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THE PRODUCT

Products are almost always combinations

of the tangible and intangible. The entire

package is sometimes referred to as theaugmented product.

The mix of tangibles and intangibles in

the augmented product varies from oneproduct or service to another.


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THE PRODUCT

Product is a key element in the market

offering. Marketing mix planning begins

with formulating an offering to meettarget customers needs or wants.

The customer will judge the offering by

three basic elements : product featuresand quality, services mix and quality, and

price appropriateness.


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COMPONENTS OF THE MARKET

OFFERING

Attractiveness of the

market offering

Value based pricing

Product features and

quality

Services mix and

quality


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PRODUCT LEVELS

In planning its market offering, the

marketer needs to think through five

levels of the product.

Each level adds more customer value,

and the five constitute a customer value

hierarchy.( Contd. )


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FIVE LEVELS OF THE PRODUCT

(1) CoreProduct

(2) Basic

Product

(3) ExpectedProduct(4) Augmented

Product

(5) PotentialProduct


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(1) Core Product / Core Benefit : The

fundamental service or benefit that the

customer is really buying.

(2) Basic Product : At the same level, the

marketer has to turn the core benefit into

a basic product.

(3) Expected Product : A set of attributes

and conditions buyers normally expect

when they purchase this product.


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(4) Augmented Product : The marketer

prepares an augmented product that

exceeds customer expectations.

Todays competition essentially takes

place at the product-augmentation level.

( In less developed countries, competitiontakes place mostly at the expected

product level ). ( Contd... )


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( Augmented Product )

According to Levitt : The new

competition is not between what

companies produce in their factories, but

between what they add to their factory

output in the form of packaging, services,

advertising, customer advice, financing,delivery arrangements, warehousing, and

other things that people value.


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Some things should be noted about

product-augmentation strategy :

First, each augmentation adds cost. The

marketer has to ask whether customers

will pay enough to cover the extra cost.

Second, augmented benefits soon become

expected benefits. For gaining

competitive advantage one will have to

search for still other features and

benefits.


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( product-augmentation strategy )

Third, as companies raise the price of

their augmented product, some

competitors can offer a Stripped-down

version at a much lower price. Thus

alongside the growth of fine products we

see the emergence of lower-cost productsfor the clients who simply want the basic

product.


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(5) Potential Product : encompasses all the

possible augmentations and transformations

the product might undergo in the future.

Companies search for new ways to satisfycustomers and distinguish their offer.

( Successful Companies add benefits to theiroffering that not only satisfy customers but also

surprise and delight them. ) The best way to

hold customers is to constantly figure out how togive them more for less.


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PRODUCT DIFFERENTIATION

Service Differences ( eg., delivery,

installation, training, consulting,

maintenance, repair )

Price Differences ( eg., very high price,

medium price, low price, very low price )

Image Differences ( eg., symbols,

atmosphere, events, media )


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CHALLENGES FOR PRODUCT

INNOVATORSAny successful differentiation will tend todraw imitators. The innovator faces threechoices :

Lower the price to protect market shareand accept lower profits.

Maintain the price and lose some market

share and profits. Find a new basis to differentiate the

product and maintain current price.


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PRODUCT CLASSIFICATION

ON THE BASIS OF PRODUCT

CHARACTERISTICS :DURABILITY,

TANGIBILITY AND USE (consumer or

industrial )

(1) NON-DURABLE

(2) DURABLE

(3) SERVICES

( CONTD . )


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(1) NON-DURABLES

These are tangible goods normally

consumed in one or few uses. Because

these goods are consumed quickly andpurchased frequently, the appropriate

strategy is to make them available at

many locations, charge only a smallmark up and advertise heavily to induce

trial and build preference.


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(2) DURABLES

These are tangible goods that normally

survive many uses. Normally require

more personal selling and service,

command a higher margin, and require

more seller guarantees.


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(3) SERVICES

These are intangible,

inseperable,

variable and

perishable products.

Normally require more quality control,superior credibility, and adaptability.


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PRODUCT CLASSIFICATION

ON THE BASIS OF CUSTOMER

SHOPPING HABITS :

(1) CONVENIENCE GOODS

(2) SHOPPING GOODS

(3) SPECIALITY GOODS

(4) UNSOUGHT GOODS


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(1) CONVENIENCE GOODS

are goods that the customer usually

purchases frequently, immediately, and

with a minimum of efforts.

(A) Staples: Consumers purchase on aregular basis.

(B) Impulse Goods: are purchased

without any planning or search efforts.

(C) Emergency Goods: are purchased

when a need is urgent.


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(2) SHOPPING GOODS

are goods that the customer , in the process

of selection and purchase, characteristically

compares on such basis as suitability,

quality, price and style.

(A) Homogeneous Shopping Goods: are

similar in quality but different enough in

price to justify shopping comparisons.

(B) Heterogeneous Shopping Goods: differ in

product features and services that may be

more important than price.


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(4) UNSOUGHT GOODS

are goods the consumer does not know

about or does not normally think of

buying. These goods require advertising

and personal selling support.


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PRODUCT STRATEGY

Calls for coordinated decisions on :

(1) Product Mix

(2) Product Line

(3) Individual Product

(4) Service Product


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PRODUCT MIX

A product mix (also called product

assortment) is the set of all products and

items that a particular seller offers forsale.

A total group of products that an

organization markets. A companys product mix has a certain

width, length, depth and consistency.


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DIMENSIONS OF PRODUCT MIX

The width of companys (say HLLs)

product mix refers to how many different

product lines the company carries, such

as bathing soap, detergents, shampoos,

toothpaste, food products.


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The length of a companys product mix

refers to the total number of items in its

product mix. Thus in each of the product

line HLL has a number of product items.

Eg., in the product line of bathing soaps,HLL has several product items like Lux,

Liril, Lifebuoy, Pears.


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The depth of a companys product mixrefers to how many variants are offered

of each product in the line. Thus if closeup toothpaste comes in threeformulations and in three sizes, Close uphas a depth of nine (3x3). The average

depth of HLL product mix can becalculated by averaging the number ofvariants within the brand groups.


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The Consistency of the product mix

refers to how closely related the various

product lines are in end-use, productionrequirements, distribution channels, or

some other way. HLLs product lines are

consistent insofar as they are consumergoods that go through the same

distribution channels.


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These four dimensions of the product mix

provide the handles for defining the companysproduct strategy. The company can expand itsbusiness in four ways.

1. The Co. can add new product lines, thus

widening its product mix. 2. The Co. can lengthen each product line.

3. The Co. can add more product variants toeach product and deepen its product mix.

4. The Co. can pursue more product-lineconsistency or less, depending upon whether itwants to acquire a strong reputation in a singlefield or participate in several fields.


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PRODUCT LINE

A product line is a group of products that

are closely related, because they perform

a similar function, are sold to the samecustomer groups, are marketed through

the same channels or fall within the given

price ranges. The product mix may be composed of

several product lines.


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PRODUCT LINE ANALYSIS

Product line managers need to know the

sales and profits of each item in their line

in order to determine which items tobuild, maintain, harvest,, or divest. They

also need to understand each products

market profile, i.e. how their product lineis positioned against competitors

product lines (The Product Map).

PRODUCT PORTFOLIO


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PRODUCT PORTFOLIO

MANAGEMENT

Product Line Length :. Downward Line Stretching. Upward Line Stretching. Two Way Stretching

Present

Product

New

Product

Low HighLow

High

Price

Quality

Present

New

Present

New

New

(Downward) (Upward) (Two Way)


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PRODUCT PORTFOLIO

MANAGEMENT

Filling in the Product Line ( adding more

items within the present range of line )

Product Line Modernization

Product Line Featuring

Product Line Pruning


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INDIVIDUAL PRODUCT DECISIONS

Product Attribute Decisions

Brand Decisions

Brand Positioning

Packaging and Labeling


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DEFINITION OF BRAND

American Management Association

defines brand as follows :

A brand is a name, term, sign, symbol,or design, or a combination of them,

intended to identify the goods and

services of one seller or group of sellersand to differentiate them from those of

competitors.


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THE MEANING OF BRAND

The brand is not a product but it gives the

product meaning and defines its identity

in both time and space.

Brands are a direct consequence of the

strategy of market segmentation and

product differentiation.

Companies want to stamp their mark on

different sectors and set their imprint on

their products.


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BUILDING THE BRAND

The art of marketing is the art of brand

building. When something is not a brand,

it will probably viewed as a commodity.Then price is what counts. When price is

the only thing that counts, the only

winner is the low-cost producer.. ( Philip Kotler )


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BRAND NAME DECISIONS

Individual Names

Blanket Family Names

Separate Family Names for all products

Company Trade name combined with

individual product names.


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BRAND NAME

It should suggest something about theproducts benefits.

It should suggest something aboutproduct qualities.

It should be easy to pronounce, recognizeand remember.

It should be distinctive.

It should not carry poor meanings inother countries and languages.


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BRAND IDENTITY AND ASSOCIATION

A brand identity or association is anythingthat is directly or indirectly linked inmemory to a brand. The most common

association is that of product attributes orcustomer benefits.

A brands associations are assets that candifferentiate, provide reasons to buy, instilconfidence and trust, affect feelingstowards a product and the use experience,and provide the basis for brand extension.


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BENEFITS OF BRAND AWARENESS

First, awareness provides the brand witha sense of familiarity, and people like thefamiliar.

Second, name awareness can be a signalof presence, commitment, and substance.The logic is that if a name is recognized,there must be a reason.

Third, the salience of a brand willdetermine if it is recalled at a key time inthe purchasing process.


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BRAND LOYALTY

First, brand loyalty reduces the marketing costs

of doing business, since existing customers arerelatively easier to hold.

Second, brand loyalty represents a substantialbarrier to competitors. Excessive resources are

required when entering a market in whichexisting customers must be enticed away from anestablished brand that they are loyal to.

Third, Brand loyalty provides trade leverage.

Fourth, a relatively large, satisfied customer baseprovides an image of a brand as an accepted,successful, and enduring product.

Finally, brand loyalty provides the time torespond to competitive moves.


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DEFINITION OF BRAND EQUITY

Brand equity is a set of assets and

liabilities linked to a brands name and

symbol that add to or substract from thevalue provided by a producer or service to

a firm and / or that firms customers.

Brand equity generates value to thecustomer that can emerge either as a price

premium or enhanced brand loyalty.


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BRAND EQUITY

Brand

Awareness

Brand

Identity

BrandLoyalty

Perceived

Quality

Brand

Equity

( Powerful brands have high brand

equity, higher brand loyalty.)


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TOOLS FOR BUILDING BRAND

Advertising

Sponsorship of games and events

Social Causes

Public Facilities

Founders personality


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BRAND STRATEGY DECISIONS

Line Extensions

Brand Extensions

Multibrands

New brands

Co-brands


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BRAND STRATEGY DECISIONS

Product Category

Existing New

BrandName

Existing

New

LineExtension

BrandExtension

MultibrandsNew Brand

Names


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LINE EXTENSION

Line extension occurs when a company

introduces additional items in the same product

category under the same brand name, usually

with new flavours, forms, colours, added

ingredients, package sizes and so on.

Line extensions generally have a higher chance

of survival than new products.

On the down side extensions may lead to thebrand name losing its specific meanings; Ries

and Trout call this Line Extension Trap .


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BRAND EXTENSION

Brand Extension occurs when a company

decides to use an existing brand name to

launch a product in the new category.

Brand Extension offers a number of

advantages.

-Instant recognition and earlier acceptance

-Saves considerable advertisement costs


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BRAND EXTENSION

Brand Extension also involves risks.

- The new product might disappoint

buyers and damage their respect forcompanys other products.

- The brand name may loose its special

positioning in the consumers mindthrough over extension - a phenomenon

called brand dilution .


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MULTI BRANDS

A company will often introduce additional

brands in the same product category.

- One of the motives for multibranding is

to establish different features and/orappeal to different buying motives.

- It also enables the company to lock up

more distributor shelf space and protest itsmajor brand by setting up flanker brands.


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NEW BRANDS

When a company launches products in a

new category, it may find that none of its

current brand names are appropriate.

When the present brand image is not

likely to help the new product, companies

are better off creating new brand names.


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CO-BRANDS

Co-branding occurs when two different

companies pair their respective brands in

a collaborative marketing effort.

Each brand sponsor expects that other

brand name will strengthen brand

preference or purchase intention.


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PRODUCT LIFE CYCLE

The Product Life Cycle ( PLC ) is an

important concept in marketing that

provides insights into a productscompetitive dynamics.

To fully understand the concepts of PLC ,

one should first understand its parentconcept, the demand and technology life

cycles.

DEMAND / TECHNOLOGY


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DEMAND / TECHNOLOGY

LIFE CYCLE

Marketing thinking should not beginwith a product or even a product class,but rather with a need.

The product exists as one solution among

many to meet a need. A need is satisfied by some technology.

Each new technology normally satisfiesthe need in a superior way and it shows ademand-technology life cycle.

The PLC portrays distinct stages in thesales history of a product.


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DEMAND-TECHNOLOGY-PRODUCT

LIFE CYCLES

Time

Sales


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STAGES IN THE PRODUCT LIFE

CYCLE

Sales&

Profits

TimeIntroduction Growth Maturity Decline


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STAGES IN THE PRODUCT LIFE

CYCLE

By identifying the stage that a product is in, or may beheaded toward, companies can formulate bettermarketing plans.

Products require different marketing, financial,

manufacturing, purchasing and personnel strategies ineach stage of their life cycle.

Marketers must pursue appropriate marketingstrategies in each stage of PLC.

Today, in order to succeed, it is absolutely essential to

constantly improve products to increase the valueoffered to customers, ( V = B/P ).

The success of competitors is based on creating valuefor the customer by differentiating their product,( Competitive Differential ).


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EXTENDING THE PRODUCT LIFE

CYCLE

Sales

Time( When the sales of a product starts decliningmarketers may choose suitable strategy forfurther growth of product /business/enterprise.)


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PRODUCT LIFE CYCLE

Reasons for change in behavior of PLC :

--Changes in the consumer needs and

preferences --Advancing Technology

--Competition, Government Policies etc.

--Changes in number of potential buyers

Stages in PLC :

Introduction, Growth, Maturity, And Decline.


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MARKETING STRATEGIES IN THE

INTRODUCTION STAGE

Promotion

Price

High Low

High

Low

RapidSkimmingStrategy

SlowSkimmingStrategy

RapidPenetration

Strategy

SlowPenetration

Strategy


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GROWTH STAGE

It improves product quality and adds newproduct features and improved styling.

It adds new models and flanker products (i.e.,products of different sizes, flavors, and so forth

that protect the main product ). It enters new market segments.

It increases its distribution coverage and entersnew distribution channels.

It lowers prices to attract the next layer of price-sensitive buyers.

It shifts from product-awareness advertising toproduct-preference advertising.


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MATURITY STAGE

Sales are increasing but at a decreasing

rate.

Profits are beginning to decline.

Price competition increases.

The manufacturer assume a greater

share of the total promotional effort inthe fight to retain dealers and shelf space

in their stores.


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MATURITY STAGE

To understand better, we can devide

Maturity Stage into three stages :

Growth Maturity : When the rate of sales growth startsto decline because of distribution saturation.

Stable Maturity : When the rate of sales growth starts

declining due to market saturation.

Decaying Maturity : The sales level starts to decline as

some of the customers move towards other competitive

and substitute products.


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MATURITY STAGE

Market Modification

Product Modification

Marketing Mix Modification



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MATURITY STAGE

Market Modification Expand number of users :

- Convert non-users

- Enter new market segments- Win competitors customers

Increase annual usage :

- More frequent use- More usage per occasion

- New and more varied uses


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MATURITY STAGE

Product Modification

A strategy of quality improvement aims atincreasing the products functionalperformance - its durability, reliability, speed,taste.

A strategy of feature improvement aims atadding new features ( for example - size,weight, materials, additives, accessories ) thatexpand the products versatility, safety, orconvenience.


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MATURITY STAGE

Product Modification (contd.)

A strategy of style improvement aims at

increasing the products aesthetic appeal.The periodic introduction of new car

models amounts to style competition

rather than quality or featurecompetition.


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MATURITY STAGE

Marketing Mix Modification

Prices

Distribution

Advertising

Sales Promotion

Personal Selling

Services


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DECLINE STAGE (Contd)

Determining Marketing Strategies :

( Go Strategy )

Concentration Strategy :

- Decreasing the firms investment levelselectively, by dropping unprofitable customergroups, while simultaneously strengthening thefirms investment in lucrative niches.

Harvesting Strategy :- Divesting the business quickly by disposing of

its assets as advantageously as possible.


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DECLINE STAGE (Contd)

The Drop Strategy

- When a company decides to drop a product, it

faces further decisions. If the product hasstrong distribution and residual goodwill, thecompany can probably sell it to another firm.

- If the company cant find any buyers, it must

decide whether to liquidate the brand quicklyor slowly. It must also decide on how muchparts inventory and service to maintain for pastcustomers.


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NEW PRODUCT DEVELOPMENT

PROCESS

(1) Idea Generation

(2) Screening

(3) Concept Development and Testing (4) Marketing Strategy

(5) Business Analysis

(6) Product Development (7) Market Testing

(8) Commercialization


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THE CONSUMER ADOPTIONPROCESS

(STAGES IN THE ADOPTION PROCESS )

Awareness : The consumer becomes aware ofthe innovation but lacks information about it.

Interest : The consumer is stimulated to seek

information about the innovation.

Evaluation : The consumer considers whetherto try the innovation.

Trial : The consumer tries the innovation toimprove his or her estimate of its value.

Adoption : The consumer decides to make fulland regular use of the innovation.

ADOPTER CATEGORIZATION ON THE


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ADOPTER CATEGORIZATION ON THE

BASIS OF RELATIVE TIME OF

ADOPTION OF INNOVATIONS

Time of adoption of innovations

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