WHAT IS PRODUCT?

Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want

Components of the Market Offering

Value-based prices

Services mixand quality

Product featuresand quality

Attractiveness ofthe market offering

Five Product Levels

Potential product

Augmented product

Expected product

Basic product

Core benefit

Product Classification Schemes

Durability

Use

Tangibility

Durability & Tangibility

Nondurable goods

Tangible goods

Normally has to be consumed in one or few uses

Strategy- to make product available in many locations

Durable goods

Tangible goods

It can survive to many uses

Strategy- more personal selling & service

Services

Services are intangible, inseparable, variable,& perishable product that normally requiremore quality control, supplier credibility, &adaptability.

Example:-

Haircuts

Legal advice

Appliance repairs

Customer-Goods Classification

Convenience goods

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

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

Speciality goodsSpecialty 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

Unsought goods

Unsought goods are those the customer doesnot know about or normally think of buyingsuch goods.

Examples:-

Industrial-Goods Classification

Materials & Parts

They are the goods that enters the manufacturer’s product completely. They falls into 2 parts i.e. Raw material & manufactured material and parts.

Raw material can be of

Farm products (fruits, vegetables) &

Natural products (crude oil, iron ore)

Capital Items-long lasting goods

Installations – building & heavy equipments

Equipments – portable factory equipments, tools, office equipments

Supplies & business services-short term goods

• Maintenance & repair items

• Operating supplies

• Maintenance & repair services

• Business advisory services

Product and Service Differentiation

Product differentiation -is a business level strategy in which firms

attempt to create and exploit differences between their products and those

offered by competitors. These differences may lead to competitive

advantage if customers perceive the difference and have a preference for the

difference.

Form : Many products can be differentiated in form – the size, shape,

or physical structure of a product.

Features : Most products can be offered with varying features that

supplement their basic function.

Customization : Marketers can differentiate products by making them

customized to an individual.

Mass customization is the ability of the company to meet each customers

requirement – to prepare on a mass basis individually designed products,

services, programs and communications.

Performance quality : is the level at which the product's primary

characteristics operate. Most product are established at one of four

performance levels : low, average, high, or superior.

Daag achhe hain

Quality : is the degree to which all the produced units are identical and meet

the promised specifications.

Durability : is a measure of the product`s expected operating life under

natural of stressful conditions, and a valued attribute for certain products .

Reliability : is a measure of the probability that a product will not

malfunction or fail with in a specified time period.

Reparability : is measure of the ease of fixing a product when

it malfunction or fails

Style : describes the product`s look and feel to the buyer .

Service Differentiation

• Ordering Ease

• Delivery

• Installation

• Customer Education

• Consulting Repair

Ordering Ease- It refers to how easy it is for the customer to place on order with the company

Delivery- It refers to how well the service is delivered to the customer covering speed , accuracy and customer care

Installation- It refers to the work done to make a product operational in its planned location

Customer education- It refers to how the customer’s employees are trained to use the equipment

Consulting- Customer consulting refers to data information systems and advice services that the seller offers to buyers

Repair- Repair describes the service program for helping customers keep purchased products in good working orders

Product Hierarchy

Need Family

Product Family

Product Class

Product Line

Product Type

Item

Product system and mix

Product system is a group of diverse but related items that function in a compatible manner.

Product mix consists of all the products and items that a particular seller offers for sale

• Width

• Length

• Depth

• Consistency

Product mix width is the number of different product lines the company carries

Product mix length is the total number of items the company carries within its product lines

Product line depth is the number of versions offered of each product in the line

Consistency is how closely the various product lines are in end use, production requirements, or distribution channels

Product line

Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges.

Product line length is the number of items in the product line

• Line stretching

• Line filling

Product line stretching

Product line stretching is when a company lengthens its product line beyond its current range

• Downward

• Upward

• Combination

of both

Downward product line stretching is used by

companies at the upper end of the market to

plug a market hole or respond to a competitor’s

Attack

Upward product line stretching is by companies

at the lower end of the market to add prestige

to their current products

Product line filling

Product line filling occurs when companies add more items within the present range of the line

• More profits

• Satisfying dealers

• Excess capacity

PRODUCT MIX AND PRICING

• Price-setting logic must be modified when, the product is part of a product mix.

• The firm searches for a set of prices that maximizes profits on the total mix.

• Pricing is difficult because the various products have demand and cost interrelationships and are subject to different degrees of competition

STRATEGIES

• Product Line Pricing

– Setting price steps between product line items.

• When firms offer consumers a choice of price-quality levels – the “good-better-best” choice – a challenge for managers is how to set price differentials

EXAMPLE-TOYOTA

Optional-product pricing

• Optional-Product Pricing

– Pricing optional or accessory products sold with the main product. Automobile company advertise entery level model at very low prices to pull people into their showrooms.

– EXAMPLE

– RESTAURANTS

OPTIONAL PRODUCT PRICING

In Restaurants Customers can often order liquor in addition to the meal. Many restaurants price their liquor high and their food low. The food revenue covers costs, and the liquor produces the profit. This explains why servers often press hard to get customers to order drinks. Other restaurants price their liquor low and food high to draw in a drinking crowd.

Captive –product pricing

• Captive-Product Pricing

– Pricing products that must be used with the main product

– High margins are often set for supplies

• EXAMPLE

• Cellular service operators

Captive-product pricing

A cellular service operator may give a cellular phone free if the person commits to buying two years of phone service.

Two- Part Pricing

Service:- two-part pricing strategy• Fixed fee plus a variable usage rate

EXAMPLES

• Amusement parks

• Telecom operators

• The service firm faces a problem similar to captive -product pricing-namely, how much to charge for the basic service and how much for the variable usage

two-part pricing strategy

Telephone users pay a minimum monthly fee plus charges for calls beyond the minimum number.

Amusement parks charge an admission fee plus fees for rides over a certain minimum.

By- product pricing

• By-Product Pricing– Pricing low-value by-products to get rid Of them or to

earn extra margin in profit.

• If the by-products have value to a customer group, they should be priced on their value. Any income earned on the by-products will make it easier for the company to charge a lower price on its main product if competition forces it to do so.

• EXAMPLE

• In the timber industry

By-Product pricing

In the timber industry, for example, by-products include sawdust, small offcuts and bark.

Product- Bundling Pricing

• Product Bundle Pricing– Pricing bundles of products sold together

• When offering a mixed bundle, the seller normally charges less for the bundle than if the items were purchased separately.

• Good way to test market for a new product or to clear the stock.

• EXAMPLES

• Resorts,Airfare deals etc.

Product Bundle Pricing

A theatre company will price a season subscription at less than the cost of buying all the performances separately or some combo offers in movies.

Because customers may not have planned to buy all the components, the savings on the price bundle must be substantial enough to induce them to buy the bundle.

PRODUCT DESIGN

• Design is the totality of features that effect how a product looks, feels and function to a consumer.

• Design offers functional and aesthetic benefits and appeals to both rational and emotional sides.

• A well design product is pleasant to look at and easy to open, install, use, repair and dispose of.

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• Holistic marketers recognize the emotional power of design.

• Design can shift consumer perception to make brand experiences more rewarding.

• A bad design can ruin a product prospects.

• Well design features can help differentiate a product from others in the market.

PACKAGING

Packaging includes all the activities of Designing and Producing the container for a Product.

PACKAGING

Packaging means any product after being in its original form packed and gets ready to be served in the market.

Well-designed products can build brand equity and drive sales.

Packaging is the buyer’s first encounter with the product and can influence the buyer’s behavior to buy the product or not.

Some marketers call “p” of packaging as fifth “p” of product-mix with product, price, place & promotion.

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Various factors have contributed to the growing use of packaging as a marketing tool :-

1) Self- service :- In supermarkets most number of products are sold on the self-service basis. The effective package must perform many of the sales tasks : attract attention, describe the product’s features.

2) Consumer affluence :- Consumer affluence means consumers are willing to pay a little more for the convenience, appearance, dependability & better packages.

3) Company & brand image :- Packages contribute to instant recognition of company or

brand.

4) Innovation opportunity :- Innovative and new style of packaging can bring large benefits

to consumers and profits to customers.

Packaging Objectives

• Identify the Brand.

• Convey descriptive and persuasive information.

• Facilitate product Transportation and Protection.

• Assist at-home storage.

• Aid product consumption.

LABELLING

A simple tag attached to the product which carries brand name & different deals of information.

It is a part of package.

It performs several functions.

It identifies the product.

It grades the product.

Where the product is made, by whom, what it contains, how it is to be used safely.

WARRANTIES

• All sellers are legally responsible for fulfilling a buyer’s normal or reasonable expectations.

• Warranties are formal statements of expected product performance by the manufacturer.

• Products under warranty can be returned to the manufacturer or designated repair center for repair, replacement and refund.

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For manufacturers it is reasonable to provide warranties.

It helps the customer to trust the brand.

It is beneficial for the company also, as customers start taking interest & trust the product due to the warrantee provided.

GUARANTEES

Many sellers either give general or specific guarantee.

For eg: Procter & gamble promises general guarantee to the customers.

Guarantees reduce the buyer’s risk.

Guarantees suggest that the product is of high quality.

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Guarantees can be especially helpful when the company or product is not well known in the market.

When the product’s quality is superior to competitors.

Company’s service performance can be measured by the kind of guarantees they provide.

THANK YOU