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12
Setting Product Strategy
Chapter Questions
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What are the characteristics of products and how
can they be classified?
How can companies differentiate products?
How can a company build and manage its
product mix and product lines?
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?
12-2
Product
Anything that can be offered to a market to
satisfy a want or need.
12-3
Figure 12.2 Five Product
Levels
Core benefit
 Basic product
 Expected product
 Augmented product
 Potential product
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12-4
Product Classification
Schemes
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Durability
Tangibility
Use
12-5
Durability and
Tangibility
Nondurable goods
 Durable goods
 Services
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12-6
Consumer Goods
Classification
Convenience
 Shopping
 Specialty
 Unsought
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(e.g., smoke
detectors)
12-7
Industrial Goods Classification
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Materials and parts
Capital items
Supplies/business services
12-8
Product Differentiation
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Product form
Features
Performance
Conformance
Durability
Reliability
Reparability
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Style
Design
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance
12-9
The Product Hierarchy
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Need family (e.g., security)
Product family (e.g., savings and income)
Product class (e.g., financial instruments)
Product line (e.g., life insurance)
Product type (e.g., term life insurance)
Item (SKU or product variant)
12-10
Product Systems and Mixes
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Product system
Product mix
Product assortment
Depth
 Length
 Width
 Consistency
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12-11
Product Line Analysis
(i.t.o. sales, profit, & market profile)
Core product
 Staples
 Specialties
 Convenience items
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Product line managers
need to know the sales
and profits of each item
in their line in order to
determine which items
to build, maintain,
harvest, and divest.
12-12
Line Stretching
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Down Market Stretch
Up-Market Stretch
Two-Way Stretch
12-13
Product-Mix Pricing
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Product-line pricing
Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
12-14
Ingredient Branding
Packaging: The 5th P
All the activities of designing and producing
the container for a product.
12-16
Branding a
commodity via
packaging
12-17
Packaging has been influenced by:
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Self-service
Consumer affluence
Company and brand image
Innovation opportunity
12-18
Functions of Labels
Identifies
 Grades
 Describes
 Promotes
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12-19
Creative packaging designs (1)
12-20
Shorts with Meat Patterns
12-21
Reebok Extra Grip Packaging
12-22
Wine Can
This unusual wine packaging, designed by Jens
Andersson and Jonas Forsman, has won the 2006
Swedish packaging design award.
12-23
Milk Packaging
Incredible milk packaging concept designed by
Julien De Repentigny and Gabriel Lefebvre.
12-24
Banana Guard Packaging
A robust case that ensures your banana survives
your travels in perfect condition.
12-25
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Resealable
Soda Can
Creative
packaging
concept that
allows for a
soda can to
be resealed
called SodaSeal.
12-26
Nike Stadium
Packaging
Limited number of
Nike shoeboxes were
transformed to house
a stadium within by
inserting a printed
sheet of the stadium
interior with
embedded sound
chips. So you could
hear the crowd go
wild when the box
was opened.
12-27
Anti-Theft Lunch
Bags
Sandwich bags that
have green splotches
printed on both sides,
making your freshly
prepared lunch look
spoiled. Don’t suffer
the injustice of having
your sandwich stolen
again!
12-28