Setting Product Strategy

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Setting Product Strategy
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Marketing Management, 13th ed
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Chapter Questions

• What are the characteristics of products and how
  do marketers classify products?
• How can companies differentiate products?
• How can a company build and manage its product
  mix and product lines?

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Chapter Questions (cont.)

• 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?

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At the heart of a great brand is a great product
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What is a Product?
A product is anything that can be offered to a
market to satisfy a want or need, including
physical goods, services, experiences, events,
persons, places, properties, organizations,
information, and ideas.
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Five Product Levels

• Core benefit service or benefit (e.g., hotel
  guest is buying rest and sleep)
• Basic product turn core benefit into basic
  product (e.g., hotel room includes a bed,
  bathroom, towels, desk, dresser, and closet)
• Expected product set of attributes and
  conditions buyers normally expect (e.g., clean
  bed, fresh towels, working lamps)
• Augmented productexceeds customer expectations
  (e.g., free health spar)
• Potential productall the possible augmentations
  and transformations (e.g., free internet
  connections and use)

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Product Classes

• Two broad classes
• consumer products
• business products
• Classes help in planning marketing mix needed
• Based on how the customer views the product
• how consumers think about and shop for products
• how business/organizational buyers think about
  products and how they'll be used

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Product Classes Help Plan Marketing Strategy
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Goods and/or Services Are the Product (Exhibit
9-2)
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Differences in Goods and Services
Devoted to erasing stereotypes
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Differences in Goods and Services
Tangibility
When produced relative to when consumed
Where produced (storing and transporting)
Differences
Balancing supply and demand
Contact with customer by producer of product
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Product Classification Schemes
Durability
Tangibility
Use
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Durability and Tangibility
Nondurable goods
Services
Durable goods
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Consumer Goods Classification
Staples
Convenience Products
Convenience Products
Impulse Products
Emergency Products
Specialty Products
Specialty Products
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Industrial Goods Classification
Accessories short-lived capital itemstools
production equipment
Raw Materials unprocessed expense items that
become a physical part of a physical good
Installations important capital items
Business Product Classes
Component Parts Materials processed expense
items that become part of a finished product
MRO Supplies Supplies for Maintenance, Repair,
and Operating
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Product Differentiation

• Product formsize, shape, or physical structure
• Featuressupplement basic functions
• Customizationindividual versus mass
• Performancelevel at which the products primary
  characteristics operate
• Conformancedegree to which all the produced
  units are identical and meet the promised
  specifications
• Durabilityproducts operating life
• Reliabilityprobability that a product will not
  malfunction or fail
• Repairabilitythe ease of fixing a product when
  it malfunction or fails
• Styleproducts look and feel to the buyer.

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Service Differentiation

• Ordering easehow easy to place an order
• Deliveryhow well (e.g., speed, accuracy, and
  care) product or service is brought to the
  customer
• Installationwork done to make a product
  operational
• Customer trainingtraining the customers
  employees to operate the vendors equipment
  properly and efficiently
• Customer consultingdata, information, systems,
  and advice that the seller offers to buyers
• Maintenance and repairservice programs for
  helping customers keep purchased products in good
  working order
• Returns

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Dunkin Donuts Differentiation
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Design Differentiation
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Maintenance and Repair
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Product Systems and Mixes

• Product systemgroup of diverse but related items
  (e.g., Palm One handheld and Smartphone product
  lines come with attachableheadsets, cameras,
  keyboards, etc.)
• Product mix or assortmentvarious product lines
  (e.g., GEs consumer Appliance Divisionrefrigerat
  ors, stoves, washing machines, etc.)
• Depthvariants of each product (e.g., tide comes
  in two scents)
• Lengthtotal number of items in the mix (e.g.,
  PGDetergents (Ivory, tide, etc) Toothpaste
  (Gleem, Crest) Bar soap (Camay, Zest, etc)
  Disposable Diapers (Pampers, Luvs) Paper
  Products (Charmin, Bounty)
• Widthnumber of different product lines
  (PGDetergents, Toothpaste, Bar Soap, Disposable
  Diapers, Paper Products)
• Consistencyhow closely related various product
  lines are in some way (e.g., consumer goods that
  go through the same distribution channel.

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Product Line Analysis
Core product (basic products e.g., laptop
computers)
Staples (items with lower sales volume but not
promoted e.g., CPU, bigger memories)
Convenience Items (peripheral items e.g.,
carrying cases and accessories)
Specialties (items with lower sales volume but
highly promoted e.g., digital moviemaking
equipment)
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Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
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Line Filling
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Product-Mix Pricing

• Product-line pricing (various levels 200, 400,
  and 600)
• Optional-feature pricing (sunroof, theft
  protection)
• Captive-product pricing (require the use of
  ancillary products razors, films)
• Two-part pricing (fixed fee plus variable usage
  fee telephone service)
• By-product pricing (production of certain goods
  often result in by-products meat and fat in
  sausage)
• Product-bundling pricingoffer products only in a
  bundle product plus service

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Product Line Pricing
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Two-Part Pricing
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Co-branding
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Ingredient Branding
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What is the Fifth P?
Packaging, sometimes called the 5th P, is all
the activities of designing and producing the
container for a product.
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Factors Contributing to the Emphasis on Packaging
Self-service
Consumer affluence
Company/brand image
Innovation opportunity
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Packaging Objectives

• Identify the brand
• Convey descriptive and persuasive information
• Facilitate product transportation and protection
• Assist at-home storage
• Aid product consumption

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Functions of Labels
Identifies
Grades
Describes
Promotes
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Innovations in Packaging
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Warranties and Guarantees