Products are almost always combinations of the tangible and intangible. The entire package is sometimes referred to as the augmented product. The mix.

Products are almost always combinations of the tangible and intangible. The entire package is sometimes referred to as the augmented product.

The mix of tangibles and intangibles in the augmented product varies from one product or service to another.

Product is a key element in the market offering. Marketing mix planning begins with formulating an offering to meet target customers’ needs or wants.

The customer will judge the offering by three basic elements : product features and quality, services mix and quality, and price appropriateness.

Value based pricing

Attractiveness of the market offering

Product features and quality

Services mix and quality

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…. )

(1) CoreProduct

(2) Basic Product

(3) ExpectedProduct(4) Augmented

Product

(5) PotentialProduct

(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.

(4) Augmented Product : The marketer prepares an augmented product that exceeds customer expectations.

Today’s competition essentially takes place at the product-augmentation level. ( In less developed countries, competition takes place mostly at the expected product level ). ( Contd.….. )

( 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, delivery arrangements, warehousing, and other things that people value.

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.

( 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 products for the clients who simply want the basic product.

(5) Potential Product : encompasses all the possible augmentations and transformations the product might undergo in the future. Companies search for new ways to satisfy customers and distinguish their offer.

( Successful Companies add benefits to their offering that not only satisfy customers but also surprise and delight them. ) “ The best way to hold customers is to constantly figure out how to give them more for less. ”

The challenge before the product marketers is to create relevant and distinctive product differentiation. The product differentiation may be based on :

Physical Differences ( eg., features, performance, conformance, durability, reliability, design, style, packaging )

Availability Differences ( eg., available from stores or orderable by phone, mail, fax, internet )

Service Differences ( eg., delivery, installation, training, consulting, maintenance, repair )

Price Differences ( eg., very high price, very low price )

Image Differences ( eg., symbols, atmosphere, events, media )

Any successful differentiation will tend to draw imitators. The innovator faces three choices :

Lower the price to protect market share and accept lower profits.

Maintain a reasonable price and lose some market share and profits.

Find a new basis to differentiate the product and maintain current price.

ON THE BASIS OF PRODUCT CHARACTERISTICS :DURABILITY, TANGIBILITY AND USE (consumer or industrial )

(1) NON-DURABLE (2) DURABLE (3) SERVICES ( CONTD . )

These are tangible goods normally consumed in one or few uses. Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available at many locations, charge only a small mark up and advertise heavily to induce trial and build preference.

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.

These are intangible, inseperable, variable and perishable products. Normally require more quality

control, superior credibility, and adaptability.

ON THE BASIS OF CUSTOMER SHOPPING HABITS :

(1) CONVENIENCE GOODS(2) SHOPPING GOODS(3) SPECIALITY GOODS(4) UNSOUGHT GOODS

are goods that the customer usually purchases frequently, immediately, and with a minimum of efforts.

(A) Staples: Consumers purchase on a regular basis.

(B) Impulse Goods: are purchased without any planning or search efforts.

(C) Emergency Goods: are purchased when a need is urgent.

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.

are goods with unique characteristics

or brand identification for which buyer

is willing to make a special purchasing

effort.

are goods the consumer does not know

about or does not normally think of

buying. These goods require

advertising and personal selling

support.

Calls for coordinated decisions on :

(1) Product Mix(2) Product Line(3) Individual Product(4) Service Product

A product mix (also called product assortment) is the set of all products and items that a particular seller offers for sale.

A total group of products that an organization markets.

A company’s product mix has a certain width, length, depth and consistency.

The width of company’s (say HLL’s)

product mix refers to how many

different product lines the company

carries, such as bathing soap,

detergents, shampoos, toothpaste,

food products.

The length of a company’s 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.

The depth of a company’s product mix refers to how many variants are offered of each product in the line.

The Consistency of the product mix refers to how closely related the various product lines are in end-use, production requirements, distribution channels, or some other way. HLL’s product lines are consistent insofar as they are consumer goods that go through the same distribution channels.

These four dimensions of the product mix provide the handles for defining the company’s product strategy. The company can expand its business 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

to each product and deepen its product mix.

4. The Co. can pursue more product-line consistency or less, depending upon whether it wants to acquire a strong reputation in a single field or participate in several fields.

A product line is a group of products that are closely related, because they perform a similar function, are sold to the same customer groups, are marketed through the same channels or fall within the given price ranges.

The product mix may be composed of several product lines.

Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest,, or divest. They also need to understand each product’s market profile, i.e. how their product line is positioned against competitors’ product lines (The Product Map).

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

Present

Product

NewProduct

Low HighLow

High

Price

Quality

Present

New

Present

New

New

(Downward) (Upward) (Two Way)

Filling in the Product Line ( adding

more items within the present range of

line )

Product Line Modernization

Product Line Featuring

Product Line Pruning

Product Attribute Decisions

Brand Decisions

Brand Positioning

Packaging and Labeling

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 sellers and to differentiate them from those of competitors. ”

Individual Names

Family Names

Company Trade name combined with

individual product names.

First, awareness provides the brand with a sense of familiarity, and people like the familiar.

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

Third, the salience of a brand will determine if it is recalled at a key time in the purchasing process.

First, brand loyalty reduces the marketing costs of doing business, since existing customers are relatively easier to hold.

Second, brand loyalty represents a substantial barrier to competitors. Excessive resources are required when entering a market in which existing customers must be enticed away from an established brand that they are loyal to.

Third, a relatively large, satisfied customer base provides an image of a brand as an accepted, successful, and enduring product.

The inception of Emami Group took place way back in mid seventies when two childhood friends, Mr. R.S. Agarwal and Mr. R.S. Goenka left their high profile jobs with the Birla Group to set up Kemco Chemicals, an Ayurvedic medicine and cosmetic manufacturing unit in Kolkata in 1974. It was an extremely bold step in the early seventies when the Indian FMCG market was still dominated by multinationals

Emami’s FMCG business is currently split into two divisions: personal care and healthcare, and both contribute equally to the total turnover of its FMCG business which is currently about Rs 350 crore. Kolkata-based personal and healthcare major Emami Group is now planning to manufacture and market a range of ayurvedic medicines under their brand name Himani. The move will bring Emami closer to the turf of ayurvedic majors like Dabur India and Himalaya Herbal. Emami’s new foray will include a range of products like digestives, memory booster, cough syrups, blood purifiers and others

. The mid-1990s saw actors Govinda and Rambha endorse the brand (the ‘Thanda Thanda, Cool Cool’ campaigns), which enjoyed a high media presence. However, in 2004, Himani executives decided to lend stature and salience to the brand, and roped in the Big B, in the hope that he would break geographical barriers for them and appeal to the masses. Thus followed a commercial which had Bachchan talking into the camera about how the ‘cool’ oil helped him counter stress and headaches in his days of struggle.

That ad did quite well for us,” says Probal Bhattacharya, senior brand manager, Himani Navratna. So, it came as a surprise to watch actor Shah Rukh Khan endorse the brand next in 2006, cast in an ad. “This was done to make the brand even more relevant and full of life to the younger lot,” Bhattacharya remarks. Sadly, the replica communication didn’t work; King Khan failed to appeal to Himani Navratna’s TG: 25-45 year old males. Having learnt their lesson, the Himani Navratna executives have revived Big B in their communication, as “people still largely associate him with the brand”.

Brand equity is a set of assets and liabilities linked to a brand’s name and symbol that add to or substract from the value provided by a producer or service to a firm and / or that firm’s customers.

Brand equity generates value to the customer that can emerge either as a price premium or enhanced brand loyalty.

Brand

AwarenessBrand Identity

BrandLoyalty

PerceivedQuality

BrandEquity

( Powerful brands have high brand equity, higher brand loyalty.)

Advertising

Sponsorship of games and events

Social Causes

Public Facilities

Founder’s personality

Line Extensions

Brand Extensions

Multibrands

New brands

Co-brands

Product Category

Existing New

BrandName

Existing

New

Line

ExtensionBrand

Extension

Multibrands New Brand

Names

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 the brand name losing its specific meanings; Ries and Trout call this “ Line Extension Trap .”

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

Brand Extension also involves risks. - The new product might disappoint

buyers and damage their respect for company’s other products.

- The brand name may loose its special positioning in the consumer’s mind through over extension - a phenomenon called “ brand dilution .”

A company will often introduce additional brands in the same product category.

- One of the motives for multibranding is to establish different features and/or appeal to different buying motives.

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.

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.

Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization

New Product Development ProcessStep 1. Idea Generation

New Product Development ProcessStep 1. Idea Generation

Systematic Search for New Product Ideas

Internal sources

Customers

Competitors

Distributors

Suppliers

Process to spot good ideas and drop poor ones

Criteria◦ Market Size◦ Development Time & Costs◦ Manufacturing Costs◦ Rate of Return

New Product Development ProcessStep 2. Idea Screening

New Product Development ProcessStep 2. Idea Screening

New Product Development ProcessStep 3. Concept Development & Testing

New Product Development ProcessStep 3. Concept Development & Testing

1. Develop Product Ideas into Alternative

Product Concepts

1. Develop Product Ideas into Alternative

Product Concepts

2. Concept Testing - Test theProduct Concepts with focus Groups

2. Concept Testing - Test theProduct Concepts with focus Groups

3. Choose the Best One3. Choose the Best One

New Product Development ProcessStep 4. Marketing Strategy Development

New Product Development ProcessStep 4. Marketing Strategy Development

Part Two - Short-Term:Product’s Planned Price

DistributionMarketing Budget

Part Two - Short-Term:Product’s Planned Price

DistributionMarketing Budget

Part Three - Long-Term:

Sales & Profit GoalsMarketing Mix Strategy

Part Three - Long-Term:

Sales & Profit GoalsMarketing Mix Strategy

Marketing Strategy Statement Formulation

Part One - Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

Part One - Overall:Target Market

Planned Product PositioningSales & Profit Goals

Market Share

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

New Product Development ProcessStep 5. Business Analysis

Step 6. Product Development

Business Analysis

Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

Business Analysis

Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If Yes, Move to Product Development

If Yes, Move to Product Development

If No, Eliminate Product ConceptIf No, Eliminate

Product Concept

New Product Development ProcessStep 7. Test Marketing

New Product Development ProcessStep 7. Test Marketing

StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Overestimation of Market Size Product Design Problems Product Incorrectly Positioned, Priced or

Advertised Costs of Product Development Competitive Actions

To create successful new products, the company must:◦ understand it’s customers, markets and

competitors ◦ develop products that deliver superior value to

customers.

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

Any tangible or intangible offerings that is perceived as a bundle of benefits by the customers and attempts to satisfy their unsatisfied needs

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Low sales Low sales High cost per

customerHigh cost per

customerNegativeNegativeCreate product

awareness and trial

Create product awareness

and trial

Growth Stage of the PLCGrowth Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Rapidly rising sales Rapidly rising sales Average cost per

customerAverage cost per

customerRising profitsRising profits

Maximize market shareMaximize market share

Maturity Stage of the PLCMaturity Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Peak salesPeak sales

Low cost per customerLow cost per customer

High profitsHigh profitsMaximize profit while defending

market share

Maximize profit while defending

market share

Decline Stage of the PLCDecline Stage of the PLC

SalesSales

CostsCosts

ProfitsProfits

Marketing ObjectivesMarketing Objectives

Declining salesDeclining sales

Low cost per customerLow cost per customer

Declining profitsDeclining profitsReduce expenditure and milk the brand

Reduce expenditure and milk the brand

Price is the monetary amount or compensation given by one party to another in return for goods or services.

The concept of value

Profit maximization To achieve ROI To increase sales volume Survival To address the competition

The degree to which the price of a product affects consumers purchasing behaviors.

The degree of price sensitivity varies from product to product and from consumer to consumer.

Price of substitute product

Unique value effect

Switching cost

Price-quality effect

Difficult comparison effect

Corporate objective

Costs

Demand

Competitor

Cost based pricing◦ Mark up or full cost pricing

Competitor based pricing◦ Going rate pricing◦ Sealed bid pricing◦ Pricing below the competition◦ Pricing above the competition

Skimming pricing Penetration pricing Bundle pricing

The packaging of the product is the outer layer that assist an organization to protect the product and make it more attractive for the customers

Primary Packaging: It is the first material that envelops the product. This is the initial packaging of the Product and the smallest unit of Packaging which is in direct contact with the product.

Secondary Packaging: It is outside the primary packaging, which helps in protecting the primary-packed product.

Tertiary Packaging: It is the last Packaging used for bulk handling, warehouse storage and transport shipping. Palletized Unit Load is the most common of the Tertiary Packaging which is used to pack the Secondary-packed products tightly into the containers.

What is a brand? Brand – A brand is a name, term, sign,

symbol, or design which is intended to identify the goods or services of one seller or group of sellers, create value and to differentiate them from those of competitors.

Brand image refers to the perception of the brand in the public's mind.

E Branding is the promotional and branding activities planned by an organization in the internet media

It should be noted that Indian markets are growing in terms of usage of internet. Hence, the organizations spreads awareness through e banners, pop ups, pop unders, viral marketing efforts etc