1. MARKETING MANAGEMENT 12 Setting Product Strategy KotlerKeller

2. 12-2 Product Anything that can be offered to a market to satisfy a want or need.

3. 12-3 Five Product Levels n Core product n Actual Product n Augmented product

4. 12-4 Product Classification Schemes n Durability n Tangibility n Use

5. 12-5 Durability and Tangibility n Nondurable goods n Durable goods n Services

6. Consumer Products … end users. Durablegoods Non durable goods Services Durable & Non Durable Consumer Products Short Time of consumption

7. The Product Classification Sequence CONSUMPTION BEHAVIOR (Leads to) PRODUCT CLASSIFICATION Level of effort Level of reward Convenience Shopping Specialty (Which leads to) MARKETING MIX STRATEGY Conceptual Model

8. Consumer Product Goods Classification (M. Copeland) Convenience Products Shopping Products Specialty Products Is based on Level of Effort expended.. To satisfy information needs & buying motives

9. CONVENIENCE GOODS Staples - goods purchased on a regular basis (ex. milk, eggs) Staples - goods purchased on a regular basis (ex. milk, eggs) Emergency goods - purchased when the need is urgent (ex. umbrella, boots) Emergency goods - purchased when the need is urgent (ex. umbrella, boots) Impulse purchases – no conscious pre planning Impulse purchases – no conscious pre planning MILK Convenience goods – consumers use minimal effort for frequently purchased low cost items * Ordering a mixed drink in a bar * 70 % of cheese purchases (Donut)

10. Convenience Products Marketing Strategy Principles - Intensive distribution Provide convenient locations and hours of operation - Self-Service/Pre sold Brand Name - Low Markup - Substantial substitution TOM’S MARKET Open 24 hrs.

11. Shopping Products Shopping goods - consumers make a considerable effort to evaluate … Shopping goods - consumers make a considerable effort to evaluate … Consumers make product comparison(s), They seek information before purchase, they are not impulsive Moderate substitutions are made Products last a considerable time Monetary & social costs may be high

12. TV’s As a Shopping Product (2007 ---- 1950’s) Attribute-based Price-based PICTURE SIZE WARRANTY REMOTE CONTROL LOW PRICE Brand Name Plasma –LCD screen observation Homogeneous products select on price Heterogeneous products select on benefits

13. Marketing Strategy Principles - Product Differentiation (Quality,design,etc.) - Selective Distribution - Brand Name Focus - Moderate Markup - Somewhat Knowledgeable sales force n Homogeneous shopping goods have numerous substitutes which are similar in quality and features but they are different in price. Principle: you need to find a way to make your good stand out and make people want it (product differentiaion) Shopping Good Principles

14. Specialty Products n infrequently (seldom) purchased n relatively expensive n little or no substitution n High involvement, well informed consumers n High “visibility” to “others” Specialty goods - consumers make a significant effort to acquire the desired brand. Specialty goods - consumers make a significant effort to acquire the desired brand.

15. Specialty Products Marketing Strategy Principles - Have a knowledgeable sales force (pro’s) - Exclusive Distribution - High Markup/exceptional service - Be Innovative/”cutting edge” - Maintain a differential advantage

16. Consumer Behavior Product Classification Market Strategy n Intensive Distribution(convenience) n Selective Distribution (shopping) n Exclusive Distribution (specialty) Product Category Market Coverage

17. 12-17 Industrial Goods Classification n Materials and parts (raw material + manufactured material-component material, component part)) n Capital items(Building, machine) n Supplies/business services

18. Production Based n Installations (Capital Projects) n Raw Materials  n Component Parts  Supplies maintenance & repair n Business Services Operations Based Business Products …used to create other products

19. What Do You Think? n Do you think the consumer product classification sequence has an impact on marketing strategy?

20. 12-20 Line Stretching n Down Market Stretch n Up-Market Stretch n Two-Way Stretch

21. Product Portfolio Concept n.. The sales revenue (cash flow) for the complete mix of products is emphasized rather than (isolated) problems of individual products n.. Focus on the interrelatedness among products n Issue: Cannibalism A small percentage of the organization’s products contribute to a large % of profits.(80/20 rule) A small percentage of the organization’s products contribute to a large % of profits.(80/20 rule)Principles: Protect best sellers Protect best sellers Delete marginal products Delete marginal products Reallocate marketing support Reallocate marketing support