Setting Product Strategy

1. Setting Product Strategy

2. Objectives Identify the product and the various characteristics of products. Level of products.  Learn how companies build and manage product lines and mixes. Understand how companies make better brand decisions.  Comprehend how packaging and labeling can be used as marketing tools. Warranties & guarantees can offer further assurance to consumers.

3. The Product Product is a key element in the market offering. Is the first and the most important element of the marketing mix. Product strategy calls for making coordinated decisions on product mixes, product lines, product brands, packaging and labeling. Who should ultimately design the product? The customer of course.

4. What is a Product ? The product is any thing that can be offered to market to satisfy a want or a need.

5. Information Type Of Product Places Goods Organizations A Product can be Properties Services Experiences Events Persons Ideas

6. The Product Levels Potential Product Augmented product Expected product Basic Product Core benefit According to Kotler there are 5 levels

7. Levels of Product and Services

8. The Product and Product Mix The customer value hierarchy:  Core benefit The service or benefit the customer is really buying.  Basic product The marketer has to turn the core benefit into basic product.  Expected product A set of attributes and conditions buyers normally expect when they purchase the products.  Augmented product The product exceeds customer expectation.  Potential product All possible augmentations and transformations the product or offering might undergo in the future.

9. Example

10. Product Classification 1. Durability and Tangibility. 2. Consumer Goods. 3. Industrial Goods.

11. Nondurable goods • Tangible • Rapidly consumed in one or a few uses. • Example: Milk - Soap • Durable goods • Tangible • Lasts a long time • Example: Oven – electronics-Refrigerators • Clothes • Services • Intangible • Example: Appliance repairs, Transportation Services Product Classification 1. Durability and tangibility

12. 2. Consumer Goods ClassificationsConsumer products are products and services for personal consumption Classified by shopping habits Convenience goods  Shopping goods  Specialty goods  Unsought goods

13. 2. Consumer Goods Classifications

14. 2. Consumer Goods Classification 2.1 Convenience goods : are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort  Staples Goods: Goods consumers purchase on a regular basis (Toothpast). Impulse Goods: Purchased without any planning or search efforts (Magazines). Emergency Goods: Are purchased when a need is urgent (umbrellas during a rainstorm)

15. 2. Consumer Goods Classification 2.2 Shopping goods : are consumer products and services that the customer compares carefully on suitability, quality, price, and style Homogeneous shopping goods: Are similar quality but different enough in price to justify shopping comparisons.  Heterogeneous shopping goods: Offer in product features & services that maybe more important than price.

16. ComparativeBetween Convenience & Shopping Goods

17. 2.3 Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort • Medical services • Designer clothes • Buyers normally don’t compare specialty products, they invest only the time needed to reach dealers carrying the wanted products

18. 2.4 Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying • Life insurance • Funeral services • Blood donations • Unsought products require a lot of advertising, personal selling, and other marketing efforts

19. Industrial goods classification

20. 3. Industrial goods Classifications Are goods that enter the manufactures product completely 3.1 Materials and parts  Farm products ( Wheat, Cotton, Fruits …)  Natural products (Fish, Crude petroleum …)  Component materials (Iron, cement, wires…)  Component parts ( Small motors, tires …) 3.2 Capital items  Installations (Factories, offices)  Equipment (drill presses, personal computer, elevators). 3.3 Supplies and business services  Maintenance and repair (paint, window cleaning, copier repair…)  Advisory services (Legal, management consulting, advertising)

21. The Product Hierarchy: Need family The core need that underlies the existence of a product family (Security). Product family All the product classes that can satisfy a core need with reasonable effectiveness (Saving, income) Product class A group of products within the product family recognized as having a certain functional coherence (financial instruments) Product line A group of products within a product class that are closely related because they perform a similar function. Product type A group of items within a product line that share one of several possible forms of the product. Item. A distinct unit within a brand or product line distinguishable by size, price, appearance or some other attribute.

22. Product Mix Decision • Product mix consists of all the products and items that a particular seller offers for sale • Width • Length • Depth • Consistency

23. The set of all products and items that a particular seller offers for sale.  A Product mix consists of various product lines. Product mix Product mix dimensions:: The Width: Number of product lines. The Length: Total number of items in mix. The Depth: How many variants are offered of each product in the line. Consistency: Degree to which product lines are related. (Production requirements, distribution channels)

24. Product mix Width = 4 Depth L1 = 3 Length = 12 The Depth The Width

25. Product Line Decisions • Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges

26. Product-Line Decisions Product-Line Analysis Product line managers need to know the sales and profit items in their lines in order to determine which items to built, maintain, harvest and divest.

27. Product-Line Analysis

28. Market Profile  Product line managers need to look at market profile.  The manager must review how the line is positioned against competitor’s lines.  The product map is useful for designing product line marketing strategy & identifies market segments.

29. Market Profile Product Map for a Paper-product Line

30. Product Line Length Product linelength is the number of items in the product line A company lengthen its product line in two ways 1. Line stretching: involves the question of whether a particular line should be extended: Down market: it introduces a lower priced line for any three reasons: 1- The company may notice strong growth opportunities in the down market. 2- To tie up lower end competitors who might other wise try to move up market. 3- The middle market is declining.

31. - Upward stretch: Enter the high end of market for more growth , higher margins. • - The two way stretch: The line in both direction • 2- Line filling: A product line can be lengthened by adding more items within the present rang like reaching for incremental profits, trying to satisfy dealers,

32. - Line modernizations: whether the line needs a new look . • In rapidly changing product markets , modernization is continuous. • A major issue is timing improvements , so they do not appear too early ( damaging sales of the current line ) or too late ( after the competition has established a strong reputation for more advanced equipment).

33. - Line pruning : How to delete and remove weaker items from the line,

34. Product mix pricing  There are six situation involving product mix pricing: 1) Product line pricing: Companies normally develop product lines rather than single products and introduce price steps. 2) Optional feature pricing: Many companies offer optional products, features and service a long with their main product. 3) Captive product pricing: Some products require the use of ancillary or captive products.

35. 4) Two part pricing product: Service firms often engage in two-part pricing consisting of affixed fee plus variable usage fee. 5) By-product pricing: The production of certain goods-meats, petroleum products often results in by-products. 6) Product bundling: Sellers often bundle products and features.

36. Mixed Bundling The seller offers goods both individually and in bundles.  When offering a mixed bundle, the seller normally charges less for the bundle than if the items were purchased separately.

37. Product Differentiation Product Differentiation : It is the process of distinguishing a product or service from others, to make it more attractive to a particular target market .

38. Product Differentiation • Many products can be differentiated in form (Size, shape, physical structure of a product ). Form The company should consider how many people want each feature, how much it would take to introduce each feature, and think of feature bundles or packages. Feature Most products are established at one of four performance levels: Low, average, high or superior. Performance Quality

39. Product Differentiation • A measure of the product's expected operating life under natural or stressful conditions, is a valued attribute for certain products. Durability • Measure of the probability that a product will not fail within a specified time period. Reliability • Describe the product's look and feel to the buyer. Style

40. Product Differentiation Is the degree to which all the produced units are identical and meet the promised specifications Conformance Quality • Is a measure of the ease of fixing a product when it malfunction or fails. Repair ability

41. Services Differentiation • Ordering ease: refers to how easy it is for the customer to place an order with the company. • Delivery:refers to how well the product or service is delivered to the customer. • Installation:refers to the work done to make a product operational in its planned location.

42. Services Differentiation • Customer training: refers to training the customer’s employees to use the vendor’s equipment properly and efficiently. • Customer consulting: refers to data, information systems, and advice services that the seller offers to buyers. • Maintenance & repair: describes the service program for helping customers keep purchased products in good working order.

43. Brand Decision Definition of a brand: “A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.”

44. Brand Decision Brands can convey six levels of meaning: • Attributes A brand bring to mind certain attributes. • Benefits Attributes must be translated in to functional & emotional benefits • Values The brand say something about the product (Mercedes-Safety)

45. Brand Decision • Culture It may represent a certain culture (Mercedes- German) • Personality It project a certain personality • User It suggests the kind of consumer who buys or use the product.

46. Brand Decision Companies need to develop brand policies for the individual product items in their lines. They must decide whether to brand at all , whether to use family or individual brand names, whether to extend the brand name to new products , and whether to create multiple brands.

47. Brand Decision • In developing marketing strategy for individual product, the seller has to confront the branding decision. • Branding is a major issue in product strategy. • Developing branded product requires a great deal of long term investment spending especially for advertising, promotion, and packaging. • Companies need to develop brand polices for individual product items in their lines.

48. Co-Branding & Ingredient Branding Co-Branding: It called dual branding or brand bundling, in which two or more well known existing brands are combined into a joint product or marketed together in some fashion.

49. Integrated Branding: • Is a special case of co-branding. • It involves creating brand equity for materials, components or parts that are necessarily contained within other branded products.

50. Packaging and Labeling • Packaging : • Is all the activities of designing and producing the container for a product.