Transcript
WHAT IS PRODUCT?
Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want
Components of the Market Offering
Value-based prices
Services mixand quality
Product featuresand quality
Attractiveness ofthe market offering
Five Product Levels
Potential product
Augmented product
Expected product
Basic product
Core benefit
Product Classification Schemes
Durability
Use
Tangibility
Durability & Tangibility
Nondurable goods
Tangible goods
Normally has to be consumed in one or few uses
Strategy- to make product available in many locations
Durable goods
Tangible goods
It can survive to many uses
Strategy- more personal selling & service
Services
Services are intangible, inseparable, variable,& perishable product that normally requiremore quality control, supplier credibility, &adaptability.
Example:-
Haircuts
Legal advice
Appliance repairs
Customer-Goods Classification
Convenience goods
Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum buying effort
Shopping goodsShopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style
Speciality goodsSpecialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
Unsought goods
Unsought goods are those the customer doesnot know about or normally think of buyingsuch goods.
Examples:-
Industrial-Goods Classification
Materials & Parts
They are the goods that enters the manufacturer’s product completely. They falls into 2 parts i.e. Raw material & manufactured material and parts.
Raw material can be of
Farm products (fruits, vegetables) &
Natural products (crude oil, iron ore)
Capital Items-long lasting goods
Installations – building & heavy equipments
Equipments – portable factory equipments, tools, office equipments
Supplies & business services-short term goods
• Maintenance & repair items
• Operating supplies
• Maintenance & repair services
• Business advisory services
Product and Service Differentiation
Product differentiation -is a business level strategy in which firms
attempt to create and exploit differences between their products and those
offered by competitors. These differences may lead to competitive
advantage if customers perceive the difference and have a preference for the
difference.
Form : Many products can be differentiated in form – the size, shape,
or physical structure of a product.
Features : Most products can be offered with varying features that
supplement their basic function.
Customization : Marketers can differentiate products by making them
customized to an individual.
Mass customization is the ability of the company to meet each customers
requirement – to prepare on a mass basis individually designed products,
services, programs and communications.
Performance quality : is the level at which the product's primary
characteristics operate. Most product are established at one of four
performance levels : low, average, high, or superior.
Daag achhe hain
Quality : is the degree to which all the produced units are identical and meet
the promised specifications.
Durability : is a measure of the product`s expected operating life under
natural of stressful conditions, and a valued attribute for certain products .
Reliability : is a measure of the probability that a product will not
malfunction or fail with in a specified time period.
Reparability : is measure of the ease of fixing a product when
it malfunction or fails
Style : describes the product`s look and feel to the buyer .
Service Differentiation
• Ordering Ease
• Delivery
• Installation
• Customer Education
• Consulting Repair
Ordering Ease- It refers to how easy it is for the customer to place on order with the company
Delivery- It refers to how well the service is delivered to the customer covering speed , accuracy and customer care
Installation- It refers to the work done to make a product operational in its planned location
Customer education- It refers to how the customer’s employees are trained to use the equipment
Consulting- Customer consulting refers to data information systems and advice services that the seller offers to buyers
Repair- Repair describes the service program for helping customers keep purchased products in good working orders
Product Hierarchy
Need Family
Product Family
Product Class
Product Line
Product Type
Item
Product system and mix
Product system is a group of diverse but related items that function in a compatible manner.
Product mix consists of all the products and items that a particular seller offers for sale
• Width
• Length
• Depth
• Consistency
Product mix width is the number of different product lines the company carries
Product mix length is the total number of items the company carries within its product lines
Product line depth is the number of versions offered of each product in the line
Consistency is how closely the various product lines are in end use, production requirements, or distribution channels
Product line
Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.
Product line length is the number of items in the product line
• Line stretching
• Line filling
Product line stretching
Product line stretching is when a company lengthens its product line beyond its current range
• Downward
• Upward
• Combination
of both
Downward product line stretching is used by
companies at the upper end of the market to
plug a market hole or respond to a competitor’s
Attack
Upward product line stretching is by companies
at the lower end of the market to add prestige
to their current products
Product line filling
Product line filling occurs when companies add more items within the present range of the line
• More profits
• Satisfying dealers
• Excess capacity
PRODUCT MIX AND PRICING
• Price-setting logic must be modified when, the product is part of a product mix.
• The firm searches for a set of prices that maximizes profits on the total mix.
• Pricing is difficult because the various products have demand and cost interrelationships and are subject to different degrees of competition
STRATEGIES
• Product Line Pricing
– Setting price steps between product line items.
• When firms offer consumers a choice of price-quality levels – the “good-better-best” choice – a challenge for managers is how to set price differentials
EXAMPLE-TOYOTA
Optional-product pricing
• Optional-Product Pricing
– Pricing optional or accessory products sold with the main product. Automobile company advertise entery level model at very low prices to pull people into their showrooms.
– EXAMPLE
– RESTAURANTS
OPTIONAL PRODUCT PRICING
In Restaurants Customers can often order liquor in addition to the meal. Many restaurants price their liquor high and their food low. The food revenue covers costs, and the liquor produces the profit. This explains why servers often press hard to get customers to order drinks. Other restaurants price their liquor low and food high to draw in a drinking crowd.
Captive –product pricing
• Captive-Product Pricing
– Pricing products that must be used with the main product
– High margins are often set for supplies
• EXAMPLE
• Cellular service operators
Captive-product pricing
A cellular service operator may give a cellular phone free if the person commits to buying two years of phone service.
Two- Part Pricing
Service:- two-part pricing strategy• Fixed fee plus a variable usage rate
EXAMPLES
• Amusement parks
• Telecom operators
• The service firm faces a problem similar to captive -product pricing-namely, how much to charge for the basic service and how much for the variable usage
two-part pricing strategy
Telephone users pay a minimum monthly fee plus charges for calls beyond the minimum number.
Amusement parks charge an admission fee plus fees for rides over a certain minimum.
By- product pricing
• By-Product Pricing– Pricing low-value by-products to get rid Of them or to
earn extra margin in profit.
• If the by-products have value to a customer group, they should be priced on their value. Any income earned on the by-products will make it easier for the company to charge a lower price on its main product if competition forces it to do so.
• EXAMPLE
• In the timber industry
By-Product pricing
In the timber industry, for example, by-products include sawdust, small offcuts and bark.
Product- Bundling Pricing
• Product Bundle Pricing– Pricing bundles of products sold together
• When offering a mixed bundle, the seller normally charges less for the bundle than if the items were purchased separately.
• Good way to test market for a new product or to clear the stock.
• EXAMPLES
• Resorts,Airfare deals etc.
Product Bundle Pricing
A theatre company will price a season subscription at less than the cost of buying all the performances separately or some combo offers in movies.
Because customers may not have planned to buy all the components, the savings on the price bundle must be substantial enough to induce them to buy the bundle.
PRODUCT DESIGN
• Design is the totality of features that effect how a product looks, feels and function to a consumer.
• Design offers functional and aesthetic benefits and appeals to both rational and emotional sides.
• A well design product is pleasant to look at and easy to open, install, use, repair and dispose of.
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• Holistic marketers recognize the emotional power of design.
• Design can shift consumer perception to make brand experiences more rewarding.
• A bad design can ruin a product prospects.
• Well design features can help differentiate a product from others in the market.
PACKAGING
Packaging includes all the activities of Designing and Producing the container for a Product.
PACKAGING
Packaging means any product after being in its original form packed and gets ready to be served in the market.
Well-designed products can build brand equity and drive sales.
Packaging is the buyer’s first encounter with the product and can influence the buyer’s behavior to buy the product or not.
Some marketers call “p” of packaging as fifth “p” of product-mix with product, price, place & promotion.
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Various factors have contributed to the growing use of packaging as a marketing tool :-
1) Self- service :- In supermarkets most number of products are sold on the self-service basis. The effective package must perform many of the sales tasks : attract attention, describe the product’s features.
2) Consumer affluence :- Consumer affluence means consumers are willing to pay a little more for the convenience, appearance, dependability & better packages.
3) Company & brand image :- Packages contribute to instant recognition of company or
brand.
4) Innovation opportunity :- Innovative and new style of packaging can bring large benefits
to consumers and profits to customers.
Packaging Objectives
• Identify the Brand.
• Convey descriptive and persuasive information.
• Facilitate product Transportation and Protection.
• Assist at-home storage.
• Aid product consumption.
LABELLING
A simple tag attached to the product which carries brand name & different deals of information.
It is a part of package.
It performs several functions.
It identifies the product.
It grades the product.
Where the product is made, by whom, what it contains, how it is to be used safely.
WARRANTIES
• All sellers are legally responsible for fulfilling a buyer’s normal or reasonable expectations.
• Warranties are formal statements of expected product performance by the manufacturer.
• Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement and refund.
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For manufacturers it is reasonable to provide warranties.
It helps the customer to trust the brand.
It is beneficial for the company also, as customers start taking interest & trust the product due to the warrantee provided.
GUARANTEES
Many sellers either give general or specific guarantee.
For eg: Procter & gamble promises general guarantee to the customers.
Guarantees reduce the buyer’s risk.
Guarantees suggest that the product is of high quality.
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Guarantees can be especially helpful when the company or product is not well known in the market.
When the product’s quality is superior to competitors.
Company’s service performance can be measured by the kind of guarantees they provide.
THANK YOU
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