Setting Product Strategy 12 Setting Product Strategy Marketing Management, 13th ed

Chapter Questions What are the characteristics of products and how do marketers classify products? How can companies differentiate products? How can a company build and manage its product mix and product lines? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-2

Chapter Questions (cont.) How can companies combine products to create strong co-brands or ingredient brands? How can companies use packaging, labeling, warranties, and guarantees as marketing tools? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-3

Caterpillar: A Great Product Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-4

What is a Product? A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-5

Figure 12.1 Components of the Market Offering Value-based prices Attractiveness of the market offering Product features and quality Services mix and quality Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-6

Figure 12.2 Five Product Levels Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-7

The Wedding Market is a MetaMarket Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-8

Product Classification Schemes Durability Tangibility Use Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-9

Durability and Tangibility Nondurable goods Durable goods Services Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-10

Consumer Goods Classification Convenience Shopping Specialty Unsought Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-11

Industrial Goods Classification Materials and parts Capital items Supplies/ business services Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-12

Product Differentiation Product form Features Customization Performance Conformance Durability Reliability Repairability Style Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-13

Dunkin’ Donuts’ Differentiation Click on the video icon to see a clip on product differentiation at Dunkin’ Donuts. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-14

Design Differentiation Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-15

Service Differentiation Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-16

Maintenance and Repair Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-17

The Product Hierarchy Item Product type Product line Product class Product family Need family Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-18

Product Systems and Mixes Product mix Product assortment Depth Length Width Consistency Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-19

Product Line Analysis Core product Staples Specialties Convenience items Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-20

Figure 12.3 Product Item Contributions to a Product Line’s Total Sales and Profits Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-21

Figure 12.4 Product Map Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-22

Line Stretching Down-Market Stretch Up-Market Stretch Two-Way Stretch Video icon links to Marriott video on Marriott’s downward stretch. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-23

Line Filling Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-24

Pruning Pruning weak brands can strengthen the remaining brands in the line Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-25

Product-Mix Pricing Product-line pricing Optional-feature pricing Captive-product pricing Two-part pricing By-product pricing Product-bundling pricing Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-26

Product Line Pricing Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-27

Two-Part Pricing Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-28

Co-branding Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-29

Ingredient Branding Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-30

What is the Fifth P? Packaging, sometimes called the fifth P, is all the activities of designing and producing the container for a product. Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-31

Factors Contributing to the Emphasis on Packaging Self-service Consumer affluence Company/brand image Innovation opportunity Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-32

Innovations in Packaging Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-33

Packaging Objectives Identify the brand Convey descriptive and persuasive information Facilitate product transportation and protection Assist at-home storage Aid product consumption Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-34

Functions of Labels Identifies Grades Describes Promotes Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-35

Warranties and Guarantees Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-36

Marketing Debate With products, is it form or function? Take a position: Product functionality is the key to brand success. or 2. Product design is the key to brand Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-37

Marketing Discussion Consider the different means of differentiating products and services. Which ones have the most impact on your choices? Why? Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall 12-38