setting product strategy ch12

8/7/2019 Setting Product strategy ch12

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Marketing Management

Setting Product Strategy

PROF. JITENDRA SHARMA

Leyland

is knownfor its

products

What Is a Product?

Anything that can be offered to a market

for attention, acquisition, use, or

consumption and that might satisfy a want

or need.

Includes: physical objects, services, events,

persons, places, organizations, ideas, or some combination thereof.

What Is a Service?

A form of product that consists of activities,

benefits, or satisfactions offered for sale

that are essentially intangible and do not

result in the ownership of anything.

Examples: banking, hotel, airline, retail, tax

preparation, home repairs.

Market Offerings Continuum ranges from pure tangible

goods (with no services) to pure services

(with no good component) with manycombinations in between.

Pure good: Camay soap.

Pure service: Legal representation.

Combination: Restaurant meal.

Creating and managing customer experiences differentiates offers.

Figure 12.1 Components of the

Market Offering

Attractiveness

of the market

offering

Value-based prices

Product

features

and quality

Services

mix and

quality

Figure 12.2 Five Product Levels

Product attributes

Product mix

� Breadth or width

± Wide product mix containing many differentproduct lines.� Unilever producing cooking oil, toilet soap, cosmetics

� Length± Total number of products in the product lines

� Depth± Different versions, such as size of packaging and

different formulations.

� Consistency ± How closely related the various product lines are

in end use, production requirements, distributionchannels etc.

Product mix strategies� Company can add new product lines, thus

widening the product mix.

� Company can lengthen the existing product linesto become a more full line company.

� It can add more product versions of each productand deepen its product mix.

� The company can pursue more product line

consistency, or less, depending upon whether itwants to have a strong reputation in a single fieldor in several fields.

Product Classification SchemesDurability

Tangibility

Durability and Tangibility

Nondurable

Services

Durable

Consumer Goods Classification

Convenience

Unsought

Shopping

Specialty

Industrial Goods Classification

Materials and parts

Supplies/

business servicesCapital items

Developing products for rural markets

Products should be designed keeping in mindthe rural conditions

Packaging is one of the key drivers of

success in rural areasIssue of transfer and storage: Rugged

packing

The issue of affordability: small-unit packs Brand elements should be decided keeping in

mind rural consumers

Product Line AnalysisSales and Profits

Every company¶s product portfolio contains products with

different margins.A) A company can classify its products into four types

that yield different gross margins, depending on sales

volume and promotion.

Core products

Staples

Specialties

Convenience items

Line Stretching

Down-Market StretchDown-Market Stretch

Up-Market StretchUp-Market Stretch

Two-Way StretchTwo-Way Stretch

Line Filling

Pruning

Pruning weak

brands can

strengthen the

remaining brands inthe line

What is the Fifth P?Packaging, sometimes called the

fifth P, is all the activities of

designing and producing the

container for a product.

Factors Contributing to the

Emphasis on PackagingSelf -serviceSelf -service

Consumer affluenceConsumer affluence

Company/brand imageCompany/brand image

Innovation opportunityInnovation opportunity

Innovations in Packaging

Packaging Objectives Identify the brand

Convey descriptive and persuasive

information

Facilitate product transportation and

protection

Assist at-home storage

Aid product consumption

After packaging is designed, it must be tested

Engineering tests are conducted to ensure that the

package stands up under normal conditions.

Visual tests are used to ensure that the script is legible

and the colors harmonious.

Dealer tests are performed to ensure that dealers find

the packages attractive and easy to handle.

Consumer tests ensure favorable consumer response

Functions of LabelsIdentifies

Grades

Describes

Promotes

Labels eventually become outmoded and need freshening up

Companies with labels that have become icons need to tread very

carefully when initiating a redesign. The Fair Packaging and Labeling Act of 1967, set mandatory

labeling requirements, and allows federal agencies to set packaging

regulations in specific industries.

The Food and Drug Administration (FDA) sets other labeling

requirements.

Consumerists have lobbied for additional labeling laws to require:

Open dating

Unit pricing

Grade labeling

Percentage labeling

Warranties and Guarantees

Warranties are formal statements of expected product

performance by the manufacturer. Warranties, whether expressed or implied are legally enforceable.

Many sellers offer either general guarantees or specific

guarantees.

Guarantees reduce the buyer¶s perceived risk.

Guarantees are most effective in two situations:

Where the company or the product is not well-known.

Where the product¶s quality is superior to the competition.

setting product strategy ch12

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