRODUCT AND SERVICE CLASSIFICATIONS
CONVENIENCE PRODUCTS SHOPPING PRODUCTS
A consumer product
A consumer product that the
that customers usually
customer, in the process of
buy frequently,
selecting and purchasing,
immediately, and with
usually compares on such
minimal comparison
attributes as suitability, quality,
and buying effort.
price, and style

A consumer product CONSUMER PRODUCTS

with unique
characteristics or brand
identification for A consumer product that
which a significant the consumer either does
group of buyers is willing not know about or knows
to make a special about but does not normally
purchase effort. consider buying.
SPECIALTY PRODUCTS UNSOUGHT PRODUCTS
 3. PRODUCT AND SERVICE CLASSIFICATIONS
CONVENIENCE PRODUCTS SHOPPING PRODUCTS
Example: laundry Example: furniture,
detergent, candy, clothing, used cars,
magazines, major appliances,
and fast food. and hotel and airline
services.

CONSUMER PRODUCTS
Example:
life insurance,
preplanned funeral
Example: services, and blood
A Lamborghini donations to the
automobile Red Cross
SPECIALTY PRODUCTS UNSOUGHT PRODUCTS
 3. PRODUCT AND SERVICE CLASSIFICATIONS
MATERIALS AND PARTS CAPITAL ITEMS
- Raw materials. Industrial products
- Manufactured that aid in the buyer’s
materials and parts. production or
operations, including:
- Installations.
- Accessory
INDUSTRIAL PRODUCTS equipment.

Supplies:
- operating supplies.
- repair and maintenance items.
Business services:
- maintenance and repair services.
- business advisory services.
SUPPLIES AND SERVICES
 3. PRODUCT AND SERVICE CLASSIFICATIONS
MATERIALS AND PARTS CAPITAL ITEMS
Example: wheat, Example: factories,
cotton, fish, lumber, offices, generators,
iron, yarn, small drill presses, hand
motors, tires,… tools, lift trucks,
computers, fax
machines,…
INDUSTRIAL PRODUCTS

Example: lubricants, coal, paint,

nails, window cleaning, computer
repair, legal, management
consulting, advertising,…
SUPPLIES AND SERVICES
 3. PRODUCT AND SERVICE CLASSIFICATIONS
ORGANIZATIONS, PERSONS, PLACES, AND IDEAS
In addition to tangible products and services, marketers have
broadened the concept of a product to include other market
offerings: organizations, persons, places, and ideas.

IDEAS
ORGANIZATIONS PERSONS PLACES
Social marketing is the use of
commercial marketing concepts
Activities undertaken to create, maintain, or change
and tools in programs designed
attitudes and behavior of target consumers toward…
to influence individuals’
behavior to improve their well-
an organization particular people particular places being and that of society.
4. Product and Service Decisions

INDIVIDUAL PRODUCT PRODUCT LINE PRODUCT MIX

DECISIONS DECISIONS DECISIONS
 What are the differences?
For example:
A specific product Samsung Galaxy S7 smartphone,
Samsung 4K SUHD (TV)

PRODUCT LINE For example:

A group of products that are closely Samsung's mobile phones are
related because they function in a similar divided into product lines based
manner, are sold to the same customer on the following features; touch
groups, are marketed through the same screens, slider/folders, QWERTY
types of outlets, or fall within given price keyboards and bar phones.
ranges.

PRODUCT MIX (OR PRODUCT PORTFOLIO) For example:

The set of all product lines and items that a Samsung's product mix includes
particular seller offers for sale. mobile phones, netbooks, tablets,
televisions, fridges, microwaves,
printers and memory cards.
4. Product and Service Decisions

INDIVIDUAL PRODUCT DECISIONS

4. Product and Service Decisions
Product and Service Attributes

QUALITY FEATURES STYLE AND DESIGN

4. Product and Service Decisions
Product and Service Attributes

Product quality
The characteristics of a product or service that bear on its ability to satisfy
stated or implied customer needs.
Product quality has two dimensions: level (Performance quality) and
consistency (Conformance quality).
 Performance quality: companies choose a quality level that matches
target market needs and the quality levels of competing products.
QUALITY  Conformance quality: All companies should strive for high levels of
conformance quality.
4. Product and Service Decisions
Product and Service Attributes
For example:
 Performance quality:
A Rolls-Royce provides higher performance quality than a Chevrolet: It has
a smoother ride, provides more luxury and “creature comforts,” and lasts
longer.
 Conformance quality:
A Chevrolet can have just as much quality as a RollsRoyce. Although a
QUALITY Chevy doesn’t perform at the same level as a Rolls-Royce, it can deliver
as consistently the quality that customers pay for and expect.
4. Product and Service Decisions
Product and Service Attributes

Product features:
▪ are a competitive tool for differentiating a product
from competitors’ products.
▪ are assessed based on the value to the customer
versus the cost to the company
FEATURES
 4. Product and Service Decisions
Product and Service Attributes

 Style describes the appearance of the product.

 Design contributes to a product’s usefulness as
well as to its looks.

STYLE AND DESIGN

4. Product and Service Decisions
Branding

 Brand: A name, term, sign, symbol, design, or a

combination of these, that identifies the products
or services of one seller or group of sellers and
differentiates them from those of competitors.
 Consumers view a brand as an important part of
a product, and branding can add value to a
BRANDING product.
4. Product and Service Decisions
Packaging

 Packaging: The activities of designing and producing

the container or wrapper for a product.
 The primary function of the package was to hold and
protect the product. In recent times, packaging
become an important marketing tool as well.
PACKAGING
4. Product and Service Decisions
Labeling
 Labeling: Labels range from simple tags attached to
products to complex graphics that are part of the
packaging.
 They perform several functions:
 Identify the product or brand.
 Describe several things about the product.
LABELING  Promote the brand, support its positioning, and
connect with customers.
 4. Product and Service Decisions
Product Support Services
 Support services: are an important part of the customer’s
overall brand experience.
 For example, HP offers a complete set of sales and after-sale
services. It promises “HP Total Care—expert help for every
stage of your computer’s life. From choosing it, to configuring
it, to protecting it, to tuning it up—all the way to recycling it.”
Customers can click on the HP Total Care service portal that
offers online resources for HP products and 24/7 tech support,
PRODUCT SUPPORT which can be accessed via e-mail, instant online chat, and
SERVICES telephone.
4. Product and Service Decisions

INDIVIDUAL PRODUCT PRODUCT LINE PRODUCT MIX

DECISIONS DECISIONS DECISIONS
4. Product and Service Decisions
▪ The major product line decision involves product line length.
▪ Product line length is the number of items in the product line.
▪ A company can expand its product line in two ways:
 Line filling
 Line stretching:
 Downward
PRODUCT LINE
DECISIONS  Upward
 Both directions
4. Product and Service Decisions
For example:
 Line filling:
Cozy Teabag:
- Red Tea
- Gold Tea
- Strawberry Flavored Tea
PRODUCT LINE - Peach Flavored Tea
DECISIONS - Mint Flavored Tea
- Apple Flavored Tea
 4. Product and Service Decisions
For example:
 Line stretching:
 Downward:
Honda stretched downward by
adding its thrifty little Honda Fit to its
line. The Fit, economical to drive and
priced in the $14,000 to $15,000
range, met increasing consumer
PRODUCT LINE
demands for more frugal cars and
DECISIONS
preempted competitors in the new-
generation minicar segment.
 4. Product and Service Decisions
For example:
 Line stretching:
 Upward:
Some years ago, each of the
leading Japanese auto
companies introduced an
upmarket automobile: Honda
launched Acura; Toyota
PRODUCT LINE
launched Lexus; and Nissan
DECISIONS
launched Infiniti.
 4. Product and Service Decisions
For example:
 Line stretching:
 Both directions:

Marriott did this with its hotel product line. Along with regular
Marriott hotels, it added eight new branded hotel lines to serve both
the upper and lower ends of the market.
- Renaissance Hotels & Resorts aims to attract and please top
executives.
PRODUCT LINE - Fairfield Inn by Marriott, vacationers and business travelers on a
DECISIONS tight travel budget.
- Courtyard by Marriott, salespeople and other “road warriors.”
4. Product and Service Decisions

INDIVIDUAL PRODUCT PRODUCT LINE PRODUCT MIX

DECISIONS DECISIONS DECISIONS
4. Product and Service Decisions

A company’s product mix has four important dimensions:

 Width
 Length
 Depth
PRODUCT MIX  Consistency
DECISIONS
4. Product and Service Decisions

A company’s product mix has four important dimensions:

 Width: the number of different product lines the company

carries.
For example: GE manufactures as many as 250,000 items
across a broad range of categories, from light bulbs to jet
PRODUCT MIX engines and diesel locomotives.
DECISIONS
4. Product and Service Decisions

A company’s product mix has four important dimensions:

 Length: the total number of items a company carries

within its product lines.
For example: Colgate’s personal care line includes
Softsoap liquid soaps and body washes, Irish Spring bar
PRODUCT MIX soaps, Speed Stick deodorant, and Skin Bracer and
DECISIONS
Afta aftershaves.
4. Product and Service Decisions

A company’s product mix has four important dimensions:

 Depth: the number of versions offered for each

product in the line.
For example: you can buy Colgate Total in regular,
mint stripe gel, or whitening liquid.
PRODUCT MIX
DECISIONS
4. Product and Service Decisions

A company’s product mix has four important dimensions:

 Consistency: how closely related the various product

lines are in end use, production requirements, distribution
channels, or some other way.
For example: Colgate product lines are consistent insofar
PRODUCT MIX as they are consumer products and go through the
DECISIONS
same distribution channels..
5. Branding Strategy
What is Brand?

 A brand is a promise.
 It exists only in the minds of the consumer.
 It is both functional and emotional.
 It must stand for something.
 5. Branding Strategy
▪ Brand Loyalty BRAND IQUITY
▪ Brand Awareness ▪ Brand Personality
▪ Perceived Quality ▪ Brand-Customer
▪ Brand Associations BRAND IDENTITY ▪ Relationships
▪ Other Proprietary ▪ Organizational
Brand Assets ▪ Associations
PRODUCT ▪ Symbol
▪ User Imaginary
▪ Scope ▪ Functional Benefits
▪ Attributes ▪ Emotional Benefits
▪ Quality ▪ Self-Expressive
▪ Uses Benefits
▪ Country of origin
5. Branding Strategy
What is Brand Equity?
“Brand Equity is a set of brand assets and liabilities linked to a brand, its
name and symbol, that add to or subtract from the value provided by a
product or service to a firm and/or to that firm’s customers”
(Akaer, 1991)
“A basic premise of brand equity is that the power of a brand lies in the
mind of consumers and what they have experienced and learned about
the brand over time. Brand equity can be thought of as the “added value”
endowed to a product in the thoughts, words, and actions of consumers .”
(Keller, 2003)
5. Branding Strategy
What benefits result from enhancing brand equity?

 Increased consumer loyalty.

 Long-term growth and profitability for the brand.
 Maintain brand differentiation from competitive offerings.
 Insulate brand from price competition.
5. Branding Strategy

Major Brand Strategy Decisions

5. Branding Strategy
Major Brand Strategy Decisions
BRAND POSITIONING

Brand strategy decisions include:

 Product attributes
 Product benefits
 Product beliefs and values
5. Branding Strategy
Major Brand Strategy Decisions
Desirable qualities:
 Desirable qualities
 Suggest benefits and qualities
BRAND NAME  Easy to pronounce, recognize, and remember
SELECTION
 Distinctive
 Extendable
 Translatable for the global economy
 Capable of registration and legal protection
5. Branding Strategy
Major Brand Strategy Decisions

BRAND
DEVELOPMENT
STRATEGIES
6. New-Product Development Strategy
Two ways to obtain new products:

ACQUISITION NEW PRODUCT DEVELOPMENT

refers to the buying of refers to original products,
a whole company, a product improvements,
patent, or a license to product modifications, and
produce someone new brands developed
else’s product from the firm’s own research
and development.
6. New-Product Development Strategy
Major Stages in New-Product Development
7. Product Life-Cycle Strategies

Product Life Cycle (PLC)

The course of a product’s sales
and profits over its lifetime.
It involves five distinct stages:
 Product development
 Introduction
 Growth
 Maturity
 Decline
7. Product Life-Cycle Strategies
 Product development
 Sales are zero and investment costs mount
 Introduction
 Slow sales growth and profits are nonexistent
 Growth
 Rapid market acceptance and increasing profits
 Maturity
 Slowdown in sales growth and profits level off or decline
 Decline
 Sales fall off and profits drop
7. Product Life-Cycle Strategies
SUMMARY OF PRODUCT LIFE-CYCLE CHARACTERISTICS, OBJECTIVES
What do you need to
remember?
THREE LEVELS OF PRODUCT
 CORE CUSTOMER VALUE
Eg. People who buy a iPhone are buying
more than a cell phone, an e-mail device,
or a personal organizer. They are buying
freedom and on-the-go connectivity to
people and resources.
 ACTUAL PRODUCT
Eg. iPhone is an actual product.
 AUGMENTED PRODUCT
Eg. When consumers buy a BlackBerry, the
company and its dealers also might give
buyers a warranty on parts and
workmanship, instructions on how to use
the device, quick repair services when
needed.
 PRODUCT AND SERVICE CLASSIFICATIONS
CONSUMER PRODUCTS INDUSTRIAL PRODUCTS
products and services bought those purchased for further
by final consumers for processing or for use in
personal consumption. conducting a business.

convenience products shopping products materials and parts capital items

specialty products unsought products supplies and services

Product and Service Decisions

INDIVIDUAL PRODUCT PRODUCT LINE PRODUCT MIX

DECISIONS DECISIONS DECISIONS
 What are the differences?
For example:
A specific product Samsung Galaxy S7 smartphone,
Samsung 4K SUHD (TV)

PRODUCT LINE For example:

A group of products that are closely Samsung's mobile phones are
related because they function in a similar divided into product lines based
manner, are sold to the same customer on the following features; touch
groups, are marketed through the same screens, slider/folders, QWERTY
types of outlets, or fall within given price keyboards and bar phones.
ranges.

PRODUCT MIX (OR PRODUCT PORTFOLIO) For example:

The set of all product lines and items that a Samsung's product mix includes
particular seller offers for sale. mobile phones, netbooks, tablets,
televisions, fridges, microwaves,
printers and memory cards.
 Branding Strategy

▪ Brand Loyalty BRAND IQUITY

▪ Brand Awareness ▪ Brand Personality
▪ Perceived Quality ▪ Brand-Customer
▪ Brand Associations BRAND IDENTITY ▪ Relationships
▪ Other Proprietary ▪ Organizational
Brand Assets ▪ Associations
PRODUCT ▪ Symbol
▪ User Imaginary
▪ Scope ▪ Functional Benefits
▪ Attributes ▪ Emotional Benefits
▪ Quality ▪ Self-Expressive
▪ Uses Benefits
▪ Country of origin
New-Product Development Strategy

Major Stages in New-Product Development

Product Life-Cycle Strategies

Product Life Cycle (PLC)

The course of a product’s sales
and profits over its lifetime.
It involves five distinct stages:
 Product development
 Introduction
 Growth
 Maturity
 Decline