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Classification Of Product


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Classification Of Product

  1. 1. <ul><li>Product, Classification of Products, Product Line and Product Mix </li></ul>
  2. 2. What is a Product? <ul><li>A product is any tangible, intangible offering that might satisfy the needs or aspirations of a consumer. </li></ul><ul><li>A product has 3 basic levels </li></ul><ul><li>Core Product: This answers WHY the buyer should have it. It is also called as Generic Requirement. </li></ul>
  3. 3. <ul><li>“ Purchasing agents do not buy drills, they actually buy its ability to make same size holes” </li></ul><ul><li>Theodre Levit </li></ul>
  4. 4. Core Benefit <ul><li>The generic product concept has two key issues: </li></ul><ul><li>Its consumers view of what a given product represents. </li></ul><ul><li>The aspiration of consumer differ from place to place and time to time. </li></ul><ul><li>Eg. For someone Washing Machine would be: comfort in washing the cloths, some, tough wash, some complete dryer… </li></ul>
  5. 5. Tangible Specifications <ul><li>Tangibility is added to the core product in the form of features, style, color, design, efficiency etc. </li></ul><ul><li>Eg. The Color of the machine </li></ul><ul><li>The Electricity consumption </li></ul><ul><li>Detergent Consumption </li></ul><ul><li>Capacity </li></ul><ul><li>Quality …. </li></ul>
  6. 6. Augmented Features <ul><li>This fulfill more of psychological or esteem needs. </li></ul><ul><li>Eg. Brand Name </li></ul><ul><li>Services provided </li></ul><ul><li>Warranty </li></ul><ul><li>Credit Terms </li></ul><ul><li>etc…. </li></ul>
  7. 7. Classification of Products <ul><li>The classification of the product depends upon the TANGIBILITY and DURABILITY found in an offering. </li></ul><ul><li>Typical classification of Product: </li></ul><ul><ul><li>Service </li></ul></ul><ul><ul><li>Durable </li></ul></ul><ul><ul><li>Non Durable </li></ul></ul>
  8. 8. Non Durable Products <ul><li>Products that are consumed fast and are purchased on a regular basis. The consumer here spends minimum time and effort in comparing and buying the item. </li></ul><ul><li>Consumer Products are further classified according to its use: Personal, Family and Household as Convenience, Shopping and Specialty. </li></ul>
  9. 9. FMCG <ul><li>Fast Moving Consumer Goods are the Non Durable Goods. Eg. Sot Drinks, Chips, Ice Creams etc…. The consumer shows minimum effort in buying these articles. </li></ul><ul><li>FMCG is further sub divided into 3 Classes… </li></ul>
  10. 10. <ul><li>Staples </li></ul><ul><li>These are goods purchased on a regular basis. Eg. Soap, Pulses, Toothpaste etc… </li></ul><ul><li>Whenever the stock is about to end the consumer buys these products again. </li></ul>
  11. 11. <ul><li>Impulse Goods </li></ul><ul><li>These are the goods which are purchased without planning or search… Our external stimuli provokes us to buy these products. Eg. Cold drinks, Chocolates, Chips…. </li></ul><ul><li>Most of the time the consumers aim is not buying the product solely but when spots them, feels, attracted and ends up in buying them. </li></ul>
  12. 12. <ul><li>Emergency Goods </li></ul><ul><li>These goods are purchased when the need arises. Eg. Umbrellas in rainy season, Pullovers in winters etc.. </li></ul><ul><li>The marketers tries for a very good distribution chain, as the sales is not the same throughout and whenever the need arises, the product should be available at maximum places… </li></ul>
  13. 13. Characteristics of FMCG Consumers Point <ul><li>FMCG has a very low shelf life </li></ul><ul><li>1. Frequent Purchases : Salt, Rice, Chocolates </li></ul><ul><li>2. Low Involvement : The consumer will buy an alternative if the brand ask for is not available…. </li></ul><ul><li>Exceptions to the rule: Products like Cigarettes, Personal Hygiene Products, Brand Loyalty. </li></ul>
  14. 14. Characteristics of FMCG Marketers Point <ul><li>High Volumes </li></ul><ul><li>The volume of the product required is very high. </li></ul><ul><li>Eg. An average family may require 3-4 Soaps a month… Imagine No. of family using it in the whole country??? </li></ul><ul><li>If the organization cannot ensure high sales volume, they will have difficulties in surviving. </li></ul>
  15. 15. <ul><li>Low Margins </li></ul><ul><li>As the product is required in high volume, there is an intense competition which makes the marketer sell the product with very less margin. </li></ul><ul><li>They earn through high volume sales to maximize their turnover. </li></ul><ul><li>The Key Becomes High Volumes Low Margins. </li></ul>
  16. 16. <ul><li>Extensive Distribution Networks </li></ul><ul><li>Consumer preference in FMCG products are not that rigid. </li></ul><ul><li>Recall plays a very important role. </li></ul><ul><li>Brand Loyalty is not very high. </li></ul><ul><li>Consumer allows shopkeeper to decide for him. </li></ul><ul><li>Due to all this it becomes very important for the marketer to make its product available at maximum place possible. </li></ul>
  17. 17. <ul><li>High Stock Turnover </li></ul><ul><li>It is a characteristic feature of FMCG. It is because these products are bought frequently or on a regular basis. </li></ul><ul><li>Which in turn allows the marketer to rotate the capital invested. </li></ul>
  18. 18. Product Mix <ul><li>It is the set of product lines and items that a particular company offers to buyers. </li></ul><ul><li>The Width of product mix refers to how many different product lines a company carries. </li></ul><ul><li>Product Line: It is a group of products that is closely related because they perform a similar function, targeted at the same customer groups, marketed through same channel. </li></ul>
  19. 19. <ul><li>Eg. Products line of P & G : </li></ul><ul><li>Detergents </li></ul><ul><li>Bathing Soaps </li></ul><ul><li>Shampoos </li></ul><ul><li>Disposable Diapers etc. </li></ul><ul><li>If, Pantene comes in 4 variants in 3 different sizes, the depth of the product mix becomes 4 X 3 = 12. This can also be referred as Stock Keeping Units (SKU’s) </li></ul>
  20. 20. <ul><li>Consistency of a product mix refers to how closely related the various product lines are to the end user. </li></ul><ul><li>The Width, Depth and consistency of product mix enables the company to define the Product Portfolio. </li></ul>
  21. 21. Product Line <ul><li>Line Stretching </li></ul><ul><li>Downward Stretch : It takes place when the company finds a particular segment (Lower) which is un-attended by the existing product. And introduces a product to cater that lower segment. </li></ul><ul><li>Upward Stretch : It is when company a company enters Upper market through Line Extension. </li></ul>
  22. 22. <ul><li>Line Filling : A product line can be extended by adding more items to the existing range. </li></ul><ul><li>Reasons: </li></ul><ul><li>Reaching for more profits </li></ul><ul><li>Trying to satisfy dealers who complain about lost sales due to missing items in the line </li></ul><ul><li>Trying to utilize excess capacity </li></ul><ul><li>Trying to offer a full line of the production </li></ul><ul><li>Trying to plug holes in the positioning map. </li></ul>
  23. 23. <ul><li>Line Modernization : Modernization is carried out continuously as competitors are constantly growing and coming out with new products and ideas. </li></ul><ul><li>In this process an Organization should not be too early, if so, It can harm the existing product or late so that competitors already have a hold in the market. </li></ul>
  24. 24. <ul><li>Line Featuring </li></ul><ul><li>Its about featuring a particular product of the product line, so as to increase foot falls and then making the consumer exposed to other products too. </li></ul>
  25. 25. Growth Strategies for FMCG <ul><li>Multi-brand Strategy </li></ul><ul><li>When a company nurtures number of brands in a single category. </li></ul><ul><li>Strategy: To capture as much market share as possible by trying to cater as much possible segments. </li></ul><ul><li>Eg. HUL Bathing Soaps: </li></ul><ul><li>Names?????? </li></ul><ul><li>P&G Shampoos? </li></ul><ul><li>Names????? </li></ul>
  26. 26. <ul><li>Product Flanking </li></ul><ul><li>Basically offering same product in different and price combinations to tap diverse market opportunities. </li></ul>
  27. 27. <ul><li>Brand Extensions </li></ul><ul><li>This enables the company to enter new product categories more easily. </li></ul><ul><li>Eg. Lifebuoy: Lifebuoy Plus, Lifebuoy Liquid, Lifebuoy Gold. </li></ul><ul><li>Eg. Amul: Amul Butter, Amul Ghee, Amul cheese, Amul Milk, Amul Chocolates </li></ul>
  28. 28. <ul><li>Building Product Lines </li></ul><ul><li>Companies add related new product line to the existing Line. </li></ul><ul><li>Eg. Britannia: It has all Baked food items which are increasing. Have also added milk products to its kitty. </li></ul>
  29. 29. <ul><li>New Product Development </li></ul><ul><li>Its due to ever increasing Competition in the market </li></ul>
  30. 30. <ul><li>Innovations in Core Product </li></ul><ul><li>The life of a FMCG product is short. The marketer continuously tries to introduce new products and a consumer is also open to try new products. </li></ul>
  31. 31. <ul><li>Long Term Outlook </li></ul><ul><li>Eg. Kelloggs </li></ul>
  32. 32. <ul><li>Extending the PLC </li></ul><ul><li>Expanding Markets by Usage </li></ul><ul><li>Increase the Number of Customers </li></ul><ul><li>Encouraging more consumption. </li></ul><ul><li>Wide distribution Network </li></ul>
  33. 33. <ul><li>Advertising and Media Coverage </li></ul><ul><li>Sales Promotion </li></ul><ul><li>Sales Pomotions offer a direct incentive to buy more in the short term. </li></ul>
  34. 34. <ul><li>Thank You </li></ul>