PRODUCT STRATEGY

SOURABH KHEDKAR, LALJI A.S.

SHUBHAM DWIVEDI

TOPIC OVERVIEW

“PRODUCT” AS CONCEPT & CLASSIFICATION PRODUCT SYSTEMS & MIXES MANAGING PRODUCT LINES PRODUCT-MIX PRICING PACKAGING AND LABELS

“PRODUCT” AS CONCEPT

What is a product? Anything offered to the market To satisfy want or need

• Goods, services, experiences, events, persons, places, organizations and ideas.

Most important element of marketing mix

Market offering Customer will judge the offering by three

basic elements• Product features and quality• Service mix and quality• price

Product levels In planning its market offering, the marketer

needs to address five product levels .Each level adds more customer value, and the five constitute a customer-value hierarchy:

CORE BENEFIT • The service or benefit the customer is really buying.

• A hotel guest is buying rest and sleep.

• The purchaser of a drill is buying holes.

• Marketers must see themselves as benefit providers.

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

CORE BENEFIT • The marketer must turn the core benefit into a basic product.

• Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and closet.

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

CORE BENEFIT • The marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product.

• Hotel guests minimally expect a clean bed, fresh towels, working lamps, and a relative degree of quiet

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

CORE BENEFIT • The marketer prepares an augmented product that exceeds customer expectations.

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

CORE BENEFIT • `The potential product, which encompasses all the possible augmentations and transformations the product or offering might undergo in the future.

BASIC PRODUCT

EXPECTED PRODUCT

AUGMENTED PRODUCT

POTENTIAL PRODUCT

PRODUCT CLASSIFICATION

Marketers classify product based on • Durability and Tangibility• Use

Consumer Industrial

Durability and tangilbility• Non-durable goods

Tangible goods normally consumed in one or few uses. Purchased frequently

• Durable goods Tangible goods that survive many uses. They require more seller guarantee and

command higher margin.

Intangible products

• Services Intangible Requires more quality control, supplier credibility

and adaptability

Consumer goods classification• Convenience goods

goods purchased frequently and immediately with minimum effort

Staples, impulse goods and emergency goods

• Shopping goods Those goods consumer characteristically compares on such bases as

suitability, quality, price, and style. Homogeneous and heterogeneous

• Specialty goods

Those goods having unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort.

• Unsought goods Those goods the consumer does not know about or normally

think of buying, such as smoke detectors, grave stones.

Industrial goods classification

Material and parts Capital items Supplies and business services

Industrial goods classification• Materials and parts

Materials and parts are goods that enter the manufacturer’s product completely

Raw materials o Farm products

o Natural products

• Supplies and business services

Manufactured materials Component materials

Component parts

• Capital items Capital items are long-lasting goods that facilitate developing or the finished product.

Installations

equipment

Supplies and business services supplies are two kinds

maintenance items and repair items operating supplies

business services include maintenance and repair services (window cleaning, copier

repair) Business advisory services (legal, advertising)

Product and service differentiation product differentiation

Form

Features

customizations

Performance quality

Conformance quality

Durability Reliability

Reparability

style

Service differentiation

Ordering ease

Delivery

Installation

Customer rating

Customer consulting

Maintenance and repair

Returns

Design Design is the totality of features that affect how a product

looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals

to both our rational and emotional sides.

e.g.. The product strategy of Hawkins is to span wide range of cooking products with innovative product designs.

PRODUCT SYSTEMS & MIXES

PRODUCT SYSTEMS & MIXES

Product Systems

Product Mixes

Product Systems Properties

Product System

Is a group of diverse but related items that functions in compatible manner

Why its call Product System?? Eg. Mobile Phone Industry, Automobile Industry

Product Mixes

Set of all products and items a particular seller offers for sales

Product Mixes Properties

Product Mixes LENGTH

WIDTH

DEPTH

CONSISTANCY

• NO.DIFFERENT PRODUCT LINE COMPAINY OFFERS

WIDTH

• TOTAL NO. OF PRODUCT IN SINGLE LINE

LENGTH

• NO. VARIANTS OF EACH PRODUCT IN LINEDEPTH

• HOW CLOSELY RELATED PRODUCT LINES ARE

CONSISTANCY

HUL Product Mixes Width and Line Length

HUL Product Mixes Width and Line Length

P&G Product Mixes Width and Line Length

Nestle Product Mixes Width and Line Length

ITC Product Mixes Width and Line Length

Emami Product Mixes Width and Line Length

MANAGING PRODUCT LINES

MANAGING PRODUCT LINESMANAGING PRODUCT

LINES

LINE LENGTH

LINE STRETCHING

LINE FILLING

LINE ANALYSIS

SALES AND PROFITS

MARKET PROFILE

Managing “Sales and Profit” can help determine which items to Build, Maintain, Promote or Discontinue.

Sales and Profits (Cont’d)

Product line managers must review how the line is positioned against competitor’s line to

enhance “Market Profile”

Market Profile (Cont’d)

Objective behind managing product line length

To induce up-selling To facilitates cross-selling Protects against economic ups and downs To use excess manufacturing capacity To satisfy specific customer demands

line stretching

Occurs when company lengthens its product line beyond its current range

Ways of line stretching

• Introduction of lower price line than current offering to enter low-end segment

Down- Market Stretch

• Introduction of higher price line than current offering to enter high end market

Up-Market Stretch

• Stretching in both ways to gain market dominance

Two Way Stretch

line Stretching Illustration

Line filling

Lengthening product line by adding more item within present range

Plugging holes to keep out competitors Overdone result in Cannibalization and Customer

Confusion BMW’s evolution one brand five model to 3

brands 14 Series Good Knight journey to market leader

Product line management

Line Modernization: Introducing advance product

Line Featuring: Introducing Special edition’s Line pruning: Cutting Product Line

PRODUCT-MIX PRICING

PRODUCT-MIX PRICING STRATEGIESPRICING

PRICE IS THE VALUE THAT IS PUT TO A PRODUCT OR SERVICE IT IS THE RESULT OF A COMPLEX SET OF CALCULATIONS, RESEARCH AND UNDERSTANDING AND RISK TAKING ABILITY. PRICING STRATEGY TAKES INTO ACCOUNT SEGMENTS, ABILITY TO PAY, MARKET CONDITIONS, COMPETITOR ACTIONS, TRADE MARGINS AND INPUT COSTS.

Product-Mix Pricing Strategies

Product line pricing takes into account the cost difference between products in the line, customer evaluation of their features, and competitors’ prices.

Product-Mix Pricing Strategies

Optional product pricing takes into account optional or accessory products along with the main product.

New car with ordinary rims

8,00,000Rs New car with sports rims8,60,000Rs

Product-Mix Pricing Strategies

Captive product pricing involves products that must be used along with the main product.

Two-part pricing is where the price is broken into Fixed fee Variable usage fee

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Product –Mix Pricing Strategies

Product bundle pricing combines several products at a reduced price.

1 bottle: 60Rs Bundled 2 bottles: 100Rs

Product-Mix Pricing Strategies

Pricing Strategies Product line pricing Optional product pricing Captive product pricing By-product pricing Product bundle pricing

PACKAGING AND LABELS

PACKAGINGThe package refers to physical container or wrapping for a

productIt is an integral part of product planning and promotion

10% of the retail price is spent on developing, designing, and producing just the package

Companies sometimes change packaging to update their image and reach a new market

Tropicana Famous Packaging Failure:

PepsiCo experienced great success with its Tropicana brad, acquired in 1998.Then in 2009, the company launched a redesigned package to “Refresh and modernize” the brand. The goal was to create an “emotional attachment with design and trumpeting the natural fruit goodness.

After the new packing and design, Tropicana hit by record 20percent sales dropped in 2months, PepsiCo management announced it would revert to old packaging.

FACTORS INFLUENCING PACKAGING

Self Service An increasing number of products are sold on a self –

serve basis. In an average supermarket, which may stock 5,000 items, the typical shopper passes some 50-60 products per minute.

Effective package must perform many sales tasks. Attract attentions, describe the products features, create consumer confidence, and make a favorable overall impression.

Factors Influencing Packaging Cont’d

Consumer Affluence

Rising affluence means consumers are willing to pay a little more for the convenience, appearance, dependability, and prestige of better packages.

Factors Influencing Packaging Cont’d

Company And Brand Image

Packages contribute to instant recognitions of the company or brand. In the store, they can create a billboard effect.

Factors Influencing Packaging Cont’d

Innovation Opportunity

Unique or innovative packaging such as resalable spouts can bring big benefits to consumers and profits to producers.

OBJECTIVES OF PACKAGING

1. Promoting and Selling the Product

2. Defining Product Identity

3. Providing Information

4. Expressing Customer Needs

5. Ensure Safe Use

6. Protecting the Product

1. Promoting and Selling the Product

Attractive, colorful, and visually appealing packages have promotional value

A well designed

package is a powerful selling device because it helps the product stand out from its competitors.

2. Defining Product Identity

Packaging is sometimes used to promote and image such as prestige, convenience, or status

Can be a crucial part of the marketing strategy, particularly in advertising

3. Providing Information Gives customer useful

information on: directions for using the

productits contentsproduct guaranteesnutritional valuepotential hazards

4. Expressing Customer Needs When designing packages, companies analyze

customer lifestyles and create packaging that meets their needs for size and convenience.

Packages often come in various sizes Family size Single serving

5. Ensure Safe Use Proper packaging helps to eliminate potential

injuries or misuse of a product Formerly glass containers are now plastic Childproof caps Tamper resistant packages

Blister packs – packages with preformed plastic molds surrounding individual items arranged on a backing

6. Protecting the Product Must protect during shipping, storage, and

display Prevent or discourage from tampering Prevent shoplifting Protect against breakage and spoilage

LABELINGLabel – an identification tag, wrapper, seal,

imprinted message that is attached to a product or its package

KINDS OF LABELS1. Brand Label – gives brand name and trademark

or logo

Kinds of Labels Cont’d

Descriptive Label – give information about product use, construction, care, performance, and other features

Kinds of Labels Cont’d Grade Label – Some products have given grade

label. Grade label shows the grade of the product. It shows the quality of products by words, letters, or figure.

References and Sources

A Marketing Management: A South Asian Perspective By Kotler, Keller, Koshy, Jha

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