Product Mix and Product Classification by Neeraj Bhandari ( Surkhet.Nepal )
• Product classification
• Product mix
• New product development,
• Product life cycle
• Brand decisions
PRODUCT: BUNCH OF BENEFITS
• anything that is offered to a market for attention, acquisition, use or
consumption and satisfies a want or need. It includes physical
objects, services, persons, places, organizations and ideas.
BASIC 3 LEVELS OF A PRODUCT
• Core Product: The problem-solving services or core
benefits that consumers are buying when they obtain the
product. (Mobile phone)
• Actual Product: a product’s parts, quality, features,
design, brand name, packaging, staling etc., that
combine to deliver core product benefits. Mobile Charger,
• Augmented product: additional consumer services and
benefits built around the core and actual products
(installation, delivery etc. – for example , the Sony
Camcorder, one year warranty on mobile)
The three levels of a product
• Product quality: the ability of a product to perform its functions; it includes the
product’s overall durability, precision, ease of operation and repair, and other
• Total quality management (TQM) (Improve all product/process quality in every
phase of production)
• Conformance quality
• Freedom from defects/consistency in delivering a targeted level of performance.
• Product features: features are a competitive tool for differentiating the
company’s product from competitors’ products. Being the first producer to
introduce a valued new feature is one of the most effective ways to compete.
• Product style and design: how a product is designed and how it appears.
Companies may have many designs for a product (i.e., Nike shoes – 500
footwear designs each year)
THE NEW PRODUCT DEVELOPMENT PROCESS
ORGANIZING FOR NEW PRODUCT
Special organizational arrangements are to be made for
NPD which can answer three important questions-
1) Who is to be responsible for NPD.
2) What are the tasks to be accomplished.
3) How the tasks will be accomplished.
The Brooks, Allen and Hamilton Study of NPD suggests
that “the organizations which encounter the greatest
success in NPD are the ones that have given the
greatest care to organizing NPD”
GENERATING, SCREENING & DEVELOPMENT OF NEW
PRODUCT IDEAS (NPI)
• Generating New Product Ideas.
• NPI generating sources .
• Internal Recourses- Sales Personnel,Marketing personnel, R&D, top
Management Executives, Production Departments, Purchase
Department, Customer service division, employee suggestion
• External Recourses- customers, competitive products, foreign products,
consultants, advertising agencies,
METHODS OF GENERATING NEW
• Direct Methods.
Individual Techniques- Morphological analysis, Consumer Surveys
Group Techniques- Brain Storming, focus groups, interviews,
• Indirect Methods- Consumer, engineering magnitude, estimations
• Generating concept is a creative process and there is
mechanism in concept generation which is categorized in
• Problem based ideation.
• This is the most simple method of progress, where someone has found a
problem and as a result, solves it.
• Attribute based ideation.
• As we know that product is a bundle of attributes and to alter a attribute in an
analytical method is attribute based ideation.
PHYSICAL DEVELOPMENT OF
• Product architecture.
• Industrial Designing in Product
• Product prototyping
• Concurrent engineering
PRETEST MARKETING & TEST
• Test Marketing is Penultimate step in NPD but as its
costly ,time consuming and exposes product to
competitors hence pre test marketing is the solution.
Wide PTM we simulate market conditions under a
controlled environment which helps in understanding the
key market impacts and forces.
• Various Models Of PTM-
• Assessors Model.
• Preference Model.
• Trail repeat Model.
THE PRODUCT LIFE CYCLE
PRODUCT LIFE CYCLE: SALES AND PROFITS
• The product life cycle is the course of a product’s sales and
profits over its lifetime. It involves the 5 stages below:
• Product development: the company finds and develops a new
product idea – costs mount,
• Introduction: the product is being introduced in the market – profits
• Growth: a period of rapid market acceptance – increased profits
• Maturity: the product has achieved acceptance – profits start to
• Decline: the period when sales fall off and profits drop.
WHY PLC ?
• Products have a limited life,
• Product sales pass through distinct stages, each
posing different challenges, opportunities, and
problems to the seller,
• Products require different marketing, financing,
manufacturing, purchasing, and human resource
strategies in each life cycle stage.
STAGES OF PLC
• Product Development- When the new idea is being
converted into a product
• Introduction- When developed product is introduced in
• Growth: the product life cycle stage at which a product’s
sales start climbing quickly. Here we have high market
share or high current profit.
• Maturity: the stage where sales growth slows or levels
off. (market development, product development or
SUCCESS RATE OF NEW PRODUCTS
• The success rate of new products is very low – less than
5%. ‘You have to kiss a lot of frogs to find a prince.”
• Product obsolescence is rapid with improvements in
• Shorter PLCs
• Product family
• Product class
• Product Line
• Product type
THE IMPORTANCE OF BRANDS
• “Consumers are starved for time and
overwhelmed by the choices available to them.
They want strong brands that simplify their
decision making and reduce their risks”
• Are there other good reasons?
• A name becomes a brand when consumers
associate it with a set of tangible and
intangible benefits that they obtain from the
product or service
• It is the seller’s promise to deliver the same
bundle of benefits/services consistently to
Defines the differential features of a
product or service:
• Real or Imaginary
• Rational or Irrational
• Tangible or Intangible
DEFINITION OF A BRAND
(2) Constitutes an image that creates a personal experience:
• Third party
DEFINITION OF A BRAND CONTD...
(3) With conscious and unconscious contents that the consumer projects
and deposits on it;
(4) Constitutes part of and builds up his/her identity;
(5) Generates certain perceptions, attitudes and behaviors and enables
fulfillment in their lives
DEFINITION OF A BRAND CONTD...
In a highly competitive world, where
manufacturers are losing their pricing power,
branding is seen as a way of clawing back
some of the lost influence.
ROLE OF BRANDS: FOR THE COMPANY
• When a commodity becomes a brand, it is said to
• The premium a brand can command in the
• The difference between the perceived value and
the intrinsic value
• Customer will change brands for price reasons
• Customer is satisfied. No reason to change.
• Customer is satisfied and would take pains to get the
• Customer values the brand and sees it as a friend
• Customer is devoted to the brand
ADVANTAGES OF BRANDING
• Easy for the seller to track down problems and process
• Provide legal protection of unique product features
• Branding gives an opportunity to attract loyal and profitable
set of customers
• It helps to give a product category at different segments,
having separate bundle of benefits
• It helps build corporate image
• It minimises harm to company reputation if the brand fails