Chapter 5Product Decision

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Marketing 1

What is product? Classification of product Level and types of product Product items, lines and mixes Branding Packaging

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Marketing 2

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Marketing 3

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PromotionPromotion

Place (Distribution)Place (Distribution)

PricePrice

ProductProduct Product is the “heart” of

Marketing Mix

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Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want (Kotler and Gary)

Product is everything, both favorable and unfavorable, that a person receives in an exchange (McDaniel/Lamb/Hair)

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Levels of Product and Services

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UnsoughtProducts

UnsoughtProducts

SpecialtyProductsSpecialtyProducts

ShoppingProducts

ShoppingProducts

ConvenienceProducts

ConvenienceProducts

ConsumerProducts

ConsumerProducts

BusinessProductsBusinessProducts

PRODUCTSPRODUCTS

8

ConvenienceProduct

ShoppingProduct

SpecialtyProduct

UnsoughtProduct

A relatively inexpensive item that merits little shopping effort

A product that requires comparison shopping, because it is usually more expensive and found in fewer stores

A particular item for which consumers search extensively and are reluctant to accept substitutes

A product unknown to the potential buyer or a known product that the buyer does not actively seek

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Marketing

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Industrial products are products purchased for further processing or for use in conducting a business

Classified by the purpose for which the product is purchased◦ Materials and parts◦ Capital◦ Raw materials◦ Processed materials◦ Supplies and service

Product and Service Classifications (Business Product)

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Product ItemProduct Item

Product LineProduct Line

Product MixProduct Mix

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A group of closely-related product items.

A group of closely-related product items.

All products that an organization sells.

All products that an organization sells.

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Product Mix WidthThe number of Product Lines an organization offere.g: Nestle-Drinks, confectionary, Instand noodels

Product Line DepthThe number of Product items in a product linee.g: Nestle, In the Product Line of Junior Foods, there are 11 Products Items+++

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Equivalent QualityEquivalent Quality

Efficient Sales andDistribution

Efficient Sales andDistribution

Standardized Components

Standardized Components

Package UniformityPackage Uniformity

Advertising EconomiesAdvertising Economies

3

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Product Modification

Product Modification

ProductRepositioning

ProductRepositioning

Product LineExtension or Contraction

Product LineExtension or Contraction

Adjustments to Product Items,

Lines, and Mixes

Adjustments to Product Items,

Lines, and Mixes

15

Quality ModificationQuality Modification

Functional ModificationFunctional Modification

Style ModificationStyle Modification

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Marketing

Is the changing consumer’s perception of a brand in relation to competing brand

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Changing Demographics

Changing Demographics Declining SalesDeclining Sales

Changes in Social

Environment

Changes in Social

Environment

Why reposition Why reposition established brands?established brands?

Why reposition Why reposition established brands?established brands?

Product Line ExtensionADDING more product items to an existing product line

Product Line ContractionDELETING product items in the product line because PL over extension

-Cannibalization-harvested product that not generate much

sales

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● Some products have low sales or cannibalize sales of other items

● Resources are disproportionately allocated to slow-moving products

● Items have become obsolete because of new product entries

Symptoms of Symptoms of Product Line Product Line

OverextensionOverextension

Symptoms of Symptoms of Product Line Product Line

OverextensionOverextension

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Brand Name

Brand Name

BrandMark

BrandMark

Brand EquityBrand Equity

That part of a brand that can be spoken, including letters, words, and numbers.

It’s a name, term, symbol, design or combination thereof that identifies a seller’s products and

differentiate them from competitor

That part of a brand that can be spoken, including letters, words, and numbers.

It’s a name, term, symbol, design or combination thereof that identifies a seller’s products and

differentiate them from competitor

The elements of a brand that cannot be spoken.

The elements of a brand that cannot be spoken.

The value of company and brand names.The value of company and brand names.

Source of brand nameQuality, Benefits, Animals, Persons, Numbers, Things etc…

Benefits having a Brand Name: Product Identification Repeat sales New product sales

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It refer to the value of company and brand names.

High Awareness + Perceived Quality + Brand Loyalty = Brand EQUITY.

A strong brand equity is a strong asset to the company.

Easy to pronounce, recognize remember and short

Distinctive and unique Describe the product, use and benefits Has a positive connotation Reinforce the desired product image Legally protectable in home and foreign

markets of interest

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Trade markExclusive right to use a brand or part of a brand (shapes, ornamental color or design,

catchy phrases, abbreviations, sounds etc).

Generic Product name-Company that fail to protect their trademarks face the problem of generic product name-Consumer identifies the product by class or type and cannot be trademarked

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BrandBrand No BrandNo Brand

Manufacturer’s Brand

Manufacturer’s Brand Private BrandPrivate Brand

IndividualBrand

IndividualBrand

Family Brand

Family Brand

Combi-nation

Combi-nation

IndividualBrand

IndividualBrand

Family Brand

Family Brand

Combi-nation

Combi-nation

Generic Product vs. Branded ProductsGeneric Product-no frills, no brand name and low cost, low

quality

Branded Product-Product with name

Manufacturers’ Brands vs. Private BrandsManufacturers’ Brand-Company/ Manufacturer name

Private Brand-Wholesaler/ retailer's name

Individual Brands vs. Family BrandsIndividual Brand-different brand names for different products

Family Brands-Same brand names for different products

Cobranding-placing 2 or more brand names on a product or its packages

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Generic products – No frills, no brand name, low cost product and easy to identified by it’s product category.

What is the main appeal of generic products??

PRICE

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Manufacturer’s brand – National Brand (brand’s owner)E.g: Kodak, Pensonic, Akira etc.

Private brand – Private label or store brand.E.g GIANT BRAND, FIRST CHOICE, PARKSON etc.

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Individual brand – Using different brand name for different products.

Use only: Products vary greatly in use and performance.E.g: Colgate- Kayu Sugi, Fresh, White, Active Solution etc.

Family Brand – marketing several different products under the same brand.E.g: Sony, Toshiba, NIKE, PADINI etc.

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IngredientBrandinge.g: Intel

IngredientBrandinge.g: Intel

Cooperative Branding

e.g: Air Asia and Citybank

Cooperative Branding

e.g: Air Asia and Citybank

Complementary Branding

e.g: Nescafe and Creamer

Complementary Branding

e.g: Nescafe and Creamer

Types of CobrandingTypes of CobrandingTypes of CobrandingTypes of Cobranding

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“The activities of designing the container or wrapper for a product”

Package:Container/ wrapper

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1. Primary PackageA product’s Immediate container

2. Secondary PackageA container to protect primary package

3. Shipping PackageA container used to store, to ship the product

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Contain and ProtectContain and Protect

Promoting ProductsPromoting Products

Facilitate Storage, Use, and Convenience

Facilitate Storage, Use, and Convenience

Facilitate RecyclingFacilitate Recycling

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Persuasive

Focuses on promotional theme/ effort

Emphasis on attractive color, graphical and text

Consumer information is secondary

Informational

Focus on giving product info such as ingredients, nutritional information, net weight, manufacturer’s address, expire date, storage instruction, suggested price, halal sign, customer info line service, UPC etc.

Helps make proper selections

Lowers cognitive dissonance

Includes use/care

‘Is a printed information appearing on or with the package’

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Universal Product CodeA series of thick and thin vertical lines (bar code), readable by computerized optical scanners, that represent numbers used to track products

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‘A confirmation of the quality or performance of a good or service’

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-Written Guarantee-Simple statement e.g: 100% genuine leather 100% COTTON 100% ORGANIC

Express Express WarrantyWarrantyExpress Express WarrantyWarranty

Implied Implied WarrantyWarrantyImplied Implied WarrantyWarranty Unwritten Guarantee