Product

Decisions
 The Product
“ A product is any thing that can be offered to a
market to satisfy a want or need.”
“ Products that are marketed include physical
goods, services, events, persons, places,
properties, organizations, information and
ideas.”
“Everything, both favorable and unfavorable,
that
a person receives in an exchange.”
 Components of the
Market Offering
Value-based prices

Attractiveness of
the market offering

Product features Services mix

and quality and quality
Five Product Levels
Potential product
Augmented product
Expected product
Basic product
Core benefit
 Product Classifications
1. Classification on the basis of Durability
and Tangibility
 Non durable goods
 Durable goods
 Services
 Product Classifications
2. Classification on the basis of Usage

A
A product
product used
used toto manufacture
manufacture otherother
Business
Business goods
goods or
or services,
services, to
to facilitate
facilitate an
an
Product
Product organization’s
organization’s operations,
operations, or or to
to resell
resell
to
to other
other consumers.
consumers.

Consumer
Consumer Product
Product bought
bought to
to satisfy
satisfy an
an
Product
Product individual’s
individual’s personal
personal wants
wants
 Consumer-Goods Classification
Convenience Products Shopping Products
Buy frequently & immediately Buy less frequently
> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods

Specialty Products Unsought Products

Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
New innovations
> Products consumers don’t
want to think about.
>Require much advertising &
personal selling
 Industrial Goods
1. Materials and Parts
2. Capital Items
3. Supplies and business services
 Industrial Goods
Farm
Products
Raw-materials

Natural
Products
Materials and parts

Component
Material

Manufactured
Materials and parts Component
Parts
 Industrial Goods

Installations

Capital Items

Equipments
 Industrial Goods
Maintenance &
Repair items
Supplies

Operating
supplies

Maintenance &
Repair Services
Business
Services
Business Advisory
Services
Product Items, Lines, and Mixes
A
A specific
specific version
version of
of aa product
product
that
that can
can be
be designated
designated as as aa
Product
Product Item
Item distinct
distinct offering
offering among
among anan
organization’s
organization’s products.
products.

A
A group
group of
of closely-related
closely-related
Product
Product Line
Line product
product items.
items.

All
All products
products that
that an
an
Product
Product Mix
Mix organization
organization sells.
sells.
 Product Mix
“ A product mix is the set of all products
and items that a particular seller offers
for Sale.”
 Product Mix

Width
Width -- number
number of
of
different
different product
product
Consistency

lines
lines

Length
Length -- total
total Product
Product MixMix --
number
number of of items
items all
all the
the product
product
within
within the
the mix
mix lines
lines offered
offered

Depth
Depth -- number
number of of
versions
versions ofof each
each
product
product inin the
the line
line
 Gillette’s Product Lines and Mix
Width of the product mix
Depth of the product lines

Blades and Writing

razors Toiletries instruments Lighters

Mach 3 Series Paper Mate Cricket

Sensor Adorn Flair S.T. Dupont
Trac II Toni
Atra Right Guard
Swivel Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic Brush Plus
New Product Development
 What is New Product?
1. New-to-the-world
2. New product lines
3. Additions to existing product lines
4. Improvements and revisions of
existing products
5. Repositioning
6. Cost reductions
 Why New Products Fail?
 Inadequate market analysis
 Product deficiencies
 Higher Cost
 Poor timing of introduction of a new
product
 Competition
 Insufficient Marketing efforts
 Inadequate Sales force
 Weakness in Distribution
 New Product Development
Process
Marketing Business
Strategy Analysis
Development
Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
 Idea Generation

Company Employees

Customers

Competitors

Distributors

Suppliers
 Idea Screening

 Process to spot good ideas and drop poor ones.

 Develop system to estimate: market size,
product price, development time and costs,
manufacturing costs, and rate of return.
 Evaluate these findings against set of company
criteria for new products.
Concept Development and Testing
 Product Idea: idea for a possible product that
the company can see itself offering.
 Product Concept: detailed version of the idea
stated in meaningful consumer terms.
 Product Image: the way consumers perceive
an actual or potential product.
 Marketing Strategy Development

Part
Part One
One Describes:
Describes:
The
The Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales,
Sales, Market
Market Share,
Share, && Profit
Profit Goals
Goals

Part
Part Two
Two Outlines
Outlines the
the First-Year’s:
First-Year’s:
Product’s
Product’s Planned
Planned Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget

Part
Part Three
Three Describes
Describes Long-Run:
Long-Run:
Sales
Sales &
& Profit
Profit Goals
Goals
Marketing
Marketing Mix
Mix Strategy
Strategy
Business Analysis
 Involves a review of the
sales, costs,
Competition, investment
and profit projections to
assess fit with company
objectives.

 If yes, move to the

product development
phase.
Product Development
 Develop concept into
physical product
 Calls for large jump in
investment
 Prototypes are made
 Prototype must have
correct physical features
and convey psychological
characteristics
 Test Marketing
 Product and program introduced in more
realistic market setting.
 Not needed for all products.
 Can be expensive and time consuming, but
better than making major marketing mistake.
 Test Marketing

Nokia test-marketed its new cell phone/mobile game player

extensively before introducing it worldwide.
 Commercialization
 Must decide on timing (i.e., when to introduce
the product).
 Must decide on where to introduce the
product (e.g., single location, state, region,
nationally, internationally).
 Must develop a market rollout plan.
 Product Line Decisions
“ In offering a product line, companies
normally develop basic platform and
modules that can be added to meet
different customers requirements.
 This modular approach enables the
company to offer variety of proucts to
consumer.
 Product Line Decisions
 It includes three elements-
 Product line analysis
 Product line length decisions
 Product line Modernization decisions
 1. Product Line Analysis
 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, or divest.
 In product –line analysis marketer has
to analyze-
 Sales and profits of product
 Market profile.
 2. Product Line Length Decision
 The product line length decision calls
for adding new brands to the product
line and subsequently eliminating the
unprofitable brands from the line.
 A company lengthens its product line
in two ways
 Line stretching
 Line filling
 Line Stretching
 Product line stretching occurs when a
company lengthens its product line
beyond its current range by-
 Downward stretch
 Upward stretch
 Two way (Combined) Stretch
 Two-Way Product-Line Stretch:
Hotels
Quality
Economy Standard Good Superior

High (Top
executives)
Price

Above (Middle
average managers)

Average (Salespeople)

Fairfield Inn
Low (Vacationers)
 Line Filling
 A product line can be lengthened by
adding more items with in present
range of line.
 Some time it may results in
cannibalization and creates confusion
in the minds of customers.
 3. Product line Modernization
Decision
 In some case product line length is
adequate but there is a need of
modernizing it.
 An important aspect of product line
modernization decision is that, it allows
competitors see changes and start
redesigning their own lines.
 Branding
Brand
 “ A brand is a name, term, sign, symbol or design or a
combination of them which is intended to identify the
goods or services of one seller or group of sellers and
to differentiate them from those of competitors”
Brand Name
 Brand name is a part of a brand consisting of a word,
letter, group of word, or letters comprising a name
which is intended to identify the goods or services of a
seller or a group of sellers and to differentiate them
from those of competitors”
 Branding
Brand Mark
 “ A brand mark is the part of the brand which
appears in the form of a symbol, design or
distinctive colouring or lettering” ”
Trade mark
 “Part of a brand that is given legal
protection because it is capable of
excusive appropriation”
 Branding
“ Branding is the management process by
which a product is branded
 It covers various activities such as-
 Giving brand name to a product
 Deciding a brand mark
 Establishing and popularizing brand
name and brand mark.
 An Overview of
Branding Decisions

Brand- Brand- Brand- Brand-

Branding Sponsor Name Strategy Repositioning
Decision Decision Decision Decision Decision
•Manu- •Individual •Line
facturer brand extension
brand names
•Blanket •Brand •Reposi-
family extension tioning
•Brand •Distribu-
tor name •Multi-
•No brand •Separate •No
(private) family brands
brand reposi-
names •New tioning
•Licensed •Company- brands
brand individual
names •Cobrands
 Brand Strategies

Product Category
Existing New
Brand Name

Existing
Line Brand
Extension Extension

New
Multibrands New
Brands
Good Brand Names:

Lack Poor
Foreign
Distinctive
Language
Meanings

Easy to:
Suggest Suggest
Pronounce
Product Product
Recognize
Qualities Benefits
Remember
 Packaging
 Packing is wrapping a commodity or
bundling it in a way suitable for
transporting, storing and handling.
 Packaging includes activities of
designing and producing the contains
for a product.
 Packaging involves promoting and
protecting the product.
 Importance of Packaging

Protection
Protection

Promote
Promote
Importance
Importance
of
of
Facilitate
Facilitate Storage,
Storage, Use,
Use, Packaging
Packaging
and
and Convenience
Convenience

Facilitate
Facilitate Recycling
Recycling
 Labeling
 Label is the part of the product that
carries information about the product
and the seller.
 A label indicates the products brand
name, the company logo, ingredients,
promotional messages, and instruction
for use.
 Labeling

Persuasive
Persuasive Informational
Informational

● Helps make proper

● Focuses on selections
promotional
theme ● Lowers cognitive
dissonance
● Information is
secondary ● Includes use
instruction
 Classification of labels
 Brand labels
 Grade labels
 Descriptive labels
 Product Life Cycle
 Like a human being, all products have
certain length of life during which they
pass through certain identifiable stages.
 Once the product or service reaches the
market, it enters the product life cycle.
 The PLC is a theoretical concept which
serves as a conceptual base for
examining product growth and
development.
 Product Life Cycle

Sales and
Profits ($) Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Sales and Profits Over the Product’s

Lifetime
 Introduction Stage of the PLC
Summary of Characteristics, Objectives, &
Sales
Sales Strategies Low Low

Costs
Costs High
High cost
cost per
per customer
customer

Profits
Profits Negative
Negative

Marketing
Marketing Objectives
Objectives Create
Create product
product awareness
awareness and
and trial
trial

Product
Product Offer
Offer aa basic
basic product
product

Price
Price Use
Use cost-plus
cost-plus formula
formula

Distribution
Distribution Build
Build selective
selective distribution
distribution

Promotion
Promotion Heavy
Heavy to
to entice
entice product
product trial
trial
 Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Rapidly
Rapidly rising
rising

Costs
Costs Average
Average cost
cost per
per customer
customer

Profits
Profits Rising
Rising

Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share

Product
Product Offer
Offer extension,
extension, service,
service, warranty
warranty

Price
Price Penetration
Penetration strategy
strategy

Distribution
Distribution Build
Build intensive
intensive distribution
distribution

Promotion
Promotion Reduce
Reduce to
to take
take advantage
advantage of
of demand
demand
 Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Peak
Peak

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits High
High
Maximize
Maximize profits
profits while
while defending
defending market
market
Marketing
Marketing Objectives
Objectives share
share
Product
Product Diversify
Diversify brand
brand and
and models
models

Price
Price Match
Match or
or best
best competitors
competitors

Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution

Promotion
Promotion Increase
Increase to
to encourage
encourage brand
brand switching
switching
 Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Declining
Declining

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits Declining
Declining

Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditures
expenditures and
and milk
milk the
the brand
brand

Product
Product Phase
Phase out
out weak
weak items
items

Price
Price Cut
Cut price
price

Distribution
Distribution Selective:
Selective: phase
phase out
out unprofitable
unprofitable outlets
outlets

Promotion
Promotion Reduce
Reduce to
to minimum
minimum level
level
 Practical Problems of PLC
Hard to identify Hard to pinpoint
which stage of the when the product
PLC the product is in moves to next stage

Hard to identify
factors that affect
product’s movement
through stages

Hard to forecast Strategy is both a

sales level, length of cause and result of
each stage, and the PLC
shape of PLC