3. 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?
• How can companies use packaging, labeling, warranties, and guarantees as
marketing tools?
• What strategies are appropriate for new product development and through
the product life cycle?
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, services, experiences, events, persons,
places, properties, organizations, information, and ideas.
• Examples: Starbuck’s 3rd Place. The place between someone’s work and
home. Starbuck’s coffee is a product, but the Starbuck’s experience is a
product as well, and include comfortable cafe’s, free wifi, and service that
is beyond typical fast food and beverage.
6. Five Product Level Example: Kohl’s
• Core Benefit: Clothes
• Basic Product: Clothing and home goods in a variety of styles and sizes
• Augmented Product: Clothing and home goods, with weekly and seasonal
specials, customers will get excited about savings
• Potential Product: Any future updates Kohl’s would do in the future to
exceed customer expectations (More online offerings, same day shipping,
etc)
11. Consumer Goods Classifications
• Convenience Goods: Purchased frequently,, and with minimal effort (often self service)
• Ex: Soft Drinks
• Shopping Goods: Consumers compare on the basis of suitability, price, and style
• Ex. Appliance
• Speciality Good: Unique characteristics or brand identification for which enough buyers make a
special purchasing effort
• Ex. Cars
• Unsought Goods: Needs, that the customer does not normally think about buying
• Ex. Smoke detectors, first aid kits
12. Industrial Goods Classification
• Materials and parts: Go into the final finished product
• Ex. Wheat delivered to make cereal
• Capital items: Equipment to make final product
• Ex. Oven to roast cereal
• Supplies/business services: Short term items that help making the final
product, like office supplies and consulting fees
17. Product
Differentiation
Style: The look and feel of a
product to a buyer. Often a key
item in creating demand for a
product. Style often depends on
target market being sought.
18. Service Differentiation
• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance and repair
• Returns
20. Product-Mix Pricing
• Product-line pricing: Varying prices in a line of products: Ex. Soda
• Optional-feature pricing: Price of product plus options: Ex. Cars
• Captive-product pricing: Introduction products and the price of ancillary or
captive products: Ex. Razors, Low intro price, and high price of blades
• Two-part pricing: Fixed fee plus variable pricing: Ex. Cell Phone + Data Plans
• By-product pricing: Price of by products in the production of the main
product: Ex. Meats
• Product-bundling pricing: Price for a bundle of products or service: Ex.
Comcast Triple Play
21. Ingredient Branding
Creating brand equity for the
materials or components inside
of a finished product, to increase
demand and create higher
margins based on perceived
quality
22. • Packaging, sometimes called the 5th P, is all the activities of designing and
producing the container for a product
• Sometimes, packaging is just as important as the product itself
• Packaging is the customers first experience with the product
• It must identify the brand, convey descriptions and persuasive information,
facilitate product transportation, and aid in product consumption
• Can you think of any iconic brand packaging?
27. Ways to Find Great New Ideas
• Run informal sessions with customers
• Allow time off for technical people to putter on pet projects
• Make customer brainstorming a part of plant tours
• Survey your customers
• Undertake “fly on the wall” research to customers
• Social Media Crowd sourcing: Gathering popular ideas directly from
customers
28. Concept Testing
Concept Testing: Who will use this product? What benefit will it provide?
When will they use it?
• Need level
• Perceived value
• Purchase intention
• User targets, purchase occasions, purchasing frequency
29. Prototype Testing
• Alpha testing: Testing within the firm
• Beta testing: Testing with a group of customers
• Market testing: Testing in a few markets to gauge customer acceptance, sales
forecasts, identify any logistic issues
34. Figure 10.4 Adopter Categorization on the
Basis of Relative time of Adoption Technology is speeding up the
life cycles
35. Figure 10.4 Adopter Categorization on the
Basis of Relative time of Adoption Technology is speeding up the
life cycles
36. Product Life Cycle Marketing
• Introduction and Innovator Stage: High marketing costs and low profit, due to
getting awareness out to customers and driving trial
• Growth: Improve quality, reduce cost, add features to maximize profitability.
Can become a market leader in this stage, increasing profitability in the
maturity stage
• Maturity: Longest section of life cycle. This is where targeted marketing takes
over from broad based marketing to increase users at a reduced marketing
cost.
• Decline: Choice to let the brand die, or innovate to create a new product or
service based on new needs, technology, etc. Declining products should not
be invested in unless it is to be relaunched
37. AthleteTrax
• What is the product of
AltheteTrax?
• Is it a good? Or an
experience?
• What stage of the life cycle
is it in?
• Who should it target at this
stage to grow?