Blekinge Institute of Technology SE Karlskrona MARKETING MANAGEMENT Chaudhry Muhammad Nadeem Faisal Cell: B- Url:

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy  What are the characteristics of products and how can they be classified?  How can companies differentiate products?  How can a company build and manage its product mix and product lines?  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?

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product functionality is the key to brand success versus Product design is the key to brand success Product Anything that can be offered to a market to satisfy a want or need. Components of the Market Offering

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product Levels: The Customer Value In planning its market offering, marketers needs to address 5 product levels. Each level adds more customer value, and the five constitute a customer value hierarchy Five Product Levels

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Five Product Levels 1. Core Benefit-the fundamental need or want that consumers satisfy by consuming the product or service. 2. Generic Product-a version of the product containing only those attributes or characteristics absolutely necessary for it to function. 3. Expected Product-the set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. 4. Augmented Product-inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors. 5. Potential Product-all the augmentations and transformations a product might undergo in the future.

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Kotler noted that much competition takes place at the Augmented Product level rather than at the Core Benefit level or, as Levitt put it: 'New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Kotler noted that much competition takes place at the Augmented Product level rather than at the Core Benefit level or, as Levitt put it: 'New competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value Product Classification Schemes Durability Use Tangibility

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Durability and Tangibility Consumer Goods Classification  convenience products: low price, low risk, consumer is not prepared to shop around, widely available in a variety of retail stores  shopping products: consumer will want to compare quality and price, risk and price are higher, available in selected retail outlets  specialty products: consumer has strong brand preferences, risk is high, prepared to seek out exclusive retail outlets Nondurable goods Services Durable goods

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Classifying Business Products  raw materials: unprocessed, become part of other manufactured products  manufactured parts and materials: processed products that become part of other products  installations: major buildings and equipment  accessory equipment: used in operations, include computers, desks, tools  operating supplies: low value, used by most firms, convenience products for businesses

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product Differentiation Service Differentiation  Product form Ordering ease  Features Delivery  Performance Installation  Conformance Customer training  Durability Customer consulting  Reliability Maintenance  Reparability  Style  Design

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Design Differentiation

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product Hierarchy need - core need product family - all products satisfying a core need product class - functional coherence within family product line - closely related within a class {same customers, outlets, prices} product type - different forms of same product brand - one manufacturer’s offering item - one unit within a brand

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy 1.Need family. Information exchange. Communications. 2. Product family. Devices for electronic information exchange. Wireless information devices. 3. Product category (class). GSM devices. 4. Product line. GSM Smartphones. 5. Product type. GSM Smartphones with Symbian OS. 6. Brand. Nokia. 7. Item. Nokia N70.

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product Systems and Mixes  Product system (group of diverse but related items that function in a compatible manner)  Product mix  Depth  Length  Width  Consistency

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product Mixes Width number of product lines Length Total number of items in a mix depth number of items in a line (how many variants) consistency similarity of product lines in terms of production and marketing

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product Line Analysis  Sales and profit  Market profile- How the line is positioned against competitors’ lines. -The product map shows which competitors’ items are competing against company’s items. -It identifies market segments Product-line length  Line stretching  Line filling  Line modernisation, featuring and pruning

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Line stretching Down-Market Stretch, Up-Market Stretch, Two-Way Stretch Line Filling

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product-Mix Pricing  Product-line pricing  Optional-feature pricing  Captive-product pricing  Two-part pricing  By-product pricing  Product-bundling pricing

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product-Mix Pricing  Product-line pricing  Optional-feature pricing  Captive-product pricing  Two-part pricing  By-product pricing  Product-bundling pricing Packaging All the activities of designing and producing the container for a product

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Packaging has been influenced by  Self-service  Consumer affluence  Company/brand image  Innovation opportunity Innovations in Packaging PACKAGING IS THE EXPRESSION OF THE SOUL OF EVERY PRODUCT

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy What is innovation? Anything which creates or improve profitable business

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Product-Mix Pricing  Product-line pricing  Optional-feature pricing  Captive-product pricing  Two-part pricing  By-product pricing  Product-bundling pricing Packaging All the activities of designing and producing the container for a product

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Functions of Labels  Identifies  Grades  Describes  Promotes

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy Functions of Labels  Identifies  Grades  Describes  Promotes Warranties and Guarantees Assurance to consumers

Blekinge Institute of Technology SE Karlskrona Setting Product Strategy References P. Kotler, Marketing Management, 13 th ed, Pearson, 2009