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ProductProduct
ManagementManagement

Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 11-2
 Product:Product: bundle of physical, service, and
symbolic attributes designed to enhance
buyers’ want satisfaction

Product VS Brand
A product is anything that can be offered to the market
for attention , acquisition, use, or consumption that might
satisfy a need or want. Thus, a product can be a
physical good, service, organization, place or ideas.
A brand is a product but adds other dimensions that
differentiate it in some way from other products designed
to satisfy the same need.

 Service:Service: intangible task that satisfies
consumer or business user needs
 Goods-services continuum:Goods-services continuum: device that
helps marketers to visualize the differences and
similarities between goods and services

Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Product Area Decision
Target Market
Product
Idea
Brand
Packaging
Warranty

Augmented product,
Easy finance facility,
Proactive service call
etc
Total Product ConceptTotal Product Concept
Generic product
( A car, color,
weight, mileage
etc.)
Expected product
(Core + Certain level of reliability,
Service from the dealer, Prestige
obtained by driving the car)
Potential product
How else the product
can be used.

Unsought ProductsUnsought Products
 New innovations
 Products consumers don’t
want to think about
 Require much advertising &
personal selling
i.e Life insurance, blood donation
Specialty ProductsSpecialty Products
 Special purchase efforts
 High price
 Unique characteristics
 Brand identification
 Few purchase locations
i.e Mercedes, Rolex
Shopping ProductsShopping Products
 Buy less frequently
 Higher price
 Fewer purchase locations
 Comparison shop
i.e Clothing, cars,
appliances
Convenience ProductsConvenience Products
 Buy frequently & immediately
 Low priced
 Mass advertising
 Many purchase locations
i.e Candy, newspapers
Product Classifications: Consumer

Product Classes Help Plan Marketing StrategyProduct Classes Help Plan Marketing Strategy
Consumer Products Business Products

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

 Convenience productConvenience product: good or service that
consumers want to purchase frequently,
immediately, and with minimal effort
Impulse goods and services are
purchased on the spur of the moment.
Staples are convenience goods and
services that consumers constantly replenish
to maintain a ready inventory.
Emergency goods and services are bought
in response to unexpected and urgent needs.

ConsumerConsumer Product Goods ClassificationProduct Goods Classification
Convenience
Products Shopping
Products
Specialty
Products
Is based on Level of Effort expended
. . To satisfy information needs & buying motives

CONVENIENCE GOODSCONVENIENCE GOODS
StaplesStaples - goods purchased on a regular- goods purchased on a regular
basis (ex. milk, eggs)basis (ex. milk, eggs)
Emergency goodsEmergency goods - purchased when the need is- purchased when the need is
urgent (ex. umbrella, boots)urgent (ex. umbrella, boots)
ImpulseImpulse purchases – no conscious prepurchases – no conscious pre
planningplanning
Convenience goods – consumers use minimal
effort for frequently purchased low cost items

CONVENIENCE. . .CONVENIENCE. . .
Segment Profile: Average supermarketSegment Profile: Average supermarket
consumer (a woman) spends 21 min. to shopconsumer (a woman) spends 21 min. to shop
 buys 18 items (average) out of 30-40,000buys 18 items (average) out of 30-40,000
 browse time decreased 25% over 5yrs.browse time decreased 25% over 5yrs.
 doesn’t bother to check pricesdoesn’t bother to check prices
(Proctor & Gamble)(Proctor & Gamble)

Convenience ProductsConvenience Products
Marketing Strategy PrinciplesMarketing Strategy Principles
-- Intensive distributionIntensive distribution Provide convenientProvide convenient
locations and hours of operationlocations and hours of operation
- Self-Service/Pre sold Brand Name- Self-Service/Pre sold Brand Name
- Substantial substitution- Substantial substitution

 Shopping productShopping product: good or service
purchased only after the customer compares
competing offerings from competing vendors
on such characteristics as price, quality, style,
and color
Typically cost more than convenience
purchases.
Include tangible items.
Shopper lacks complete information and
gathers information during the buying
process.

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

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

 infrequently (seldom) purchasedinfrequently (seldom) purchased
 relatively expensiverelatively expensive
 little or no substitutionlittle or no substitution
 High involvement, well informed consumersHigh involvement, well informed consumers
 High “visibility” to “others”High “visibility” to “others”
 Specialty goodsSpecialty goods - consumers make a- consumers make a
significant effortsignificant effort to acquire the desired brand.to acquire the desired brand.

-- HaveHave a knowledgeable sales force (pro’s)a knowledgeable sales force (pro’s)
-- ExclusiveExclusive DistributionDistribution
- Exceptional service- Exceptional service
- Be Innovative/”cutting edge”- Be Innovative/”cutting edge”
- Maintain a differential advantage- Maintain a differential advantage

Consumer Behavior ProductConsumer Behavior Product
ClassificationClassification
Market StrategyMarket Strategy
 Intensive DistributionIntensive Distribution (convenience)(convenience)
 Selective DistributionSelective Distribution (shopping)(shopping)
 Exclusive DistributionExclusive Distribution (specialty)(specialty)
Product
Category
Market Coverage

Classifying Goods and Services forClassifying Goods and Services for
Consumer and Business MarketsConsumer and Business Markets
 Consumer productsConsumer products: products meant for use
by ultimate consumers
 Business (or B2B) productsBusiness (or B2B) products: those that
contribute directly or indirectly to the output of
other products for resale
Also called industrial or organizational
products

 InstallationInstallation: major capital investment by a
business buyer that typically involves expensive
and relatively long-lived products, such as a
new factory or piece of heavy machinery
 Accessory equipmentAccessory equipment: capital product, usually
less expensive and shorter-lived that insulation,
such as a laptop computer
 Component parts and materialsComponent parts and materials: finished
business products that become parts of buying
firms’ final products, such as spark plugs for
new cars

 Raw materialsRaw materials: business product, such as a
farm product (wheat, cotton, soybeans) or
natural product (coal, iron ore) that become part
of a final product
 SuppliesSupplies: products that represent regular
expenses necessary to carry out a firm’s daily
operations but are not part of the final product.
supply itemsupply item: part of business supplies
categorized as maintenance items, repair
items, or operating supplies such as light
bulbs, nuts and bolts used in repairing
equipment, or pencils

 Business servicesBusiness services: intangible product
purchased to facilitate a firm’s production
and operating processes such as financial
services, leasing of vehicles, legal advice
and consulting

What is a Brand?What is a Brand?
 A brand is a name, term, sign, symbol, or
design which is intended to identify the goods
or services of one seller or group of sellers
and to differentiate them from those of
competitors.

Brand ElementsBrand Elements
 A variety of brand elements can be chosen that inherently
enhance brand awareness or facilitate the formation of
strong, favorable, and unique brand associations:
Brand Name
Logo
Symbol
Character
Packaging
Slogan

Products of a company are called
PRODUCT MIX.
PRODUCT LINE
Close related products are called
PRODUCT LINES.
PRODUCT MIX

LAMPSLAMPS
•TableTable
•CeilingCeiling
•TrackTrack
•DeskDesk
• Product Line - a groupa group
of closely relatedof closely related
productsproducts
Product Mix - the total group of productsProduct Mix - the total group of products
offeredoffered consistencyconsistency: relatedness of items: relatedness of items
Product mixProduct mix
Product lineProduct line

HUL Product mix
Product Line=10, Product
length= 52
Red colour shows out of market products
Green colour shows new products

Length :Length : Total Number of items in theTotal Number of items in the
product line.product line.
Consistency :Consistency : Closely related the various productClosely related the various product
lines.lines.
Width : Number of different product lines
carries by the company.
Depth : Number of version offered of
each product in the line.

Soap Shampoo Cream Toothpast
e
PERSONAL CARE
FOOD &
DRINKS
TeaIce
cream
Lux
Dove
Lifebuoy
Clear
Dove
Lifebuoy
Close up
Pepsodent
Cornetto
Magnum
Lipton
Supreme
Ponds
Dove
Fair
& Lovely
Product
Mix
Depth
Product Line - 1
Product Mix Width
Product Line - 2
Product Line Length Product Line Length
Product Mix Length
Consistency

CONCEPTUALIZATION OF PRODUCT MIXCONCEPTUALIZATION OF PRODUCT MIX
WIDTH
D
E
P
T
H
# of lines = 4
# of items = 12
A wide product mix facilitates one stop shopping

PRODUCT MIX FIGUREPRODUCT MIX FIGURE
HAIR
CARE
SALTY
SNACKS
DENTAL
CARE
SOFT
DRINKS
Shampoo
Conditioner
Hair Spray
Brush
Chips
Nuts
Crackers
Tooth Brush
Tooth Paste
Dental Floss
Cola
Ginger Ale
Root Beer
Width (# of product lines)
Depth(#ofitems)

Development of Product LinesDevelopment of Product Lines
 Product LineProduct Line: a series of related products
Motivation
Desire to Grow
Enhancing the Company’s Position in
the Market
Optimal Use of Company Resources
Exploit the Product Life Cycle

 A company’s assortment of product lines and
individual offerings
Product Width--the number of product lines
offered.
Product Length--the number of different
products a firm sells.
Product Depth--variations in each product that
a firm markets in its mix.
The Product MixThe Product Mix

 Product Mix DecisionsProduct Mix Decisions
A firm may lengthen or widen its product
mix
A Company may decide to add variations
that will attract new users
A product may be altered, and new product
may extend the product life cycle
Line extension: introduction of a new
product that is closely related to other
products in the firm’s existing line

Managing
Products over
Their Life Cycles

Life cycle Span
Varies from product to product
Pharmacy Fifteen
years
Industrial long
5 to 6 Years
When PLC
shortens the
product
development cycle
also get shortened
Few months

Managing Products over Their Life Cycles
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth Maturity Decline
Losses/Investments (Rs)
Sales and
Profits
(Rs)

Trouble identifying
Which Stage of the
PLC the Product Is
In
Difficult to Forecast
the Sales Level, the
Length of Each Stage,
and Shape of the PLC
Strategy is Both a
Cause and a Result
of the Product’s Life
Cycle
The PLC Concept can be
applied by marketers for
describing how products
and markets work, but
may also present some
problems:
Problems Using the PLC

SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low salesLow sales
High cost per customerHigh cost per customer
Negative or lowNegative or low
Create product awareness and trialCreate product awareness and trial
Offer a basic productOffer a basic product
Usually is highUsually is high
DistributionDistribution High distribution expensesHigh distribution expenses
AdvertisingAdvertising Spending is high to inform
consumers
Spending is high to inform
consumers
Summary of Characteristics, Objectives, & Strategies
Introduction Stage of the PLC

 Introduction StageIntroduction Stage
Firm works to stimulate demand for the
new market entry
Promotional campaigns stress features
Additional promotions to intermediaries
attempt to induce them to carry the product
Although prices are typically high, financial
losses are common due to heavy
promotional and research-and-
development costs

SalesSales
CostsCosts
ProfitsProfits
ProductProduct
PricePrice
Rapidly rising salesRapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer new product features and
models
Offer new product features and
models
Remain where they are or fall
slightly
Remain where they are or fall
slightly
DistributionDistribution Increase number of distribution
outlets
Increase number of distribution
outlets
AdvertisingAdvertising Educating consumers and meeting
competition
Educating consumers and meeting
competition
Growth Stage of the PLC

 Growth StageGrowth Stage
Sales volume rises rapidly
Firm usually begins to realize substantial
profits
Success attracts competitors
Firm may need to make improvements to
the product
Additional spending on promotion and
distribution may be necessary

SalesSales
CostsCosts
ProfitsProfits
ProductProduct
PricePrice
Begin to slowBegin to slow
Low cost per customerLow cost per customer
High profits, then lower profitsHigh profits, then lower profits
Maximize profits while defending
market share
Maximize profits while defending
market share
May modify productMay modify product
May declineMay decline
DistributionDistribution Build more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and
benefits
Stress brand differences and
benefits
Maturity Stage of the PLC

 Maturity StageMaturity Stage
Industry sales continue to grow, but
eventually reach an area of stability
Many competitors have entered the
market, and profits began to decline
Differences between competing products
diminish
Available supplies exceed industry demand
for the first time
Competition intensifies and heavy
promotional outlays are common

SalesSales
CostsCosts
ProfitsProfits
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and maintain,
or drop the product
Reduce expenditure and maintain,
or drop the product
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Selective: phase out unprofitable
outlets
Selective: phase out unprofitable
outlets
AdvertisingAdvertising Reduce to level needed to retain
hard-core loyal customers
Reduce to level needed to retain
hard-core loyal customers
Decline Stage of the PLC

 Decline StageDecline Stage
Innovations or shifts in consumer
preferences cause an absolute decline in
industry sales
Industry profits fall -- sometimes become
losses
Firms cut prices in a bid for the dwindling
market
Manufacturers gradually drop the declining
items from their product lines

Competitors
May Help
Adoption
Competitors
May Help
Adoption
Anticipate
Speed of
Movement
Anticipate
Speed of
Movement
Consider the
Four Ps
Consider the
Four Ps
Consider the
Four Ps
Consider the
Four Ps
Allocate
Sufficient
Money
Allocate
Sufficient
Money
Be FlexibleBe Flexible
Planning for Different StagesPlanning for Different Stages
of the Product Life Cycleof the Product Life Cycle
Market
Introduction
& Growth
Market
Introduction
& Growth

Extending the Product Life CycleExtending the Product Life Cycle
 Marketers usually try to expand each stage of the
life cycle for their products as long as possible
 Product life cycles can stretch indefinitely as a
result of decisions designed to:
Increase the frequency of use by current
customers
Increase the number of users for the
product
Find new uses
Change package sizes, labels, or product
quality

Product Deletion DecisionsProduct Deletion Decisions
 Product lines must sometimes be shorten and
marginal products eliminated
 This decision is typically faced during the late
maturity and early declined stages of the
product life cycle
 An unprofitable item may be continued in
order to provide a complete line for
customers

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