2. Arab World Edition Kotler, Keller, Hassan, Baalbaki and Shamma
Marketing Management
Arab World Edition
Kotler, Keller, Hassan, Baalbaki and Shamma
Chapter 12
Setting Product Strategy

3. 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?
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 © 2012 Pearson Education

4. Product Characteristics and Classifications
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Characteristics and Classifications
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.
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5. Product Characteristics and Classifications
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Characteristics and Classifications
The customer will judge the offering by three basic elements, as shown in Fig. 12.1:
Fig. 12.1: Components of the Market Offering
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6. Product Levels: The Customer-Value Hierarchy
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Levels: The Customer-Value Hierarchy
In planning its market offering, the marketer needs to address five product levels:
1- Really buying
2-Specific actual product
3-Atrributes expected
4- Feature go beyond expectation
5- all
Fig. 12.2: Five Product Levels
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7. Product Classifications
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Classifications
Marketers classify products on the basis of:
Durability and tangibility
Use (consumer or industrial)
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8. Product Classifications
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Classifications
Durability and Tangibility
Three groups of products:
Nondurable goods – tangible goods consumed in one or a few uses (e.g. tea, soap)
Durable goods – tangible goods that survive many uses (e.g. refrigerators, clothing)
Services – intangible, variable, perishable (e.g. haircuts, legal advice, appliance repairs)
Marketers rely on well-trained salespeople to help customers compare quality and features of shopping goods, such as appliances.
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9. Product Classifications
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Classifications
Consumer-goods classification
Classified on the basis of shopping habits:
Convenience goods : Frequently with minimum efforts
Shopping goods : Compares (Quality-Price-style)
Specialty goods : Unique- brand identifications with effort
Unsought goods : Not normally think about (smoke detector- life insurance)
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10. Product Classifications
Chapter Question 1:
What are the characteristics of products, and how do marketers classify products?
Product Classifications
Industrial-goods classification
Classified in terms of relative cost and how they enter the production process:
Materials and parts ( raw – tires in Auto)
Capital items ( buildings – generators )
Supplies and business services ( maintenance – lubrications – copiers repair- legal services)
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11. How can companies differentiate products?
Chapter Question 2:
How can companies differentiate products?
Differentiation
Product Differentiation
Products can be differentiated in many ways, including:
Form (shape- size)
Features
Customization
Performance quality
Conformance quality (all products identical and meet promised specifications)
Durability (Operating life)
Reliability (will not fail within specific time)
Repairability (easy to fix)
Style (look and feel)
– 4.6 m km – test
Copyright © 2012 Pearson Education

12. How can companies differentiate products?
Chapter Question 2:
How can companies differentiate products?
Services Differentiation
When the physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving their quality.
Service differentiators include:
Ordering ease (how easy to order)
Delivery (speed and quality of delivery)
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
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13. Product and Brand Relationships
Chapter Question 3:
How can a company build and manage its product mix and product lines?
Product and Brand Relationships
The Product Hierarchy
Need family
Product family
Product class
Product line
Product type
Item
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14. How can a company build and manage its product mix and product lines?
Chapter Question 3:
How can a company build and manage its product mix and product lines?
Product Systems and Mixes
Product system - a group of diverse but related items that function in a compatible manner.
Product mix - consists of various product lines.
A company’s product mix has a certain: P&G
Width (different product lines)
Length (total No items)
Depth (variant of each product)
Consistency (use, production, channels)
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15. How can a company build and manage its product mix and product lines?
Chapter Question 3:
How can a company build and manage its product mix and product lines?
Product Line Analysis
Sales and profits:
Product-line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest.
Market profile:
Managers also need to understand each product line’s market profile.
Copyright © 2012 Pearson Education

16. How can a company build and manage its product mix and product lines?
Chapter Question 3:
How can a company build and manage its product mix and product lines?
Product Line Analysis
Sales and Profits
A company can classify its products into four types that yield different gross margins, depending on sales volume and promotion:
Core products (laptop)
Staples (Memory)
Specialties (installation)
Convenience
Items (Accessories)
Fig. 12.3: Product-Item Contributions to a Product Line’s Total Sales and Profits
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17. How can a company build and manage its product mix and product lines?
Chapter Question 3:
How can a company build and manage its product mix and product lines?
Product-Line Length
A company lengthens its product line in two ways:
Line stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
Line filling
Adding more items within the present range.
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18. How can a company build and manage its product mix and product lines?
Chapter Question 3:
How can a company build and manage its product mix and product lines?
Product-Mix Pricing
In product-mix pricing, the firm searches for a set of prices that maximizes profits on the total mix.
There are six situations calling for product-mix pricing:
Product-line pricing (albassam)
Optional-feature pricing (cars)
Captive-product pricing (Printers-4G+Phone)
Two-part pricing (fixed fee + variable usage)
By-product pricing (sugar + waste)
Product-bundling pricing (almajd)
Copyright © 2012 Pearson Education

19. Co-Branding and Ingredient Branding
Chapter Question 4:
How can companies combine products to create strong co-brands or ingredient brands?
Co-Branding and Ingredient Branding
Co-Branding
Marketers often combine their products with products from other companies in various ways.
Forms of co-branding include:
Same company co-branding
Joint-venture co-branding (alforsan-samba)
Multiple-sponsor co-branding skyteam alliance
Retail co-branding (fast food resturents)
The two brands must separately have brand equity: adequate brand awareness and a sufficiently positive brand image.
Most important requirement is a logical fit between the brands.
Copyright © 2012 Pearson Education

20. Co-Branding and Ingredient Branding
Chapter Question 4:
How can companies combine products to create strong co-brands or ingredient brands?
Co-Branding and Ingredient Branding
Ingredient Branding
Ingredient branding is a special case of co-branding.
It creates brand equity for materials, components, or parts that are contained within other branded products. (intel + Ketchups)
Moroccanoil’s ingredient brand, Argan Oil, opened up opportunities for other products in the beauty industry, too.
Copyright © 2012 Pearson Education

21. Packaging, Labeling, Warranties, and Guarantees
Chapter Question 5:
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Packaging, Labeling, Warranties, and Guarantees
Packaging
Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product.
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22. Chapter Question 5:
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Packaging
Various factors have contributed to the growing use of packaging as a marketing tool:
Self-service
Consumer affluence
Company/brand image
Innovation opportunity (Heinz)
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23. Chapter Question 5:
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Packaging
Packaging must achieve certain objectives, both for the company and for consumers:
Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at-home storage
Aid product consumption
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24. Labeling A label might perform several functions:
Chapter Question 5:
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Labeling
A label might perform several functions:
Identifies the product
Grades the product
Describes the product
Promotes the product
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25. Warranties and Guarantees
Chapter Question 5:
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Warranties and Guarantees
Warranties are formal statements of expected product performance by the manufacturer.
Products under warranty can be returned to the manufacturer for repair, replacement, or refund.
Warranties are legally enforceable.
Guarantees - many sellers offer general or specific guarantees.
General: “If you are not satisfied for any reason, return for replacement, exchange, or refund.”
Specific: guaranteeing a particular service if a problem arises.
Copyright © 2012 Pearson Education

26. Warranties and Guarantees
Chapter Question 5:
How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
Warranties and Guarantees
Marketing advantages:
Guarantees reduce the buyer’s perceived risk.
They suggest that the product is of high quality and that the company and its service performance are dependable.
Especially helpful when the company or product is not that well known or when the product’s quality is superior to competitors.
Copyright © 2012 Pearson Education

27. Credits Slide 1 Raya Group Slide 7 Corbis: Ali Haider / epa
Slide 10 Corbis: Bernd Weissbrod / dpa
Slide 11 aviationimages.com: Mark Wagner
Slide 17 “Industrial Product Policy: Managing the Existing Product Line”, Marketing Science Institute Report No. 77–110, (Benson P. Shapiro), copyright © Reprinted by permission of Marketing Science Institute and Benson P. Shapiro
Slide 21 Alamy Images: MARKA