PRODUCT

DECISION

MODULE 3
Product Characteristics
and Classifications
○ 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

○ A Product is anything that can be offered in a market for attention,

acquisition, use, or consumption that might satisfy a need or want

 Product
Levels:
Customer
Value
Hierarchy
Product Classifications

Durability and
Use
Tangibility
Durability and Tangibility

Non
Durable
Durable

Services
Use

Consumer Industrial
Goods Goods
Consumer Goods
Industrial Goods Classification

– Materials and Parts

– Capital Goods

– Supplies and Business Services

Product Differentiation Features

– Form – Reliability
– Features
– Repairability
– Customization
– Style
– Performance Quality

– Conformance Quality

– Durability
Services Differentiation
❖ Ordering ease
❖ Delivery
❖ Installation
❖ Customer training
❖ Customer consulting
❖ Maintenance and repair
❖ Returns
Product Design
Features of Product Design
❖ Is emotionally powerful
❖ Transmits brand meaning/positioning
❖ Is important with durable goods
❖ Makes brand experiences rewarding
❖ Can transform an entire enterprise
❖ Facilitates manufacturing/distribution
❖ Can take on various approaches
Product Hierarchy
Need Family
Health and Hygiene

Product Family
Oral Care

Product Class
Teeth Hygiene

Product Line
Toothpaste
Product Type
Toothpaste for sensitive
teeth
Item
Sensodyne
 Product Systems
and Mixes

Product Systems are diverse

but related items that
function in a compatible
manner
 Product Mix

A product mix is the total number of

product lines and individual products
or services offered by a company.
Additionally referred to as product
assortment or product portfolio.
Product mixes vary from company to
company.
Elements of
Product Mix
• Product Width
• Product Length
• Product Depth
• Product consistency
Product Line Length
● Line stretching
○ Down-market stretch
○ Up-market stretch
○ Two-way stretch
● Line filling
● Line modernization
● Line featuring
● Line pruning
Product Mix
Pricing
Strategies

Optional
ByBundle –Pricing
Captive Feature
–ProductPricing
product
Two-part Line
pricing
Pricing
PricingPricing
Cobranding
Two or more well-known
brands are combined into
a joint product or
marketed together in
some fashion

• Ingredient Branding
Packaging
Used as a marketing tool Packaging objectives
• Self-service • Identify the brand
• Consumer affluence • Convey descriptive and
• Company and brand image persuasive information

• Innovation opportunity • Facilitate product transportation

and protection
• Assist at-home storage
• Aid product consumption
Labelling, Warranties and
Guarantees
● Labeling

○ Identifies, grades, describes, and promotes the product

● Warranties

○ Formal statements of expected product performance by the

manufacturer
● Guarantees

○ Promise of general or complete satisfaction

New Product Development
Strategies
● Buy other companies
● Buy patents from other companies
● Buy a license or franchise from another company
● New-to-the-world items
● Improvine existing products
Organizing New Product
Development
– New product department

– Venture teams

– Skunkworks

– Communities of practice

– Crowdsourcing

– Stage gate systems

Concept to Strategy

– Product positioning map

– Brand positioning map

Concept Testing Responses

Communicability
Perceived Value Need Level
and Believability

User Targets,
Purchase Intention purchase occasions
and frequency
Market Testing

Consumer Market Testing

Sales – wave research
Simulated Test Marketing
Controlled Test Marketing
Test Markets
Development to
Commercialization

– Physical Prototypes

– Alpha Testing

– Beta Testing
Development to
Commercialization – When?
– First Entry

– Parallel Entry

– Late Entry
Sources for New Product Ideas

• Informal customer sessions • Iterative rounds with customers

• Time off for technical people to • Keyword search to scan trade
putter publications
• Customer brainstorming • Treat trade shows as intelligence
• Survey your customers missions
• “Fly on the wall” research • Have employees visit supplier
labs
• Set up an idea vault
Drawing ideas from customers

➢ Observe customers using product

➢ Ask customers about product problems
➢ Ask customers about dream products
➢ Use customer advisory board
➢ Use Web sites
➢ Form brand community of enthusiasts
➢ Challenge customers to improve product
Creativity Techniques

Attribute Forced
Mind Mapping
Listing Relationships

Reverse
Morphological
New contexts Assumption
Analysis
Analysis
Types of New Products

– New to the world products

– New to the firm products

– Additions to existing product lines

– Improvements and revisions to existing products

– Repositioning

– Cost Reductions
New Product Failure

• Fragmented markets • Shorter development time

• Social, economic, and • Poor launch timing

government constraints • Shorter PLCs
• Development costs • Lack of organizational support
• Capital shortages
Product Life Cycle
Marketing Strategies -
Introduction
– Product – Offer a basic product
– Price – Use cost-plus basis to set
– Distribution – Build selective distribution
– Advertising – Build awareness among early adopters and
dealers/resellers
– Sales Promotion – Heavy expenditures to create trial
Marketing Strategies - Growth

– Product – Offer product extensions, service, warranty

– Price – Penetration pricing/Retain price

– Distribution – Build intensive distribution

– Advertising – Build awareness and interest in the mass market

– Sales Promotion – Reduce expenditures to take advantage of

consumer demand
Marketing Strategies - Maturity

– Product – Diversify brand and models

– Price – Set to match or beat competition

– Distribution – Build more intensive distribution

– Advertising – Stress brand differences and benefits

– Sales Promotion – Increase to encourage brand switching

Marketing Strategies - Decline

– Product – Phase out weak items

– Price – Cut price

– Distribution – Use selective distribution: phase out unprofitable

outlets

– Advertising – Reduce to level needed to retain hard-core loyalists

– Sales Promotion – Reduce to minimal level

Styles, Fashion and Fads

– Style, fashion, and fads are three terms that may sound familiar, but it doesn’t refer to
them in a clothing sense. Style, fashion, and fads are three terms used to describe the
life cycle trends of a product. Below are trend graphs that distinguish which is which:
Style, Fashion and Fads

– Style
As you can see style is the most unpredictable trend of the three. A style has a cycle that
it runs through that show a mix of increased and decreased sales over time. The longest
lasting trend, style can be related to almost any product.
– Fashion
As opposed to style, fashion is a more steady progression of a trend. Fashion starts out,
increases steadily, plateaus, and then decreases proportionally to a decline.
– Fads
Fads are the most unreliable trends as they have a quick rise, peak, and steep decline all
in a short period of time. Fads are usually driven by consumer support and immediate
brand popularity.
– Market penetration - involves increasing sales to present
target customers. The product remains unchanged although
there may be a substantial change in how the product is
promoted;

– Market development - involves identifying new segments for

Ansoff Matrix
the current products offered by the company;

– Product development - seeks growth by modifying existing

products or introducing new products to serve existing
markets;

– Diversification - involves taking profits from existing products

or businesses to acquire or enter new markets, usually in
different industries from previous company efforts.
Brand

– A brand is a name, term, sign, symbol or design, or a combination of them,

intended to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.
– A brand can convey up to six levels of meaning:
– Attributes
– Benefits
– Culture
– Personality
– User
Brand Equity

Brand Brand
Awareness Acceptability

Brand Brand
Preference Loyalty
Branding Decision

The first decision is whether the company –Brand-Name Decision – Commonly, four
should develop a brand name for its brand-name strategies are used:
products, but today branding is such a strong
force that hardly anything goes unbranded. ▪ Individual Brand Names (Surf, Wheel…)

▪ A blanket family name for all products

–Brand-Sponsor Decision – Manufacturer has (Godrej)
several options with respect to brand
sponsorship. The product may be launched ▪ Separate Family names for all products
as: (Marie Claire, Hush Puppies from Bata)
▪ Manufacturers Brand (HLL)
▪ Company Trade Name combined with
▪ Distributor Brand (Food World) Individual Product Names (Maggi
▪ Licensed Brand (Van Heusen/ Louis Noodles, Kellogg’s Corn Flakes…)
Phillipe by Madura Garments)
Brand – Strategy Decisions

– Line Extensions: additional items in the same product category under same brand name
such as new flavours, forms, colours. (Ex: Complan)

– Brand Extensions: use an existing brand name to launch a product in a new category (Ex:
Nike, Adidas apparels)

– Multi Brands (companies will often introduce additional brands in the same category (Ex:
Toyota and Lexus)

– New Brands (when a company launches products in a new category, it may find that
none of its current brand names are appropriate, thus they prefer to use a different
brand name (Ex: Gillette and Oral B)
Services

– Intangibility – Physical evidence – people, place,

equipment, communication material, symbols, price

– Perishability

– Inseparability

– Variability
7 P’s of
Service
Marketing
ServQUAL Model - Dimensions

– Tangibles – Security

– Reliability – Competence

– Responsiveness – Courtesy

– Communication – Understanding

– Credibility – Access
ServQUAL Model – Gaps – Kindly Switch
the parcel Delivery day to the Coming
SATurday

– Knowledge Gap

– Standards Gap

– Delivery Gap

– Communications Gap

– Satisfaction Gap (Gap 1 + Gap 4)

Strategies to match demand and
supply of services
On Demand Side On Supply Side
• Differential pricing • Part-time employees

• Nonpeak demand • Peak-time efficiency routines

• Complimentary services • Increased consumer

• Reservation services participation

• Shared services

• Facilities for future expansion

Improving Service Quality

❖ Listening ❖ Surprising customers

❖ Reliability ❖ Fair play

❖ Basic service ❖ Teamwork

❖ Service design ❖ Employee research

❖ Recovery ❖ Servant leadership

Three Customer Worries

Failure Frequency

Downtime

Out of Pocket Costs