Chapter
13
Setting
Product Strategy
Copyright © 2016 Pearson Education Ltd. 13-1
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?
6. How can a company build and manage its product mix and
product lines?
Copyright © 2016 Pearson Education Ltd. 13-2
Learning Objectives
7. How can companies combine products to create
strong co-brands or ingredient brands?
8. How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?
Copyright © 2016 Pearson Education Ltd. 13-3
What Are The Characteristics Of Products, And How Do Marketers Classify Product?
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
Copyright © 2016 Pearson Education Ltd. 13-4
Figure 13.1
Components Of The Market Offering
Copyright © 2016 Pearson Education Ltd. 13-5
Product Levels: The Customer-Value
Hierarchy
• Figure 13.2: Five Product Levels
Copyright © 2016 Pearson Education Ltd. 13-6
Product Classifications
Durability: Nondurable & Durable
Tangibility: tangible & intangible
Use: consumer or industrial
Copyright © 2016 Pearson Education Ltd. 13-7
Durability and Tangibility
Nondurable goods: shampoo
Durable g: clothing, refrigerator
Services: haircut, legal advice
Copyright © 2016 Pearson Education Ltd. 13-8
Consumer-Goods Classification
Convenience
Shopping
Specialty
Unsought
Copyright © 2016 Pearson Education Ltd. 13-9
Industrial-Goods Classification
Materials and parts
Capital items
Supplies and
business services
Copyright © 2016 Pearson Education Ltd. 13-10
How Can Companies Differentiate Products?
Product Differentiation
• Form • Reliability
• Features • Reparability
• Performance quality • Style
• Conformance quality • Customization
• Durability
Copyright © 2016 Pearson Education Ltd. 13-11
Services Differentiation
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
Copyright © 2016 Pearson Education Ltd. 13-12
Why Is Product Design Important, And What Are The Different Approaches
Taken?
Design
• Design
– The totality of
features that affect
the way a product
looks, feels, and
functions to a
consumer
Copyright © 2016 Pearson Education Ltd. 13-13
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
Copyright © 2016 Pearson Education Ltd. 13-14
How Can Marketers Best Manage Luxury Brands?
Luxury Brands
• Quality
• Uniqueness
• Craftsmanship
• Heritage
• Authenticity
• History
Copyright © 2016 Pearson Education Ltd. 13-15
Marketing Luxury Brands
Copyright © 2016 Pearson Education Ltd. 13-16
What Environmental Issues Must Marketers Consider In Their Product
Strategies?
Environmental Issues
• Environmental issues are
also playing an
increasingly important
role in product design and
manufacturing
Copyright © 2016 Pearson Education Ltd. 13-17
How Can A Company Build And Manage Its Product Mix And Product Lines?
THE PRODUCT HIERARCHY
6. Item
5. Product
type
4. Product
line
3. Product
class
2. Product
family
1. Need
family
Copyright © 2016 Pearson Education Ltd. 13-18
Product Systems
and Mixes
• Product system
• Product
mix/assortment
– Width
– Length
– Depth
– Consistency
Copyright © 2016 Pearson Education Ltd. 13-19
Product Line Analysis
• Sales and profits
Copyright © 2016 Pearson Education Ltd. 13-20
Product Line Analysis
• Market profile and image
Copyright © 2016 Pearson Education Ltd. 13-21
Product line length
• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
Copyright © 2016 Pearson Education Ltd. 13-22
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
Copyright © 2016 Pearson Education Ltd. 13-23
How Can Companies Combine Products To Create Strong Co-brands Or
Ingredient Brands?
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
Copyright © 2016 Pearson Education Ltd. 13-24
INGREDIENT BRANDING
• Co-branding that creates brand equity for parts
that are necessarily contained within other
branded products
Copyright © 2016 Pearson Education Ltd. 13-25
HOW CAN COMPANIES USE PACKAGING, LABELING, WARRANTIES,
AND GUARANTEES AS MARKETING TOOLS?
Packaging
• All the activities of designing and producing
the container for a product
Copyright © 2016 Pearson Education Ltd. 13-26
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
Copyright © 2016 Pearson Education Ltd. 13-27
Packaging
Copyright © 2016 Pearson Education Ltd. 13-28
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
Copyright © 2016 Pearson Education Ltd. 13-29
Copyright © 2016 Pearson Education Ltd. 13-30
