Setting Product Strategy What is a Product? Components of the Market Offering Durability and Tangibility Use Consumer Goods Classification The Product Hierarchy (using life insurance example) Product Systems and Mixes Product Line Analysis Packaging , labeling warranties Packaging Objectives Functions of Labels

1. Setting Product Strategy
Prepared By,
Mr. Nishant Agrawal

2. Chapter Questions
• What are the characteristics of products and
how do marketers classify products?
• How can companies differentiate products?
• How can a company build and manage its
product mix and product lines?

3. Chapter Questions (cont.)
• How can companies combine products to
create strong co-brands or ingredient brands?
• How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?

4. What is a Product?
A product is anything that can be offered to a market
to satisfy a want or need, including physical goods,
experiences, persons, places, properties,
organizations etc.

5. Components of the
Market Offering
1. Product features and quality
2. Services mix and quality

6. Five Product Levels
1. Core benefit: the benefit the customer is really buying. A hotel
guest is buying rest and sleep.
2. Basic product : Hotel room include bed, bathroom, towels etc
3. Expected product : Set of attribute buyers normally expect
when they purchase the product
4. Augmented product : Exceeds customer expectations.
5. Potential product : Here companies search for new ways to
satisfy customers and distinguish their offering.

7. Product Classification Schemes
1. Durability
2. Tangibility
3. Use

8. Durability and Tangibility
1.Nondurable goods: tangible goods normally consumed. Ex.
Soft drinks ,shampoos. These goods are purchase frequently.
Appropriate strategy is to make them available in many location.
2. Durable goods : tangible goods normally survive many uses.
Refrigeration , machine tools , cloth. Product require more
personal selling and service & require more seller guarantees.
3.Services : are intangible , inseparable and perishable products

9. Consumer Goods Classification
• Convenience: Frequently, immediately and with min effort.
• Staples : Goods purchase on regualr basis
• Impulses: Purchase without any planning ex. Chocolates, potatoes chips
• Emergency Goods : When need is urgent. Ex. Raincoat, sweater etc
• Shopping
• Specialty : unique characteristics . Ex. Cars , men’s suits
• Unsought: Consumer does not know about or normally thinking
of buying, such as smoke detectors.

10. Industrial Goods Classification
1. Materials and parts
1. Raw material
1. Farm Products (wheat , cotton , fruits, vegetable
2. Natural Products (crude petroleum, oil )
2. Manufactured materials and parts
1. Component material (iron ,cement, wires)
2. Component parts (small motors , tires)
2. Capital items
1. Installation
2. Equipment
3. Supplies/business services

11. Product Differentiation
• Product form : Size , shape , or physical structure
• Features :
• Customization
• Performance
• Conformance Quality
• Durability : measure product’s expected operating life under
natural or stressful condition
• Reliability : Buyers will pay premium for more reliable product
• Style

12. Service Differentiation
• Ordering ease : How easy it is for customer to place an order
with company.
• Delivery
• Installation
• Customer training
• Customer consulting : Data, information system and advice
services
• Maintenance and repair
• Returns

13. The Product Hierarchy
(using life insurance example)
Need family
Product family
Product class
Product line
Product type
Item

14. Product Systems and Mixes (Page No 303)
• Product system is group of diverse but related items that function in
compatible manner. Ex. I pod = headphone + headset + cables + cases,
power and car accessories.
• Product mix is set of all product and item a particular seller offer for sell. It
consist of various product line. Ex. Sunfeast, Nestle, HUL
• Depth of product mix is how many variants available. (Lux : Rose)
• Length is total number of items in product mix.
• Width is how many different product line that company carries
• Consistency is how closely related the various product lines are in end use

15. Product Line Analysis
(Graph page No 305)
• Sales and Profit
• Every company’s portfolio contain product with different
margin.
• Supermarket make almost no margin on bread and milk but
better margin on flower. Ex. Recharge shop
• Market Profile
• Product line manager must review how the li eis positioned
against competitors

16. Line Stretching
• Every company’s product line cover certain part of
total possible range. Ex. BMW upper price range
1.Down-market stretch
2.Up-market stretch
3.Two-way stretch

17. Product-Mix Pricing
• Product-line pricing : Companies normally develop product lines
rather than single products. Ex. Men jeans Rs.500 , 1000, 1500
• Optional-feature pricing : companies offer optional product, feature
and service with their main product. Ex. Automobile advertise entry
level model at low prices to pull people into showroom
• Two-part pricing : consist of fixed fee + variable usage fees. Cell
phone users pay min fees + charges calls. Fixed fees should low
enough to introduce purchase ,profit can then come from usage fees.
• By-product pricing : the production of certain goods like petroleum
and other chemical often result in by products that should be priced
on their value.

18. What is the Fifth P?
Packaging , labeling warranties
Packaging, sometimes called the 5th
P, is all the activities of
designing and producing the container for a product.
Package might have up to 3 layers.
1.Primary Package (Basic Bottle)
2.Secondary package (cardboard box)
3.Shipping Package (contain six dozen box)

19. Factors Contributing to the
Emphasis on Packaging
• Self-service
• Consumer affluence : Rising affluence means consumer are
willing to pay little more for the convenience , appearance, and
prestige of better packing
• Company/brand image
• Innovation opportunity

20. Packaging Objectives
• Identify the brand
• Convey descriptive and persuasive/credible
information
• Facilitate product transportation and protection
• Assist at-home storage
• Aid product consumption

21. Functions of Labels
• Identifies : product or brand
• Grades : Oil like pure or Veg / Non Veg
• Describes : Who , when made it
• Promotes : bright graphics

22. Assignment
• What is a Product Line? Discuss some decisions
related to the Product Line Length with a suitable
example

23. Thank You