Product strategy

At the heart of a great brand is a great product. Product is a key element in the market offering. Market leaders generally offer products and services of superior quality.

Kotler on MarketingKotler on Marketing

Managing Product Lines, Brands, and Packaging

   Five levels of product 

Core product : Use-benefit, problem-solving service. 

Generic product : Basic version of the product. 

Expected product : Set of attributes and conditions

that buyers normally expect. 

Augmented product : Consists of additional

services and benefits that distinguish the

company’s offer from that of the competition.

Potential product : Possible augmentations and

transformations that this product might ultimately

undergo in future.

  Product classifications 1. Durability and Tangibility 

Non-durable goods – Normally consumed in one

or few uses. Durable goods – Normally survives many uses. 

Services – Intangible, inseparable, variable and

perishable products.

     Consumer goods classification 

Convenience goods – Usually purchased frequently

with minimum efforts.

Further classified into staple, impulse, emergency 

Shopping goods – In the process of selection and

purchase, comparison on suitability, quality, price

and style is done.

Further classified into homogeneous and

heterogeneous goods.  

Homogeneous goods – Similar in quality, vary in

price, whereas heterogeneous vary in product features

and services and is considered more important than

price. 

Speciality goods – Goods with unique characteristics

or brand image. To purchase these goods, buyers

make special purchasing efforts. 

Unsought goods – Consumers does not know or does

not normally think of buying.

     Industrial – goods classification 

Three groups of industrial goods : Material and

parts, capital items, and supplies and business

services. 

Materials and Parts – enters manufacturer’s product

completely. Further classified into raw-materials and

manufactured materials and parts. 

Capital items – facilitates developing and

managing finished goods. They include

installations and equipments.

Supplies and business services – supplies include

operating supplies and maintenance and repair

items. Business services include business advisory

services.

Differentiation – Products can be differentiated

on the basis form, features, performance quality,

conformance quality, durability, reliability,

repairability, and style.

Product Differentiation :

Form – can be differentiated on the basis of

size, shape or physical structure of a product.

Features – A company can identify and select

appropriate new features by surveying recent

buyers and then calculating customer value versus

company cost for each potential feature.

Each company must also think in terms of feature

customization at a higher cost or a few standard

packages at lower cost.

Performance quality – most products are

established at one of four performance levels;

low, average, high or superior.

Performance quality is the level at which the

product’s primary characteristics operate.

The manufacturer must design a performance

level appropriate to the target market and

competitor’s performance levels.

Continuously improving the product can

produce the high returns and market share.

Conformance Quality – Is the degree to which all

the produced units are identical and meet the

promised specification.

Durability – In a measure of the product’s

expected operating life under natural or stressful

conditions.

For such products consumers are willing to pay a

little extra, provided the product will not be

subject to rapid technological obsolescence.

Reliability – Reliability is a measure of the

probability that a product will not malfunction or

fail within a specified time period.

Repairability – Is a measure of the ease of fixing a

product when it malfunctions or fails.

Ideal repairability would exist if users could fix

the product themselves with a little cost in money

or time.

Style – It is the product’s look and feel to the

buyer.

Buyers are willing to pay a premium because

of the extraordinary look.

Style has the advantage of creating

distinctiveness that is difficult to copy.

Design : The Integrative Force.

Design is the totality of features that affect how

a product looks and functions in terms of

customer requirements.

As competition intensifies, design offers a

potent way to differentiate and position a

company’s product and services.

To the company, a well – designed product is

one that is easy to manufacture and distribute.

To the consumer, a well – designed product is

the one that is pleasant to look at and easy to

open, install, use, repair, and dispose of. The

designer has to take all these factors into

consideration.

Services Differentiation – Where physical

product cannot be differentiated, the key to

competitive success may lie in adding valued

services and improving their quality.

The main service differentiators are ordering

ease, delivery, installation, customer training,

customer consulting, and maintenance and

repair.

Ordering Ease -

Delivery – It includes speed, accuracy, and care

attending the delivery process.

Installation – refers to the work done to make a

product operational in its planned location.

Customer Training – Refers to training the

customer’s employees to use the vendor’s

equipment properly and efficiently.

Customer consulting refers to data,

information systems and advice services that

the seller offers to the buyer.

Maintenance and repair describes the service

programme for helping customers keep

purchased products in good working order.

Product Systems :

A product system is a group of diverse but

related items that function in a compatible

manner.

Eg: Smart phone product lines come with detachable

products including headsets, cameras,

keyboards, presentation, projectors, e-books,

MP3 players and voice recorders.

  Product mix (Product Assortment) is a set of

all products and items a particular seller offers for

sale. A product mix consists of various product

lines. 

Width – how many different product lines the

company carries. Eg HLL: detergents, toothpaste,

shampoos, bathing soaps, etc.

Length – refers to total number of items in the

mix. Eg: All items in each line gives the length. It

may be 20-30 

Depth – refers to how many variants are offered in

each product line. Eg: detergents may have six to

eight. Suppose surf comes in three sizes in three

formulations, here surf has a depth of nine.

Consistency : refers to how closely related with

various product lines are in the end use, production

requirements, distribution channels etc. 

    Product - line Analysis

 Product – line sales and profits

 Product – line market profile – positioning against

competitors.

  Product – line Length  Line is too short if the managers can increase profits by adding items.

Line is too long if the manager can increase profits by dropping items.

Line – stretching decision a) Downward stretchb) Upward stretchc) Two-way stretchd) Line-filling

Line-modernization – update to reflect current

trends. 

Line-featuring – select one or few items in the

line to feature.

Line-pruning – when a product is depressing

profits, or a company is short of production

capacity. 

Product-Mix Pricing

Product-line pricing – price steps

Optional-feature pricing – in addition to main product

Captive-product pricing – main products that require ancillary products

Two-part pricing – fixed fee plus variable fee based on usage

Byproduct pricing – to recoup production costs of main product

Product-bundling pricing – less costly when purchased together