Final PPT Product

8/3/2019 Final PPT Product

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THE PRODUCT

Products are almost always combinations ofthe tangible and intangible. The entirepackage is sometimes referred to as the

augmented product.

The mix of tangibles and intangibles in the

augmented product varies from one productor service to another.


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THE PRODUCT

Product is a key element in the marketoffering. Marketing mix planning beginswith formulating an offering to meet target

customers needs or wants.

The customer will judge the offering by

three basic elements : product featuresand quality, services mix and quality, andprice appropriateness.


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COMPONENTS OF THE MARKETOFFERING

Attractiveness of the

market offering

Value based pricing

Product features and

quality Services mix andquality


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PRODUCT LEVELS

In planning its market offering, themarketer needs to think through fivelevels of the product.

Each level adds more customer value, andthe five constitute a customer valuehierarchy.


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FIVE LEVELS OF THE PRODUCT

(1) CoreProduct

(2) Basic

Product

3)Expected

Product(4) Augmented

Product

(5) PotentialProduct


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Core Product / Core Benefit :Thefundamental service or benefit that thecustomer is really buying.

Basic Product :At the same level, themarketer has to turn the core benefit into abasic product.

Expected Product :A set of attributes andconditions buyers normally expect when theypurchase this product.


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Augmented Product :The marketer prepares anaugmented product that exceeds customerexpectations.

Todays competition essentially takes place at the

product-augmentation level. ( In less developed

countries, competition takes place mostly at the

expected product level ).


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( Augmented Product )

According to Levitt : The new competition is not

between what companies produce in theirfactories, but between what they add to theirfactory output in the form of packaging, services,advertising, customer advice, financing, deliveryarrangements, warehousing, and other things that

people value.


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Some things should be noted about product-augmentation strategy :

First, each augmentation adds cost. Themarketer has to ask whether customers will payenough to cover the extra cost.

Second, augmented benefits soon becomeexpected benefits. For gaining competitiveadvantage one will have to search for still otherfeatures and benefits.


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( product-augmentation strategy )

Third, as companies raise the price of

their augmented product, somecompetitors can offer a Stripped-down version at a much lower price. Thusalongside the growth of fine products wesee the emergence of lower-costproducts for the clients who simply wantthe basic product.


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Potential Product :encompasses all the possibleaugmentations and transformations the productmight undergo in the future. Companies search fornew ways to satisfy customers and distinguish

their offer. ( Successful Companies add benefits to their

offering that not only satisfy customers but alsosurprise and delight them. ) The best way to hold

customers is to constantly figure out how to givethem more for less.


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PRODUCT DIFFERENTIATION

The challenge before the product marketers is tocreate relevant and distinctive productdifferentiation. The product differentiation maybe based on :

Physical Differences ( eg.features, performance,conformance, durability, reliability, design, style,packaging )

Availability Differences (eg.available from storesor orderable by phone, mail, fax, internet )


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PRODUCT DIFFERENTIATION

Service Differences ( eg., delivery, installation,training, consulting, maintenance, repair )

Price Differences ( eg., very high price, mediumprice, low price, very low price )

Image Differences ( eg., symbols, atmosphere,

events, media )


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CHALLENGES FOR PRODUCTINNOVATORS

Any successful differentiation will tend todraw imitators. The innovator faces threechoices :

Lower the price to protect market shareand accept lower profits.

Maintain the price and lose some marketshare and profits.

Find a new basis to differentiate theproduct and maintain current price.


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PRODUCT CLASSIFICATION

ON THE BASIS OF PRODUCTCHARACTERISTICS :DURABILITY,TANGIBILITY AND USE (consumer or

industrial )

(1) NON-DURABLE

(2) DURABLE(3) SERVICES


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(1) NON-DURABLES or SOFT GOOD These are tangible goods normally consumed in one

or few uses. Because these goods are consumedquickly and purchased frequently, the appropriatestrategy is to make them available at many

locations, charge only a small mark up andadvertise heavily to induce trial and buildpreference.

Ex-FMCGs such as cosmetics and cleaning products, food,

fuel, office supplies, packaging and containers, paper andpaper products, personal products, rubber, plastics,textiles, clothing and footwear. Toothpaste, Soaps, Medicine,Eatables
http://en.wikipedia.org/wiki/FMCGhttp://en.wikipedia.org/wiki/Cosmeticshttp://en.wikipedia.org/wiki/Cosmeticshttp://en.wikipedia.org/wiki/FMCG


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(2) DURABLES OR HARD GOOD

These are tangible goods that normallysurvive many uses. Normally require more

personal selling and service, command ahigher margin, and require more sellerguarantees.

Ex: Cars, appliances, business equipment, electronicequipment, home furnishings and fixtures, housewareand accessories, photographic equipment, recreationalgoods, sporting goods, toys and games
http://en.wikipedia.org/wiki/Home_appliancehttp://en.wikipedia.org/wiki/Home_appliance


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PRODUCT CLASSIFICATION

ON THE BASIS OF CUSTOMER SHOPPINGHABITS :

(1)CONVENIENCE GOODS(2)SHOPPING GOODS

(3)SPECIALITY GOODS

(4)UNSOUGHT GOODS


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(1) CONVENIENCE GOODS are goods that the customer usually

purchases frequently, immediately, andwith a minimum of efforts.

(A) Staples: Consumers purchase on aregular basis.

(B) Impulse Goods: are purchased withoutany planning or search efforts.

(C) Emergency Goods: are purchased whena need is urgent.


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(2) SHOPPING GOODS

are goods that the customer , in the process of

selection and purchase, characteristically compareson such basis as suitability, quality, price and style.

(A) Homogeneous Shopping Goods: are similar in

quality but different enough in price to justifyshopping comparisons.

(B) Heterogeneous Shopping Goods: differ in product

features and services that may be more importantthan price.


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(3) SPECIALITY GOODS

are goods with unique characteristics or

brand identification for which buyer is

willing to make a special purchasing effort.


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(4) UNSOUGHT GOODS

are goods the consumer does not know

about or does not normally think of buying.

These goods require advertising and

personal selling support.


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PRODUCT STRATEGY

Calls for coordinated decisions on :

(1) Product Mix

(2) Product Line

(3) Individual Product

(4) Service Product


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PRODUCT MIX

A product mix (also called productassortment) is the set of all products linesand items that a particular company offers

for sale. A total group of products that an

organization markets.

A companys product mix has a certainwidth, length, depth and consistency.


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DIMENSIONS OF PRODUCT MIX

The width of companys (say HULs) product

mix refers to how many different product

lines the company carries, such as bathing

soap, detergents, shampoos, toothpaste,

food products.


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The length of a companys product mix

refers to the total number of items in its

product mix. Thus in each of the product

line HLL has a number of product items.

Eg., in the product line of bathing soaps,

HLL has several product items like Lux,

Liril, Lifebuoy, Pears.


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The depth of a companys product mixrefers to how many variants are offered ofeach product in the line. Thus if close up

toothpaste comes in three formulations andin three sizes, Close up has a depth of nine(3x3). The average depth of HLL productmix can be calculated by averaging the

number of variants within the brand groups.


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The Consistency of the product mix refersto how closely related the various productlines are in end-use, production

requirements, distribution channels, orsome other way. HLLs product lines areconsistent insofar as they are consumergoods that go through the same distribution

channels.


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These four dimensions of the product mixprovide the handles for defining the companysproduct strategy. The company can expand itsbusiness in four ways.

The Co. can add new product lines, thus wideningits product mix.

The Co. can lengthen each product line.

The Co. can add more product variants to each

product and deepen its product mix. The Co. can pursue more product-line

consistency or less, depending upon whether itwants to acquire a strong reputation in a single

field or participate in several fields.


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HLL PRODUCT MIX

PRODUCT MIX WIDTH

PL-1Bath Soaps

PL-2Fabric Wash

PL-3Beverages

PL-4,5 etc

DoveLirilLe SancyRexonaLifebuoyHamamBreezeJaiMoti

SurfRinWheelSunlightAla501

BruBrooke Bond red labelLipton Green labelTTaazaTaj Mahal

Super DustRuby DustA1


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PRODUCT LINE

A product line is a group of productsthat are closely related, because theyperform a similar function, are sold to

the same customer groups, aremarketed through the same channelsor fall within the given price ranges.

The product mix may be composed of

several product lines.


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PRODUCT LINE ANALYSIS

Product line managers need to knowthe sales and profits of each item intheir line in order to determine which

items to build, maintain, harvest,, ordivest. They also need to understandeach products market profile, i.e.how their product line is positioned

against competitors product lines(The Product Map).


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Product Line Stretching

Line stretching is a measure firms undertakefrequently in product management.

AIM:

To enter a new price slot and a new marketsegment ,which is not covered by the existingoffers of the firm. It can be in two ways

Line Stretching

Stretching UPStretching Down


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Product Line Stretching

When a company stretches a particular product line upwardor downwardit changes current productpositioning into customer mind

Its find new positioning planks for the new offers andenters new market segments

Satisfaction of new segments of customers through newoffers

Co. always take care to see that the stretching down orstretching up decisions do not adversely affect its mainproduct /brand in the line and image it has built up over theyears

Ex-As Parker has stretched down to lower end market it haslost its premium image


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Stretching UP When the Co. Has positioned its product at lower end

market ,decides to make higher priced offer for the topslots known as stretching up

In stretching up firm moves up the line from its originalposture to and make high priced offers from its stable

It addresses the new segment ,even existing customers areencouraged to aspire for premium products for theirpreferred firm/brand

Examples:

Philips-Earlier phase Philips was into two in one section b/w

1000-1500 & use to cater mass market ,at that time due tohigh sales and good services co thought to take a risk andmove into higher segment. They launched there Power Playrange & it got successful.


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Stretching Down

When company has initially taken its position athigher price slot ,stretches the line downwards byoffering the product in the same line for lower endmarkets

They move their product availability from nichemarket to mass market

To make more profits & try to enter into newmarket

Existing customers also get excited and are theprobable purchasers at initial stage to thecompany


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Stretching Down

Examples:

a) HUL-HUL was playing into market into higher slot of detergentsof Surf due to higher price segment and wake of competition oflow price brands like Nirma, Ghadi, HLL decided to down stretchits detergent line by giving lower priced offers Like Wheel,Sunlight were the result of this decision.

b) Parker-Parker has come down to economic change where themass market can afford it.

c) Ariel-When P & G was entering the Indian detergent market ,it

chose to serve the high end market ,high tech offers.-It was high premium priced , concentrated , detergent powder

To enter into lower end market they launched the variousproducts into blue & green bars, Airtel super soaker


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Line filling

In Line filling company offers Full Line products,so that customers do not go to competitors foroffers /models in a particular price slots.

Examples: Videocon

Air Conditioners

TV segment

Washing Machines

Microwaves Iron


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Line Pruning

Companies after some years of growth find thattheir product lines have become unduly long &complicated ,with too many brands ,variantsand pack sizes ,because of this company

withdraw/reduce its some of the brands . Reason for Pruning:

a) Profitability might be under strain

b) Line pruning is opposite of line stretching

c)

Serving market through some value addedproducts

Ex: P&G,Head & Shoulders[35 versions but reducedto 15]


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Why Product Management

Product management means managing thevarious Product lines and the overall Product mixof the company, it is also know as Product policyManagement.

Main task in Product Management:

How many different Product Lines should theFirm accommodate? How can the different linesbe grouped for effective management?

What composition need to be taken within aproduct line

How to position these product in the market?


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Why Product Management

What should be the brand policy? Shouldthere be individual brands or Familybrands? what should be the approach to

brand extensions? How to develop brand equity?

How to plan for new products so that inthe long run the firm retains a healthy

product portfolio?


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Main tasks in Product Management

Appraisal of each product line and eachproduct/brand in the line

Decisions on Packaging

Product differentiation and positioning Managing brands and developing brand

equity

New Product Development Managing the PLC of Products/Brands

Managing product quality

A i l f h d li d h


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Appraisal of each product line and each

product/brand in the line

Appraisal is required due to changingbusiness environment ,Customer tasteand preferences,Comptetion

Why:

Given product might have lost its marketacceptance

It may be facing problem in its functional

criteria due to new/improved/substituteproducts

Lost its profitability

A i l f h d li d h


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Other product may be poor and damaging its ownsales and members of the product line

Product might be entered into its decline stage

Results:

Withdrawal of existing products

Changing the quality control of products

Giving an independent brand name to product Adding new features to the product

Introducing new product all together

A i l f h d t li d h


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Ex: HUL

Is soap line working properly?

Is it achieving it sales target?

What market share it is maintaining? Is there too much competition?

Do lime have too many brands

Which brand need to be discontinued

Should the line stretching need to be doneto new price slots

A i l f h d t li d h


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Does the line need pruning?

Does the line need filling

Which are the best performing brands?

Which are the weak ones?

The Firms need to be continuous monitor

and take decisions to its product line forbetter profits.


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Packaging Everyday, we encounter different types of packaging, but

how many of us truly appreciate the art of packaging? Fromfood packaging to beverage containers, tissue boxes to CDcovers, packaging is hard to be missed in our daily lives.Yet not many of us see packaging as a form of art. Are wetaking it for granted because it is around us at all times? Orperhaps we see it simply as a marketing tool to sellproducts?

When was the last time you were excited by the packagingof a product? Did it persuade you to buy the product?

Packaging is not only a powerful selling tool, it is also aneffective method of communication that can stimulate theviewers senses. Good packaging can break through thelanguage barrier and can stand the test of time.


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Packaging

Packaging is the science, art and technology ofenclosing or protecting products for distribution,storage, sale, and use. Packaging also refers totheprocess of design, evaluation, and production

of packages. Packaging can be described as acoordinated system of preparing goods fortransport, warehousing, logistics, sale, and enduse. Packaging contains, protects, preserves,

transports, informs, and sells. In many countriesit is fully integrated into government, business,institutional, industrial, and personal use.


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Packaging

Physical protection - The objects enclosed in thepackage may require protection from, among other things,shock, vibration, compression, temperature, etc

Barrier protection - A barrier from oxygen, water

vapor, dust, etc. Containment or agglomeration - Small objects

are typically grouped together in one package for reasonsof efficiency Liquids, powders, and granular materials need

containment.

Convenience - Packages can have features that addconvenience in distribution, handling, stacking, display,

sale, opening, reclosing, use, dispensing, and reuse
http://en.wikipedia.org/wiki/Shock_(mechanics)http://en.wikipedia.org/wiki/Vibrationhttp://en.wikipedia.org/wiki/Temperaturehttp://en.wikipedia.org/wiki/Oxygenhttp://en.wikipedia.org/wiki/Water_vaporhttp://en.wikipedia.org/wiki/Water_vaporhttp://en.wikipedia.org/wiki/Powder_(substance)http://en.wikipedia.org/wiki/Granular_materialhttp://en.wikipedia.org/wiki/Granular_materialhttp://en.wikipedia.org/wiki/Powder_(substance)http://en.wikipedia.org/wiki/Water_vaporhttp://en.wikipedia.org/wiki/Water_vaporhttp://en.wikipedia.org/wiki/Oxygenhttp://en.wikipedia.org/wiki/Temperaturehttp://en.wikipedia.org/wiki/Vibrationhttp://en.wikipedia.org/wiki/Shock_(mechanics)


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Packaging Types

Packaging may be looked at as being of several differenttypes. For example a transport package or distributionpackage can be the shipping container used to ship, store,and handle the product or inner packages. Some identify aconsumer package as one which is directed toward a

consumer or household.

Packaging may be described in relation to the type ofproduct being packaged: medical device packaging, bulkchemical packaging, over-the-counter drug packaging,retail food packaging, military materiel packaging,

pharmaceutical packaging, etc.
http://en.wikipedia.org/wiki/Shipping_containerhttp://en.wikipedia.org/wiki/Medical_devicehttp://en.wikipedia.org/wiki/Chemical_substancehttp://en.wikipedia.org/wiki/Over-the-counter_drughttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Materielhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Medicationhttp://en.wikipedia.org/wiki/Materielhttp://en.wikipedia.org/wiki/Foodhttp://en.wikipedia.org/wiki/Over-the-counter_drughttp://en.wikipedia.org/wiki/Over-the-counter_drughttp://en.wikipedia.org/wiki/Over-the-counter_drughttp://en.wikipedia.org/wiki/Over-the-counter_drughttp://en.wikipedia.org/wiki/Over-the-counter_drughttp://en.wikipedia.org/wiki/Chemical_substancehttp://en.wikipedia.org/wiki/Medical_devicehttp://en.wikipedia.org/wiki/Shipping_container


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Packaging Types It is sometimes convenient to categorize packages by layer

or function: "primary", "secondary", etc. Primary packaging is the material that first envelops the

product and holds it. This usually is the smallest unit ofdistribution or use and is the package which is in directcontact with the contents.

Secondary packaging is outside the primary packaging,perhaps used to group primary packages together.

Tertiary packaging is used for bulk handling, warehousestorage andtransport shipping. The most common form isa palletizedunit load that packs tightly into containers.

These broad categories can be somewhat arbitrary. For

example, depending on the use, a shrink wrap can beprimary packaging when applied directly to the product,secondary packaging when combining smaller packages,and tertiary packaging on some distribution packs.
http://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Warehousehttp://en.wikipedia.org/wiki/Pallethttp://en.wikipedia.org/wiki/Unit_loadhttp://en.wikipedia.org/wiki/Unit_loadhttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Containerizationhttp://en.wikipedia.org/wiki/Pallethttp://en.wikipedia.org/wiki/Unit_loadhttp://en.wikipedia.org/wiki/Containerizationhttp://en.wikipedia.org/wiki/Shrink_wraphttp://en.wikipedia.org/wiki/Shrink_wraphttp://en.wikipedia.org/wiki/Shrink_wraphttp://en.wikipedia.org/wiki/Containerizationhttp://en.wikipedia.org/wiki/Unit_loadhttp://en.wikipedia.org/wiki/Pallethttp://en.wikipedia.org/wiki/Transporthttp://en.wikipedia.org/wiki/Warehousehttp://en.wikipedia.org/wiki/Logistics


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Packaging Types


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Symbols used on packages and labels

Many types of symbols for package labeling are nationallyand internationally standardized. For consumer packaging,symbols exist for product certifications, trademarks, proofof purchase, etc. Some requirements and symbols exist tocommunicate aspects of consumer use and safety.

Examples of environmental and recycling symbols include:Recycling symbol, Resin identification code (below), andGreen Dot (symbol).

Bar codes (below), Universal Product Codeslabels are common to allow automatedinformation management in logistics andretailing. Country of Origin Labeling is often used.
http://en.wikipedia.org/wiki/Trademarkhttp://en.wikipedia.org/wiki/Proof_of_purchasehttp://en.wikipedia.org/wiki/Proof_of_purchasehttp://en.wikipedia.org/wiki/Recycling_symbolhttp://en.wikipedia.org/wiki/Resin_identification_codehttp://en.wikipedia.org/wiki/Green_Dot_(symbol)http://en.wikipedia.org/wiki/Barcodehttp://en.wikipedia.org/wiki/Universal_Product_Codehttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Country_of_Origin_Labelinghttp://en.wikipedia.org/wiki/Country_of_Origin_Labelinghttp://en.wikipedia.org/wiki/Retailinghttp://en.wikipedia.org/wiki/Logisticshttp://en.wikipedia.org/wiki/Universal_Product_Codehttp://en.wikipedia.org/wiki/Barcodehttp://en.wikipedia.org/wiki/Green_Dot_(symbol)http://en.wikipedia.org/wiki/Resin_identification_codehttp://en.wikipedia.org/wiki/Recycling_symbolhttp://en.wikipedia.org/wiki/Proof_of_purchasehttp://en.wikipedia.org/wiki/Proof_of_purchasehttp://en.wikipedia.org/wiki/Trademark


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Product differentiation A marketing process that showcases the differences

between products. Differentiation looks to make a productmore attractive by contrasting its unique qualities withother competing products. Successful productdifferentiation creates a competitive advantage for theseller, as customers view these products as unique or

superior.

The Major attraction and the major benefit in resorting todifferentiation is that it takes the firm away form a totalprice based competition .

It Allows firm to fight on No-Price Plank

Through differentiation ,firms move to a position whereinthey can claim a premium in the market


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Product differentiation Differentiation can be Achieved through Multiple Sources

and in multiple ways:

Product differentiation can be achieved in many ways. Itmay be as simple as packaging the goods in a creative way,or as elaborate as incorporating new functional features.

Sometimes differentiation does not involve changing theproduct at all, but creating a new advertising campaign orother sales promotions instead

Cos can achieve diff. using the product, or distributionmethods , or promotion steps.

It can start from Firms collaboration , or Plant location , toits after sales service.


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Product differentiation

Being unique in the marketplace provides distinctadvantages. In fact, if you do not providesomething unique, your business will be severelychallenged. So, what are the three elements of

product differentiation?

1. Convenience (or timing)

2. Customization.

3. Cost Recovery


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1. Convenience (or timing)

People don't want to wait these days. In order todifferentiate your product from your competitors', considerhow you can deliver your goods and services preciselywhen they are needed. Often, this means being faster than

your competitor but not always! If I order drapes as partof a renovation project, for example, I don't necessarilywant them immediately. I may not need them for sixweeks. If I get them too soon, they might get damagedwaiting to be hung.

However, I do want them when the time is right forme. The company that can deliver what I need when Ineed it will certainly be better positioned to earn mycontinued business.


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2. Customization. When I order those drapes, I don't want just any old size or

pattern. They need to fit perfectly to my windows, and I wantthem in the style and color pattern that goes best in my house.

Customization is an element of product differentiation that cannotbe over-emphasized. The more you know about your customers'

needs and the better you do in serving those needs to yourcustomers' satisfaction the stronger your competitive positionwill be in the market.

Service-based businesses are particularly capable ofcustomization.

Even with a product-based business, there are still techniquesavailable for individualizing your firm, such as customizing yourbillings, or special packaging for your best customers.

Product customization is a rapidly growing field for clothing,footwear (ex. sports shoes in school colors), backpacks in thecolor you want, cosmetics, automobiles, motorcycles, etc.


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3. Cost Recovery

Cost recovery does not mean paying the cheapestprice. It does mean gaining the highest leverageper rupee spent. Often, in fact, it makes more

sense to spend a little more to obtain a productor service that most closely aligns with yourneeds and brings satisfaction. Too frequently, "Igot it cheap" is the consolation prize when you

end up with something that really doesn'tproperly serve your needs


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Product differentiation These three elements of product differentiation

convenience, customization, and cost recovery mayappear to be simple and obvious. Unfortunately, they arefar too often missing in your efforts to develop and improveyour position in the market. As a result, companies thatfocus on providing these three elements and improving

them steadily will be in a much better position to gain andkeep a competitive advantage over their rivals. To put itanother way, paying attention to these three "c"s will yielda fourth: commerce.

Commerce happens when your customers' needs equal

your ability to satisfy them, building a steady flow ofcontinued customer satisfaction and business growth.

Please take a few moments over the next week or so andlook to see how well you do in each of these three elementsof product differentiation.


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Maximum Scope of diff. remains with product:

The Product can be differentiation along 2 major planks:

A. Tangible product

B. Intangible Product

Tangible Product:

a) Ingredients/Formulas

b) Functional value

c) Additional Features

d) Packaging

e) Design Superiority

f) Product Quality/technology/service/operational efficiency

Product differentiation-Tangible


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Product differentiation-Tangible

Product

Ingredients/Formulas

Ex: Close Up toothpaste with gelTTK Prestige with Teflon coatingPromise with clove oil

Vatika with herbal ingredientsParashute ,Antidandruff OilClinic plus Antidandruff ShampooSafola for reduce Cholesterol

Functional value

Ex: 3M Scotch TapeVideocon Computer controlled fridgeNokia Phone BatteriesMicrowave


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Additional FeaturesEx: The mega feature as a differentiation: Companies in the

television ,audio and refrigerators industries in India.came with mega sized products and used the mega feature aspart of their differentiation effort

In TV sets BPL,Videocon, Onida, Philips etc.

After sales service, Pre-sales service [Banking]

PackagingEx: The Ponds cold cream and brylcreem in tubes

Application convenience of Harpic

The beer CanEconomy PacksSachetsReusable ContainersRefill Packs


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Design SuperiorityEx: Titan Watches

Tanishq Jwellery

Automobile industry

Product Quality/technology/service/operational efficiencyEx: Godrej

Infosys

Sony

Ford

EscodaNokia Phones

Raymonds

Rayban

Zodiac

Kingfisher

Product differentiation-Intangible


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Product differentiation Intangible

Product

Dinesh Suitings

Reid & Taylor

Rayban

BMW

Mercedes

Ferrari

Diamonds


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INDIVIDUAL PRODUCT DECISIONS

Product Attribute Decisions

Brand Decisions

Brand Positioning

Packaging and Labeling


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DEFINITION OF BRAND

American Management Associationdefines brand as follows :

A brand is a name, term, sign,

symbol, or design, or a combination ofthem, intended to identify the goodsand services of one seller or group ofsellers and to differentiate them from

those of competitors.


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THE MEANING OF BRAND

The brand is not a product but itgives the product meaning anddefines its identity in both time and

space. Brands are a direct consequence of

the strategy of market segmentationand product differentiation.

Companies want to stamp theirmark on different sectors and settheir imprint on their products.


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BUILDING THE BRAND

The art of marketing is the art ofbrand building. When something isnot a brand, it will probably viewed as

a commodity. Then price is whatcounts. When price is the only thingthat counts, the only winner is thelow-cost producer.

. ( PhilipKotler )


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BRAND NAME DECISIONS

Individual Names

Blanket Family Names Separate Family Names for all

products

Company Trade name combined

with individual product names.


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BRAND NAME

It should suggest something aboutthe products benefits.

It should suggest something about

product qualities. It should be easy to pronounce,

recognize and remember.

It should be distinctive.

It should not carry poor meanings inother countries and languages.


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BRAND IDENTITY AND ASSOCIATION

A brand identity or association isanything that is directly or indirectlylinked in memory to a brand. Themost common association is that of

product attributes or customerbenefits.

A brands associations are assetsthat can differentiate, providereasons to buy, instil confidence andtrust, affect feelings towards aproduct and the use experience, andprovide the basis for brand

extension.


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BENEFITS OF BRAND AWARENESS

First, awareness provides the brandwith a sense of familiarity, andpeople like the familiar.

Second, name awareness can be asignal of presence, commitment,and substance. The logic is that if aname is recognized, there must be areason.

Third, the salience of a brand willdetermine if it is recalled at a keytime in the purchasing process.


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BRAND LOYALTY

First, brand loyalty reduces the marketing

costs of doing business, since existingcustomers are relatively easier to hold. Second, brand loyalty represents a

substantial barrier to competitors.Excessive resources are required when

entering a market in which existingcustomers must be enticed away from anestablished brand that they are loyal to.

Third, Brand loyalty provides tradeleverage.

Fourth, a relatively large, satisfied customerbase provides an image of a brand as anaccepted, successful, and enduring product.

Finally, brand loyalty provides the time torespond to competitive moves.


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DEFINITION OF BRAND EQUITY

Brand equity is a set of assets and

liabilities linked to a brands name

and symbol that add to or substract

from the value provided by aproducer or service to a firm and /

or that firms customers.

Brand equity generates value to thecustomer that can emerge either as

a price premium or enhanced brand

loyalty.


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BRAND EQUITY

Brand

Awareness

Brand

Identity

BrandLoyalty

Perceived

Quality

Brand

Equity

( Powerful brands have high brand

equity, higher brand loyalty.)


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TOOLS FOR BUILDING BRAND

Advertising

Sponsorship of games and events

Social Causes

Public Facilities

Founders personality


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BRAND STRATEGY DECISIONS

Line Extensions

Brand Extensions

Multibrands

New brands

Co-brands


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BRAND STRATEGY DECISIONS

ProductCategory

Existing New

BrandName

Existing

New

LineExtension

BrandExtension

Multibrands

New Brand

Names


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LINE EXTENSION

Line extension occurs when a companyintroduces additional items in the sameproduct category under the same brandname, usually with new flavours, forms,

colours, added ingredients, package sizesand so on.

Line extensions generally have a higherchance of survival than new products.

On the down side extensions may lead tothe brand name losing its specificmeanings; Ries and Trout call this LineExtension Trap .


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BRAND EXTENSION

Brand Extension occurs when a

company decides to use an existing

brand name to launch a product inthe new category.

Brand Extension offers a number of

advantages.

-Instant recognition and earlier

acceptance

-Saves considerable advertisement


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BRAND EXTENSION

Brand Extension also involves risks.

- The new product might disappoint

buyers and damage their respect forcompanys other products.

- The brand name may loose itsspecial positioning in the

consumers mind through overextension - a phenomenon called brand dilution .


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MULTI BRANDS

A company will often introduceadditional brands in the sameproduct category.

- One of the motives formultibranding is to establishdifferent features and/or appeal todifferent buying motives.

- It also enables the company to lockup more distributor shelf space andprotest its major brand by setting upflanker brands.


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NEW BRANDS

When a company launches products

in a new category, it may find that

none of its current brand names are

appropriate.

When the present brand image is not

likely to help the new product,companies are better off creating new

brand names.


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CO-BRANDS

Co-branding occurs when two

different companies pair their

respective brands in a collaborative

marketing effort.

Each brand sponsor expects that

other brand name will strengthenbrand preference or purchase

intention.


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PRODUCT LIFE CYCLE

The Product Life Cycle ( PLC ) is animportant concept in marketing that

provides insights into a productscompetitive dynamics.

To fully understand the concepts ofPLC , one should first understand its

parent concept, the demand andtechnology life cycles.

DEMAND / TECHNOLOGY

LIFE CYCLE


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LIFE CYCLE

Marketing thinking should notbegin with a product or even aproduct class, but rather with aneed.

The product exists as one solution

among many to meet a need. A need is satisfied by some

technology. Each new technology normally

satisfies the need in a superior wayand it shows a demand-technologylife cycle.

The PLC portrays distinct stages in

the sales history of a product.

DEMAND-TECHNOLOGY-PRODUCT


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DEMAND TECHNOLOGY PRODUCT

LIFE CYCLES

Time

Sales


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STAGES IN THE PRODUCT LIFE CYCLE

Sales&

Profits

TimeIntroduction Growth Maturity Decline

STAGES IN THE PRODUCT LIFE


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STAGES IN THE PRODUCT LIFE

CYCLE

By identifying the stage that a product is in, ormay be headed toward, companies can formulatebetter marketing plans.

Products require different marketing, financial,manufacturing, purchasing and personnelstrategies in each stage of their life cycle.

Marketers must pursue appropriate marketingstrategies in each stage of PLC.

Today, in order to succeed, it is absolutelyessential to constantly improve products toincrease the value offered to customers, ( V =B/P ).

The success of competitors is based on creatingvalue for the customer by differentiating theirproduct, ( Competitive Differential ).

EXTENDING THE PRODUCT LIFE


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U

CYCLE

Sales

Time( When the sales of a product starts decliningmarketers may choose suitable strategy forfurther growth of product /business/enterprise.)


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PRODUCT LIFE CYCLE

Reasons for change in behavior ofPLC :

--Changes in the consumer needs and

preferences --Advancing Technology

--Competition, Government Policies etc.

--Changes in number of potential buyers

Stages in PLC :Introduction, Growth, Maturity, AndDecline.

MARKETING STRATEGIES IN THE


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INTRODUCTION STAGE

Promotion

Price

High Low

High

Low

RapidSkimmingStrategy

SlowSkimmingStrategy

Rapid

PenetrationStrategy

SlowPenetration

Strategy



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GROWTH STAGE

It improves product quality and adds newproduct features and improved styling.

It adds new models and flanker products(i.e., products of different sizes, flavors,and so forth that protect the main product).

It enters new market segments. It increases its distribution coverage and

enters new distribution channels.

It lowers prices to attract the next layer ofprice-sensitive buyers. It shifts from product-awareness

advertising to product-preferenceadvertising.


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MATURITY STAGE

Sales are increasing but at adecreasing rate.

Profits are beginning to decline.

Price competition increases.

The manufacturer assume a greatershare of the total promotional

effort in the fight to retain dealersand shelf space in their stores.


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MATURITY STAGE

To understand better, we can devideMaturity Stage into three stages :

Growth Maturity : When the rate of sales growth

starts to decline because of distribution saturation.

Stable Maturity : When the rate of sales growthstarts declining due to market saturation.

Decaying Maturity : The sales level starts to decline

as some of the customers move towards other

competitive and substitute products.



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MATURITY STAGE

Market Modification

Product Modification

Marketing Mix Modification


MATURITY STAGE


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MATURITY STAGE

Market Modification Expand number of users :

- Convert non-users

- Enter new market segments

- Win competitors customers Increase annual usage :

- More frequent use

- More usage per occasion

- New and more varied uses



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MATURITY STAGE

Product Modification A strategy of quality improvement aims at

increasing the products functional

performance - its durability, reliability,speed, taste.

A strategy of feature improvement aimsat adding new features ( for example -size, weight, materials, additives,

accessories ) that expand the productsversatility, safety, or convenience.



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MATURITY STAGE

Product Modification (contd.)

A strategy of style improvement aimsat increasing the products aesthetic

appeal. The periodic introduction ofnew car models amounts to stylecompetition rather than quality orfeature competition.



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MATURITY STAGE

Marketing Mix Modification Prices

Distribution

Advertising Sales Promotion

Personal Selling

Services



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DECLINE STAGE

Identifying the Weak Products

To do this, many companies appoint aproduct-review committee with

representatives from marketing,R&D, manufacturing and finance. Theproduct review committee makes a

recommendation for each dubiousproduct--leave it alone, modify itsmarketing strategy, or drop it.


DECLINE STAGE (Contd )


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DECLINE STAGE (Contd.)

Determining Marketing Strategies :

( Go Strategy )

Continuation Strategy :

-Increasing the firms investment ( to

dominate the market or strengthenthe competitive position )

- Maintaining the firms investmentlevel until the uncertainties aboutthe industry are resolved.(Contd.)



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DECLINE STAGE (Contd)

Determining Marketing Strategies :( Go Strategy )

Concentration Strategy :

- Decreasing the firms investment level

selectively, by dropping unprofitablecustomer groups, while simultaneouslystrengthening the firms investment inlucrative niches.

Harvesting Strategy :- Divesting the business quickly by disposing

of its assets as advantageously as possible.



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DECLINE STAGE (Contd)

The Drop Strategy

- When a company decides to drop aproduct, it faces further decisions. If the

product has strong distribution andresidual goodwill, the company canprobably sell it to another firm.

- If the company cant find any buyers, itmust decide whether to liquidate the

brand quickly or slowly. It must alsodecide on how much parts inventory andservice to maintain for past customers.

NEW PRODUCT DEVELOPMENT


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PROCESS

(1) Idea Generation

(2) Screening

(3) Concept Development andTesting

(4) Marketing Strategy

(5) Business Analysis

(6) Product Development (7) Market Testing

(8) Commercialization

THE CONSUMER ADOPTIONPROCESS


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(STAGES IN THE ADOPTION PROCESS )

Awareness : The consumer becomesaware of the innovation but lacksinformation about it.

Interest : The consumer is stimulated toseek information about the innovation.

Evaluation : The consumer considerswhether to try the innovation.

Trial : The consumer tries the innovation

to improve his or her estimate of itsvalue.

Adoption : The consumer decides to makefull and regular use of the innovation.

ADOPTER CATEGORIZATION ON THEBASIS OF RELATIVE TIME OF


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ADOPTION OF INNOVATIONS

Ti f d ti f i ti

Documents

Final PPT Product