Product Planning

By:

Mrunalini Rane,

Roll No :- MBA/12/14

International Product Planning : STANDARDISATION vs ADAPTATION

Objectives…

1. Definitions of product

2. Importance of product

3. Levels of product

4. Classification of products• Traditional Classification

• Modern Classification

5. Product Adaptation and strategies

6. Standardization and its benefits

7. Product planning

What Is a Product?According to P.Kotler

• A product is a bundle of physical service & symbolic particulars expected to yield satisfaction or benefits to the buyer.

© Bradley Johnson

What Is a Product?• A product is anything that can be offered in a

market for attention, acquisition, use, or consumption that might satisfy a need or want.

• E.g. soap, toothpaste, Lipsticks etc

© Bradley Johnson

• Experiences represent what buying the product or service will do for the customer.

• E.g., Disney, Lego, Toys “R” Us

What Is a Product?

© Bradley Johnson

© A

ud

ry D

rap

ier

Importance of Product

• Product is the central point of all marketing activities

• Marketing activities revolve around product

• Marketing, selling, purchasing, advertisement, distribution, sales promotion are useless without product

• Firms bargain profitability through their product

• Marketing program not possible without product

• Marketing activities like distribution, price, sales, promotion etc is done on the basis of nature, quality and demand of the product

Importance of ProductProduct is an end:-

• Main objective of all marketing is to satisfy the customer.

• Decisions are taken to provide customer benefit, utility and satisfaction through product

• Product is an end and that is to satisfy the customers

Employment opportunities:-

• Product provides employment to crores of people in activities of production, distribution, advertisement, sales, transportation, warehouse etc

Importance of ProductProduct is a competitive weapon:-

• Competition develops change in consumer preference

• Manufacturer needs to change the product in terms of packing, colour, size etc to stay in the market

Importance for Buyer:-

• Product affects purchasing power, standard of living and mental satisfaction of buyer

• Life of a buyer is deeply associated with various products available in market

Importance of ProductImportance for Seller:-

• Existence of any company depends upon acceptance of its products in the market

• Profits depend upon how much products are being sold & at what price

Social Importance:-

• Products fulfill necessities of society

• Distribution of goods at proper prices is necessary for society

Levels of Product

• Core product

• Actual product

• Augmented product

Levels of Products

8-7

Core benefits represent what the buyer is really buying

Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer.Augmented product represents

additional services or benefits of the actual product

• Core benefits represent what the buyer is really buying.

• Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer.

• Augmented product represents additional services or benefits of the actual product.

Levels of Products

What Is a Product?Core – A software application that enables a PC to function

Actual – A well-designed, high-quality, branded, and packaged computer operating system that provides a variety of features that are important to the user

Augmented – An operating system software application that offers a series of channel and consumer services. The channel member can obtain favorable pricing and credit terms, training, engineering support, etc. The consumer can get online support, version updates, access to forums and communities, etc.

Classification of Products

• Consumer products

• Industrial products

• Consumer products are products and services bought by final consumers for personal consumption.

• Classified by how consumers buy them

• Convenience products

• Shopping products

• Specialty products

• Unsought products

Classification of Products

• Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort.

• Newspapers

• Candy

• Fast food

Classification of Products

• Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style.

• Furniture

• Cars

• Appliances

Classification of Products

• 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.

• Designer watches

• Branded fashion wear

• High-end electronics

Classification of Products

• 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

Classification of Products

• A laptop computer – shopping good: most people purchase a laptop infrequently, and when they purchase it, they usually conduct extensive research and comparison of brands and features

• A surgeon – Specialty good: There is usually little comparison between doctors as most patients collect only a few names

• Automobile tires – it depends on the individual and the situation. If a consumer has a luxury brand of car and will consider only “designer” tires, this is a specialty good; for most consumers, tires are a shopping good, and they will be heavily influenced by price and brand name; in some situations, the tires could be an unsought good.

If one was traveling and had a flat tire in an unknown area he would probably be towed to a local station and with little product knowledge, agree to a tire carried by the local station

Classification of Products

• Industrial products are products purchased for further processing or for use in conducting a business.

• Classified by the purpose for which the product is purchased

Classification of Products

• Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users.

• Wheat

• Lumber

• Iron

• Cement

Classification of Products

• Capital items are industrial products that aid in the buyer’s production or operations.

• Buildings

• Elevators

• Computers

Classification of Products

• Supplies and Services include operating supplies, and repair and maintenance items, as well as maintenance and repair services and business advisory services.

• Copy papers

• Stationary

• Training service

• Market research/Advertising service

Classification of Products

• Proposed by famous scientist Prof. L. Aspinwall

• Traditional product classification does not clear the relationship between “BUYER SEARCH PRODUCT” and “MARKETING MIX”

Modern Product Classification

Modern Product Classification

Product Characteristi

cs

• Replacement rates

• Gross margin

• Adjustment

• Consumption time

• Searching time

Replacement rate : Rate at which the product is purchased and consumed

Gross Margin: Sales price – Cost of productAdjustments related to the use of productConsumption time : Time taken in consumption of

productSearching time: Contact time between consumer and

retailer

Modern Product Classification

Prof. Aspinwall classified products into three categories

• RED PRODUCTS

• ORANGE PRODUCTS• YELLOW PRODUCTS

Type RED PRODUCTS

Replacement Rate High Replacement Rate

Gross Margin Low Score Value

Adjustment Low Score Value

Consumption Time Low Score Value

Searching Time Low Score Value

Details Convenience products, Dominated by buying habits of consumer

Products Household products like soap, pen, pencil, bread, cigarettes, Ice cream etc

Type ORANGE PRODUCTS

Replacement Rate Medium Replacement Rate

Gross Margin Medium Score Value

Adjustment Medium Score Value

Consumption Time Medium Score Value

Searching Time Medium Score Value

Details Mixture of red & yellow products, Marketer adopts middle level distribution system for sale

Products Crockery, readymade garments, Tinned eatable products, Radio, TV, AC etc

Type YELLOW PRODUCTS

Replacement Rate Low Replacement Rate

Gross Margin High Score Value

Adjustment High Score Value

Consumption Time High Score Value

Searching Time High Score Value

Details Shopping & specialty products, Consumer buys after comparison on criteria like quality, price, suitability, style

Products Furniture, sarees, jewellery, car, bike, costly watches etc

• G.E.Miracle, Lipson & Darling also contributed to development of Modern Product Classification Theory

• Lipson & Darling divided products into following categories:-

1. Low

2. Very Low

3. Medium

4. High

5. Very High

Modern Product Classification

Lipson & Darling is broader classification of Prof. Aspinwall’s theory.

Prof. Aspinwall Lipson & Darling

Modern Product Classification

• RED PRODUCTS

• ORANGE PRODUCTS

• YELLOW PRODUCTS

1st Group

2ND,3RD & 4TH group

5th Group

Warren Keegan has suggested following product adaptation strategies:

1. One product one message worldwide

2. Same product modified communication

3. Product adaptation communication extension

4. Double adaptation

5. Product innovation

Product Adaptation Strategies

• Product Market Analysis

• -Who

• -When

• -What

• -How

• Firm’s Objectives

• Financial position of the firm

• Packing

Choosing the correct Strategies

According to Lipson & Darling

Standardization is the process of establishing

particular physical attributes and chemical

composition against other items.

Activities involved in standardization:-

1. To determine the standard of the product

2. To inspect the product on the basis of predetermined standard

3. To divide the product according to these standards into several groups

Standardization

1. Increase in sales

2. Easy marketing

3. Goodwill

4. Less selling risk

5. Large scale production economies

6. Technical factor

7. Legal factor

8. Buyer’s will

9. Resource environment

Advantages of product Standardization

Standardization versus Adaptation

Factors Encouraging Standardization

• Economies of scale in production

• Economies in product R&D

• Economies in marketing

• “Shrinking” of the world marketplace/ economic integration

• Global competition

Factors Encouraging Adaptation

• Differing use conditions

• Government and regulatory influences

• Differing consumer behavior patterns

• Local Competition

• True to the marketing concept

According to Johnson

Product planning determines the characteristics of product that best meets the consumers numerous desires, characteristics that add salability to products and incorporates these characteristics into the finished products.

Characteristics of product planning:-

1. Product investigation

2. Changing in commodity according to demand

3. To know the practical aspect of the product

4. Discontinuance of the product

5. Importance of the product planning

Product Planning

Importance of the product planning marketing:-

1. Starting point of the marketing

2. Means of fulfilling social ability

3. Indicators to managerial ability

4. Competitive tool

5. Wide scope

Product Planning