Chapter 13. Setting Product Strategy. Copyright 2016 Pearson Education Ltd. 13-1

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2 Product Product Characteristics and Classifications 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 Copyright 2016 Pearson Education Ltd. 13-2

Product Levels: The Customer-Value Hierarchy Figure 13.

4 FIVE PRODUCT LEVELS Core benefit: the service or benefit the customer is really buying (Automobile-transportation) Basic product: components that make up a basic product (Automobile-engine, wheels, steering wheel..) Expected product: set of attributes and conditions buyers normally expect when they purchase this product (Automobile- quality, good design, aftersales service..) Augmented product: attributes that exceeds customer expectations (Automobile- glass ceiling, bank loan support..) Potential product: encompasses all the possible augmentations and transformations the product or offering might undergo in the future Copyright 2016 Pearson Education Ltd. 13-4

6 Durability and Tangibility Nondurable goods cosmetics, cigarette, cleaning products, food Availability - Small markup - Heavy advertisement Durable goods computers, refrigerators Personal selling Higher margin - Guarantees Services haircuts, legal advice Quality control Supplier credibility Copyright 2016 Pearson Education Ltd. 13-6

9 MATERIALS AND PARTS Enter the manufacturer s product completely Raw materials farm products (wheat, cotton, livestock, fruits, and vegetables) natural products (fish, lumber, crude petroleum) Manufactured materials and parts component materials : fabricated further (iron, yarn, cement, wires) component parts: no further change in form (small motors, tires) Copyright 2016 Pearson Education Ltd. 13-9

10 CAPITAL ITEMS Long-lasting goods that facilitate developing or managing the finished product Installations: consist of buildings (factories, offices) Heavy equipment (generators, drill presses, mainframe computers, elevators) portable factory equipment and tools (hand tools, lift trucks) office equipment (desktop computers, desks) Copyright 2016 Pearson Education Ltd

11 SUPPLIES AND BUSINESS SERVICES Short-term goods and services that facilitate developing or managing the finished product Supplies Maintenance and repair items (paint, nails, brooms) Operating supplies (lubricants, writing paper, pencils) Business services Maintenance and repair services (window cleaning, copier repair) Business advisory services (legal, management consulting, advertising) Copyright 2016 Pearson Education Ltd

Product Differentiation Form Features Performance quality Conformance quality Durability

Design Design The totality of features that affect the way a product looks,

Environmental Issues Environmental issues are also playing an increasingly important

18 THE PRODUCT HIERARCHY A distinct unit within a brand or product line distinguishable by size, price, appearance or some other attributes similar functioning, sold to the same customer groups, are marketed through the same channels, or fall within given price ranges product classes that can satisfy a core need 1. Need family 2. Product family 3. Product class 4. Product line having a certain functional coherence 5. Product type 6. Item A group of items within a product line that share one of several possible forms of the product The core need Computation Copyright 2016 Pearson Education Ltd

Need Family: Personal care Sunsilk Example Product Family: Hair care Product Class: Shampoo Product Line: Sunsilk Product Type: Yellow colour- dream and soft sunsilk shampoo, pink colour-

19 Need Family: Personal care Sunsilk Example Product Family: Hair care Product Class: Shampoo Product Line: Sunsilk Product Type: Yellow colour- dream and soft sunsilk shampoo, pink colour- lusciously thick and long shampoo, orange colour- damaged hair reconstruction shampoo, blue colour- anti dandruff shampoo Item: 50ml, 100ml, 350ml etc Copyright 2016 Pearson Education Ltd

Product system Product mix/assortment Width Length Depth Consistency

25 Product line length Line stretching (lengthening the product line beyond current range) Down-market stretch Up-market stretch Two-way stretch Line filling (within the present range) Copyright 2016 Pearson Education Ltd

31 Co-Branding Two or more well-known brands are combined into a joint product or marketed together in some fashion Same-company Joint-venture Multiple-sponsor Retail Copyright 2016 Pearson Education Ltd

Packaging All the activities of designing and producing the

40 Packaging Used as a marketing tool Self-service Consumer affluence Company and brand image Innovation opportunity Packaging objectives Identify the brand Convey descriptive and persuasive information Facilitate product transportation and protection Assist at-home storage Aid product consumption Copyright 2016 Pearson Education Ltd

42 Labeling Labeling, Warranties, and Guarantees Identifies, describes, and promotes the product Warranties Formal statements of expected product performance by the manufacturer Guarantees Promise of general or complete satisfaction Copyright 2016 Pearson Education Ltd