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Product Management, & New Product Development

Product & ServiceProduct - Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need, it includes physical objects, services, persons, places, organizations and ideas.Service - Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Generic differences between products and services : There are generally four generic difference which distinguish services from products Intangibility it is difficult to have ownership on service. Heterogeneity (variability) it is difficult to imitate a service Perishability of output service cannot be inventoried. Simultaneity of production and consumption participation of consumer in the process of service generation.

Five Product Levels

Potential product Augmented product Expected product Basic product

Core product

Product LevelsFive level of the product constitute a CUSTOMER VALUE HIERARCHY.1. 2. 3. 4. 5.

Core product : At the fundamental level, it offers service or benefit that the customer is really buying. Basic / actual product : At the second stage the marketer has to turn the core benefit into a basic or actual product. Expected product : At the third level the marketer prepares an expected product, a set of attributes and conditions buyers normally expects. Augmented product : At the fourth level the marketer prepares an augmented product that exceeds customer expectations. Potential product : At the fifth level stands the potential product which encompasses all the possible augmentations and transformations the product or offering might undergo in the future.

Product ClassificationProducts can be classified on the basis of durability, tangibility and use (consumer or industrial). Durability and tangibility : Products can be classified into three groups according to durability and tangibility. Non-durable goods these are tangible goods. Durable goods these are also tangible goods and survive longer durations. Services these are intangible, inseparable, variable and perishable products. Consumer-goods classification : the goods consumers buy can be classified on the basis of shopping habits. Convenience goods : these are the ones consumers usually purchase frequently, immediately and with a minimum effort. Staple - these fall under buyers regular shopping list Impulse goods are purchased without any planning : cold drinks, candy Emergency goods purchased when a need is urgent : umbrella for rainy season.

Product Classification contd.. Shopping goods : these are the goods that the customer in the process of selection

and purchase characteristically compares on such bases as suitability, quality, price and style. Specialty goods : these goods have unique characteristics or brand identifications for which a sufficient number of buyers are willing to make a special purchase effort. Unsought goods : these goods the consumers does not know about or does not normally think of buying.

Industrial-goods classification : industrial goods can be classified in terms of how they enter the production process and their relative costliness. Materials and parts : industrial products that enter the manufacturers product completely, including raw materials and manufactured materials and parts. Capital items : industrial products that partly enter the finished product, including installation and accessory equipment. Supplies and services : industrial product that does not enter finished product at all.

Product Mix

Product mix is the set of all products and items that a particular seller offers for sale. A companys product mix has certain width, length, depth and consistency. The width of a product mix refers to how many different product lines the company carries. The length of a product mix refers to the total number of items in a particular product line. The depth of a product mix refers to how many variants are offered of each product in the line. The consistency of the product mix refers to how closely relate the various product lines are in end use, production requirements, distribution channels, or some other way.

HLL Product MixPRODUCT MIX WIDTH Product Line 1 Bath soaps

Product Line 2 Fabric washSurf Rin Wheel Sunlight Ala 501

Product Line 3 Beverages

PRODUCT LINE LENGTH

Dove Liril Le sancy Pears Rexona Lifebuoy Hamam Breeze Jai Moti

Bru Brook Bond Red Level Lipton Green Level 3 Roses Tazza Deepam Taj Mahal Super Dust Ruby Dust A1

Product-Mix Product line decisions In offering a product line companies normally develop a basic platform and module that can be added to meet different customer requirements.Product-line length A product line is too short if profits can be increased by adding items; the line is too long if profits can be increased by dropping items. Line stretching occurs when the company lengthen its product line beyond its current length. Down market stretch

A company position in the middle market may want to introduce a lower price line for any of three reasons : 1. Company may notice strong growth opportunities down the line. 2. Company may wish to tie up lower end competitors who may otherwise try to move up market and thus offer low priced offering. 3. The company may find that the middle market is stagnating or declining.

Product-MixUp market stretch

Companies may wish to enter the high end of the market for more growth, higher margins or simply to position themselves as full-line manufacturers.Two way stretch

Company serving the middle market might decide to stretch their line in both directions. Line filling

A product line can be also be lengthened by adding more items within the present range e.g., Maruti introduces Alto in between Zen and 800.

Brand DecisionsAn orange is an orange. is an orange. Unless,.that orange happens to be Sunkist, a name 80% of consumers know and trust. Russell Hanlin, CEO of Sunkist Growrs. What is a brand? Brand is a unique symbol conveying the following meanings : Attributes Maruti 800 suggests inexpensive, small, entry-level car. Benefits fuel-efficient, hence low operational cost. Values Mercedes stands for high performance, safety and prestige. Culture The Ambassador represents traditional Indian culture of joint family and values. Personality Mercedes may suggest a no nonsense boss (person).

Brand Equity

Brands vary in the amount of power and value they have in the marketplace and customers will pay more for a strong brand. The variables for brad equity: Brand awareness Brand acceptability Brand preference Brand loyalty According to David Aaker, there are five levels of customers attitude towards brand. 1. Customer will change brand, especially for price reasons. No brand loyalty 2. Customer is satisfied no reason to change the brand. 3. Customer is satisfied and would suffer a cost if change of brand is required. 4. Customer values a brand and sees it as a friend. 5. Customer is devoted to the brand.

Value of Brand Equity

Brand equity is the positive differential effect that knowing the brand name has on

customer response to the product or service. The extent to which the customers are willing to pay more on a particular brand is

measure of brand equity. But Brand Valuation, which is different from brand equity, is the measure of the

total value of the brand in the marketplace. In 2001, Coco-colas brand value was $69 billion, Microsoft $65 billion. Brand equity is a major contributor to customer equity, which can again be

measured in terms of Customer Lifetime Value.

Brand Name DecisionFour strategies are available : Individual name e.g., Zen, Esteem, Surf, Lux etc. A major advantage of the individual name strategy is that the company do not tie its reputation to the products. Blanket family names e.g., General Electric, Mercedes Benz, Campbell, Maruti, Honda, Nirma, Tata etc. Separate family names for all products e.g., Sears, Pantaloon, Walmart Corporate name combined with the individual product name e.g., Maruti 800, Honda City,Tata Sumo, Tata Safari, Microsoft office etc. Among the desirable qualities for a brand name are the following: It should suggest something about the products benefit It should suggest the product r service category It should suggest concrete, high imagery qualities It should be easy to spell, pronounce, recognize and remember It should be distinctive It should not carry poor meaning in other countries or languages

Brand Strategy Decisions

Brand strategy will vary with whether the brand is a fnctional brand, an image brand, or an experiential brand. Functional brand : satisfy a functional need such as Matuti 800 fuel efficiency. Image brand : associated with a celebrity/ designer/ powerful advertising e.g, Raymond suiting, McKinsey & Co., Pierre cardin Experiential brand : e.g., Disney land, Barista, Amby Valley Brand can be further developed as : Line extension : existing brand name extended to new sizes or flavor in the

existing category, e.g., surf excel Brand extension : brand name extended to nw product category Honda car & Honda Motor byke, Nature Fresh sunflower Oil & Nature Fresh Flour. Multi brand : Maruti zen, Maruti 800, Maruti Esteem, Titan & Sonata Co brand : Maruti Suzuki, Tata-IBM, Brla-AT&T etc.

Brand Strategy Decisions contd..

Product category

ExistingLine extension

NewBrand extension

Existing Brand name New

Multi brands

New brands

Product Life Cycle & Marketing Strategies

Product Life Cycle

The concept of the product that passes through changes