1. 11 Setting Product Strategy

2. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-2 Chapter Questions  What are the characteristics of products and how do marketers classify products?  How can companies differentiate products?  Why is product design important and what factors affect a good design?

3. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-3 Chapter Questions  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?

4. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-4 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.

5. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-5 Figure 11.1 Components of the Market Offering

6. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-6 Figure 11.2 Five Product Levels

7. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-7 Product Classification Schemes Durability Tangibility Use

8. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-8 Durability and Tangibility Nondurable goods Durable goods Services

9. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-9 Consumer Goods Classification Convenience Shopping Specialty Unsought

10. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-10 Industrial Goods Classification  Materials and parts  Capital items  Supplies/business services

11. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-11 Product Differentiation  Product form  Features  Customization  Performance  Conformance  Durability  Reliability  Repairability  Style

12. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-12 Products can be differentiated in many ways including: Form, features, customization, performance quality, conformance quality, durability, reliability, repairability, and style. Many products can be differentiated in form—the size, shape, or physical structure of a product. Most products can be offered with varying features that supplement their basic function. Marketers can differentiate products by customizing them. Most products occupy one of four performance levels: low, average, high, or superior. Performance quality is the level at which the product’s primary characteristics operate. Buyers expect a high conformance quality, the degree to which all produced units are identical and meet promised specifications. Durability, a measure of the product’s expected operating life under natural or stressful conditions, is a valued attribute for vehicles, kitchen appliances, and other durable goods. Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period. Repairability measures the ease of fixing a product when it malfunctions or fails. Ideal repairability would exist if users could fix the product themselves with little cost in money or time. Style describes the product’s look and feel to the buyer. It creates distinctiveness that is hard to copy.

13. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-13 Service Differentiation  Ordering ease  Delivery  Installation  Customer training  Customer consulting  Maintenance and repair  Returns

14. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-14 Design

15. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-15 The Product Hierarchy Need family Product family Product class Product line Product type Item

16. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-16 1.Need family—The core need that underlies the existence of a product family. Example: security. 2. Product family—All the product classes that can satisfy a core need with reasonable effectiveness. Example: savings and income. 3. Product class—A group of products within the product family recognized as having a certain functional coherence, also known as a product category. Example: financial instruments. 4. Product line—A group of products within a product class that are closely related because they perform a similar function, are sold to the same customer groups, are marketed through the same outlets or channels, or fall within given price ranges. A product line may consist of different brands, or a single family brand, or individual brand that has been line extended. Example: life insurance. 5. Product type—A group of items within a product line that share one of several possible forms of the product. Example: term life insurance. 6. Item (also called stock-keeping unit or product variant)—A distinct unit within a brand or product line distinguishable by size, price, appearance, or some other attribute. Example: Prudential renewable term life insurance.

17. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-17 Product-Mix Pricing  Product-line pricing  Optional-feature pricing  Captive-product pricing  Two-part pricing  By-product : wheat germ is a byproduct of wheat milling, and orange and lemon oil are byproducts of citrus fruit being processed into juice. Sawdust is a byproduct of the lumber industry, and feathers are a byproduct of poultry processing.  Product-bundling pricing

18. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-18 What Is Cobranding? In co-branding—also called dual branding or brand bundling—two or more well-known brands are combined into a joint product or marketed together in some fashion.

19. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-19 What is the Fifth P? Packaging, sometimes called the 5 th P, is all the activities of designing and producing the container for a product.

20. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-20 Factors Contributing to the Emphasis on Packaging  Self-service  Consumer affluence  Company/brand image  Innovation opportunity

21. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-21 Packaging Objectives

22. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-22 Functions of Labels  Identify the product or brand  Grade it  Promote it

23. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-23 For Review  What are the characteristics of products and how do marketers classify products?  How can companies differentiate products?  Why is product design important and what factors affect a good design?

24. Copyright © 2013 Dorling Kindersley (India) Pvt Ltd. Authorized adaptation from the United States edition of Marketing Management, 14e. 11-24 Also for Review  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?