Ch-13: Setting Product
Strategy
Kazi Ahmed
What is Product?
• Many people think a product is tangible thing, but technically -
• 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.
Product Life Cycle (PLC)
Product Levels: The Customer-Value
Hierarchy
• The fundamental level is the core benefit: the service or benefit the customer is
really buying. A hotel guest is buying rest and sleep. The purchaser of a drill is
buying holes. Marketers must see themselves as benefit providers.
• • At the second level, the marketer must turn the core benefit into a basic
product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and
closet.
• • At the third level, the marketer prepares an expected product, a set of
attributes and conditions buyers normally expect when they purchase this
product. Hotel guests minimally expect a clean bed, fresh towels, working lamps,
and a relative degree of quiet.
• • At the fourth level, the marketer prepares an augmented product that exceeds
customer expectations. In developed countries, brand positioning and
competition take place at this level. In developing and emerging markets such as
India and Brazil, however, competition takes place mostly at the expected
product level.
• • At the fifth level stands the potential product, which encompasses all the
possible augmentations and transformations the product or offering might
undergo in the future. Here companies search for new ways to satisfy customers
and distinguish their offering.
Product Durability Classifications
• Products fall into 3 groups according to durability and tangibility:
1. Nondurable goods are tangible goods normally consumed in one or a
few uses, such as soft drinks and shampoo.
Because these goods are purchased frequently, the appropriate strategy is
to make them available in many locations, charge only a small markup, and
advertise heavily to induce trial and build preference.
2. Durable goods are tangible goods that normally survive many uses:
refrigerators, machine tools, and clothing.
They normally require more personal selling and service, command a
higher margin, and require more seller guarantees.
3. Services are intangible, inseparable, variable, and perishable products
that normally require more quality control, and adaptability.
Examples include haircuts, legal advice, and appliance repairs.
Product classification based on usage
• 2 types-
1. Consumer Goods
2. Industrial Goods
Consumer goods classification
• Consumers goods are categorized into 4 types-
1. Convenience Goods: The consumer usually purchases convenience goods frequently,
immediately, and with minimal effort. Examples include- soft drinks, soaps, and
newspapers
Among consumer goods there are two special categories-
Impulse goods are purchased without any planning or search effort, like candy bars.
Emergency goods, are purchased when a need is urgent—umbrellas during a
rainstorm.
2. Shopping Goods: Shopping goods are those the consumer characteristically compares
on such bases as suitability, quality, price, and style. Examples include furniture,
clothing, and major appliances.
Homogeneous shopping goods are similar in quality but different enough in price to
justify shopping comparisons.
Heterogeneous shopping goods differ in product features and services that may be
more important than price
3. Specialty Goods: Specialty goods have unique characteristics or brand
identification for which enough buyers are willing to make a special
purchasing effort.
Examples A Mercedes is a specialty good because interested buyers will
travel far to buy one.
Specialty goods don’t require comparisons; buyers invest time only to reach
dealers carrying the wanted products. Dealers don’t need convenient
locations, though they must let prospective buyers know where to find them.
4. Unsought goods: Unsought goods are those the consumer does not know
about or normally think of buying, such as smoke detectors.
Unsought goods require advertising and personal-selling support.
Industrial-Goods Classification
We classify industrial goods in terms of their relative cost and the way they enter
the production process:
1. Materials and parts: Materials and parts are goods that enter the
manufacturer’s product completely. They fall into two classes: raw materials and
manufactured materials and parts.
2. Capital items: Capital items are long-lasting goods that facilitate developing or
managing the finished product. They fall into two groups: installations and
equipment. Installations consist of buildings (factories, offices) and heavy
equipment (generators, drill presses, mainframe computers, elevators).
3. Supplies and business services: short-term goods and services that facilitate
developing or managing the finished product. Example-paint, writing paper,
pencils, window cleaning, management consulting etc.
Product Differentiation
• Features: Most products can be offered with varying features that supplement
their basic function.
• Performance Quality: Most products occupy one of four performance levels: low,
average, high, or superior. Performance quality is the level at which the product’s
primary characteristics operate.
• Conformance Quality: Buyers expect a high conformance quality, the degree to
which all produced units are identical and meet promised specifications. Suppose
a Porsche 911 is designed to accelerate to 60 miles per hour within 10 seconds. If
every Porsche 911 coming off the assembly line does this, the model is said to
have high conformance quality. A product with low conformance quality will
disappoint some buyers.
• Durability: Durability, a measure of the product’s expected operating life under
natural or stressful conditions, is a valued attribute for vehicles, kitchen
appliances, and other durable goods. The extra price for durability must not be
excessive, however, and the product must not be subject to rapid technological
obsolescence, as personal computers, televisions, and cell phones have
sometimes been.
• Reliability: Reliability is a measure of the probability that a product
will not malfunction or fail within a specified time period
• Repairability: Repairability measures the ease of fixing a product
when it malfunctions or fails. Ideal repairability would exist if users
could fix the product themselves with little cost in money or time.
• Style: Style describes the product’s look and feel to the buyer and
creates distinctiveness that is hard to copy. Car buyers pay a premium
for Jaguars because of their extraordinary looks.
• Customization: customized products and marketing allow firms to be
highly relevant and differentiating by finding out exactly what a
person wants—and doesn’t want—and delivering on that.
Service differentiation
• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance and repair
• Returns
Product Systems and Mixes
• A product system is a group of diverse but related items that function in a
compatible manner. For example, the extensive iPod product system includes
headphones and headsets, cables and docks, armbands, cases, power and car
accessories, and speakers.
• A product mix (also called a product assortment) is the set of all products and
items a particular seller offers for sale.
• A company’s product mix has a certain width, length, and depth
• Width: How many different product lines?
• Length: Total number of item in a mix
• Depth: How many variants are offered for each product type.
