The document discusses various aspects of product management including levels of products, product classifications, differentiation strategies, design considerations, and product mix and pricing. It describes five levels of a product from core to potential and classifications like consumer goods. It also outlines ways to differentiate products based on form, features, quality, style and services. An effective design is highlighted as an important way to position products. The concept of product systems and optimizing product mix and pricing strategies are also summarized.

1. At the heart of a great
brand is a great
product. Product is a
key element in the
market offering. Market
leaders generally offer
products and services of
superior quality.
Kotler on MarketingKotler on Marketing

2. Managing Product Lines,
Brands, and Packaging
 Five levels of product
Core product : Use-benefit, problem-solving service.
Generic product : Basic version of the product.
Expected product : Set of attributes and conditions
that buyers normally expect.

3. Augmented product : Consists of additional
services and benefits that distinguish the
company’s offer from that of the competition.
Potential product : Possible augmentations and
transformations that this product might ultimately
undergo in future.

4. ♦ Product classifications
1. Durability and Tangibility
Non-durable goods – Normally consumed in one
or few uses.
Durable goods – Normally survives many uses.
Services – Intangible, inseparable, variable and
perishable products.

5. ♦ Consumer goods classification
Convenience goods – Usually purchased frequently
with minimum efforts.
Further classified into staple, impulse, emergency
Shopping goods – In the process of selection and
purchase, comparison on suitability, quality, price
and style is done.
Further classified into homogeneous and
heterogeneous goods.

6. Homogeneous goods – Similar in quality, vary in
price, whereas heterogeneous vary in product features
and services and is considered more important than
price.
Speciality goods – Goods with unique characteristics
or brand image. To purchase these goods, buyers
make special purchasing efforts.
Unsought goods – Consumers does not know or does
not normally think of buying.

7. ♦ Industrial – goods classification
Three groups of industrial goods : Material and
parts, capital items, and supplies and business
services.
Materials and Parts – enters manufacturer’s product
completely. Further classified into raw-materials and
manufactured materials and parts.

8. Capital items – facilitates developing and
managing finished goods. They include
installations and equipments.
Supplies and business services – supplies include
operating supplies and maintenance and repair
items. Business services include business advisory
services.

9.  Differentiation – Products can be differentiated
on the basis form, features, performance quality,
conformance quality, durability, reliability,
repairability, and style.
 Product Differentiation :
 Form – can be differentiated on the basis of
size, shape or physical structure of a product.

10.  Features – A company can identify and select
appropriate new features by surveying recent
buyers and then calculating customer value versus
company cost for each potential feature.
 Each company must also think in terms of feature
customization at a higher cost or a few standard
packages at lower cost.

11.  Performance quality – most products are
established at one of four performance levels;
low, average, high or superior.
 Performance quality is the level at which the
product’s primary characteristics operate.
 The manufacturer must design a performance
level appropriate to the target market and
competitor’s performance levels.
 Continuously improving the product can
produce the high returns and market share.

12.  Conformance Quality – Is the degree to which all
the produced units are identical and meet the
promised specification.
 Durability – In a measure of the product’s
expected operating life under natural or stressful
conditions.
 For such products consumers are willing to pay a
little extra, provided the product will not be
subject to rapid technological obsolescence.

13.  Reliability – Reliability is a measure of the
probability that a product will not malfunction or
fail within a specified time period.
 Repairability – Is a measure of the ease of fixing a
product when it malfunctions or fails.
 Ideal repairability would exist if users could fix
the product themselves with a little cost in money
or time.

14.  Style – It is the product’s look and feel to the
buyer.
 Buyers are willing to pay a premium because
of the extraordinary look.
 Style has the advantage of creating
distinctiveness that is difficult to copy.

15.  Design : The Integrative Force.
Design is the totality of features that affect how
a product looks and functions in terms of
customer requirements.
 As competition intensifies, design offers a
potent way to differentiate and position a
company’s product and services.
 To the company, a well – designed product is
one that is easy to manufacture and distribute.

16.  To the consumer, a well – designed product is
the one that is pleasant to look at and easy to
open, install, use, repair, and dispose of. The
designer has to take all these factors into
consideration.

17.  Services Differentiation – Where physical
product cannot be differentiated, the key to
competitive success may lie in adding valued
services and improving their quality.
 The main service differentiators are ordering
ease, delivery, installation, customer training,
customer consulting, and maintenance and
repair.

18.  Ordering Ease -
 Delivery – It includes speed, accuracy, and care
attending the delivery process.
 Installation – refers to the work done to make a
product operational in its planned location.
 Customer Training – Refers to training the
customer’s employees to use the vendor’s
equipment properly and efficiently.

19.  Customer consulting refers to data,
information systems and advice services that
the seller offers to the buyer.
 Maintenance and repair describes the service
programme for helping customers keep
purchased products in good working order.

20. Product Systems :
 A product system is a group of diverse but
related items that function in a compatible
manner.
Eg: Smart phone product lines come with detachable
products including headsets, cameras,
keyboards, presentation, projectors, e-books,
MP3 players and voice recorders.

21.  Product mix (Product Assortment) is a set of
all products and items a particular seller offers for
sale. A product mix consists of various product
lines.
Width – how many different product lines the
company carries. Eg HLL: detergents, toothpaste,
shampoos, bathing soaps, etc.

22. Length – refers to total number of items in the
mix. Eg: All items in each line gives the length. It
may be 20-30
Depth – refers to how many variants are offered in
each product line. Eg: detergents may have six to
eight. Suppose surf comes in three sizes in three
formulations, here surf has a depth of nine.

23. Consistency : refers to how closely related with
various product lines are in the end use, production
requirements, distribution channels etc.
♦ Product - line Analysis
Product – line sales and profits
Product – line market profile – positioning against
competitors.

24. ♦ Product – line Length
 Line is too short if the managers can increase
profits by adding items.
 Line is too long if the manager can increase
profits by dropping items.
♦ Line – stretching decision
a) Downward stretch
b) Upward stretch
c) Two-way stretch
d) Line-filling

25. Line-modernization – update to reflect current
trends.
Line-featuring – select one or few items in the
line to feature.
Line-pruning – when a product is depressing
profits, or a company is short of production
capacity.

26. Product-Mix Pricing
 Product-line pricing – price steps
 Optional-feature pricing – in addition to main product
 Captive-product pricing – main products that require
ancillary products
 Two-part pricing – fixed fee plus variable fee based on
usage
 Byproduct pricing – to recoup production costs of main
product
 Product-bundling pricing – less costly when purchased
together