THE INSTITUTE OF CHARTERED
ACCOUNTANTS OF SRI LANKA
POSTGRADUATE DIPLOMA IN BUSINESS
MANAGEMENT
MARKETING STRATEGY
SETTING PRODUCT STRATEGY
HAFEEZ RAJUDIN
SETTING PRODUCT STRATEGY
Marketing Planning begins with formulating an
offering to meet target customers’ needs
and wants.
The customer will judge the offerings by three
basic elements:
1.
Product Features and Quality.
2.
Services Mix and Quality.
3.
Price
COMPONENTS OF THE MARKET OFFERING
Value-based prices
Attractiveness
of the
Market offering
Product features
and quality
Services mix and
quality
Product Characteristics and
Classifications
Definition of Product:
“ A product is anything that can be
offered to a market to satisfy a want
or need.”
Products that are marketed include:
physical goods, services, experiences,
events, persons, places, properties,
organizations,
Product Levels: The Customer Value
Hierarchy
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product
Product Levels: The Customer Value
Hierarchy
Core Benefit:
the service or benefit the customer
is really buying
e.g. a hotel guest is buying “rest
and
sleep” .
The purchaser of a drill is
buying
“holes”.
(Marketers should see themselves as
benefit providers)
1.
Product Levels: The Customer Value
Hierarchy
2.
Basic Products:
at the second level Marketers has to
turn the core benefit into a basic
product.
Thus a hotel room includes a bed,
bathroom, towels, desk, dresser and
closet.
Product Levels: The Customer Value
Hierarchy
3.
Expected Product
At the third level the marketer
prepares an EXPECTED PRODUCT, a
set of attributes and conditions
buyers normally expect when the
purchase a product.
e.g. hotel guest expect a clean bed,
fresh towels, working lamps, and a
relative degree of quite.
Product Levels: The Customer Value
Hierarchy
4.
Augmented Product:
At the fourth level the marketer prepares an
augmented product that exceeds customer
expectations.
Differentiation arises on the basis of product
augmentation.
Product augmentation also leads the marketer to
look at the user’s total consumption system: the
way the user performs the tasks of getting and
using the products and related services.
Product Levels: The Customer Value
Hierarchy
The new competition is not between
what companies produce in their
factories, but between what they add
to their factory output in the form of
packaging, services, advertising,
customer advice, financing, delivery
arrangements, warehousing and other
things that people value.
Product Levels: The Customer Value
Hierarchy
Some thing should be noted about
product-augmentation strategy.
1. Each augmentation adds cost.
2. Augmented benefits become
expected benefits and necessary
point-of parity
“ today’s hotel guests expect cable or satellite television
with a remote control and high-speed internet access or
two phone lines. This means competitors will have to
search for still other features and benefits”.
Product Levels: The Customer Value
Hierarchy
5.
Potential Product:
This encompasses all the possible
augmentations and transformations
the product or offering might
undergo in the future.
Here is where companies search for
new ways to satisfy customers and
distinguish their offer.