12
Setting Product Strategy
Marketing Management, 13th ed
Chapter Questions
• What are the characteristics of products
and how do marketers classify
products?
• How can companies differentiate
products?
• How can a company build and manage
its product mix and product lines?
12-2
Chapter Questions (cont.)
• How can companies combine products
to create strong co-brands or ingredient
brands?
• How can companies use packaging,
labeling, warranties, and guarantees as
marketing tools?
12-3
At the heart of a great brand is a great product
12-4
What is a Product?
A product is 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.
12-5
Five Product Levels
• Core benefit —service or benefit (e.g., hotel guest is
buying “rest and sleep”)
• Basic product —turn core benefit into basic product
(e.g., hotel room includes a bed, bathroom, towels,
desk, dresser, and closet)
• Expected product – set of attributes and conditions
buyers normally expect (e.g., clean bed, fresh towels,
working lamps)
• Augmented product—exceeds customer
expectations (e.g., free health spar)
• Potential product—all the possible augmentations
and transformations (e.g., free internet connections
and use)
12-6
Product Classes
 Two broad classes
• consumer products
• business products
 Classes help in planning marketing mix
needed
 Based on how the customer views the
product
• how consumers think about and shop for
products
• how business/organizational buyers think
about products and how they'll be used
Product Classes Help Plan Marketing Strategy
Consumer Products
Business Products
Goods and/or Services Are the Product (Exhibit 9-2)
Differences in Goods and Services
Devoted to
erasing
stereotypes
Differences in Goods and Services
Tangibility
When produced
relative to when
consumed
Where produced
Differences
Balancing supply and
demand
(storing and transporting)
Contact with customer
by producer of
product
Product Classification Schemes
Durability
Tangibility
Use
12-12
Durability and Tangibility
Nondurable
goods
Durable
goods
12-13
Services
Consumer Goods Classification
Staples
Convenience Products
Products
Convenience
Impulse Products
Emergency Products
Shopping Products
Homogeneous
Shopping Products
Heterogeneous
Shopping Products
Specialty Products
Unsought Products
New Unsought
Products
Regular Unsought
Products
Industrial Goods Classification
Accessories
short-lived
capital
Accessories
items—tools &
production equipment
Installations
Installations
important
capital items
Professional
Services
specialized services to
support a firm’s
operations--consulting
services
Busine
ss
Product
Classes
MRO Supplies
Supplies
for
MRO
Supplies
Maintenance, Repair,
and Operating
Raw
Materials
Raw
unprocessed expense
items that become a
physical part of a
physical good
Materials
Component
Component
Parts &
Parts &
Materials
processed
expense
Materials
items that become part
of a finished product
Product Differentiation
•
•
•
•
•
•
•
•
•
Product form—size, shape, or physical structure
Features—supplement basic functions
Customization–individual versus mass
Performance—level at which the product’s primary
characteristics operate
Conformance—degree to which all the produced units
are identical and meet the promised specifications
Durability—product’s operating life
Reliability—probability that a product will not malfunction
or fail
Repairability—the ease of fixing a product when it
malfunction or fails
Style—product’s look and feel to the buyer.
12-16
Service Differentiation
• Ordering ease—how easy to place an order
• Delivery—how well (e.g., speed, accuracy, and care)
product or service is brought to the customer
• Installation—work done to make a product operational
• Customer training—training the customer’s employees
to operate the vendor’s equipment properly and
efficiently
• Customer consulting—data, information, systems, and
advice that the seller offers to buyers
• Maintenance and repair—service programs for helping
customers keep purchased products in good working
order
• Returns
12-17
Dunkin’ Donuts’ Differentiation
12-18
Design Differentiation
12-19
Maintenance and Repair
12-20
Product Systems and Mixes
•
•
•
•
•
•
12-21
Product system—group of diverse
but related items (e.g., Palm One
handheld and Smartphone product
lines come with attachable—
headsets, cameras, keyboards, etc.)
Product mix or assortment—
various product lines (e.g., GE’s
consumer Appliance Division—
refrigerators, stoves, washing
machines, etc.)
Depth—variants of each product
(e.g., tide comes in two scents)
Length—total number of items in the
mix (e.g., PG—Detergents (Ivory,
tide, etc); Toothpaste (Gleem, Crest);
Bar soap (Camay, Zest, etc);
Disposable Diapers (Pampers, Luvs) ;
Paper Products (Charmin, Bounty)
Width—number of different product
lines (PG—Detergents, Toothpaste,
Bar Soap, Disposable Diapers, Paper
Products)
Consistency—how closely related
various product lines are in some way
(e.g., consumer goods that go
through the same distribution
channel.
Product Line Analysis
Core product (basic products;
e.g., laptop computers)
Specialties (items with lower
sales volume but highly
promoted; e.g., digital
moviemaking equipment)
12-22
Staples (items with lower sales
volume but not promoted;
e.g., CPU, bigger
memories)
Convenience Items
(peripheral items; e.g.,
carrying cases and accessories)
Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
12-23
Line Filling
12-24
Product-Mix Pricing
• Product-line pricing (various levels: $200, $400,
and $600)
• Optional-feature pricing (sunroof, theft protection)
• Captive-product pricing (require the use of
ancillary products: razors, films)
• Two-part pricing (fixed fee plus variable usage fee:
telephone service)
• By-product pricing (production of certain goods
often result in by-products; meat and fat in sausage)
• Product-bundling pricing—offer products only in a
bundle: product plus service
12-25
Product Line Pricing
12-26
Two-Part Pricing
12-27
Co-branding
12-28
Ingredient Branding
12-29
What is the Fifth P?
Packaging, sometimes called the
5th P, is all the activities of
designing and producing
the container for a product.
12-30
Factors Contributing to the
Emphasis on Packaging
Self-service
Consumer affluence
Company/brand image
Innovation opportunity
12-31
Packaging Objectives
• Identify the brand
• Convey descriptive and persuasive
information
• Facilitate product transportation and
protection
• Assist at-home storage
• Aid product consumption
12-32
Functions of Labels
Identifies
Grades
Describes
Promotes
12-33
Innovations in Packaging
12-34
Warranties and Guarantees
12-35