PRODUCT & SERVICE

STRATEGIES

Marketing Management-I
Lecture 8
 LEARNING OBJECTIVES

 What are the characteristics of products

and how do marketers classify products?
 How can companies differentiate products?
 How can a company build and manage its
product mix and product lines?
 WHAT IS A PRODUCT?

A product is 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.
 COMPONENTS OF THE
MARKET OFFERING
Value-based prices

Attractiveness
of the market
offering

Product Services
features mix and
and quality quality
FIVE PRODUCT LEVELS
 PRODUCT DIFFERENTIATION

 Product form
 Features
 Customization
 Performance
 Conformance
 Durability
 Reliability
 Repairability
 Style
 THE PRODUCT
HIERARCHY

Item

Product type

Product line
Product class
Product family
Need family
 CONSUMER GOODS
CLASSIFICATION
Convenience Products Shopping Products
Buy frequently & immediately Buy less frequently
> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods

Specialty Products Unsought Products

Special purchase efforts New innovations
> Unique characteristics > Products consumers don’t
> Brand identification want to think about.
> Few purchase locations >Require much advertising &
personal selling
 INDUSTRIAL GOODS
CLASSIFICATION

 Materials and parts

 Capital items
 Supplies/business services
WHAT IS A SERVICE?

A service is any act of performance

that one party can offer another that
is essentially intangible and does not
result in the ownership of anything; its
production may or may not be tied to
a physical product.
 EXAMPLES OF POSSIBLE BLENDS OF
PHYSICAL GOODS AND SERVICES IN
A PRODUCT

Restaurant
Restaurant
Canned
Canned soup,
soup, meal,
meal, cell
cell Satellite
Satellite radio,
radio,
steel
steel pipe,
pipe, phone,
phone, hair
hair styling,
styling,
paper
paper towels
towels automobile
automobile postal
postal service
service
tune-up
tune-up
100% physical 100%
good service
emphasis emphasis
Blend of physical
good and service
 SERVICE DIFFERENTIATION

 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Returns
CONTINUUM OF EVALUATION FOR
DIFFERENT TYPES OF PRODUCTS
DETERMINANTS OF SERVICE
QUALITY
Reliability

Responsiveness

Assurance

Empathy

Tangibles
 Depth
Depth--number
numberofof
versions
versionsof
ofeach
each
product
product
Product
ProductMix
Mix-- Length
Length--total
total
all
allthe
theproduct
product number
numberof ofitems
items
lines
linesoffered
offered within
withinthe
thelines
lines
Consistency

Width
Width--number
numberofof
different
differentproduct
product
lines
lines
PRODUCT MIX
PRODUCT LINE DECISIONS
 PRODUCT MIX
EXTENSION
Line Extension
 L’Oreal announces new versions of kid’s shampoo.
 Annapurna Atta announces Farm Fresh and
Special Atta
Product mix extension
 Johnson & Johnson adds Acuvue disposable
contact lenses as it added another product to the
company’s product mix
 LINE STRETCHING

Down-Market Stretch

Up-Market Stretch

Two-Way Stretch
 CHANGE PRODUCT MIX
DEPTH

Increase Depth

Band-Aid now has

over 40 products to
heal cuts.
Decrease Depth
MANAGING PRODUCT LINES FOR
CUSTOMER APPEAL AND PROFIT
PERFORMANCE
 Whether a product line is too short or too long
depends on:
 The extent to which the market can be
segmented.
 How the company wants to position itself.
 The stage of product-market evolution.
 More and more companies are pursuing
product expansion strategies.
 MANAGING PRODUCT LINES
FOR CUSTOMER APPEAL AND
PROFIT PERFORMANCE
 Line filling
 Lengthens the product line by adding items
within the present range.
 Aims to satisfy more customers, to increase
sales and profits, to placate dealers, and to
ward off competitors.
 Line stretching
 Lengthening the line beyond its current range.
 Such stretching may be up or down or both.
 MANAGING PRODUCT
LINES FOR CUSTOMER
APPEAL AND PROFIT
PERFORMANCE
 Line extensions
 Introducing new products that differ significantly
from those in the existing line by more than just
size and price.
 Involves greater costs and financial risks than line
filling or stretching strategies.
 Provides an extended technological base for the
firm and is more likely to tap new market
segments.
 WHAT IS THE FIFTH
P?
Packaging, sometimes called the 5th P, is
all the activities of designing and
producing the container for a product.
 PACKAGING
OBJECTIVES
 Identify the brand
 Convey descriptive and persuasive
information
 Facilitate product transportation and
protection
 Assist at-home storage
 Aid product consumption
FUNCTIONS OF
LABELS
Identifies

Grades

Describes

Promotes
 NEW-PRODUCT
DEVELOPMENT PROCESS
1.
1. Idea
Idea
generation
generation

2.
2. Screening
Screening

3.
3. Idea
Idea
evaluation
evaluation

4.Development
4.Development

5.
5. Commercial-
Commercial-
ization
ization
 IDEA GENERATION
1.
1. Idea
Ideageneration
1.
1. Idea
Idea generation
generation
generation

•• Ideas
Ideas from
from customers
customers
2.
2. Screening
Screening
and
and users
users
•• Marketing
Marketing research
research 3.
3. Idea
Idea
•• Competitors
Competitors evaluation
evaluation
•• Other
Other markets
markets
•• Company
Company people,
people, 4.Development
4.Development
intermediaries, etc.
intermediaries, etc.
5.
5. Commercial-
Commercial-
ization
ization
 SCREENING
1.
1. Idea
Idea
generation
generation
2.
2. Screening
Screening
2.
2. Screening
Screening
•• Strengths
Strengths and
and
weaknesses 3.
weaknesses 3. Idea
Idea
•• Fit evaluation
evaluation
Fit with
with objectives
objectives
•• Market
Market trends
trends
•• Rough
Rough ROI estimate 4.Development
ROI estimate 4.Development

5.
5. Commercial-
Commercial-
ization
ization
 SCREENING AND TYPES
OF NEW PRODUCT
OPPORTUNITIES
1.
1. Idea
Idea
generation
generation

2.
2. Screening
Screening
Immediate satisfaction
3.
3. Idea
Idea
High
evaluation
Low
evaluation
Long-run High Desirable Salutary
consumer products products
4.Development
4.Development
welfare
Low Pleasing Deficient
products 5.
5. Commercial-
Commercial-
products
ization
ization
 IDEA EVALUATION
1.
1. Idea
Idea
generation
generation

2.
2. Screening
3.
3. Idea
Idea Evaluation
Screening Evaluation

•• Concept 3.
3. Idea
Concept testing Idea
testing
evaluation
Reactionsevaluation
•• Reactions from
from
customers
customers
•• Rough
Rough estimates
estimates of 4.Development
4.Development
of
costs,
costs, sales,
sales, and
and profits
profits
5.
5. Commercial-
Commercial-
ization
ization
 DEVELOPMENT

1.
1. Idea
Idea
generation
generation

2.
2. Screening
Screening
4.
4. Development
Development
3.
3. Idea
Idea
R&D
••evaluation
R&D
evaluation
•• Develop
Develop model
model or
or
service
service 4.Development
4.Development
•• Test
Test marketing
marketing mix
mix
•• Revise
Revise plans
plans as
as needed
needed
5.
5. Commercial-
Commercial-
•• ROI estimate
ROI estimate ization
ization
 COMMERCIALIZATION

1.
1. Idea
Idea
generation
generation

2.
2. Screening
Screening
5.
5. Commercialization
Commercialization
3.
3. Idea
Idea
evaluation •• Finalize
evaluation Finalize product
product and
and
marketing
marketing planplan
Start
Start production
production and
••4.Development
4.Development and
marketing
marketing
•• “Roll
“Roll out” in
out”5. select
inCommercial-
select
5. Commercial-
markets
markets ization
ization
•• Final
Final ROI
ROI estimate
estimate
ITC LAUNCHES NEW
PRODUCTS
MCDONALD’S NEW
PRODUCTS
NESTLE’S NEW PRODUCTS
PRODUCT LIFE CYCLE