The learning objectives

Product Product classification Product life-cycle strategies New-product Development Product-line decision Brands decisions

1. What is product?

Anything that can be offered to a market for attention,acquisition,use,or consumption that might satisfy a want or need.

Components of theMarket Offering

Value-based prices

Services mixand quality

Product featuresand quality

Attractiveness ofthe market offering

2. Product classifications

Consumer products Industrial products

Consumer product

Convenience products Shopping products Specialty products Unsought products

Specialty ProductsSpecialty Products Unsought ProductsUnsought Products

Shopping Shopping ProductsProducts

Buy less frequently> Gather product information> Fewer purchase locations> Compare for:

• Suitability & Quality • Price & Style

Convenience ProductsConvenience Products

Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations

Products consumers don’t demand normally. Require much advertising &personal selling

Buy frequently & immediately> Low priced> Many purchase locations> Includes:

• Staple goods• Impulse goods• Emergency goods

Consumer-Goods Classification

Industrial Product

Material and parts Capital items Supplies and services

6.Product-line decision

Product mix Product-line analysis Product –line length

Product mix(assortment)

The set of all products and items that a particular seller offers for sale.

A company’s product mix has a certain width,length,depth, and consistency.

Product Mix Concepts:

Width:how many different product lines.

Length:the total number of items.

Depth:how many variants are offered of each product in the line.

Consistency:how closely related the various product lines are in end use,production requirement,distribution channels, or some other way.

Product Mix & Product Line- HUL

Personal wash Personal wash : Lux , lifebuoy , Liril , Hamam , Breeze , Dove ,

Pears , Laundry Laundry : Surf Excel , Rin , Wheel Skin Care Skin Care : Fair and Lovely , Ponds Hair Care Hair Care: Sunsilk , Clinic Plus Oral care Oral care : Pepsodent , Close Up Color Cosmetic Color Cosmetic : Lakme Beverage Tea : Broke Bond , Lipton Coffee: Bru Foods Foods: Kissan , Knorr Annapurna Ice-Cream Quality Walls

Product Mix

WidthWidth - number of different

product lines

WidthWidth - number of different

product lines

LengthLength - total number of itemswithin the lines

LengthLength - total number of itemswithin the lines

Depth Depth - number of versions of each product

Depth Depth - number of versions of each product

Product Mix - Product Mix - all the product

lines offered

Product Mix - Product Mix - all the product

lines offered

Co

nsi

sten

cy

Product-line analysis

Sales and profit Market profile

Product-Line Length

Line Stretching Downmarket (TATA Nano) Upmarket (Maruti 800 to Maruti SX4) Two-way

Line Filling Line Modernization Line Featuring & Line Pruning

Trading Up and Trading Down

Trading up:Trading up: Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products.

Trading down:Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status.

3.Product Life Cycles (PLC)

The course of a product’s sale and profit over it lifetime.It involves five distinct stages:product development,introduction,growth,maturity,and decline.

Sales & Profit Life Cycles

IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline

TimeTimeSal

esS

ales

&& p

rofi

tsp

rofi

ts

Product Life Cycle Stages

IntroductionIntroduction—most risky and expensive.

GrowthGrowth—both sales and profits rise, often rapidly.

MaturityMaturity—sales increase at a decreasing rate and profits decline.

DeclineDecline—demand drops, often because of another product development.

Strategic Implications of the Stages

introductory stage:introductory stage: developing the market, creating awareness, reaching the innovators

growth stage:growth stage: competition begins, sales grow quickly, profits peak, market penetration

maturity stage:maturity stage: competition is intense, sales slow down, differentiated product offerings, customers are brand loyal, few new entrants

decline stage:decline stage: customers move to other options, competitors leave, profits are low, consider exit

Characteristics of Introduction Stage

Low sales High cost per customer Zero or Negative profits Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Awareness building advertising

Four IntroductoryPrice-Promotion Strategies

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-skimmingskimmingstrategystrategy

Rapid-Rapid-penetrationpenetration

strategystrategy

Rapid-Rapid-penetrationpenetration

strategystrategy

Slow-Slow-penetrationpenetration

strategystrategy

Slow-Slow-penetrationpenetration

strategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

Slow-Slow-skimmingskimmingstrategystrategy

PricePrice

LowLow

HighHigh

PromotionPromotionHighHigh LowLow

Characteristics of the Growth Stage

Rapidly rising sales

Average cost per customer

Rising profits

Offer product extensions

Target new market segments

Characteristics of Maturity stage Peak sales and profits

Increased advertising and trade and consumer promotion.

Frequent markdowns

Market nicher develops.

Market Modification Strategy

Marketing Mix Modification Strategy

Characteristics of Declining Stage

Declining sales& Profits

Phase out unprofitable outlets

Cut on promotional expenditure

Liquidating, Divesting and Harvesting the business

Special categories of PLC (Style, Fashion, Fad)

Style is a basic/distinctive mode of expression appearing in a field of human endeavors.-Once a style is invented, it can last for generations.

Fashion is a currently accepted/popular style in a given field.

Fads are fashion that comes quickly into the public eye, are adopted with great zeal, peak easily and decline fast

5.new-product development

What is new product? Major stages in new product

development

What is new product?

Original products Product improvements Product modifications New brands that the firm develops

through its own research and development efforts

Major stages in new product development Idea generation Idea screening Concept development and testing Marketing strategies Business analysis Product development Test marketing Commercialization

New Product Development

Process

IdeaIdeaGenerationGeneration

ConceptConceptDevelopmentDevelopmentand Testingand Testing

MarketingMarketingStrategyStrategy

DevelopmentDevelopment

IdeaIdeaScreeningScreening

BusinessBusinessAnalysisAnalysis

ProductProductDevelopmentDevelopment

MarketMarketTestingTesting

CommercializationCommercialization

Probability of Success

ProbabilityProbabilityof technicalof technicalcompletioncompletion

OverallOverallprobabilityprobabilityof successof success==

Probability ofProbability ofcommercializationcommercialization

given technicalgiven technicalcompletioncompletion

XXProbability ofProbability of

economiceconomicsuccess givensuccess given

commercializationcommercializationXX

Concept Development & Testing

1. Develop Product Ideas into Alternative Product Concepts

1. Develop Product Ideas into Alternative Product Concepts

2. Concept Testing - Test the ProductConcepts with Groups of Target Customers

2. Concept Testing - Test the ProductConcepts with Groups of Target Customers

3. Choose the Best One3. Choose the Best One

High price/ozHigh price/oz..

Lo

w in

Lo

w in

cal

ori

esca

lori

es

LowLow price/oz.price/oz.

Hig

h in

calories

Hig

h in

calories

Product & Brand Positioning

((a)a) Product-positioningProduct-positioningmapmap

(breakfast market)(breakfast market)

ExpensiveExpensive

Slo

wS

low

InexpensiveInexpensive

Qu

ickQ

uick

Baconandeggs

Pancakes Instantbreakfast

Coldcereal

Hotcereal

b)b) Brand-positioningBrand-positioningmapmap

(instant breakfast market(instant breakfast market))

Brand C

Brand B

Brand A

Conjoint AnalysisBrand nameBrand name

----------

Uti

lity

Uti

lity

1.01.0

00 | | |K2R Glory BissellK2R Glory Bissell

Retail PriceRetail Price

Uti

lity

Uti

lity

----------

1.01.0

0| | |

$1.19 $1.39 $1.59$1.19 $1.39 $1.59

Good Housekeeping Seal?Good Housekeeping Seal?

Uti

lity

Uti

lity

1.01.0----------

00 | |No YesNo Yes

Uti

lity

Uti

lity

Money-BackMoney-BackGuarantee?Guarantee?

1.01.0----------00

| |No YesNo Yes

Consumer-Goods Market Testing

Sales-Wave

ResearchTest offering trail to

a sample of consumers in

successiveperiods.

Sales-Wave

ResearchTest offering trail to

a sample of consumers in

successiveperiods.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

2 1/2%Innovators

13 1/2%Early

adopters

34%Early

majority

34%Late

majority

16%Laggards

Time of adoption innovations

Adopter Categorization of the Basis of Relative Time of Adoption of Innovations

6.Brand Decision

What is brand? Band decision

What is brand?

Brand is a name,term,sign,symbol,or design,or a combination of them,intended to identify the goods or services of one seller or group of sellers and differentiate them from those of competitors.

What is a Brand?

Attributes Benefits Values

Culture

User

Personality

An Overview ofBranding Decisions

BrandingDecision

•Brand

•No brand

Brand-SponsorDecision

•Manu-facturerbrand

•Distribu-tor(private)brand

•Licensedbrand

Brand-Name

Decision

•Individualbrandnames

•Blanketfamilyname

•Separatefamilynames

Brand-Repositioning

Decision

•Reposi-tioning

•Noreposi-tioning

Brand-StrategyDecision

•Lineextension

•Brandextension

•Multi-brands

•Newbrands

•Cobrands

Good Brand Names:

SuggestProductBenefits

Distinctive

Lack PoorForeign

LanguageMeanings

SuggestProductQualities

Easy to:PronounceRecognizeRemember

Brand Strategies

BrandExtension

New

Bra

nd

Nam

e

Product Category

LineExtension

Existing

Existing

MultibrandsNew NewBrands

Why Package Crucial as a Marketing Tool

Self-service Consumer affluence Company & brand image Opportunity for innovation

Labels

IdentifyIdentifyIdentifyIdentify

DescribeDescribeDescribeDescribe

PromotePromotePromotePromote