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Copyright © 2016 Pearson Education Ltd. 13-1
Chapter 13
SettingProduct Strategy
Copyright © 2016 Pearson Education Ltd. 13-2
Product Characteristicsand Classifications
• Product– 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. 13-3
Product Levels: The Customer-Value Hierarchy
• Figure 13.2: Five Product Levels
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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. 13-5
Product Classifications
Durability
Tangibility
Use-consumer-industrial
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Durability and Tangibility
Nondurable goods – cosmetics, cigarette, cleaning products, food Availability - Small markup - Heavy advertisement
Durable goods – computers, refrigeratorsPersonal selling – Higher margin - Guarantees
Services – haircuts, legal adviceQuality control – Supplier credibility
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Consumer-Goods Classification
Convenience
Shopping
Specialty
Unsought
Staples: regular basis
Impulse goods: Without plan
Emergency goods
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Industrial-Goods Classification
Materials and parts
Capital items
Supplies and business services
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MATERIALS AND PARTS
• 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)
Enter the manufacturer’s product completely
Copyright © 2016 Pearson Education Ltd. 13-10
CAPITAL ITEMS
• 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)
Long-lasting goods that facilitate developing or managing the finished product
Copyright © 2016 Pearson Education Ltd. 13-11
SUPPLIES AND BUSINESS SERVICES
• 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)
Short-term goods and services that facilitate developing or managing the finished product
Copyright © 2016 Pearson Education Ltd. 13-12
Product Differentiation• Form• Features• Performance quality• Conformance quality• Durability
• Reliability• Repairability• Style• Customization
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Services Differentiation
Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns
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Design
• Design– The totality of
features that affect the way a product looks, feels, and functions to a consumer
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Luxury brands
• Quality• Uniqueness• Craftsmanship• Heritage• Authenticity• History
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Marketing Luxury Brands
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Environmental Issues
• Environmental issues are also playing an increasingly important role in product design and manufacturing
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THE PRODUCT HIERARCHY
1. Need family
2. Product family
3. Product class
4. Product line
5. Product type
6. Item
having a certain functional coherence
product classes that can satisfy a core need
The core need Computation
similar functioning, sold to the same customer groups, are marketed through the same channels, or fall within given price ranges
A group of items within a product line that share one of several possible forms of the product
A distinct unit within a brand or product line distinguishable by size, price, appearance or some other attributes
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Need Family: Personal care
Sunsilk Example
Product Family: Hair care
Product Class: Shampoo
Product Line: SunsilkProduct 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
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Product Lines of Apple
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Product Systemsand Mixes
• Product system• Product
mix/assortment– Width– Length– Depth– Consistency
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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)
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Reasons for Up-Market Stretch
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RISKS IN UP-MARKET STRETCH
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DOWN MARKET STRETCH
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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
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JOINT VENTURE CO-BRANDING
• two or more companies going for a strategic alliance to present a product to the target audience
https://www.youtube.com/watch?v=HmVkx5wTxtk
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Copyright © 2016 Pearson Education Ltd. 13-35
Citibank/ American Airlines/ Visa credit card partnership
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Copyright © 2016 Pearson Education Ltd. 13-37
INGREDIENT BRANDING
• Co-branding that creates brand equity for parts that are necessarily contained within other branded products
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Packaging
• All the activities of designing and producing the container for a product
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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
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Packaging
Copyright © 2016 Pearson Education Ltd. 13-42
Labeling, Warranties, and Guarantees
• Labeling– 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. 13-43