Chapter 5 Product Strategy

Chapter 5Product Strategy

Prepared by:

Nor Izzuddin Bin Norrahman

Lecturer of Management, Banking & Islamic Finance

Astin College

• A product can be defined as – Anything that can be offered to a market attention, acquisition, use, or consumption that might satisfy a want or need.

• It includes:– Physical Objects

– Services

– Persons

– Places

– Organizations

– Ideas

LEVELS OF PRODUCT

Core Product

• The most basic level

• Address the question: what is the buyer really buying?

• Problem-solving benefits

• The benefit that the consumers will receive

• Example?

Actual Product

• Build around the core products

• Basically have 5 Characteristics:

– Quality level

– Features

– Design

– Brand name

– Packaging

Augmented Product

• Built around both core and actual product

• By offering additional consumer services and benefits

• Examples?

Example

PRODUCT CLASSIFICATION

• Products and services fall into two broad classes based on the types of consumers that use them:

– Consumer Products

– Industrial Products

Consumers Product

• Are those brought by final consumers for personal consumption.

• Marketers usually classify these goods

– Convenience Goods

– Shopping Goods

– Specialty Goods

– Unsought Goods

Marketing Consideration for Consumer Products

Convenience Products

• Consumer products and services that the consumer usually buys:

• FREQUENTLY,

• Immediately,

• And with a minimum of comparison and buying effort.

• Examples?

Shopping Products

• Less frequently purchased.

• Customer will COMPARE carefully on:

– Suitability

– Quality

– Price

– Style

• Much time and effort needed to:

– Gather info

– Compare

Specialty Products

• Consumer products & services that have UNIQUE characteristics.

• Which significant group is WILLING to buy

• Example?

Unsought Products

• Either:

– Consumer does not know about the products

– Consumer does not think to buy the products

• Example?

INDIVIDUAL PRODUCTS DECISIONS

Product attributes

Branding Packaging LabelingProduct support services

Product Attributes

• Developing a product or services involves defining the BENEFITS that it will offer.

• These benefits measured by:

– Quality

– Features

– Design

Product Attributes• Product Quality

– Two dimensions:

• Level– In developing product, the marketer must choose quality level

– To support the product position in market

– Examples?

• Consistencies– Conformance quality

– Freedom from defects and consistency in delivering a targeted level of performance

– Examples?

Product Attributes

• Product Features

– A product can be offered by varying features.

– Should ask question:

• How do you like the product?

• Which specific features do you like the most?

• Which features that you want us to add in the products?

Product Attributes

• Product Designs

– Design is a larger concept than style

– Style – simply describe appearance of a product, but it doesn’t necessarily make the product perform better.

– Good design contributes to a product’s USEFULNESS as well as it’s looks.

– Good design can attract attention, improve product performance, cut production costs and give strong competitive advantage.

Branding

• A brand is a name, symbol, term, sign, or design, or combination of these, that identifies the maker or seller of a product or services.

• It help consumers identify the products.

• It also tell the buyer something about the product

Branding

• Brand Equity

– Brands vary in the amount of power and value

– A powerful brand has high brand equity.

– High brand equity provides competitive advantages.

– It also will affected the consumer brand awareness and loyalty.

Branding

• Brand Name Selection– A good name can add greatly to a product’s

success.

– Desirable qualities for a brand name includes:• Suggest benefits and qualities (examples?)

• Easy to pronounce, recognize and remember (examples?)

• Distinctive (Examples?)

• Translate easily to foreign language

• Should be capable of registration and legal protection

Branding

• Brand Sponsor

– Four sponsorship options:

• Manufacturer’s brand

• Private brand– Hard to establish / costly

– Yield high profit – cannot be bought at other competitors

• Licensing– Use well-known celebrity

• Co-Branding– Mix the company resources with another company to create a

product

Brand Strategies

Brand Strategies

• Line Extension

– When company introduces ADDITIONAL items in a given product category under the same brand name.

– Examples: Flavors, colors, ingredients

– It is a low cost & low risk method in introducing the new products.

– Risk: overextended – might lose its specific meaning (Coke vs Diet Coke, Coke Zero, Vanilla Coke)

Brand Strategies

• Brand Extensions

– Involves the use of a successful brand name to launch a NEW or MODIFIED PRODUCTS in a NEW CATEGORY]

– Example: Honda (Motorcycles, Cars, etc.)

– Pro: Instant recognition & faster acceptance

– Cons: if the brand extension fails, it may harm the consumer attitude towards the brand name.

Brand Strategies• Multi-brands

– Company often introduce additional brands in the same category

– Example: Watches (CASIO)• G-Shock (Durability)• Edifice (Low-Price)• Others?

– Why they do that? Isn’t the buyer will become more confuse on which watch that they want to buy?

– Pro: To protect the flanks of its CASIO brand in the watches industry

– Cons: May not profitable when it only meet small market share. (sources which they have separated is wasted)

Brand Strategies

• New brands

– A company may create a new brand name whenit enter a new category.

– Or because a company might believe that the power of its existing brand name is waning and need a new one.

– Example: Nestle -> MILO, HONEY STAR, NESCAFE

– Pros?

– Cons?

Brand Strategies

• Mega-brands

– Weeding out weaker brands

– Focusing the resources only on brands that can achieve number one or two in the market

– Share positions in their categories.

– Examples?

– Pros?

– Cons?

Packaging

• Packaging involve designing and producing the container or wrapper for a product.

• The package may include:

– The Brands name

– The instruction manual

– Ingredients

– Others?

• Why we need it?

Labeling

• Labels may range from simple tags to complex graphic attached with the package.

• It perform several function:

– Identifies brand or product

• Sunkist -> print on an orange picture

– Describe several thing about the product

• Who made it? Where are they from? Expired Date

– Promote the product

• NEW PRODUCT! NEW FORMULA!

The End….any question?