1. Setting Product Strategy12
Setting Product Strategy
Marketing Management, 13th ed

2. 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

3. 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

4. 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

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

6. Product Classification Schemes
Durability
(Long lasting)
Tangibility
(Touchable)
Use
(Consumer / Industrial)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

7. Durability and Tangibility
Nondurable Goods
(soft drinks & soaps)
Durable Goods
(refrigerators & clothing)
Services
(intangible, inseparable,
variable & perishable)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

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

9. Convenience Goods Frequently, immediately, minimum effort (soft drinks & soaps)
Staples-goods consumer purchase on regular basis like Colgate toothpaste & Lux soap
Impulse-without any planning or search like chocolates, candies & batteries
Emergency-when a need is urgent umbrellas, sweaters in Muree
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

10. Shopping Goods suitability, quality, price & style furniture, clothing, used cars, appliances
Homogeneous shopping goods-similar in quality but different enough in price to justify shopping comparison (tiers, stereo & TV)
Heterogeneous shopping goods-differ in product features and services that may be more important than price. Seller caries wide assortment to satisfy individual taste & well trained sales people to guide customers (major appliances, designer furniture, high tech equip.)

11. Specialty Goods
Have unique characteristics or brand identification for which a sufficient number of buyers are willing to make a special purchasing effort. Examples include cars, photographic equipment. A Mercedes is a specialty good because interested buyer will travel far to buy one. Specialty goods don’t require comparison
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

12. Unsought Goods
Those the consumers does not know about or does not normally think of buying, such as smoke detectors. Classic examples are life insurance, encyclopedias and reference books. They require advertising and personal selling support
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

13. Industrial Goods Classification
Materials and parts
Raw materials & manufactured parts
Supplies/
business services
Maintenance/repair items
& Operating supplies
Capital items
Building, machinery
& tools like fork lifters
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

14. Product Differentiation
Product form (Disprin)
Features (Cars)
Customization (Vitz, Nippon)
Performance (BMW)
Conformance (does what it says)
Durability (Duracell, Nokia)
Reliability (Toyota)
Repairability (ease of fixing)
Style (looks, Jaguar)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

15. Service Differentiation
Ordering ease (Medicine companies provide computers to hospital for ordering purposes)
Delivery (Pizza delivery in 30 min. by Dominos)
Installation (Washing machines & AC installations)
Customer training (X-Ray machines with training)
Customer consulting (1-800 numbers for customers)
Maintenance and repair (On line help by HP)
Returns (How happily you accept the returns)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

16. The Product Hierarchy Item (efu renewable life ins.)
Product type (Term life Ins.)
Product line (Life Ins.)
Product class (Financial)
Product family (Saving)
Need family (Security)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

17. Product Systems and Mixes
Product system (Smart phones & PalmOne compatible in all aspects)
Product mix (Product assortment)
Product assortment (Total # of products offered like Wal-Mart offers 100,000 + items in one store )
Depth (Variants like Colgate)
Length (Total # of items like 28 by UL in Table 12.1)
Width (How many lines a company caries like UL)
Consistency (How closely related the products are?)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

18. Carrying case, Accessories,
Product Line Analysis
Core product
Laptops
Staples
Faster CPU or
Bigger memory
Specialties
Digital movie
Making equipment
Convenience
Carrying case, Accessories,
Memory cards
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

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

20. Line Stretching / Line Filling
Down-Market Stretch
Mercedes C class
Up-Market Stretch
Toyota Lexus
Two-Way Stretch
Down Market or Up Market
(Omroc-Toyo Nasic-Nova)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

21. Product-Mix Pricing Product-line pricing (Shirts 800, 1200, 2000)
Optional-feature pricing (Xli, Gli, Saloon)
Captive-product pricing (Razors, Cameras)
Two-part pricing (PTCL Line rent + Features)
By-product pricing (Oil by product is soap)
Product-bundling pricing (Travel packages, Jahaiz packages)
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

22. Branding
Co-Branding: Two or more well known brands are combined into joint product or marketed in some fashion. Like UBL Credit Card & PSO, RBS AirBLue Master Card
Integrated Branding: Special case of co-branding. It creates brand equity for material, components or parts. Like IBM, Dell, HP, Compaq all buy chip from Intel
Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

23. 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

24. 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