11.

Setting Product Strategy

 What is a Product?
• A product is anything that can be offered to a market
to satisfy a want or need.

• It includes physical goods, services, experiences,

events, persons, places, properties, organizations,
information, and ideas.
 Product Characteristics
• One element of Marketing Mix
• Includes both goods and services/It may be tangible or
intangible
• Product is a base for entire marketing program.
• It consists of attributes like brand, package, warranty
etc.
• It has the ability to satisfy the needs and wants of
consumers.
• It has an exchange value.
 Five Product Levels: The Customer Value Hierarchy
• Each level adds more customer value.
• Five constitute a customer-value hierarchy.
Product Levels

1. Core Benefit – Service/benefit a customer is

buying
2. Basic Product – Turning benefit into basic
product
3. Expected Product – Set of attributes buyers
expect when they purchase the product
4. Augmented Product – Providing additional
services to distinguish from competitors
5. Potential Product – Future Product
 Example: Hotel

Core • Rest
• Sleep
Basic • Bed, Towel, Desk
• Bathroom, Closet
Expected • Hygiene i.e. Clean bed, working lamps
• Quietness
Augmented • Fresh flowers, Rapid check-in & check out
• Good Room services
Potential • Future Product
 Product Classifications

Durability and Tangibility

Durable Nondurable
Services
goods goods

Use (Consumer or Industrial)

 Cont’d
• Non durable goods
- Tangible goods consumed in one or few uses
- Purchased frequently
- Strategy: Available in many locations, charge small mark up
- Heavy advertisement for trial & to build brand preference
- E.g. Soft drinks, soap, shampoos, toothpaste.
• Durable goods
- More personal selling is required, require service
- Higher margin, require more seller guarantees
- E.g. Refrigerator, T.V, Kitchen appliances etc.
• Services
- Intangible, Inseparable, variable and perishable
- More supplier credibility and adaptability is required.
- Eg. Haircuts, legal advice, doctors etc
Consumer Goods Classification
(Shopping habits)

Convenience Shopping

Specialty Unsought
 Cont’d
• Convenience goods – purchases frequently,
immediately and with a minimum effort
- Staples (regular basis)
- Impulse goods (without any planning)
- Emergency goods (when need is urgent)

• Shopping goods – comparison on quality, price,

suitability and style (furniture, clothing, major appliances)
- Homogeneous shopping goods - Electronics like
television, dvd players as well as home theater systems
- Heterogeneous shopping goods – differ in product
features and services. E.g. Clothing, Jewellery, Furniture.
 Cont’d

• Specialty goods – unique characteristics or brand

identification for which a sufficient number of buyer are
willing to make a special purchasing effort.
- Does not require comparisons
- Dealers don’t require convenient location.

• Unsought goods – Consumer does not know or does not

normally think of buying
- Require advertising or personal selling effort.
 Industrial Goods Classification
1. Materials and parts
• Raw Materials [farm (wheat, cotton, fruits) & natural (fish, crude oil,
lumber)]
• Manufactured materials and parts
E.g: Small motors, tires, wires, cement, yarn etc.
2. Capital items – long lasting goods, facilitate developing finished
product
• Installation (buildings like factories, offices) and Equipments like
computers, desks etc and have shorter life than Installations.
• E.g: Offices, Factories, Generators, Computers, Elevators etc
• Purchased directly from producers.
3. Supplies and business services – short term goods and services that
facilitate the finished product
• Maintenance and repair items (paint, nails, brooms etc)
• Operating supplies (lubricants, paper, pencil etc)
 The Product Hierarchy

1. Need family
2. Product family
3. Product Class
4. Product line
5. Product type
6. Item (Stock keeping unit or product variant)
 Cont’d
• Product need – The product need is the primary reason for the existence of a product.
• Product family – In product family, the core need satisfied by a product is the focus.
This means that the attention should not be on the individual market but rather the
entire business market. For example, if travelling is the core need, then it can be
satisfied by planes, trains or ships. In this particular case, the product family is travel
and the product family is vehicles.
• Product class – Product class occurs when categories are drawn from the same
company. It is similar to product family only that product class doesn’t go outside the
company.
• Product line – A product line consists of the entire group of products included in a
class of products.
• Product type – This refers to the various products within a product line. For example,
under Hyundai I20 product line, we have product types such as I20Astana, I20 sportz
and I20 Magna.
• Product unit – This is also referred to as the stock keeping unit (SKU) and it is a
discrete item within a product type of brand that can distinguish itself by size, price or
any other feature.
 Product Systems and Mixes
• Product system – A group of diverse but related items that
function in a compatible manner.
• E.g. Mobile and charger, Laptop and headphone, T.V and speakers
etc.
• Product mix (Product assortment) – It is set of all products and
items a particular seller offers for sale.
 Cont’d
• Product mix consists of various product lines.
• A Company’s Product mix has certain width, depth, length and
consistency.
- Width – The number of product lines that the organization is
offering. (12)
- Length (& avg. length of a line) - Total no. of items in the mix
- Depth – How many variations are offered by each product in
the line.
- Consistency – How closely the products are related in end use,
production requirements, distribution channels.

A product line can be defined as a set of products offered by a

company that are similar in function and benefit.
[Product Mix of HUL
 Cont’d
• Product mix dimensions permit the company to expand its
business in four ways:
1. It can add new product lines, widening its product mix.
2. It can lengthen each product line
3. It can add more product variants to each product
4. Company can pursue more product line consistency.
 Product line length Decisions:
Product Line Length
• Company can create a new product line or do the modifications to
induce up-selling and cross selling.
• E.g. Maruti would like to move customers from Maruti 800 to
Alto or Zen. (Up-selling)
• E.g. H.P selling printers as well as computers. (Cross selling)
• Other option is to create product line that protects against
economic ups and downs by offering wide range of products.
• Product lines tend to lengthen over time due to many reasons.
• A company lengthens is product line in two ways:
1. Line stretching
2. Line filling
 Product line and length decisions
Line stretching: Line stretching occurs when a company lengthens
its product line beyond its current range.

1.
1. Down-Market
Down-Market Stretch
Stretch

2.
2. Up-Market
Up-Market Stretch
Stretch

3.
3. Two-Way
Two-Way Stretch
Stretch
Product line length decisions
1.
1. Down-Market
Down-Market Stretch
Stretch
A company positioned in upper or middle market may want to
introduce a lower-priced line for following reasons:
1.Strong growth opportunity
2.Compete with lower-end competitors/ Counterattack competitors
3.Middle market is stagnating or declining

• Company faces a naming choices while deciding to move down.

Examples: Mercedes successfully introduced cars at $30,000, HUL, Tata
NANO, Splendor to CD Dawn etc, Kodak launched Kodak Funtime Film to
compete with lower end brands.

Gillette was known for its upper end shaving razors. But it introduced Gillette
Vector as a low priced Gillette Vector to cater to the lower end of the market.
 Cont’d
2.
2. Up-Market
Up-Market Stretch
Stretch
Companies may wish to enter the high end of the market to achieve more growth,
higher margins or position as full line manufacturers.

Examples: Toyota’s Lexus, Nissan’s Infiniti and Honda’s Acura.

HUL’s Lifebuoy to Lux/Dove, Cadbury

3.
3. Two-Way
Two-Way Stretch
Stretch
Companies in middle segment stretch their line in both directions.
For example:- Titan first introduced watches in the middle price segment. It then
stretched its range to premium segment watches (Titan edge, Nebula and Xylys) and the
economy segment (Titan Sonata), L.G Refrigerators L.G Economy Direct Cool (55 L) at
Rs. 6000/- and top end model L.G Premium (816 L) at Rs. 1.5 lac.
Product line length (Cont.)
• Line Filling
- Adding more product items within the present range.
- Profits, satisfy dealers, utilize excess capacity, try to be full line
leading company and keep out competitors.
Examples: Eg. Maruti Suzuki had launched Alto in the year 2000 which was
a product between two other models of Maruti- Maruti 800 and Maruti Zen,
Colgate Total, Colgate Sensitive, Colgate Herbal etc
- Cannibalization and confusion may occur

• Line modernization, Featuring and Pruning (Removal of

unprofitable products)
- Change in looks/ style of product.
- Maruti: Change in style of 800 cc car.
- Hero Honda: Splendor to Splendor +
 Packaging
• Packaging, sometimes called the fifth P.
• All the activities of designing and producing the container for
a product.
• A good package draws the consumers & encourages product
choice.
• Primary, secondary and shipping package.
 Cont’d
• Color is important aspect of packaging.
The Color wheel of branding and packaging:
Color Description
Red Energy, Passion and danger. Used for products with speed or
power or dominant brand
Orange Adventure and fun, Convey discount and stylish association
Yellow Used to garner attention
Green Cleanliness and freshness, organic or recycled products
Blue Security, efficiency and productivity, Personal care products
Purple For luxury brands, Females
Pink Soft, peaceful, Baby related products
Brown Honesty and dependability
Black Classic and strong, Electronics and Automobiles
White Purity and cleanliness, Organic food and personal care
Factors Contributing to the Growth on Packaging

Self-service

Consumer affluence (willing

(willing to
to
pay
pay more
more for
for better
better packages)
packages)

Company/brand image
(instant
(instant recognition
recognition of
of company)
company)

Innovation opportunity
 Packaging Objectives
• Identify the brand
• Convey descriptive and persuasive information
• Facilitate product transportation and protection
• Assist at-home storage
• Aid product consumption

• Labeling
It is a simple tag attached to the product or an elaborately
designed graphic that is part of the package.
- Brand name or label
 Warranties & Guarantees
• Warranty means a commitment from a manufacturer to its
customers that if the product breaks or if there is any problem
in the product, the manufacturer will provide free repair for
the product.
• But the manufacturer does not commit replacement.
• Only repair is committed.
• This basically means that the customer is protected against
sudden problems in the product.
• Guarantee is a step ahead of warranty wherein the company
is so confident of their product, that they offer repair or
replacement of the product.
• First try to repair the product and then if not repaired, it will
offer free replacement.
THANK YOU