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8/3/2019 Managing Product 1markets
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´Product strategy begins with a strategic vision´Product strategy begins with a strategic vision
that states where a company wants to go,that states where a company wants to go,how it will get there, and why it will behow it will get there, and why it will besuccessful.´ successful.´
´Product strategy is like a roadmap, and like a´Product strategy is like a roadmap, and like aroadmap it¶s useful only when you know roadmap it¶s useful only when you know where you are and where you want to go.´ where you are and where you want to go.´
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Product Platforms
Product 1
Product 2
Product 3
Product 1A
Product 1B Product 1C
Element A
Element B
Element C
Segment A
Segment B
Segment C
Common Platform
Elements
Unique product
elements and
common channel
elements of product line
Product 5
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Core benefit
Basic product
Expected product
Augmented product
Potential product
5 product levels
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Core benefits ± fundamental level of customer
expectations
Basic product ± turning the product into basic
product
Expected product ± with a set of attributes, and
condition buyers normally the consumer expects
when they want to purchase Augmented product- exceeds customer
expectations. Branding and positioning at this
level
Potential product ± which encompasses allpossible augmentations and transformations for
future undergo.
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The Product and Product Mix
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Product Classification
Durability 1. Non durable goods
Repeatedly purchasing goods.
Available in most of the locations
Charge less
2. Durable goods-
Are tangible goods normally survive many
uses, refrigerators, machine tools clothing.
Services
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Consumer goods classification
Convenience goodsConvenience goods ± ± frequently, immediatelyfrequently, immediatelyand with minimum effort .and with minimum effort .
Staples ± consumers purchase on a
regular basis or routine basis.
Eg. Milk, bread,toothpastes, soaps ,biscuits.
Impulse- purchased without any planning
or search effort. Eg. Chips, chocolates,
candy barsEmergency- purchased when a need is
urgent . Eg. Umbrellas, raincoats.
..
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Consumer goods classification
Specialty goodsSpecialty goods ± ± unique characteristics or unique characteristics or brand identification for which a sufficientbrand identification for which a sufficient
number of buyers are willing to make anumber of buyers are willing to make a
special purchasing effort.special purchasing effort. EgEg ± ±cars, stereos,cars, stereos,
photographic instruments.photographic instruments.Unsought goodsUnsought goods ± ± those the consumer doesthose the consumer does
not normally think of buying such asnot normally think of buying such as
detectors, life insurance, encyclopedias anddetectors, life insurance, encyclopedias and
reference booksreference books
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Consumer goods classification
Shopping goodsShopping goods ± ± that are consumer that are consumer characteristically compares on such bases ascharacteristically compares on such bases as
suitability , quality, price, and style.suitability , quality, price, and style.
Homogeneous- Products that vie with each other
in a market but which (from the consumersviewpoint) have little or no differentiation
in terms of features, benefits, or quality and are,
therefore, forced to compete in price or availability.
Eg - Vegetables, fruits, home appliances, cameras. Heterogeneous ± differ in product features and
services that may be more important than price.
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Industrial -Goods Classification
± Materials and parts ± Natural products
± Farm products
± Manufactured materials and parts(processmaterials)
± Component materials & parts
Capital items
± Installations
± Equipment
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Materials and
parts
Raw materials
Farm products Wheat ,cotton,livestock, fruits
Natural products Fish, lumber, crude
petroleum, iron ore
Process materials Component materials ±
used for processing the
finished product
1. Pig iron made into
iron
2. Yarn to cloth3. Alcohol to perfumes
Component parts-
which needs little or no
finishing. Readily sold
to the industries. Ready
to use.
1. Engine
2. Carburetor
3. Wheels
4. Seats
5. Glass panes
6. Small motors
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Capital equipment Accessory equipments 1. Mechanical tools
2. Computers
3. Calculators4. Furniture
Installations 1. Factories
2. Offices
3. Heavy equipment
like generators, drill
presses, elevators
Consumable supplies-
they often referred as
the MRO items
1. Paper
2. Pencil
3. Oils
4. Paints
5. Brooms6. Handy tools
7. Replacement tools
8. Office stationary¶
9. Electricity
10.water
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Services differentiation
Ordering case
Delivery
Installation Customer training
Maintenance and repair
Returns
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Product Hierarchy
Each product is related to obtain other
products.
Product hierarchy lists out levels toidentify product from basic needs to
particular items
that satisfy those needs.
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Need Family:
Core need that underlines the existingof a product family
Product Family:
All product classes that satisfy a core needwith reasonable effectiveness.
Product Class: Group of products within product familyrecognized to have certain functional
coherence
Group of items within a product line thatshare one of several possible forms of
productProduct Type
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Product hierarchy- Defined as an organizational chart that
depicts the array of products offered in a
given market.
Product ± the automobile
Product class- cars, bikes
Product form ± again cars can be divided
into sports and utility cars even the trucks
too
Variations in the form ± cars with 2 doors,
cars with 4 doors, etc.,
Next level into brands
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Product line
The products are closely related to eachother Under different categories
Sold to same customer groups
For example, all the courses a universityoffers constitute its product mix; courses in
the marketing department constitute a
product line; and the basic marketingcourse is a product item.
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Product mix
The set of all products that an organization
offers to its customers consist of different
product lines and categories
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Product width
The different product lines with product
categories
Product Length The length of the product mix is the total
number of items in that mix
The average length is calculated byTotal number of items(total length)
--------------------------------------------------
number of lines
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Product consistency
Consistency refers to the closeness
exhibited by the products lines and
production requirements, distribution end
usage etc.,
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Product line analysis
Sales profit analysis
Market profit
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Product line analysis ± through
sales profit analysis The company will do the analysis on the
margin it get through the different product
lines sales and profit.Core product
Staples
Specialties
Convenience items ETC.,
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Product line length
Companies seeking high market share &market growth will generally carry high
product line
But companies seeking high profitabilitywill carry shorter lines consisting of
carefully chosen items.
Sales force & distributors pressure on
complete products as the customersseeks.
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Product lengths types
Line stretching
1. Down market stretch
2. Up market stretch3. Two way stretch
Line filling
Line modernization, featuring and pruning
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Line stretching
A company indulge in line stretching when itstretches its products line beyond the current
range of products.
Line stretching provide a wide variety of
products or goods under the same umbrella Adding new products to the same product
line needs less time and cost as compared to
introducing a new product or brand &forecasting the demand & sales is much
easier for these products.
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Multiproduct branding strategy whereby a
firm markets one or more new products
under an already established and well
known brand name.
The objective is to serve different
customers needs or market segments
while taking advantage of the widespreadname recognition of the original brand.
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Down stretching
For value priced goods
As the retailers look forward for so many
sales promotional activities Counter attack strategy to the competitors
company
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Up
market stretches
Wish to enter the high end market to
achieve more growth or simply to position
themselves in the high market
Two way stretch Companies serving middle market might
stretch their line in both directions bothupward and downward.
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Line Filling Is carried out by adding more products to the
existing range of the product line. They opt for line filling when
To reach incremental profit
To satisfy sales & distribution people whocomplain missing items in the line
To utilize the excess production capacity of
manufacturing unit
To keep the competitors at bay
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LIMITATIONS Weaker lines ± some times extension of the
product lines to the point of super saturation, where
it happens to be like it cannot be explained by the
sales personnel the benefits of the products neither
the difference
Lower brand loyalty ± when marketers increase
the number of products mindless under the same
brand umbrella, it often leads to reduction in brand
loyalty. It risks disruption of well set buying patters
and habits.
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Under exploitation of ideas ± while
concentrating on line extension, marketers often
overlook the fact that the idea may warrant a new
brand rather than a new product under the samebrand. It can dilute the brand image
Stagnant demand- line extension rarely increase
the demand of the total category.
Profits gained by the extending products are
short lived: competitors can quickly and easily
match the company¶s new products.
Leads to logistics, R & D and other department's
complexity in work if there is an error in
forecasting
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Line modernization& Featuring
More advanced versions of products Timing improvements
Better featuring
Line pruning
The product lines that yield no profits
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Product mix pricing
The types of product mix pricing The types of product mix pricing
Product line pricing
Optional feature pricing
Captive product pricing
Two part pricing
By product pricing
Product bundling pricing
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