productconceptlevelclassificationmixandproductlifecycleanditsmanagement-190927015354.pptx

1. Product Concept, Level,
Classification, Mix, and Product life
cycle, and its management
CHAPTER-3

2. 9/27/2019 Jitendra Patel,Assistant Professor, PIMR 2
Module III
1.Product Definition
1.2Product Concept
2. Level of Product
3. Types of Products
4. Product Mix
5. Product Life Cycle (PLC)
6. Product Life Cycle Management (PLM)

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Product Definition
• Product: 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.
•

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Product
• A product can be anything that can
be offered to the market to satisfy a
want or a need.
• A bundle of attributes, offering for
use/consumption by the final
customer.

5. Product Concept
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Level of Product
• Product Levels: The Customer-Value Hierarchy
• Core Product: the service or benefit the customer is really buying
• Generic Product: Generic Product consists of basic feature of the
product
• Expected Product: Expected Product a set of attributes and
conditions which buyers normally expect when they purchase the
product.
• Augmented Product: The tangible component of the product along
with the generic and core components is called augmented
product.
• Potential Product: The Potential Product is the one which
encompasses all the possible augmentation and transformations
the product or offering might undergo in the future.

7. Levels of Product
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8. Level of Product
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Levels of Product
5 basic levels
Each level adds more customer value
• CORE BENEFIT
• BASIC PRODUCT
• EXPECTED PRODUCT
• AUGUMENTED PRODUCT
• POTENTIAL PRODUCT

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Core product
• - Indicate core benefit or service
• - Explains what the buyer really buys
• - Basic step in designing products
• - Defines problem solving benefits/ services
that consumers seek
• - Standardization of technology does not lead
to much of difference from competing firms

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Basic Product
• At this level, the core benefit is turned
into a basic product.
• Basic step in designing products
• Unbranded, plainly packaged, less
expensive

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Expected product
• Represents basic requirements, a customer finds
essential to buy a product
• - Attributes & conditions required by the customers –
identified-built into products
• - Includes brand name, features, design, packaging,
quality level, styling, styling, attributes, instructions
manual

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Augmented product
• Marketer prepares an augmented product
that exceeds customer expectations.
• Intangible component of the product along
with formal & core components
• Product built by adding consumer services &
benefits

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Types of Products
1. Consumer Products:
• - Bought by final consumers for personal consumption
• - Categorized as…
• a. Convenience products ;
• - Bought frequently, immediately with minimum
comparison and buying effort.
• - Are low priced
• - Available in many locations
• e.g. Soap, candy, newspapers, fast food

15. Types of product
• b. Shopping Product;
• - Characteristically compared on the basis of
suitability, quality, price and style while
selection and purchase.
• - Distributed through fewer outlets
• e.g. Furniture, clothing, used cars, major
appliances, hotel and airline services.
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Types of product
• c. Specialty Product;
• - Has unique characteristics or brand
identification for which a significant group of
buyer is willing to make a special purchase effort
• - People travel even long distances to buy them
(Lamborghini)
• - No comparison is involved in buying.
• e.g. Specific brands, types of cars, high priced
photographic equipments, designer clothes,
services of medical/ legal specialists

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Types of product
• d. Unsought Product;
• - Consumer either does not know about/
knows about but does not normally think of
buying it.
• - Require a lot of advertising, personal selling
and marketing efforts.
• e.g. Life insurance, pre planned funeral
services and blood donations.

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Types of Products
• 2. Industrial Products:
Distinguished from consumer products on the basis of
usage
e.g. A lawn mower.
1. Materials & parts
i. Raw materials & parts:
- Farm products, (wheat, cotton, livestock, fruits,
vegetables)
- Natural products (fish, lumber, crude oils, iron ore)
ii. Manufactured materials & parts:
- component materials (iron yarn, cement, wires)
- Component parts ( small motors, tires, castings)

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Types of Products
• b. Capital items
i. Installations:
- Major purchases (factories, offices)
- fixed equipment ( generators, elevators,
computer systems)
ii. Accessory equipments:
- Portable factory equipments and tools
(hand tools, lift trucks)
- Office equipments ( computers, fax machines,
desks)

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Types of Products
• c. Supplies and Services:
i. Supplies
- Operating supplies (Lubricants, coal, paper, pencil)
- Repair and maintenance (paint, nails, brooms)
ii. Services
- Maintenance and repair services (window
clearing, computer repair)
- Business advisory services ( legal, management,
consulting, advertising)

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Product Mix
• Product mix – Product mix is a combination of
total product lines within a company.
• The complete range of products present
within a company is known as the product
mix.
• A company like HUL has numerous product
lines like Shampoos, detergents, Soaps etc.
The combination of all these product lines is
the product mix.

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Product Line
• The product line is a subset of the product mix.
The product line generally refers to a type of
product within an organization
• In Nestle, there are milk based products like
milkmaid, Food products like Maggi, chocolate
products like Kitkat and other such product lines.
Thus, Nestle’s product mix will be a combination
of the all the product lines within the company.

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Product Mix Length
• The total number of products against the total
number of product lines forms the length of
the product mix. This equation is also known
as product line length.

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Product Mix Width
• The width of the product mix is equal to the
number of product lines within a company

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28. Product Life Cycle (PLC)
Saturation
Point
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29. PLC
Saturation
Point
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30. PLC and Profit
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32. PLC - Maruti 800
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About Maruti
• MARUTI UDYOG LIMITED was established in
1981
• Largest automobile company in India located at
Gurgaon, Manesar.
• Portfolio of 13 brands and 150 variants
like,MARUTI 800,ALTO,WAGANOR,SWIFT,GRAND
VITARA,SX4 AND SWIFT DZIRE etc.,
• Listed in BOMBAY STOCK EXCHANGE &NATIONAL
STOCK EXCHANGE.
• Honored with “METI” award from Govt. of Japan
for promotion of Japanese brand in India.

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Introduction Stage 1983-86
• MARUTI UDYOG LIMITED Launched first ‘MARUTI 800’
,in Indian market on December 1983.
• It’s a collaboration between INDIAN STATE
owned MARUTI and SUZUKI MOTOR JAPAN.
• Cheapest car in the Indian market.
• Also exported to countries like South Asia
and South American market.
• First car was presented to Lord Venkateswara of
Tirumala Venkateswara temple.
• First car was sold to Harpal Singh for Rs.48,000/- as a
lucky owner and received keys from Prime Minister of
India INDIRA GANDHI.

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Growth Stage 1987- 1996
• MARUTI 800 comes up with new features like , AC version
and Music System in the car.
• Sales increased by 852 units to 20,269 units and
reached up to 31,314 units.
• First export began in 1987.
• Sales soared from about 63,763 units to
about 1,89,061 units in 1996.
• Strategies adopted:-
• Customer care has became a key element for Maruti,
• Increased Maruti service stations every 25 kms on a
highway,
• For increasing its market share it launched new car models,

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Maturity Stage 1997-2002
• In 1997,MARUTI introduced a new car with Jelly Bean
shape . However it was not so successful in the market.
• Launched revamped version of MARUTI 800 EX, with new
engine, shock absorber, coil spring suspension, but this
model lost their sales gradually .
• Entry of competitors like General Motors ,
Ford , Tata.
• In 2002, MARUTI launched ‘ALTO’ ,
with bigger stylish version of the Maruti 800.
• Introduced LPG & CNG variables, called Maruti 800 Duo
with new face lifts like newer grille and clear lens head
lamps

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Maturity Stage 1997-2002 Contd…
Strategies adopted at this stage :
• Pricing strategy:– categoring to all segments ,car priced at Rs.
1,87,000/- is the lowest offer on the road
• Developed different revenue streams in the form of Maruti
insurance, Maruti finance.
• Repositioning of Maruti products
• Introduced new facelifts model based on market responses or
consumer feedbacks or the competitors moves
• Customer centric approach:
call centers bring Maruti to closer to its customer.
• Committed to motorizing India
Partnership with STATE
organized finance to
BANK
small
OF
towns
INDIA
enable
people to buy cars in Rs.2599/- scheme

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Decline Stage 2002 to 2004
• Due to heavy competition from competitors like Hyundai
i10 , Maruti Suzuki Swift, Chevrolet Spark, sales of Maruti
800 was drastically decreased.
• The sales are went down from 1,51,976 units in the year
2000 to about 69,553 in 2007.
• Buyers are attracted by high end luxuries
small cars like NANO .
• In 2008-2009 experienced sales of only 1,288 units.
• Major competitor Tata Motors launched Tata Nano smaller
car yet offer more space than the Maruti 800
• Sales are continued in semi urban and rural areas till today .
• In 2012 Maruti introduces ALTO 800 in the place of Maruti
800 .

39. Sales between 2000 - 2004
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PLC Explained
• A new product progresses through a sequence
of stages from introduction to growth,
maturity, and decline. This sequence is known
as the product life cycle and is associated with
changes in the marketing situation, thus
impacting the marketing strategy and the
marketing mix.

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Introduction Stage
In the introduction stage, the firm seeks to build product awareness
and develop a market for the product. The impact on the marketing
mix is as follows:
• Product branding and quality level is established, and intellectual
property protection such as patents and trademarks are obtained.
• Pricing may be low penetration pricing to build market share
rapidly, or high skim pricing to recover development costs.
• Place/ Distribution is selective until consumers show acceptance of
the product.
• Promotion is aimed at innovators and early adopters. Marketing
communications seeks to build product awareness and to educate
potential consumers about the product.

42. Challenges of the Introduction Stage
• Small or no market
• High costs
• Losses, Not Profits
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Growth Stage
In the growth stage, the firm seeks to build brand
preference and increase market share.
• Product quality is maintained and additional
features and support services may be added.
• Pricing is maintained as the firm enjoys
increasing demand with little competition.
• Distribution channels are added as demand
increases and customers accept the product.
• Promotion is aimed at a broader audience.

44. Challenges of the Growth Stage
ach
• Increasing Competition
• Lower Prices
• Different Marketing Appro
Costs are Reduced
Greater Consumer Awareness
Increase in Profits
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Maturity Stage
At maturity, the strong growth in sales diminishes.
Competition may appear with similar products. The
primary objective at this point is to defend market
share while maximizing profit.
• Product features may be enhanced to differentiate the
product from that of competitors.
• Pricing may be lower because of the new competition.
• Distribution becomes more intensive and incentives
may be offered to encourage preference over
competing products.
• Promotion emphasizes product differentiation.

46. Challenges of the Maturity Stage
• Sales Volumes Peak
• Decreasing Market Share
• Profits Start to Decrease
Continued Reduction in Costs
Increased Market Share Through Differentiation
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Decline Stage
As sales decline, the firm has several options:
• Maintain the product, possibly rejuvenating it
by adding new features and finding new uses.
• Harvest the product - reduce costs and
continue to offer it, possibly to a loyal niche
segment.
• Discontinue the product, liquidating remaining
inventory or selling it to another firm that is
willing to continue the product.

48. Challenges of the Decline Stage
• Market in Decline
• Falling Sales and Profits
• Product Withdrawal
⦿ Cheaper Production
⦿Cheaper Markets
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Examples
• Introduction – 3D TVs, Holographic Projection
• Growth – Blueray discs/DVR, Tablet PCs
• Maturity – DVD, Laptops
• Decline – Video cassette, Typewriters

50. Alternative product life cycles
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Product Life cycle Management
• Product Lifecycle Management (PLM) is an
integrated, information driven approach to all
aspects of a product’s life from its design
inception,
deployment
through its manufacture,
and maintenance, and
culminating in its removal from service and
final disposal.

52. MANAGING THE PRODUCT LIFE CYCLE
• Modifying the Product
Alter product quality
Enhance performance
Change appearance
• Modifying the Market
 Finding New Users
 Increase use
 Create new use situations
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53. EXTENDING THE PRODUCT LIFE CYCLE-
Repositioning
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 Reacting to a Competitor’s Position
 Catching a Rising Trend-baby aspirin is now low dose
aspirin to reduce heart attacks
 Changing the Value Offered
• Trading : add value raise price
• Trading Down- remove Value & lower price
• Downsizing-reduce contents but maintain price

54. PLM Model
Info
Core
Concept Eng &
Prototyping
Product
Engineering
Manufacturing
Engineering
Requirements
ARnealqyusirse&mPelnatnsning
Analysis & Planning
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Concept Eng &
Prototyping
Engineeri
Manufacturing
Engineering
Manufacturing &
Production
Manufacturing &
Production
Maintenance &
M
Re
ap
in
at
ir
enance &
Repair
Disposal &
D
Re
isc
p
yo
cs
lia
nlg&
Recycling
Sales &
Distribution
Sales &
Distribution

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PLM
• Provide collaborative data environments that
manages the intellectual property associated
with the evolving engineering, construction, and
maintenance definition
• Provide an accurate technical knowledge
foundation and detailed history of the
configuration throughout the entire lifecycle,
from concept to disposal, while continuously
coordinating complex interdependent changes
initiated by various technical and business
stakeholders

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PLM
relationships between PLM (Product
• Strong
Lifecycle Management), MES (Manufacturing
Execution System), and ERP (Enterprise Resource
Planning) offers the ability to build a
comprehensive closed loop information system
• PLM is unique from other enterprise software
solutions, byproviding the application depth and
breadth needed to digitally author, validate and
manage the detailed product and process data,
PLM supports continuous innovation

57. Main Components of PLM
The Main Components:
Data management: It enables appropriate stage for
management. It provides information about product features, bills
of material, data distribution, project structure.
Program and project management: It’s about the process of
developing a product. It gives information on planning, management
and checking.
Cooperation: It supports project management and it relies on
WEB standards which are based on XML(Extensible Markup
Language)
Quality management: It provides an integrated quality
management for each sector.
Management of corporate assets: It directs equipment and
physical assets
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References
1. Aakar, D. A. (2012), “Strategic Market Management” 9th Edition, New Delhi,
India, Wiley India.
2. D. Chandra Bose (2010.) “Modern Marketing Principles and Practices” PHI
Learning, 1st Edition.
3. Kotler , P (2015) “Five Product Levels by Philip Kotler” retrieved from
https://www.toolshero.com/marketing/five-product-levels-kotler/ last assessed
on 10 September 2019.
4. O. C. Ferrell and Michael Hartline (2012 ). “Marketing Strategy, Text and
Cases” , South Western Cengage Learning, sixth edition.
5. Philip Kotler, Kelvin Lane, Keller, Abraham Koshi, Mitihlesh Jha.(2011), Principles
of Marketing Management, South Asian Perspective, Pearson Education, 14th
Edition.
6. S. M. Jha. (2011), “Services Marketing”, Himalaya Publishing House, 7th Edition,
New Delhi.
7. The Product Life Cycle (2010), retrieved from
last assessed on 10
http://www.quickmba.com/marketing/product/lifecycle/
September 2019.

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