Product and Price

By: Prof.Shilpa Chadichal

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Out line
Product and Product Mix Product Line, Levels of product Product life cycle Strategies New Product development Branding, Types of brands, Brand Building Measuring Brand equity Packaging and labeling Pricing , pricing approaches, new product pricing strategies Public policy and pricing

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Product
Physical Goods Ideas Services Organizations Persons Places

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Product

Anything that can be offered to a market to satisfy a want or need Philip Kotler

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Product Items, Lines, and Mixes

Product Item A specific version of a product that can be designated as a distinct offering among an organizations products. A group of closely-related product items.

Product Line

Product Mix

All products that an organization sells.

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Example - Product Item and Line

n n

Product Item

A specific version of a product

Product Line

Whole Milk

A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations a
Skim Milk

2% Milk
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Product Mix
The sum of all the products and variants offered by an organisation. A product mix (also called product assortment) is the set of all products and items that a particular seller offers for sale. A company product mix has four important dimensions

Width Length Depth and Consistency.

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Product Mix

Width : width refers to the number of different product lines the company Carries.
Example:

Procter & Gamble consisting of many product

lines Fabric care, Hair care, Baby care.

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Product Mix
Length Product mix : length refer to the total number of items the Company carries within its products lines. Procter & Gamble typically carries many brands with in each lines, for example, it sellsHair care:

Pantene

Pro V Head & Shoulders Rejoice

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Product Mix

Depth Product mix : depth refer to the number of versions, offered of each product in the line.

Procter & gambles detergents Tide and Ariel and further Ariel has two Two Fragrances Ariel Spring Clean & Ariel Fresh Clean.

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Product Mix

Consistency of product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
Suppose a company is selling toothpaste, mouthwashes, gargles etc.. then the product lines are said to be consistent. Since all these are useful to the same set of people, and require a similar distribution chain. On the other hand if the company sells, say, wrist watches, refrigerators, detergents etc... the supply chain for these differs, and the products are said not to have consistency.

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Product Mix Width and Depth Applied to . Procter & Gamble Products
Fabric Care Ariel Front-O-Mat (1993) Ariel 2 Fragrances Tide Detergent(2000) Tide Bar(2004) Hair Care Pantene Pro V(1995) Head & Shoulders(1997) Rejoice(2004) Baby Care Pampers (2003)

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d e p t h

Width

Product Life Cycle

Product

Life Cycle

The progression of a product through four stages: introduction, growth, maturity, and decline

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The Four Stages of the Product Life Cycle

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Product Life Cycle

Introduction

The

initial stage of a products life cycleits first appearance in the marketplacewhen sales start at zero and profits are negative Why new products fail
Lack of resources, knowledge, and marketing

skills to successfully launch the product High pricing to recoup research and development costs

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Product life Cycle

Introduction

and the Pioneer Advantage:

The

initial stage of a products life cycleits first appearance in the marketplacewhen sales start at zero and profits are negative or low, and promotional expenditures are at their highest ratio to sales because of the need to: Inform potential consumers Induce product trial Secure distribution in retail outlets

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The Pioneer AdvantageExample

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WIKIPEDIA.ORG Launched in Jan 2001, the collaborative internet encyclopedia Wikipedia has ridden its pioneer advantage to become as familiar as eBay and Google. Its 5 million pages of content are created entirely by volunteers and are available, free, to users in 250 languages. It might seem that no other Internet encyclopedia could hope to eclipse Wikipedia's reach and brand equity at this point.

The Pioneer AdvantageExample

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Long-Range Product Market Expansion Strategy

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Product Life Cycle

Growth

The

stage of a products life cycle when sales rise rapidly and profits reach a peak and then start to decline
More competitors enter the market Product pricing is aggressive Brand loyalty becomes important Gaps in market coverage are filled Promotion expenditures moderate Production efficiencies lower costs

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Marketing strategies

It improves product quality and adds new product features and improved styling. It adds new models. It enters new market segments. It increase its distribution coverage and enters new distribution channels. It shifts from product-awareness advertising to product preference advertising.

These market expansion strategies strengthen the firms competitive position . Example :How Yahoo! Has fueled growth.

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Example Emami Fair and handsome fairness cream

The mens cosmetic market in south Asia in general and mens fairness (skin-lightening) cream market in India in particular is at this stage of product life cycle. With the changing attitude of men toward what is considered as good looks, the mens cosmetic market in south Asia is currently in a growth phase. Market research indicated that many men use fairness creams targeted for women, led by HULs Fair & Lovely. Emami launched the Fair and Handsome brand of mens fairness cream in India in2005.

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Product Life Cycle

Maturity
The

stage of a products life cycle when the sales curve peaks and starts to decline and profits continue to fall Intense competition Emphasis on improvements and differences in competitors products Weaker competitors lose interest and exit the market Advertising and dealer-oriented promotions predominate Distribution sometimes expands to the global market

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Marketing Product Modifications

Quality improvements Feature improvements Style improvements

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Product Life Cycle

Decline
The stage of a products life cycle when sales fall rapidly Pruning items from the product line Cutting promotion expenditures Eliminating marginal distributors Planning to phase out the product Strategic choices Harvesting the products remaining value Divesting the product when losses are sustained and a return to profitability is unlikely

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A Product in Decline

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Marketing strategies

In handling aging products, a company faces a number of tasks and decisions. The first task is to establish a systems for identifying weak product. Companies focuses on R&D Unfortunately, most companies have not developed a policy for handling aging products.

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Advertising Objectives
Informative advertising
Reminder advertising Persuasive advertising Reinforcement advertising

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Product Modification

Product Modification is an attempt by companies to extend the length of the Product Life Cycle by making small, or big changed to a product to keep customers interested in the product, or cause them to buy accessory items to keep the product popular.

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Product Differentiation
Product form Features Customization Performance Conformance Durability Reliability Repairability Style

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Product differentiation
Form :Many products can be differentiated in form- the size, shape, or physical structure of a product. Example: Doy Soap

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Product differentiation
Features:

Most products can be offered with varying features that supplement their basic function. A company can identify and select appropriate new features by surveying recent buyers and then calculating customer value versus company cost for each potential feature.

Example:

Auto companies often manufacture cars at several trim level.

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Product differentiation
Customization: Marketers

can differentiate products by making then customized to an individual. Mass customizations is the ability of a company to meet each customers requirements-to prepare on a mass basis individually designed products and services programs and communications.
Example:

Levis and Lands End were among the first clothing manufacturers to introduce custom jeans.

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Product differentiation
Performance

quality : Most products are established at one of four performance levels :Low, average, high or superior. Performance quality is the level at which the products primary characteristics operate.
Example:

From 2003-2006, Mercedes-Benz suffered a 72% of drop in sales for 1,000 errors found in the new S-Class.

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Product differentiation
Conformance

Quality: Buyers expect products to have a high conformance quality, which is the degree to which all the produced units are identical and meet the promised specifications.
Example:

suppose a Porsche 911 is designed to accelerate to 60 miles per hour within 10 seconds. If every Porsche 911coming off the assembly line does this, the model is said to have high conformance.

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Product differentiation
Durability

: Durability, a measures of the products expected operating life under natural or stressful conditions, is a valued attribute for certain products. Example:
Duracell

advertise itself as a long lasting battery and the brand commands a premium price.(video). Nokia phones are also known for their durability.

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Product differentiation
Reliability

: Buyers normally will pay a premium for more reliable products. Reliability is measure of the profitability that a product will not malfunction or fall within a specified time period.
Example:

Toyota describes how that company has excelled at making and selling high-quality, dependable automobiles. (video)

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Product differentiation
Repairability : Repairability is a measure of the ease of fixing a product when it malfunctions or fails. Ideal repairability would exists if users could fix the product themselves with little cost in money or time. Some products include a diagnostic feature that allows service people to correct a problem over the telephone or advise the user how to

correct it.

Example :Many computer hardware and software companies offers technical support over the Phone, by fax or e-mail.

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Product differentiation
Style: Style describes the products look and feel to the buyers. Example : Car buyers pay a premium for Jaguars because of extraordinary looks. Apple computers.

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Ginger Hotels has carved a profitable niche through its innovative service configurati on

Personnel Differentiation: Singapore Airlines

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Image Differentiation

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What is New Product?

A Product that opens an entirely a new market. A Product that adopts or replaces the existing product. A old Product introduced in a new market. A Product which is new to a company.

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New product development Process

New product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. New product development is a process which is designed to develop, test and consider the viability of the products which are new to a market in order to ensure growth or survival of the organization.

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New Product Development Processstages

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INTRODUCTION :

Gujrat Co-operative Milk Marketing Federation Ltd which owns amul brand to give boost to its ice cream business with the launch of two innovative ice cream . The new product AMUL PROLIFE PROBIOTIC WELLNESS ICE CREAM

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NEED OF NPDP
Rapidly changing health scenario and awareness among the people, & business environment: future trends in consumer tastes and preferences . Health conscious people . Market conditions.

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1. Idea Generation

In a function a small group of people ( over weighted , diabetes patients ) avoiding to have ice cream inspite of request made by their kids. GCMMF observed this & conducted a survey for sugar free low fat ice cream. The idea worth considering?)-------yes

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2. Idea screening

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-Is the product idea will be successful . -Yes The large number of people suffering from diabetes & obesity. The company is already running business of milk product & ice cream . The cost of machinery & labour can be minimize . The company segmented probiotic culture calorie conscious consumers .

3. Concept development and Testing

Can we have a good tasty, low fat, less calories ice cream , consumers say that they would like to taste . Yes The idea is good, There will be a revolution in the ice cream business. Can People afford. yes . They would definitely try for taste .

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4. Marketing Strategy development

Can we find a cost effective, affordable marketing strategy? Yes . GCMMF company is already running business of milk product & ice cream . Existing labour & machinery will do the needful . No extra manpower & outlet required for new product . Selective Specialization Product Specialization Market Specialization Full Market Coverage 5/25/12

5. Business analysis

Will this product meet our profit goal? Yes. Because there is a huge market in India . More than sixty million people over the world suffering from diabetes & obesity.

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6. Product Development

Have we got a commercially sound product. Yes. The product contains 50% less fat than NML ice cream . The sugar free range was supplemented with probiotic culture to aid digestion & health improvement .

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7. Market Testing
Have product sales meet the expectations. YES. A group of people at whom the organization specially intends to aim its marketing efforts. The company first tested in Bombay, Bangalore and some parts of Gujarat, before going in full-scale production and marketing

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8. Commercialization

Are product sales meeting expectations. Yes . The product became popular among calories conscious consumer , diabetic patient low- calorie sweeteners & over weighted people. Grouping buyers into different category having common desire or needs. The company received several awards for these product innovation
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Product Modification

Product Modification is an attempt by companies to extend the length of the Product Life Cycle by making small, or big changed to a product to keep customers interested in the product, or cause them to buy accessory items to keep the product popular.

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Brand extension

Companies resort to brand extension for greater market coverage. Brand extension is the practice of extending an existing band name across a range of products.

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Brand

A product is a physical entity that lives in the real world. A brand is a perceptual entity that lives in the consumers mind. Brands are drivers of competitive edge. A successful brand is a name, symbol, design or some combination, which identifies the product of a particular organization as having a sustainable differential advantage.

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Branding

A brand is a complex symbol that can convey up to six levels of meaning: Attributes: A brand brings to mind certain attributes.
Example

: Mercedes suggests expensive , well built, well-engineered, durable, high-prestige automobiles.

Benefits: Attributes must be translated into functional and emotional benefits. The attribute durable could translate into the functional benefit.

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Branding

Values: The brand also says something about the producers values.
Example:

Mercedes stands for high performance, safety, and prestige.

Culture: The brand may represent a certain culture.

Example:

The Mercedes represents German culture: organized, efficient, high quality.

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Branding

Personality : The brand can project a certain personality .

Example

: Mercedes may suggest a nononsense boss (person), a reigning lion (animal).

User : The brand suggests the kind of consumer who buys or uses the product.
Example

: we would expect to see a 55 year-old top executive behind the wheel of a Mercedes, not a 20- year-old secretary.

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Branding Decisions
Bran d No Brand Manufacturer brand Distributors brand Individual Licensed brand names Blanket family Line extensions name

Branding Decision Brand-Sponsor decision Brand Name Decision Brand-Strategy decision BrandRepositioning

Brand extensions Multi brands New brands Co brands

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Repositioning No repositioning

Branding Decisions

Branding Decision : To brand or Not to Brand?

The

first decision is whether to develop a brand name for a product. Why do sellers brand their products when doing so clearly involves costs?

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Branding Decisions

Branding gives advantages :

The

the

seller

several

brand name makes it easier for the seller to process orders and track down problems. The sellers brand name and trademark provides legal protection of unique product features. Branding gives the seller the opportunity to attract a loyal and profitable set of customers. Brand loyalty gives sellers some protection from competition. Branding helps the seller segment markets.

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Consumer want brand names to help them identify quality difference and shop more efficiently.

Brand Sponsor Decision

Brand Sponsor Decision

Manufacturer Distributor brand brand A company has several options with respect to brand sponsorship. The product may be launched as a manufacture brand or as a distributor brand.
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Brand Name decision

Manufacturers and service companies who brand their products must choose which brand names to Use. Four strategies: Individual names: A major advantage of an individual-names strategy is that the company does not tie its reputation to the products. If the product fails or appear to have low quality, the companys name or image is not hurt.

Example: seiko, can introduce a lower-quality line of watches called pulsar without diluting the seiko name. 5/25/12 Titan _sonata watches

Brand Name decision

Blanket family names: A blanket family name also has advantages. Development cost is less because there is no need for name research or heavy advertising expenditures to create brandname recognition. Furthermore, sales of new products are likely to be strong
Example:

Tata Group-steel, automobiles, information technology, communication, power, tea and hospitality.

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Brand Name decision

Separate family names for all products: where a company produces quite different products, it is not desirable to use one Blanket family name. Example: Raymond Park

Avenue- for professionals of today. Parx is a 'premium casual lifestyle. ColorPlus is one of India's premium and most respected casual wear. Zapp! -The burgeoning children's wear market

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Brand Strategy Decision

Brand Strategy will vary with whether the brand is a functional brand, image brand or an experiential brand. 1. Consumers buy a functional brand to satisfy a functional need such as to shave, to clean clothes or to relieve a headache. Hence Functional Brands rely heavily on product and or price features.

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Brand Strategy decision

Brand strategy will vary with whether the brand is a :

Functional

brands : consumers purchase a functional brand to satisfy a functional need such as to shave, to clean clothes, to relieve a headache. Functional brands rely heavily on product and or price features. Example Tide, Gillette Shave Care

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Brand Strategy Decision

2. Image Brands arise with products or services that are difficult to differentiate or to assess quality, or convey a statement about the user. Strategies include creating a distinctive design, associating them with celebrity users or creating a powerful advertising image. Also Image brands include B2B products such as Intel. Hence these brands rely heavily on advertising creativity and high advertising 5/25/12 expenditures.

Brand Strategy decision

Image brands arise with products or services that are difficult to differentiate, or to assess quality, or convey a statement about the user. Strategies include creating a distinctive design, associating them with celebrity users. Raymond, Hyundai Santro. Experiential brands involves the consumer beyond simply beyond simply acquiring the product. 5/25/12 Example Coffee day.

Brand Strategy Decision

3. Experiential brands involve the consumer beyond simply acquiring the product. Consumers encounter People and Place with these brands .like CCD, Theme Parks, Spas etc.

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Line Extension:- Line extension consist of

introducing additional items in the same product category and the same brand name ,such as New Flavors , Forms , Colors , Added Ingredients and Package Size

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Brand Extensions
A company may use its existing brand name to launch new products in other categories.

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Multi Brand Strategy

A company will often introduce additional brands in the same product category. Eg HUL Soaps

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New Brand Strategy- When a company launches product in new category , it may find that none of its current brand name are appropriate

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Co- Branding Strategy- When two or more well known brands combined in an offer

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Joint Venture Co Branding Example:-Sony Ericsson

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Umbrella Branding Strategy

Anumbrella brandis an overarching brand used across multiple related products. Umbrella branding facilitates new product introductions by providing by evoking a familiar brand name, which can lead to trial purchase, product acceptance, or other advantages. Umbrella branding may impose on the brand owner a greater burden to maintain consistent quality. If the quality of 5/25/12 one product in the brand family is

Brand Repositioning

A company will occasionally discover that it may have to reposition the brand because of changing customer preferences or new competitors. Example-Fiat Palio

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Branding

Creates and communicates a three dimensional character of a product that is not easily duplicated by competitors.

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Benefits of branding

Figure 7.4
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Product Classification
Product

Durabilit y And Tangibilit y

Consume r good classifica tion

Industrial goods classifica tion

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Durability and Tangibility

Nondura ble goods Durable goods Services

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Durability and Tangibility

Durability Durable goods are tangible goods that survive many uses. Non Refrigerators, Machine tools, Ex: Durable goods Non Durable goods are tangible goods Clothing that are consumed in one or a few uses. Ex: Soaps, Detergents, Toothpaste Services Services are intangible, inseparable, variable and perishable products. Ex: Haircuts, Repairs
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Consumer Goods Classification

Convenience Specialty

Shopping Unsought

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Consumer Goods Classification

Convenience goods : are those the customer usually purchase frequently, immediately, and with a minimum of efforts
Example

: soaps, toothpaste, newspaper etc.

Shopping goods: are goods that the customer, in the process of selection an purchase, characteristically compares on such bases as suitability, quality, price, an style.
Example

: furniture, used cars, major appliances.

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Consumer Goods Classification

Specialty goods : have unique characteristics or brand identification for which a sufficient number of buyers is willing to make a special purchasing effort. Example: Cars, Photographic equipment etc. Unsought goods : are those the consumer does not know about or does not normally think of buying.

Example : smoke detectors, life insurance etc.

Unsought goods require advertising and personal-selling support.

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Industrial Goods Classification

Materials and parts Capital items Supplies/ business services

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Industrial Goods Classification

Material and parts : are goods can be classified in terms of how they enter the production process. Example Raw materials. Capital items : are long-lasting goods that facilitate developing or managing the finished product. Example : generators, elevators etc. Supplies and business services: are shortlasting goods an services that facilitate developing or managing the finished product. Example :paint, lubricants, coal. Example for business services : legal, 5/25/12

Home Delivery Service Traveling Service

Laundry Service

Talking on Telephon e Getting a Hair Cut

Courier Service

Listening to Radio

Placeme nt Service

Internet Connectio ns Photocop ying Counseli ng Cafeteria s

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Classification of Services
1.The Degree of Tangibility of Services Restaurant Services V/S Consultant Services 2.Whether the Service is Directed to the Customer or His Possession haircut or hotel check in v/s car or TV repair 3.The Time & Place of Service Delivery Pest control has to be on site, but software services can be provided via internet in any location 4.Level of Customization V/S Standardization Some services are more customized like lawyers, doctors. On the other hand few services are standardized like a computer course, Mc Donalds menu 5/25/12 etc.

Classification of Services
5.Formal or Informal Relationship with Customers Clubs require formal membership whereas Disneyworld, or a movie theatre only requires people to buy a ticket 6.Extent to which Demand & Supply Fluctuate Some services have steady demand example a downtown restaurant and some services have highly fluctuating demand on the basis of time of the day, season etc. 7.Interaction with People or Inanimate objects/Environment Some transactions could be done on phone while others require physical presence like taking a flight 5/25/12

Questions

What is new product? Explain the various stages in its development.-10mks Explain the classification of product and services.

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