06/07/22 09:24 Prof. U.M. Amin, CMS, JMI University, New Delh i 1 Marketing Management MBA CP 205
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Marketing ManagementMBA CP 205
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Developing Product Strategy
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Learning Objectives:
• Know what are the characteristics of products and how can they be classified?
• Know how can a company build and manage its product mix and product lines?
• Know how can companies combine products to create strong co-brands or ingredient brands?
• Know how can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Developing Product Strategy
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Developing Product Strategy
Anything that can be offered to a market to satisfy a want or need.
Product
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Three components of Market offering
Developing Product Strategy
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Product Characteristics and classifications – Five levels
• Level I: Core benefit, the service/benefit the customer is buying.
• Level II: Basic product, core benefit converted to basic product.
• Level III: Expected product, attributes, conditions consumers expect.
• Level IV: Augmented product, it exceeds consumer expectations.
• Level V: Potential product, all augmentations/transformations the product might undergo future.
Developing Product Strategy
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Developing Product Strategy
Five Product Levels
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Product classification schemes
Developing Product Strategy
Durability
Use
Tangibility
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Developing Product Strategy
Nondurablegoods
ServicesDurablegoods
Durability and Tangibility
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Developing Product Strategy
Convenience
Unsought
Shopping
Specialty
Consumer goods classification
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Developing Product Strategy
Materials and parts
Supplies/ business services
Capital items
Industrial goods classification
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Product Differentiation
• To be branded, products must be differentiated. Products can be differentiated based on the following:
Form, like size, shape or physical structure. Features, refer to supplements to the basic form. Performance quality, level at which the product’s primary characteristics operate. Conformance quality, degree to which all the produced units are identical and meet the promised specifications.
Developing Product Strategy
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Durability, is a measure of the product’s expected
operating life under natural or stressful conditions. 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 ease of fixing a product when
it. malfunctions or fails. Style, describes the product’s look and feel.
The product Hierarchy
• The product hierarchy stretches from basic needs to the products that satisfy these needs. There are six levels of product hierarchy:
Developing Product Strategy
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1. Need family, The core need that underlies the existence of a product family. Ex: Security.
2. Product family, All the products that can satisfy a core need with reasonable effectiveness. Ex: Savings and money.
3. Product class or category, A group of products within the product family recognized as having a certain functional coherence. Ex: Financial instruments.
4. Product line, A group of products within a product category that
Developing Product Strategy
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are closely related as they perform a similar function, are sold to the same customer groups, are marketed through same channels and fall within given price ranges. Ex: Life Insurance.
5. Product type, a group of items within a product line that share one of several possible forms of the product. Ex: Term Life insurance.
6. Item, also called stock-keeping unit or product variant is a distinct unit with in a brand or product line distinguishable by size, price, appearance, or some other attribute. Ex: HDFC renewable Life insurance.
Developing Product Strategy
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Developing Product Strategy
The Product Hierarchy
Need family
Product family
Product class
Product line
Product type
Item
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Developing Product Strategy
• Product system• Product mix/ Product
assortment• Depth• Length• Width• Consistency
Product Systems and Mixes
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Product systems and Mixes
• A product system is a group of diverse but related items that function in a related manner.
• A product mix is the set of all products and items a particular seller offers for sale.
• A firm’s product-mix has certain width, length, depth and consistency.
• The width of a product mix refers to how many different product lines the company carries.
• The length of a product-mix refers to the total number of items in the mix.
Developing Product Strategy
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Developing Product Strategy
Personal wash
Laundry Skin care
Hair care
Oral care Deodorants
Color Cosmetic
s
Tea Coffee
Foods Ice cream
s
Lux Surf Excel
Fair &
Lovely
Sunsilk natural
s
Pepsodent
Axe Lakme Brooke Bond
Bru Kissan Kwality walls
Lifebuoy
Rin Pond’s
Clinic Close-up Rexona Lipton Knorr
Liril Wheel Annapurna
Hamam
Breeze
Dove
Pears
Rexona
Product-Mix WidthHome & Personal Care Foods
Pro
duct
Lin
e
Length
Product-Mix Width and Product line length of HUL
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• The depth of a 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 or distribution channels.
• The four product-mix dimensions permit the company to expand its business in four ways:
Add new product lines thus widening the product-mix. Lengthen each product line.
Developing Product Strategy
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Add more variants to each product and deepen its product-mix.
Pursue more product line consistency.
Product-Line Analysis
• Marketers need to carry out product-line analysis to determine which products to build, maintain, harvest or divest. This can be done by:
Company’s sales & profitability and Market profile
Developing Product Strategy
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• Every company’s product portfolio contains products with different sales volumes and margins.
• A company can classify its products into four types that yield different gross margins depending on sales volume & promotion:
1. Core product, produce high sales volumes, are heavily promoted but with low margins because they are viewed as undifferentiated.
2. Staples, items with lower sales volumes and no promotion – yield somewhat higher margins.
3. Specialties, items with lower sales volume that might be highly promoted, yield higher margins.
Developing Product Strategy
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4. Convenience items, spares that consumers buy from where they buy original equipment, can carry higher margins.
• Companies must realize that these items differ in their potential for being priced higher or advertised more as the ways to increase their sales, margins or both.
• Market profile involves reviewing how the product line is positioned against competitors.
• Product-line analysis provides information on product line length and product-mix pricing.
Developing Product Strategy
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• Company objectives influence product-line length. The objectives may be:
To induce up selling, To create a product line that facilitates cross selling and To create a product line that protects against economic
ups and downs.
• Companies seeking high market share & market growth generally carry longer product lines while companies seeking higher margins carry shorter product lines.
Developing Product Strategy
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Down-marketDown-market
Up-market Up-market
Both ways
Line Stretching
Developing Product Strategy
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• A company increases its product length in two ways:
Line stretching and Line filling
• Line stretching occurs when the company lengthens its product line beyond the current range.
• In down-market stretch, a company positioned in the middle market may introduce a lower priced line.
Developing Product Strategy
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• It may be due to the following:
The company may notice strong growth opportunities as mass retailers.
The company may wish to tie lower end competitors who might move up-market.
The company may find that the middle market is stagnating or declining.
• Company may wish to enter high end of the market to seek more growth, higher margins or simply to position itself as full line manufacturer.
Developing Product Strategy
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• Two way stretch: Companies serving middle market may decide to stretch product line in both directions.
• Line filling involves adding more items within the present range. It is undertaken to:
Reach incremental profits. Satisfy dealers who complain about lost sales due to
missing items. Try to utilize excess capacity. Plug holes to keep out competitors. Be the leading full line company.
Developing Product Strategy
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Developing Product Strategy
Line Filling
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Co-Branding and Ingredient Branding
• Co-branding also called dual branding or brand bundling involves combining two or more existing well known brands into a new joint product and/or marketed together in some fashion.
• It could be same company co-branding, joint venture co-branding, mutiple-sponser co-branding or retail co-branding.
• Ingredient branding is a special type of co-branding that involves creating brand equity for materials, components or parts that are necessarily contained within other branded products.
Developing Product Strategy
04/10/23 13:00 Prof. U.M. Amin, CMS, JMI University, New Delhi
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Packaging, Labeling, Warranties, and Guarantees
• Packaging (the 5th P) can be defined as all activities of designing and producing a container for a product. Packages may include upto three levels of materials.
• Several factors have resulted in growing use of packaging
as a marketing tool. These are:
Self service. Consumer affluence
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Company and brand image. Innovation opportunity.
• Packaging must achieve the following objectives:
Identify the brand. Convey descriptive and persuasive information. Facilitate product transportation and protection. Assist at home storage. Aid product consumption.
Developing Product Strategy
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• To achieve the marketing objectives, the aesthetics and functional components of packaging must be chosen carefully.
• Aesthetic considerations relate to size, shape, material, color, text and graphics.
• Functionally, structural design is crucial. The packaging should be re-sealable, tamper-proof, and convenient to use.
Labeling
• Sellers must label products which could be a simple tag or an elaborately designed graphic that is part of the package.
Developing Product Strategy
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• Label performs several functions:
It identifies the product or brand. The label may grade the product. It may describe the product. Label might promote the product.
Warranties and Guarantees
• Warranties are formal statements of expected product performance by the manufacturer and are legally enforceable. Some companies give general while others give specific guarantees.
Developing Product Strategy
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Recap:
• What are the characteristics of products and how can they be classified?
• How can a company build and manage its product mix and product lines?
• How can companies combine products to create strong co-brands or ingredient brands?
• How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Developing Product Strategy