Lect13-3rd Mar - Product Decisions & PLC

8/2/2019 Lect13-3rd Mar - Product Decisions & PLC

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Recap of the last Class:

Various bases of segmenting themarket

Requirements of effectivesegmentation

Targeting strategies

Positioning strategies Determinants of good positioning

Positioning Pitfalls

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Five Product Levels:


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Product Hierarchy:

Need Family: To pass time while on move Product Family: Entertainment

Product Class: Portable Entertainment

Instruments Product Line/Category: Portable DVD

players, CD players, MP3 players

Product Type/Form: High-end MP3 player Item/SKU: Apple ipod nano 4GB


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Other Product Hierarchy Concepts:

Product System: Product Mix


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Product Classifications:

On Basis of Durability & Tangibility:

Non Durable Goods

Eg: FMCG products

Durable Goods

Eg: TV, Mobiles

Services

Eg: Aviation Industry


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Consumer Goods Classification:

Convenience Goods: Purchased Frequentlywith min. effort.

Staples: Eg: Food items, soaps etc.

Impulse Goods: Eg: Chocolates, Magazines etc.

Emergency Goods: Eg: Some pharma products

Shopping Goods: Selection & ComparisonProcess before purchase Eg: Apparel, Furniture

Specialty Goods: Unique Characteristics/BrandEg: Mercedes Benz, Bose Speakers

Unsought Goods:Consumer normally doesntbuy them till persisted Eg: Helmets, Reflectors


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Industrial Goods Classification:

Materials & Parts:

Raw Material: Eg: Milk for Ice Cream etc.

Manufactured Material: Eg: Cement

Capital Items:

Installations: Eg: Factories, power plants

Equipment: Eg: Tools, Lift trucks

Supplies & Business Service

Eg: Office Stationary, cleaning services


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Product Mix:

Width of Product Mix (Product Categories):Eg: For HUL it is Detergents, Deodorants,Soap, Shampoo, Tea, Ice Cream etc.

Length of Product Mix (Brands): Eg: ForHUL it is Surf, Rin, Lux, Axe, Sun Silk,Brooke Bond, Lipton, Kwality-Walls etc.

Depth of Product Mix (SKUs): Variants ofeach brand.

Consistency of Product Mix: Close relation

among product categories


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Product Line Strategies:

Line Stretching: Taking product line to newsegment

Down Market Stretching/Trading Down: Eg:

Kelloggs MazzaUp Market Stretching/Trading Up: Eg: Hyundais

Verna, Elantra, Sonata, Tuscon

Two-Way Stretching:Tata selling Nano as well as Jaguar & LandRover


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Line Filling: Adding More Variants/FillingProduct Depth E.g. Marutis Strategy

Line Modernization: E.g: Onidas newtechnologically advanced products

Line Featuring: E.g: Tata Indica & Indigo

Line Pruning: E.g: HUL concentrating on 30power brands out of its 110 brands.

Product Line Strategies (Cont.):


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Product-Mix Pricing:

ProductLinePricing


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Product-Mix

Pricing (Cont..): Optional Feature

Pricing Eg: In

case of variantsof Car Models,Laptops

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Product-Mix Pricing (Cont.): Captive Product

Pricing Eg: lowpriced HP printer +high priced cartages

Two-part Pricing By-Product Pricing

Eg: molasses fromsugar firms

Product BundlingPricing


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Packaging & Labeling

Why is it done?

To Add Value

States the contents of the product

To Advertise

To protect the product

Mandatory Requirement

Enable self selection


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Product Life-Cycle-Sales & Profit:

SalesAnd

Profit

Time

Sales

Profit

INTR

ODUCTI

ON

GRO

WTH

MATURITY

DEC

LINE


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Introduction Growth Maturity Decline

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ProductCategory

Blu-ray discs DVDs VCDs VideoCassettes

ProductForm

Eco-friendlyPens

Gel Pens Ball PointPens

Ink Pens

Brands Force MotorsTraveler Strong

Volvo FM& FH

Tata ACE

Tata 407,AshokLeylandEcomet

912

DCMToyota,Matador

Examples of Product Life-Cycle:


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Various Product Life Cycle Patterns

Example:a) b) c)
http://en.wikipedia.org/wiki/Image:Orkut.gifhttp://en.wikipedia.org/wiki/Image:Thums_up_logo.jpg


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Marketing Strategies:

Introduction StageHigh Promotion Level Low Promotion Level

High

Price

Rapid

Skimming

Slow Skimming

LowPrice

Rapid

Penetra-

tion

Slow Penetration


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Growth Stage Growth stage for Mahindra & Mahindras Scorpio

Sales of 3,519 units in Sept. 07 vis--vis 3,333 inSept06

What is being done to the product?

Quality Improvement, Addition of new features, ImprovedStyling: New version of Scorpio launched on 28th Sept. 2007.

Add New Models: Scorpio Getaway

Enter new market Segments: Russia, South Africa Increase Distribution Coverage: 275 dealers at present

Prices are lowered: Getaway priced at Rs7.13 lakh to Rs8.18 lakhvis--vis Rs 8.33 lakh to Rs 9.72 lakh for other variants

Shift from product awareness to product preference ads.
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Three phases of this stage are:

Growth (Sales growth rate starts to decline) Eg:

Tata Indigo sold 3,436 units in Feb 07 (7% increase over

Jan 07 but less than Feb 06 over Jan 06 increase)

Stable (Sales flatten) Eg: Maruti Suzukis Alto, Zen,Estillo and Swift sales stood at 34,759 units in July 08 as

against 34,737 units in July 07 (up 0.2%).

Decaying Maturity (Absolute level of sales starts

to decline) Eg: Maruti 800 sold 5,970 units in July 07,but only 4,953 units in July 08 (17% decline)

Maturity Stage
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Market Modification: Volume = No. of Brand Users*Usage rate/user

Expand No. of Brand Users:

Convert Nonusers: Eg Competitive pricing

Enter New Market Segments: Eg - International Markets

Win Competitors Customers: Eg Better service

Increase usage of Brands:

Use Product More Frequently: Eg Loyalty programs, FFP

Using more product on each occation: Eg - More usage ofShampoo, toothpaste per occasion

Varied Uses:


Maturity Stage
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Maturity StageProduct Modification

Quality Improvement

Feature Improvement

Style Improvement

Marketing-Mix

Modification
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Source:http://www.expressindia.com/latest-news/Maruti-Suzuki-to-launch-new-M800-Uniq/340367/
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Harvest

Divest


Decline Stage
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Critique of PLC:

PLC too varied in shape & duration

Cannot be used as a forecasting tool

Problem in telling what stage a productis in
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Documents

Lect13-3rd Mar - Product Decisions & PLC