Product Planning and Control

PRODUCT OVERVIEW PRODUCT OVERVIEW

At the end of the lecture students should be able to understand the following
• What is a product?
• Types of products
• Classifying products.
• Product failure
• Product and brand management
• Product positioning and repositioning
• The product mix
What is a product?
1. An idea, a physical entity (a good), a service, or any combination
of the three that is an element of exchange to satisfy individual or
business objectives
2. A product can be anything that can be offered to the market to
satisfy a want or a need.
3. A bundle of attributes, offering for use/consumption by the final
customer.
Products that are marketed include
• Physical goods
• Services
• Experiences
• Events
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas
Types of Products
Goods:
Physical products with form and substance

Consumer Products:
Those used by consumers for their own use and Satisfaction

Services:
Non-physical products usually involving performance

Business Products:
Those used in the running of a business or in the manufacture of products for
resale.
 Classification of Product
Can be done in a variety of perspectives
1. Consumer-Goods Classification
Classified on the basis of shopping habits
2. Durability and Tangibility
3. Industrial-Goods Classification
Classified in terms of their relative cost and how they enter the production
process.
Consumer Product Classification

Convenience Goods
Inexpensive, frequently purchased.
Little effort needed to purchase them.
Staples, Impulse and emergency goods.
Shopping Goods

• Not as frequently as convenience products

• Costly
• Consumer does research before purchase.
Specialty Goods

Unique features
Consumer is prepared to pay a premium price.
Unsought Goods

Those good that consumers do not know or Doesn’t think of

buying.
Durability and Tangibility
Nondurable Goods
Tangible goods consumed in one or few uses
Purchased frequently
Strategy : availability , low priced , heavily advertised
 Durable Goods

• Tangible goods that survive many uses

• Require more personal selling and service
• Higher margins and requires seller guarantee
Services
• Intangible product
• Requires more quality control and credibility
Industrial-Goods Classification

Materials and Parts

• Raw Materials
• Manufactured
• materials and parts
• Farm Products
• Natural Products
Capital Items
• Installations
• Equipment
Supplies

• Maintenance and repair items

• Operating supplies
Business Services

• Maintenance and repair services

• Business advisory services
 Product levels

(Kotler, 1999) The Five Product Levels model provides a way to

show the different levels of need customers have for
a product. These needs range from core needs to psychological
needs. At each product level, more customer value is added
The five Product Level
Core product
• Indicate core benefit or service
- Explains what the buyer really buys
- Basic step in designing products
- Defines problem solving benefits/ services that
consumers seek
- Standardization of technology does not lead to much
of difference from competing firms
Basic Product
• At this level, the core benefit is turned into a basic product.
• Basic step in designing products
• Unbranded, plainly packaged, less expensive
Expected product
• Expected/ formal/ tangible product
- Represents basic requirements, a customer finds essential to buy a product
- Attributes & conditiones required by the customers
- identified-built into products
- Includes brand name, features, design, packaging, quality level, styling,
styling, attributes, instructions manual
- As interfirm rivalry intensifies, differentiation on basis of formal product
ceases (ceiling fans)
- Marketer searches for a possible differentiation e.g. Sony camcorder (
name, parts, styling, features, packaging
- deliver core benefit- convenient, high quality way to capture
Expected cont’d
• Marketer prepares an augmented product that exceeds customer
expectations.
• Intangible component of the product along with formal & core
components
• Product built by adding consumer services & benefits
Potential
• Potential/Future product
- Includes all possible improvements under given
technological, economical, competitive conditions
- Helps to attract and retain customers
- These offerings differ from one market to another
because of varying competitive conditions
- - Driving force-
- to retain competitive advantage.
 The five Product Level Example: Hotel
1. Core Benefit
• The fundamental need or wants that the customer satisfies when they buy the
product.
• To provide a place to rest or sleep
2. Generic Product
• A type of the product made up of only those features necessary for it to
function.
• The features are the bed, towels, a bathroom, a mirror, and a wardrobe.
3. Expected Product
• The set of features that the customers expect when they buy the product.
• This include clean sheets, some clean towels, Wifi, and a clean bathroom.
 The five Product Level con’t
4. Augmented Product
• Refers to any product variations, extra features, or services that help differentiate
the product from its competitors.
• The inclusion of a gatekeeper service or a free map of the town in every room.
5. Potential Product
• This includes all augmentations and transformations the product might undergo
in the future. i.e. to continue to surprise and delight customers the product must
be augmented.
• This could mean a different gift placed in the room each time a customer stays.
For example, it could be some chocolates on one occasion, and some luxury
water on another. By continuing to augment its product in this way the hotel will
continue to delight and surprise the customer.
 Five Product Levels Example: Coca-Cola
1. Core Benefit
To quench a thirst.
2. Generic Product
A carbonated, and sweetened fizzy drink.
3. Expected Product
The customer’s Coca-Cola is cold. If this isn’t the case then expectations won’t be met and the
drink will not taste its best in the mind of the customer.
4. Augmented Product
Coca-Cola’s augmented product is that it offers Diet-Coke. How does Coca-Cola exceed
customers expectations with this product? By offering all the great taste of Coca-Cola, but with
zero calories.
5. Potential Product
One way in which Coca-Cola delights customers is by running competitions. The prizes in these
competitions are often things that, “money can’t buy”, such as celebrity experiences. To
continue to delight customers over time the competition prizes change frequently.
Assignment 1
Analyse the five product level of any one of the given products
a) Vogue soap
b) Nivea roll on
c) A loaf of bread
d) Takeaway from Chicken inn
e) Takeaway from KFC
 Product failure -Why New Products Fail?
• Depending on study, up to 80% of new products fail. Reasons can suggest ways
of proving problems.
• Too small a target market – must be large enough to be profitable
• Poor product quality/performance – product has to work adequately, meet
customer needs
• Problem of tradeoffs. Company may mismanage a tradeoff in benefits.
• Insignificant point of difference – product is not a great improvement on
competitive offerings
• No protocol – clear statement of target market, its needs, what product would
do
• Poor positioning – diet beer vs. light beer
 Product failure -Why New Products Fail?
• No Access to Market – especially difficult for smaller companies in competitive
industries.
• Bad timing – “Better never than late.” relative to competitors, First-movers may
have advantage. Relative to customer trends, may not want to be early; too
much education required.
• Poor execution of marketing mix – wrong price, wrong distribution, wrong ad
campaign. “Bad advertising kills a good product”
• Inadequate budget – biggest reason small companies fail is inadequate capital
• Inadequate competitive analysis – reaction of current incumbents, products
from new entrants
• Blinders (=“Vision”?)– company may have preconception that is never
questioned. (Especially for high-tech)
 Product and brand management
• What is Brand?
• A brand is a person’s gut feeling about a product, service or organization.
•
• A brand defines the relationship customers have with us.
• A brand is a promise we make to our customers
• and to ourselves.
• A brand is shaped by each experience customers have with the firm.
•
• A brand differentiates the product from similar offerings.
Traditional view: A brand is a name, term, sign, symbol, or design which is
intended to identify the goods or services of one seller or group of sellers and
to differentiate them from those of competitors.
Recent views:
• Brand is what is experienced and valued by customers in everyday social life.
• Brand is the culture of the product- shared, taken-for granted brand stories,
images and associations.
• A brand is a seller’s promise to deliver consistently a specific set of features,
benefits and services to buyers.
• For customer brand is an experience
Role of Brand:
• Signify quality
• Create barriers to entry
• Serve as a competitive advantage
• Secure price premium
 How Brand works?

• Level-1: Identification-Brand name and logo ensure the product can

be recognized and distinguished from the competition.
• Level-2: Security- You get what you expect.
• Level-3: Added value- individual “laddered” benefits.
• Level-4: Transformation-the brand actually invokes change in the
consumer.

Brand: A brand is a mixture of attributes, tangible and intangible,

symbolized in a trademark, which, if managed properly, creates value
and influence.
 Branding
• A physical product is combined with something else- symbols, images and
feelings to produce an idea or concept. The two grow with and live on one
another in a mutually enhancing partnership.
• Branding is “emotional product development”.
• The purpose of branding is to transform a product. Transforming a commodity
like product into customer satisfying value added propositions is the essence of
branding.

Two routes of brand building:

• from product advantage- intangible values
• from values-products
Promotion is the vehicle that allows us to access the consumer’s mind, to create
a perceptual inventory of imagery, symbols and feelings that come to define the
perceptual entity “we call a Brand.”
 The Brand and Value
• The brand is a focal point for all the positive and negative impressions created
by the buyer over time as he comes into contact with the brand’s products,
distribution channel, personnel and communication...

• The value of a brand comes from its ability to gain an exclusive, positive and
prominent meaning in the minds of a large number of consumers” (Kapferer
1997, pg. 25).

What is brand equity?

• The differential effect that brand knowledge has on consumer response to the
marketing of that brand.
• The unique “brain space” that your brand occupies in the minds of your
customers.
 Sources of Brand Equity

Brand
Recognition Non-Product-Related
(e.g., Price, Packaging,
User and Usage Imagery)

Brand
Awareness

Attributes
Brand
Recall
Product-Related
(e.g., color, size,
design features)
Brand
Knowledge

Types of
Brand Associations Benefits
Functional

Brand
Image Symbolic

Favorability,
Overall
Strength, and
Evaluation Experiential
Uniqueness of
(Attitude)
Brand Association
Brand image:
• A strong brand Image is created by marketing programs that link strong
favorable and unique associations to the brand in the memory.

• Brand image reflects the linking of strong, favorable and unique

associations to the brand in memory.

Four steps in building brand equity:

• Who are you?
• What are you?
• What about you? What do I think or feel about you?
• What about you and me?
 Brand imagery:
• It is how people think about a brand abstractly, rather than what they think
the brand actually does. It is more a kind of intangible stuff.

Ways to differentiate:
• Being first
• Leadership
• Heritage
• Preference
 Brand Identity
Brand identity is a unique set of brand associations that the brand strategist aspires to create or maintain.
• These associations represent what the brand stands for and imply a promise to customers from
organizational members.
• A brand identity provides direction, purpose and meaning for the brand. It is central to a brand’s strategic
vision and the driver of one of the four principal dimensions of brand equity: associations, which are the heart
and soul of the brand.
•

Aspects of Brands:
BRAND IMAGE
How the brand is now perceive

BRAND IDENTITY
How strategists want the brand to be perceived

BRAND POSITION
• The part of the brand identity and value proposition to be actively
• Communicated to a target audience.
 Brand identity and Brand equity:

Brand Brand Brand

Identity Associations Equity
 Brand Identity System

Brand Identity

Brand as Brand as Brand as Brand as

Product Organization Person Symbol

Value Proposition Credibility

Brand-Customer Relationship
 Six Facets of Brand Identity
1.A brand has physical qualities or a ‘physique’
• What does it do?
• What does it look like?
2. A brand has its own personality
• Spokesperson or figurehead role
• What brand would be if it were a person
3. A brand has its own culture
• Set of values feeding the brand’s inspiration
• Country of origin
4. A brand has its own relationship
• Exchanges between people and brand
• Service sectors and retailers.
5. A brand is a reflection
• Produces a reflection or image of the buyer or user.
• Different from target the describes brand’s potential buyer or user.
• Customer is reflected as s/he wishes to be seen from using the brand.
• Consumers use brands to built their own identities.
6. A brand speaks to our self image
• Self image is the target’s own internal mirror.
• Attitude toward the brand fosters an inner relationship with self.
•
 Product/ Brand positioning and repositioning

Product positioning is the way a product or service is seen by consumers and

how they view its important attributes in relation to competitor‘s products.
For instance a car can be positioned on the basis of style, performance, safety
or economy whilst a computer might be positioned on the basis of speed,
capacity, reliability choosing and implementing your product positioning
strategy is an important task. You need to determine your product‘s
competitive advantages (ie: what sets it apart from its competitors) and then
based on this information, decide how to position your offering in the
market. Quality, features, design, branding, packaging, labelling and service
all affect the way your product is positioned.
Positioning
Positioning has come to mean the process by which
marketers try to create an image or identity in the
minds of their target market “positioning is the act of
designing the company’s offers and image so that it
occupies a distinct and valuable place in the target
customers mind ”
 Re-positioning & De-positioning

• Re-positioning involves changing the identity of a

product, relative to the identity of competing products,
in the collective minds of the target market.
• De-positioning involves attempting to change the
identity of competing products, relative to the identity
of your own product, in the collective minds of the
target market.
Approaches to Positioning
1.Focusing on the consumer
2.Focusing on the competitors
Process of Product/ Brand Positioning
Process Of Product/ Brand Positioning
 Product Mix

• Product Item- a specific version of a product that can be

designated as a distinct offering among an organization’s
products.
• Product Line- a group of closely related product items.
• Product Mix- all products that an organization sells.