The document discusses key concepts around products and marketing, including: - Products can be physical goods, services, experiences or ideas that satisfy wants/needs. They are classified by durability, tangibility and use. - Differentiation is important and can be done through product form, features, customization, performance and more. Good design appeals to both rational and emotional sides. - Companies manage product mixes and lines based on width, length, depth and consistency. Packaging, co-branding, ingredient branding and labeling are important marketing tools.

1. 12
Setting Product Strategy
1

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?
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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?
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4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 12-4
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. Five Product Levels
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Product Classification Schemes
Durability
Tangibility
Use

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Durability and Tangibility
Non-Durables
(Fresh food, shampoo)
Durable: Tangibility
(Refrigerators, clothing)
Services
(Haircuts)

8. Consumer Goods Classification
Convenience
Purchased frequently, immediately
with minimal effort
Shopping
Consumer compares on basis of
style, price
Specialty
Unique characteristics or brand
identification
Unsought
Don’t know about, don’t think of
buying

9. Industrial Goods Classification
 Materials and parts: Goods that enter the
manufacturer’s product completely
 Raw Materials (farm products and natural products)
 Manufactured Materials (Components and parts)
 Capital items: long-lasting goods that facilitate
developing or managing the finished product.
 Installations and equipment
 Supplies/business services: Law, accounting,
management

10. Product Differentiation
 Product form: Size, shape, physical structure
 Features: Qualities that supplement basic functions
 Customization: Cater individual level needs
 Performance: the level at which the product’s primary
characteristics operate
 Conformance: 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
 Reliability: the probability that a product will not malfunction or
fail within a specified time period
 Repairability: the ease of fixing a product when it malfunctions
or fails
 Style: the product’s look and feel to the buyer

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Service Differentiation
 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Returns

12. Design
 Design is the totality of features that affect the way
a product looks, feels, and functions to a
consumer.
 It offers functional and aesthetic benefits and
appeals to both our rational and emotional sides.
 In a crowded market, aesthetics is often the only
way to make a product stand out.
 Crocs, Iphone
 Examples?

13. Approaches to Design
 Design thinking is a very data-driven approach
with three phases:
 observation, ideation, and implementation.
 Design thinking requires intensive
ethnographic studies of consumers, creative
brainstorming sessions, and collaborative
teamwork to decide how to bring the design
idea to reality
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Product and Brand Relationships:
The Product Hierarchy
Need family
Product family
Product class
Product line
Product type
Item

15. Product Systems and Mixes
 A product system is a group of diverse but
related items that function in a compatible
manner.
 For example, the extensive iPod product system
includes headphones and headsets, cables and
docks, and speakers.
 A product mix (product assortment) is the set of
all products and items a particular seller offers for
sale.
 Not necessarily compatible with each other.

16. Analysis of Product Mix and Lines
 Width- How many product Lines you carry?
 Length- total number of items in the mix
 Depth- Variants offered (flavours, scents etc)
 Consistency How closely related the various product
lines are

17. Product-Item Contributions to a
Product Line’s Total Sales and
Profits

18. Product Map for a Paper-Product
Line
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19. Analysis of Product Mix and Lines
 Width- How many product Lines you carry?
 Length- total number of items in the mix
 Depth- Variants offered (flavours, scents etc)
 Consistency How closely related the various product
lines are
 EXAMPLE?????

20. Lecture 17
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Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch

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Product-Mix Pricing
 Product-line pricing
 Optional-feature pricing (additional features)
 Captive-product pricing
 Two-part pricing (fixed plus variable)
 By-product pricing (meat, petroleum)
 Product-bundling pricing (bundle products and
features, Herbs and prices)

23. Co-Branding
 Two or more well known brands are combined into a joint
product or marketed together in some fashion.
 Advantage of co-branding:
 A product can be convincingly positioned by virtue of
the multiple brands.
 Co-branding can generate greater sales from the
existing market
 open opportunities for new consumers and channels.
 It can also reduce the cost of product introduction
because it combines two well-known images and
speeds adoption.
 A valuable means to learn about consumers and how
other companies approach them.

24. Ingredient Branding
 It creates brand equity for materials,
components, or parts that are necessarily
contained within other branded products
 Self-branded ingredients: Molty Foam Luxury
Bed
 Hp, Del, Lenovo buying Chips from Intel.
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What is the Fifth P?
Packaging, sometimes called the 5th P,
is all the activities of designing and
producing the container for a product.

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Factors Contributing to the
Emphasis on Packaging
 Self-service
 Consumer affluence
 Company/brand image
 Innovation opportunity

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Packaging Objectives
 Identify the brand
 Convey descriptive and persuasive
information
 Facilitate product transportation and
protection
 Assist at-home storage
 Aid product consumption

29. Functions of Labels
 Identify the product
 Grade the product
 describe the product:
 Who made it, where and when, what it contains,
how it is to be used, and how to use it safely
 Promote the product
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30. 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?
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31. 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?
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 12-31