Lect13-3rd Mar - Product Decisions & PLC

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Transcript of Lect13-3rd Mar - Product Decisions & PLC

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    Recap of the last Class:

    Various bases of segmenting themarket

    Requirements of effectivesegmentation

    Targeting strategies

    Positioning strategies Determinants of good positioning

    Positioning Pitfalls

    1

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    Five Product Levels:

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    Product Hierarchy:

    Need Family: To pass time while on move Product Family: Entertainment

    Product Class: Portable Entertainment

    Instruments Product Line/Category: Portable DVD

    players, CD players, MP3 players

    Product Type/Form: High-end MP3 player Item/SKU: Apple ipod nano 4GB

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    Other Product Hierarchy Concepts:

    Product System: Product Mix

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    Product Classifications:

    On Basis of Durability & Tangibility:

    Non Durable Goods

    Eg: FMCG products

    Durable Goods

    Eg: TV, Mobiles

    Services

    Eg: Aviation Industry

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    Consumer Goods Classification:

    Convenience Goods: Purchased Frequentlywith min. effort.

    Staples: Eg: Food items, soaps etc.

    Impulse Goods: Eg: Chocolates, Magazines etc.

    Emergency Goods: Eg: Some pharma products

    Shopping Goods: Selection & ComparisonProcess before purchase Eg: Apparel, Furniture

    Specialty Goods: Unique Characteristics/BrandEg: Mercedes Benz, Bose Speakers

    Unsought Goods:Consumer normally doesntbuy them till persisted Eg: Helmets, Reflectors

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    Industrial Goods Classification:

    Materials & Parts:

    Raw Material: Eg: Milk for Ice Cream etc.

    Manufactured Material: Eg: Cement

    Capital Items:

    Installations: Eg: Factories, power plants

    Equipment: Eg: Tools, Lift trucks

    Supplies & Business Service

    Eg: Office Stationary, cleaning services

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    Product Mix:

    Width of Product Mix (Product Categories):Eg: For HUL it is Detergents, Deodorants,Soap, Shampoo, Tea, Ice Cream etc.

    Length of Product Mix (Brands): Eg: ForHUL it is Surf, Rin, Lux, Axe, Sun Silk,Brooke Bond, Lipton, Kwality-Walls etc.

    Depth of Product Mix (SKUs): Variants ofeach brand.

    Consistency of Product Mix: Close relation

    among product categories

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    Product Line Strategies:

    Line Stretching: Taking product line to newsegment

    Down Market Stretching/Trading Down: Eg:

    Kelloggs MazzaUp Market Stretching/Trading Up: Eg: Hyundais

    Verna, Elantra, Sonata, Tuscon

    Two-Way Stretching:Tata selling Nano as well as Jaguar & LandRover

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    Line Filling: Adding More Variants/FillingProduct Depth E.g. Marutis Strategy

    Line Modernization: E.g: Onidas newtechnologically advanced products

    Line Featuring: E.g: Tata Indica & Indigo

    Line Pruning: E.g: HUL concentrating on 30power brands out of its 110 brands.

    Product Line Strategies (Cont.):

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    Product-Mix Pricing:

    ProductLinePricing

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    Product-Mix

    Pricing (Cont..): Optional Feature

    Pricing Eg: In

    case of variantsof Car Models,Laptops

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    Product-Mix Pricing (Cont.): Captive Product

    Pricing Eg: lowpriced HP printer +high priced cartages

    Two-part Pricing By-Product Pricing

    Eg: molasses fromsugar firms

    Product BundlingPricing

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    Packaging & Labeling

    Why is it done?

    To Add Value

    States the contents of the product

    To Advertise

    To protect the product

    Mandatory Requirement

    Enable self selection

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    Product Life-Cycle-Sales & Profit:

    SalesAnd

    Profit

    Time

    Sales

    Profit

    INTR

    ODUCTI

    ON

    GRO

    WTH

    MATURITY

    DEC

    LINE

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    Introduction Growth Maturity Decline

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    ProductCategory

    Blu-ray discs DVDs VCDs VideoCassettes

    ProductForm

    Eco-friendlyPens

    Gel Pens Ball PointPens

    Ink Pens

    Brands Force MotorsTraveler Strong

    Volvo FM& FH

    Tata ACE

    Tata 407,AshokLeylandEcomet

    912

    DCMToyota,Matador

    Examples of Product Life-Cycle:

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    Various Product Life Cycle Patterns

    Example:a) b) c)

    http://en.wikipedia.org/wiki/Image:Orkut.gifhttp://en.wikipedia.org/wiki/Image:Thums_up_logo.jpg
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    Marketing Strategies:

    Introduction StageHigh Promotion Level Low Promotion Level

    High

    Price

    Rapid

    Skimming

    Slow Skimming

    LowPrice

    Rapid

    Penetra-

    tion

    Slow Penetration

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    Marketing Strategies:

    Growth Stage Growth stage for Mahindra & Mahindras Scorpio

    Sales of 3,519 units in Sept. 07 vis--vis 3,333 inSept06

    What is being done to the product?

    Quality Improvement, Addition of new features, ImprovedStyling: New version of Scorpio launched on 28th Sept. 2007.

    Add New Models: Scorpio Getaway

    Enter new market Segments: Russia, South Africa Increase Distribution Coverage: 275 dealers at present

    Prices are lowered: Getaway priced at Rs7.13 lakh to Rs8.18 lakhvis--vis Rs 8.33 lakh to Rs 9.72 lakh for other variants

    Shift from product awareness to product preference ads.

    http://www.agencyfaqs.com/advertising/newcamps/grfx/newcampaigns_inside/newcampaigns_huge/2006/scorpio_01082006_huge.jpg
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    Three phases of this stage are:

    Growth (Sales growth rate starts to decline) Eg:

    Tata Indigo sold 3,436 units in Feb 07 (7% increase over

    Jan 07 but less than Feb 06 over Jan 06 increase)

    Stable (Sales flatten) Eg: Maruti Suzukis Alto, Zen,Estillo and Swift sales stood at 34,759 units in July 08 as

    against 34,737 units in July 07 (up 0.2%).

    Decaying Maturity (Absolute level of sales starts

    to decline) Eg: Maruti 800 sold 5,970 units in July 07,but only 4,953 units in July 08 (17% decline)

    Maturity Stage

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