MODULE 4

MANAGING
THE PRODUCT
 WHAT IS PRODUCT?
Anything that possesses utility is described as
goods.
A product is both what a seller has to sell and
what a buyer has to buy.
People purchase products, because they are
capable of realizing some benefits.
The product is one which satisfies the needs
of customers.
“A product is anything that can be
offered to a market for attention,
acquisition, use or consumption that
might satisfy a want or need.”
Philip Kotler
Features of a Product:

Tangibility.
Intangible Attributes.
Exchange Value.
Consumer Satisfaction.
PRODUCT LEVELS (THE CUSTOMER
VALUE HIERARCHY)
Core Product

Generic
Product
Expected
Product
Augmented
Product
Potential
Product
 Core Product

It answers the question - What is the buyer really

buying?
The customer wishes for some core benefit when he
buys a core benefit.
Therefore it is essential that marketers must see
themselves as benefit providers.
Eg, a hotel customer is actually buying the concept of
“rest and sleep”.
 Basic or Generic Product

It is a conversion of the core product to a basic version

of the product.
It is what the market recognizes’.
It is the larger packaging of the core product.
Eg. In case of a hotel , While the core product will be
sleep & rest, the generic/basic product will be the bed,
washrooms, towels.
 Expected Product
It refers to a set of attributions & conditions that
buyers normally expect & agree to when they
purchase the product.
Eg. A hotel guest will expect clean room, a bed,
cupboard soap towel, room service etc. He will settle
for a hotel which provides him these attributes in
accordance with how much he is willing to pay.
 Augmented Product

It refers to the inclusion of additional services &

benefits.
It focuses on product differentiation so as to
distinguish it from that of the competitors.
Eg.. In case of a hotel a warm reception, quick
check in, flowers, Tv., quick service & a speedy
check out.
 Potential Product

It incorporates all the possible improvement &

sophistication that is possible under the given
technological, economic & competitive conditions.
It refers to all the possible changes that a product is
likely to undergo in future.
Marketers therefore have to be on the look out to find
new & better ways to satisfy ( delight) the customer.
Eg. A free coupon for dinner for 2 for the 100th
customer, A bouquet, spa etc.
 PRODUCT LINE
 A group of related products
manufactured by a single
company.
 Is a group of products that are
closely related, either because
they function in a similar
manner, or are sold to the same
customer groups, or are
marketed through the same
types of outlets, or fall within
given price ranges.
 HUL’S PRODUCT LINE
Color Skin Oral Confect Hair Deodor Soaps Toilet Bevera Food
Cosmet Care Care ionarie Care ants & Soaps ges
ics s Deterg
ents
Lakme Fair & Pepsod Max Sunsilk Axe Surf Liril 3 roses Knnor
Lovely ent Annapu
tna
Atta
Avlance Pond’s Toothbr Clinic Pond’s Rin Lifebuo Lipton Knoor
ush y yellow Annapu
label rna Salt
Close Rexona Wheel Lux Lipton Kissan
up green
label
Denim Vim Breeze Red Kwality
label Wall’s
Feast
Ala Pears Taj
Mahal
OK Hamam Brooke
Bond
 PRODUCT MIX
“A product mix is the set of all product lines
and items that a particular seller offers for
sale to buyers”
It need not consist of related products.
For eg, a firm manufactures watches,
machinery items, electric lamp.
Product Mix Strategies:

Expansion of Product Mix.

Contraction of Product Mix.
Alteration of Existing Product.
Trading up and Trading down.
Expansion of Product Mix:
Expansion of product mix implies increasing the
number of product lines. New lines may be
related or unrelated to the present products. For
example, Bajaj Company adds car (unrelated
expansion) in its product mix or may add new
varieties in two wheelers and three wheelers.
When company finds it difficult to stand in
market with existing product lines, it may decide
to expand its product mix.
For example, Hindustan Unilever Limited has
various products in its product mix such as:
Toilet soaps, detergent cakes, washing
powders, etc.
Cosmetic products,
Edible items,
Shaving creams and blades,
Pesticides, etc.
If company adds soft drink as a new product
line, it is the example of expansion of product
mix.
 Contraction of Product Mix:
• Sometimes, a company contracts its product
mix. Contraction consists of dropping or
eliminating one or more product lines or
product items. Here, fat product lines are made
thin. Some models or varieties, which are not
profitable, are eliminated. This strategy results
into more profits from fewer products. If
Hindustan Unilever Limited decides to eliminate
particular brand of toilet shop from the toilet
shop product line, it is example of contraction.
Alteration or Changes in Existing Products:

• Instead of developing completely a new

product, marketer may improve one or more
established products. Improvement or
alteration can be more profitable and less
risky compared to completely a new product.
For example, Maruti Udyog Limited decides to
improve fuel efficiency of existing models.
Modification is in forms of improvement of
qualities or features or both.
Trading Up:
• Trading up consists of adding the high-price-
prestige products in its existing product line.
The new product is intended to strengthen the
prestige and goodwill of the company. New
prestigious product increases popularity of
company and improves image in the mind of
customers. By trading up product mix strategy,
demand of its cheap and ordinary products
can be encouraged.
Trading Down:

• The trading down product mix strategy is quite

opposite to trading up strategy. A company
producing and selling costly, prestigious, and
premium quality products decides to add lower-
priced items in its costly and prestigious product lines.
• Those who cannot afford the original high-priced
products can buy less expensive products of the same
company. Trading down strategy leads to attract
price-sensitive customers. Consumers can buy the
high status products of famous company at a low
price
 PRODUCT LIFE CYCLE
 The product life cycle derives from the fact that
a product’s sales volume and sales revenue
follow a typical pattern of five phase cycle.
 The life cycle is a fact of existence for every
product.
 It is similar to the human life cycle.
 The length of the life cycle, the duration of each
phase and the shape of the curve vary widely for
different products.
 It helps a marketer in preplanning the entry of
a new product in a market, in prolonging the
profitable stage, in meeting competition and
long term decisions on investment on products.
 The PLC indicates that product is born or
introduced, grows, attains maturity in a
particular market and then sooner or later it is
found to enter its declining stage, i.e., decay in
its sales and ultimate death.
PRODUCT LIFE CYCLE
Stages in PLC:

Product Development.
Introduction.
Growth.
Maturity.
Decline.
Product Development:

The creation of products with new or different

characteristics that offer new or additional
benefits to the customer.
Product development may involve
modification of an existing product or its
presentation.
Introduction:

 In the early stage when the product is

introduced in a market, sales revenue begins to
grow but the rate of growth is very slow.
 Profit may not be there as we have low sales
volume, large production and distribution costs.
 Require heavy advertising and sales promotion.
 Growth:

 It is the period during which the product is accepted by

consumers and the traders.
 During the growth stage, the rate of increase of sales
turnover is very rapid.
 Profit also increase at an accelerated rate.
 In spite of competition, we may have rising sales and profit.
 The firm gives top priority to sales volume and quality
maintenance may have secondary preference.
 Maturing:

 During this stage, keen competition brings pressure on prices.

 Increasing marketing expenditure and falling prices (in the
battle for market share) will reduce profits.
 Additional expenditure is involved in product modification
and improvement or broadening the product line.
 Marketers have to adopt measures to stimulate demand and
face competition through additional advertising and sales
promotion.
 Overall marketing effectiveness becomes the key factor in the
stage of maturity.
 Low prices, increasing competition, rising marketing costs,
and declining profits are the features in this stage.
 Saturation:

 The saturation point occurs in the market when all

potential buyers are using the product and we have only
replacement sales.
 Consumption achieves a constant rate and the marketers
have to concentrate exclusively on a fight for market share
(with higher marketing expenses).
 Prices may fall rapidly and profit margins may become
small unless the firm makes substantial improvements and
realizes cost economies.
 Decline Stage:

 Once the peak or saturation point is reached, product

inevitably enters the decline stage and becomes obsolete.
 It may be gradually displaced by some new innovation.
 Sales drop severely, competition dwindles, and even then
the product cannot stand in the market.
 A marketer is expected to keep new products ready to fill
up the gap created by the demise if existing products.
 PLC STRATEGIES
Characteristics Introduction Growth Maturity Decline

Product Offer a basic Offer product Diversify brand Phase out weak
product extensions, and models items
service warranty

Price Use cost plus Price to Price to match Cut price

penetrate or beat
market competitors

Distribution Build selective Build intensive Build more Go selective and

distribution distribution intensive phase out
distribution unprofitable
outlets

Advertising Build product Build awareness Stress brand Reduce to level

awareness and interest in differences and needed to retain
among early the mass market benefits hard core loyals
adopters
NEW PRODUCT
DEVELOPMENT
New Product Ideas (Idea Generation):

Ideas may be contributed by scientists,

professional designers, rivals, customers, sales
force, top management, dealers etc.
We may need sixty new ideas to get one
commercially viable product.
 Idea Screening:

 We have to evaluate all ideas and inventions.

 Poor or bad ideas are dropped and through the process of
elimination only most promising and profitable ideas are
picked up for further detailed investigation and research.
 Screening should avoid two errors:
 Rejecting an idea that could become a very
successful product.
 Accepting an idea that later fails.
 Concept Development and Testing:

 All ideas that survive the process of screening will be

studied in detail.
 They will be developed into mature product concepts.
 Concept testing helps the company to choose the
best among the alternative product concepts.
 Consumers are called up on to offer their comments
on the precise written description of the product
concept.
Business Analysis:

Once the best product concept is picked up, it

will be subjected to rigorous scrutiny to
evaluate its market potential, capital
investment, rate of return capital, etc.
Business analysis is a combination of marketing
research, cost benefit analysis and assessment
of competition.
 Product Development Programme:

 We have three steps in this stages, when a paper idea

is duly converted into a physical product:
 Prototype development giving visual image of the product.
 Consumer testing of the model or prototype, and
 Branding, packaging and labeling.
 Consumer testing of the model products will provide
the ground for final selection of the most promising
model for mass production and mass distribution.
 Test Marketing:

 Entire product marketing programme is tried out for the

first time in a small number of well selected test
markets, i.e., test citied or areas.
 Test marketing is necessary to find out the viability of
full marketing programme for national distribution.
 It helps the company to learn through trial and error
and get additional valuable clues for product
improvement and for modification in our marketing mix.
 Commercialization:

 Once the test marketing gives green signal for the product
with or without expected modification, the company can
proceed to finalize all features of the product.
 Now marketing management can launch full fledged
advertising and promotional campaign for mass
distribution.
 Mass production will start and all distribution channels
will be duly organized. The product is now born and it will
start its life cycle in due course.
PACKING AS A MARKETING TOOL
Packing means wrapping of goods before they
are transported or stored or delivered to a
consumer.
Packaging has been defined as “ an activity
which is concerned with protection, economy,
convenience and other promotional
considerations”.
Many marketers have called packaging a fifth
P, along with four Ps.
Functions of Packaging:

 Product Protection.
 Product Containant.
 Product Identification.
 Product Attractiveness.
 Product Convenience.
 Effective Sales Tool.
Kinds of Packaging:

A Consumer Package.
A Family Package.
Re-use Package.
Multiple Package.
 ROLE OF LABELLING IN PACKING
 Label is a part of the product,
which carries verbal
information about the product
or the seller.
 It may be a part of a package,
or it may be a tag attached
directly to the product.
 The producer gives necessary
information to the consumers
through the label.
Functions of Labelling:

 It enables the producer to give clear instructions about

the uses of the product.
 Price variations caused by the middlemen are avoided
because price is printed and maintained.
 Manufacturer-buyer relation is established.
 It encourages producers to make only standard
products.
 Buyers can easily identify the product.
 A Complete Label Gives The Following Information:

 Address of the producer.

 Gross and net quantity of the content.
 Ingredients in the product.
 Directions for the use.
 Precautionary measures.
 Nature of the product.
 Date of packing and expiry.
 Retail price.
 THANK YOU
END OF MODULE 4