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 the Market Offering Value-based prices Services mix and quality Product features and quality Attractiveness of the market offering

2. Product classifications Consumer products Industrial products

Consumer product Convenience products Shopping products Specialty products Unsought products

Specialty Products Unsought Products Shopping Products Buy less frequently > Gather product information > Fewer purchase locations > Compare for: Suitability & Quality Price & Style Convenience 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 Width Width - number of different product lines Length Length - total number of items within the lines Length Length - total number of items within the lines Depth Depth - number of versions of each product Product Mix - all the product lines offered Product Mix - all the product lines offered Consistency

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,maturi ty,and decline.

Sales & Profit Life CyclesIntroductionGrowthMaturityDecline Time Sales & profits

Product Life Cycle Stages Introduction Introduction—most risky and expensive. Growth Growth—both sales and profits rise, often rapidly. Maturity Maturity—sales increase at a decreasing rate and profits decline. Decline Decline—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 Introductory Price-Promotion Strategies Rapid-skimmingstrategy Rapid-penetrationstrategySlow-penetrationstrategy Slow-skimmingstrategy Price Low HighPromotionHighLow

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 IdeaGenerationConceptDevelopment and Testing MarketingStrategyDevelopment IdeaScreening BusinessAnalysis ProductDevelopment MarketTesting Commercialization

Probability of Success Probability of technical completion Overallprobability of success = Probability of commercialization given technical completionX Probability of economic success given commercializationX

Concept Development & Testing 1. Develop Product Ideas into Alternative Product Concepts 1. Develop Product Ideas into Alternative Product Concepts 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 2. Concept Testing - Test the Product Concepts with Groups of Target Customers 3. Choose the Best One

High price/oz. Low in calories Low price/oz. High in calories Product & Brand Positioning (a) Product-positioning map (breakfast market) ExpensiveSlow Inexpensive Quick Bacon and eggs Pancakes Instant breakfast Cold cereal Hot cereal b) Brand-positioning map (instant breakfast market) Brand C Brand B Brand A

Conjoint Analysis Brand name -- Utility | | | K2R Glory Bissell Retail Price Utility | | | $1.19 $1.39 $1.59 Good Housekeeping Seal? Utility | No Yes UtilityMoney-BackGuarantee? | No Yes

Consumer-Goods Market Testing Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Sales- Wave Research Test offering trail to a sample of consumers in successive periods. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Simulated Test Market Test in a simulated shopping environment to a sample of consumers. Standard Test Market Full marketing campaign in a small number of representative cities. Standard Test Market Full marketing campaign in a small number of representative cities. Controlled Test Market A few stores that have agreed to carry new products for a fee. Controlled Test Market A few stores that have agreed to carry new products 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? AttributesBenefitsValues Culture User Personality

An Overview of Branding Decisions Branding Decision Brand No brand Brand- Sponsor Decision Manu- facturer brand Distribu- tor (private) brand Licensed brand Brand- Name Decision Individual brand names Blanket family name Separate family names Brand- Repositioning Decision Reposi- tioning No reposi- tioning Brand- Strategy Decision Line extension Brand extension Multi- brands New brands Cobrands

Good Brand Names: Suggest Product Benefits Distinctive Lack Poor Foreign Language Meanings Suggest Product Qualities Easy to: Pronounce Recognize Remember

Brand Strategies Brand Extension New Brand Name Product Category Line Extension Existing Multibrands New Brands

Why Package Crucial as a Marketing Tool Self-service Consumer affluence Company & brand image Opportunity for innovation

Labels IdentifyIdentify DescribeDescribe PromotePromote