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Product Strategy

The document discusses product strategy and management. It defines a product and different levels of a product from core benefit to potential product. It also discusses classifying products as durable/non-durable goods and consumer/industrial goods. Product systems and mixes are covered along with managing product lines through line length, stretching, and filling. Product-mix pricing strategies and packaging objectives are summarized. Packaging aims to promote products, define identity, provide information, express customer needs, ensure safe use, and protect the product. Labels are also discussed in types like brand and descriptive labels.

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Product Strategy•
PRODUCT STRATEGY SOURABH KHEDKAR, LALJI A.S. SHUBHAM DWIVEDI
TOPIC OVERVIEW  “PRODUCT” AS CONCEPT & CLASSIFICATION  PRODUCT SYSTEMS & MIXES  MANAGING PRODUCT LINES  PRODUCT-MIX PRICING  PACKAGING AND LABELS
“PRODUCT” AS CONCEPT
What is a product?  Anything offered to the market  To satisfy want or need • Goods, services, experiences, events, persons, places, organizations and ideas.  Most important element of marketing mix
Market offering  Customer will judge the offering by three basic elements • Product features and quality • Service mix and quality • price
Product levels  In planning its market offering, the marketer needs to address five product levels .Each level adds more customer value, and the five constitute a customer- value hierarchy:
CORE BENEFIT • The service or benefit the customer is really buying. • A hotel guest is buying rest and sleep. • The purchaser of a drill is buying holes. • Marketers must see themselves as benefit providers. BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT
CORE BENEFIT • The marketer must turn the core benefit into a basic product. • Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and closet. BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT
CORE BENEFIT • The marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product. • Hotel guests minimally expect a clean bed, fresh towels, working lamps, and a relative degree of quiet BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT
CORE BENEFIT • The marketer prepares an augmented product that exceeds customer expectations. BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT
CORE BENEFIT • `The potential product, which encompasses all the possible augmentations and transformations the product or offering might undergo in the future. BASIC PRODUCT EXPECTED PRODUCT AUGMENTED PRODUCT POTENTIAL PRODUCT
PRODUCT CLASSIFICATION Marketers classify product based on • Durability and Tangibility • Use  Consumer  Industrial
Durability and tangilbility • Non-durable goods  Tangible goods normally consumed in one or few uses.  Purchased frequently • Durable goods  Tangible goods that survive many uses.  They require more seller guarantee and command higher margin.
Intangible products • Services  Intangible  Requires more quality control, supplier credibility and adaptability
Consumer goods classification • Convenience goods  goods purchased frequently and immediately with minimum effort  Staples, impulse goods and emergency goods • Shopping goods  Those goods consumer characteristically compares on such bases as suitability, quality, price, and style.  Homogeneous and heterogeneous
• Specialty goods  Those goods having unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort. • Unsought goods  Those goods the consumer does not know about or normally think of buying, such as smoke detectors, grave stones.
Industrial goods classification  Material and parts  Capital items  Supplies and business services
Industrial goods classification • Materials and parts  Materials and parts are goods that enter the manufacturer’s product completely  Raw materials o Farm products o Natural products
 Manufactured materials  Component materials  Component parts
• Capital items Capital items are long-lasting goods that facilitate developing or the finished product.  Installations  equipment
 Supplies and business services  supplies are two kinds  maintenance items and repair items  operating supplies  business services include  maintenance and repair services (window cleaning, copier repair)  Business advisory services (legal, advertising)
 Product and service differentiation  product differentiation Form Features customizations Performance quality Conformance quality Durability Reliability Reparability style
 Service differentiation  Ordering ease  Delivery  Installation  Customer rating  Customer consulting  Maintenance and repair  Returns
 Design  Design is the totality of features that affect how a product looks, feels, and functions to a consumer.  Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides. e.g.. The product strategy of Hawkins is to span wide range of cooking products with innovative product designs.
PRODUCT SYSTEMS & MIXES
PRODUCT SYSTEMS & MIXES Product Systems Product Mixes Product Systems Properties
Product System  Is a group of diverse but related items that functions in compatible manner  Why its call Product System??  Eg. Mobile Phone Industry, Automobile Industry
Product Mixes Set of all products and items a particular seller offers for sales
Product Mixes Properties Product Mixes LENGTH WIDTH DEPTH CONSISTANCY
• NO.DIFFERENT PRODUCT LINE COMPAINY OFFERSWIDTH • TOTAL NO. OF PRODUCT IN SINGLE LINELENGTH • NO. VARIANTS OF EACH PRODUCT IN LINEDEPTH • HOW CLOSELY RELATED PRODUCT LINES ARECONSISTANCY
HUL Product Mixes Width and Line Length
HUL Product Mixes Width and Line Length
P&G Product Mixes Width and Line Length
Nestle Product Mixes Width and Line Length
ITC Product Mixes Width and Line Length
Emami Product Mixes Width and Line Length
MANAGING PRODUCT LINES
MANAGING PRODUCT LINES MANAGING PRODUCT LINES LINE LENGTH LINE STRETCHING LINE FILLING LINE ANALYSIS SALES AND PROFITS MARKET PROFILE
Managing “Sales and Profit” can help determine which items to Build, Maintain, Promote or Discontinue.
Sales and Profits (Cont’d)
Product line managers must review how the line is positioned against competitor’s line to enhance “Market Profile”
Market Profile (Cont’d)
Objective behind managing product line length  To induce up-selling  To facilitates cross-selling  Protects against economic ups and downs  To use excess manufacturing capacity  To satisfy specific customer demands
line stretching
Occurs when company lengthens its product line beyond its current range
Ways of line stretching • Introduction of lower price line than current offering to enter low-end segment Down- Market Stretch • Introduction of higher price line than current offering to enter high end market Up-Market Stretch • Stretching in both ways to gain market dominance Two Way Stretch
line Stretching Illustration
Line filling  Lengthening product line by adding more item within present range  Plugging holes to keep out competitors  Overdone result in Cannibalization and Customer Confusion  BMW’s evolution one brand five model to 3 brands 14 Series  Good Knight journey to market leader
Product line management  Line Modernization: Introducing advance product  Line Featuring: Introducing Special edition’s  Line pruning: Cutting Product Line
PRODUCT-MIX PRICING
PRODUCT-MIX PRICING STRATEGIES PRICING PRICE IS THE VALUE THAT IS PUT TO A PRODUCT OR SERVICE IT IS THE RESULT OF A COMPLEX SET OF CALCULATIONS, RESEARCH AND UNDERSTANDING AND RISK TAKING ABILITY. PRICING STRATEGY TAKES INTO ACCOUNT SEGMENTS, ABILITY TO PAY, MARKET CONDITIONS, COMPETITOR ACTIONS, TRADE MARGINS AND INPUT COSTS.
Product-Mix Pricing Strategies  Product line pricing takes into account the cost difference between products in the line, customer evaluation of their features, and competitors’ prices.
Product-Mix Pricing Strategies  Optional product pricing takes into account optional or accessory products along with the main product. New car with ordinary rims 8,00,000Rs New car with sports rims 8,60,000Rs
Product-Mix Pricing Strategies  Captive product pricing involves products that must be used along with the main product.  Two-part pricing is where the price is broken into  Fixed fee  Variable usage fee
Copyright©2009PearsonEducationSouthAsiaPteLtd 11 - 57
Product –Mix Pricing Strategies  Product bundle pricing combines several products at a reduced price. 1 bottle: 60Rs Bundled 2 bottles: 100Rs
Product-Mix Pricing Strategies Pricing Strategies  Product line pricing  Optional product pricing  Captive product pricing  By-product pricing  Product bundle pricing
PACKAGING AND LABELS
PACKAGING The package refers to physical container or wrapping for a product It is an integral part of product planning and promotion  10% of the retail price is spent on developing, designing, and producing just the package Companies sometimes change packaging to update their image and reach a new market
Tropicana Famous Packaging Failure: PepsiCo experienced great success with its Tropicana brad, acquired in 1998.Then in 2009, the company launched a redesigned package to “Refresh and modernize” the brand. The goal was to create an “emotional attachment with design and trumpeting the natural fruit goodness. After the new packing and design, Tropicana hit by record 20percent sales dropped in 2months, PepsiCo management announced it would revert to old packaging.
FACTORS INFLUENCING PACKAGING Self Service  An increasing number of products are sold on a self – serve basis. In an average supermarket, which may stock 5,000 items, the typical shopper passes some 50-60 products per minute.  Effective package must perform many sales tasks. Attract attentions, describe the products features, create consumer confidence, and make a favorable overall impression.
Factors Influencing Packaging Cont’d Consumer Affluence Rising affluence means consumers are willing to pay a little more for the convenience, appearance, dependability, and prestige of better packages.
Factors Influencing Packaging Cont’d Company And Brand Image Packages contribute to instant recognitions of the company or brand. In the store, they can create a billboard effect.
Factors Influencing Packaging Cont’d Innovation Opportunity Unique or innovative packaging such as resalable spouts can bring big benefits to consumers and profits to producers.
OBJECTIVES OF PACKAGING 1. Promoting and Selling the Product 2. Defining Product Identity 3. Providing Information 4. Expressing Customer Needs 5. Ensure Safe Use 6. Protecting the Product
1. Promoting and Selling the Product Attractive, colorful, and visually appealing packages have promotional value A well designed package is a powerful selling device because it helps the product stand out from its competitors.
2. Defining Product Identity Packaging is sometimes used to promote and image such as prestige, convenience, or status Can be a crucial part of the marketing strategy, particularly in advertising
3. Providing Information Gives customer useful information on:  directions for using the product its contents product guarantees nutritional value potential hazards
4. Expressing Customer Needs When designing packages, companies analyze customer lifestyles and create packaging that meets their needs for size and convenience. Packages often come in various sizes  Family size  Single serving
5. Ensure Safe Use Proper packaging helps to eliminate potential injuries or misuse of a product  Formerly glass containers are now plastic  Childproof caps  Tamper resistant packages  Blister packs – packages with preformed plastic molds surrounding individual items arranged on a backing
6. Protecting the Product  Must protect during shipping, storage, and display  Prevent or discourage from tampering  Prevent shoplifting  Protect against breakage and spoilage
LABELING Label – an identification tag, wrapper, seal, imprinted message that is attached to a product or its package
KINDS OF LABELS 1. Brand Label – gives brand name and trademark or logo
Kinds of Labels Cont’d  Descriptive Label – give information about product use, construction, care, performance, and other features
Kinds of Labels Cont’d  Grade Label – Some products have given grade label. Grade label shows the grade of the product. It shows the quality of products by words, letters, or figure.
References and Sources  A Marketing Management: A South Asian Perspective By Kotler, Keller, Koshy, Jha  www.slideshare.com