Chapter
13
Setting
Product Strategy
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Learning Objectives
1. What are the characteristics of products, and how
do marketers classify product?
2. How can companies differentiate products?
3. Why is product design important, and what are the
different approaches taken?
4. How can marketers best manage luxury brands?
5. What environmental issues must marketers
consider in their product strategies?
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Learning Objectives
7. How can a company build and manage its product
mix and product lines?
8. How can companies combine products to create
strong co-brands or ingredient brands?
9. How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?
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Product Characteristics
and Classifications
• Product
– 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
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Figure 13.1
Components Of The Market Offering
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Product Levels: The Customer-Value
Hierarchy
• Figure 13.2: Five Product Levels
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Product Classifications
Durability
Tangibility
Use
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Durability and Tangibility
Nondurable goods
Durable goods
Services
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Consumer-Goods Classification
Convenience
Shopping
Specialty
Unsought
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Industrial-Goods Classification
Materials and parts
Capital items
Supplies and
business services
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Product Differentiation
• Form
• Reliability
• Features
• Repairability
• Performance quality
• Style
• Conformance quality
• Customization
• Durability
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Services Differentiation
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
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Design
• Design
– The totality of
features that affect
the way a product
looks, feels, and
functions to a
consumer
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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
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Luxury brands
• Quality
• Uniqueness
• Craftsmanship
• Heritage
• Authenticity
• History
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Marketing Luxury Brands
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THE PRODUCT HIERARCHY
6. Item
5. Product
type
4. Product
line
3. Product
class
2. Product
family
1. Need
family
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Product Systems
and Mixes
• Product system
• Product
mix/assortment
– Width
– Length
– Depth
– Consistency
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Product Line Analysis
• Sales and profits
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Product Line Analysis
• Market profile and image
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Product line length
• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
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Product Mix Pricing
• The firm searches for a set of prices that
maximizes profits on the total mix
Optional-
Product line
feature
pricing
pricing
Product- Captive-
bundling product
pricing pricing
By-product Two-part
pricing pricing
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Co-Branding
• Two or more well-known brands are
combined into a joint product or marketed
together in some fashion
Same-company
Joint-venture
Multiple-sponsor
Retail
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INGREDIENT BRANDING
• Co-branding that creates brand equity for
parts that are necessarily contained within
other branded products
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Packaging
• All the activities of designing and
producing the container for a product
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Packaging
Used as a marketing tool Packaging objectives
• Self-service • Identify the brand
• Consumer affluence • Convey descriptive and
• Company and brand persuasive information
image • Facilitate product
• Innovation opportunity transportation and
protection
• Assist at-home storage
• Aid product consumption
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Packaging
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Labeling, 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
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