Module III

Concept of Product- Classification of products- Goods Vs Services- Major productdecisions-Product line and Product mix- An overview of Brand Management- Packagingand Labeling- Product life cycle- New product development- Pricing- Factors affectingPrice Determination- Pricing Policies and Strategies

CONCEPT OF PRODUCT

PRODUCT CLASSIFICATIONSHOPPING HABITS• Convenience

goods:purchased frequently , immediately , and with a minimum of effort

E g :soft drinks, news papers

Convenience goods:

• Staples :• Goods which come under the basic demands of human

beings • consumer purchase on regular basis• Eg : tooth paste, milk ,sugar ,rice• Impulse goods: purchased without any planning or

search effort• Eg : chocolates , potato chips,ice creams, magzines• Emergency goods : purchased when a need is urgent• Eg : umbrella ,sweaters

Shopping goods• Customer characteristically compares on such basis

as suitability , quality , price and style• EG : furniture , clothing ,Telelevisions, jewelleries• Homogeneous shopping goods: similar in quality

but differ enough in price, style etc• Heterogeneous shopping goods: differ in product

features that may be more important than price

Specialty goods

• Unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort.

• Eg : photographic equipment, antiques, jewellery, wedding dresses

Unsought goods

• The customer does not know about or does not normally think of buying

• Require advertising and personal- selling support • Eg : life insurance , reference books

Industrial goods classification-in terms of cost and

how they enter production process

Materials and parts• Raw materials

– Farm products e g : wheat ,fruits– Natural products e g : fish ,iron ore

• Manufactured materials and parts– Component materials e g :pig- iron, cement ,

yarn– Component parts e g : small motors , tyres

Capital items

• Long lasting good that facilitate developing or managing the finished product.

• Installations: Buildings and heavy equipments

• Equipments: portable factory equipment and tools and office equipments

Supplies and business services• Short term goods and services that facilitate

developing or managing the finished product.• Supplies (MRO goods)

– Maintenance and Repair items: paint, nails– Operating supplies: writing paper , lubricants

• Business services– Maintenance and repair services: maintenance

of air conditioner– Business advisory services: legal, advertising

PRODUCT DECISIONS

PRODUCT DECISIONS

Decisions about theintangible/augmented product

Decisions about thetangible/physical product

Decisions about theproduct types

Decisionsaboutfunctionalfeatures

Decisionsaboutquality

Decisionsaboutbranding

Decisionsaboutstyle

Decisionsaboutproductservices

Decisionsaboutpackaging

Decisionsaboutproductmix level

Decisionsaboutproductline level

Product mix/ product assortment

• Philip Kotler :“The set of all products and items a particular

seller offers for sale”.

Four dimensions to product mixWidth : The width of the product mix consists of all

the product lines that the company has to offer to its customers

Length : Length of the product mix includes the total number of products offered to the customers

Depth :Depth of a product mix pertains to the number of variants that are offered in each product in the line

Consistency : Consistency of a product mix refers to the relationship of the various product lines in terms of end use, product requirements, distribution channels, or some other way.

4 product mix dimensions permit the company to expand business

• Add new product lines• Lengthen each product line• Deepen its product mix• Pursue more product line consistency

Product Line Analysis

• Product Line managers need to know the sales and profit of each item in their line in order to determine which item to build , maintain , harvest or divest. Provide information for two key decision areas :

• Product Line length• Product mix pricing

Product Line length

• Line stretching: lenghten product line beyond its current range– Down market stretch : positioned in the middle market– Up - market stretch: positioned in the high end of the

market– Two –way stretch: positioned in the up market and down

market• Line filling: lenghten product line by adding more

items within the present range

Product mix pricing

• Set of price that maximises profits on the total mix.

• Product line pricing• Optional feature pricing• Captive product pricing• Two part pricing• By –product pricing• Product bundling pricing

Product line pricing

• Develop product lines and introduce price steps• Seller establish perceived quality differences that justify the

price differences• The process used by retailers of separating goods into cost

categories in order to create various quality levels in the minds of consumers

Optional feature pricing

• Offer to sell optional products , features and services along with their main product

Captive product pricing

• pricing the accessories, or captive products, sold separately to work with those products can be just as difficult, and may even affect sales of the core product itself.

Two part pricing

• Consist of a fixed fee plus a variable usage fee• Fixed fee should be low enough to induce purchase

of the service; profit can come from the usage fee

By –product pricing

• Pricing of products that are derived out of main product.

• By product have value to a customer group ,they should be priced on their value

Product bundling pricing

• several products are offered for sale in one combined unit that is often marked at a reduced price compared to the sum of their separate purchase prices.

PACKAGING• All the activities of designing and producing the container • Buyers first encounter with the product• Build brand equity• Drive sales

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PACKAGINGScience, art and technology of enclosing or protecting products for distribution, storage, sale, and use.

Packaging contains, protects, preserves, transports, informs, and sells.

A pack is the economical means of providing for a product• Presentation• Protection• Identification/information• Convenience/containment/compliance

CALCIUM SANDOZ BOTTLES

PACKAGE DESIGNS

• ENGINEERING TESTS• VISUAL TESTS• DEALER TESTS• CONSUMER TESTS

Labelling

• A simple tag attached to the product or an elaborately designed graphic that is a part of the package

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Labelling Labels applied to containers, equipment or premises should be clear. It contains : (a) the name of the product (b) a list of the active ingredients (c) the batch number assigned by the manufacturer (d) the expiry date (e) special storage condition. (f) directions for use, and warnings and precautions that may be necessary (g) the name and address of the manufacturer or the company .