PRODUCT DECISIONS

CONCEPT OF PRODUCT DECISIONS:

• Product Decision – Acc. To Peter Drucker – “So long as pdt is not bought and consumed, it remains a raw material. The pdt is almost always a combination of tangible and intangible benefits.

PRODUCT HIERARCHY: Six Levels:

• Need Family: the core need that underlies the existence of a product family. Ex: security

• Product Family: all the pdt classes that can satisfy a core need with reasonable effectiveness. Ex: Savings and Income

• Product Class: A group within the pdt family recognized as having a certain functional coherence. Ex: financial instrument.

PRODUCT HIERARCHY: Six Levels: CONT…

• Product Line: a group of pdt within a product class that are closely related because they perform a similar function, are sold to the same customer group, are marketed through the same channels, or fall with given price range. Ex: Insurance

• Product type: A group of item within pdt line that share one of several possible forms pf the pdt. Ex: term life.

• Item: A distinct unit a brand or product line distinguishable by size, price, appearance or some other attributes.

NEW PRODUCT DEVELOPMENT PROCESS:• 1. IDEA GENERATION: The new pdt

development starts with search of new ideas-customer needs, competitors, employees, company sales people, dealers and top management.

• - High cash flow, market share domination.

• - Brainstorming, Problem analysis.

NEW PRODUCT DEVELOPMENT PROCESS:• 2. IDEA SCREENING: • Drop Error – Permitting a poor idea

to move into development and commercialization or dropping a good idea - Idea rating.

NEW PRODUCT DEVELOPMENT PROCESS:• 3. CONCEPT DEVELOPMENT AND

TESTING: is an elaborated version of idea expressed in meaningful consumer terms. The concept has to be tested with appropriate group of target customers.

NEW PRODUCT DEVELOPMENT PROCESS:• 4. MARKETING STRATEGY

DEVELOPMENT: Preliminary marketing strategy statement for introducing this new pdt into the market, problem new pdts with different concept.

NEW PRODUCT DEVELOPMENT PROCESS:• 5. BUSINESS ANALYSIS: review

sales, profit projections, new info for further revision, repeat and replacement sales.

• 6. PRODUCT DEVELOPMENT: after above, R&D, engg dept to be developed in to a physical pdt.

NEW PRODUCT DEVELOPMENT PROCESS:• 7. TEST MARKETING: brand name,

packing, and a preliminary marketing prog. to be tested in an authentic consumer settings – customers and dealer reaction, using, repurchasing for how long.

• 8. COMMERCIALIZATION: when, where, whom, how.

Product Mix Strategy: • Core Benefits - Basic Product -

Expected Product - Augmented Product - Potential Product.

PRODUCT LIFE CYCLE• A pdt’s sales potential and profitability

change over time. The pdt’s life cycle is the course of a pdt’s sales and profit over its life time.

• Corresponding to the stages are distinct opportunities and problems with respect to marketing strategy and profit potential. By identifying the stages that a pdt is in, or may be headed towards, companies can formulate better marketing plans.

PDC

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Marketing Objectives• Introduction and Growth

Marketing Objectives• Maturity and Decline

Strategies• Introduction Growth

Strategies• Maturity Decline

Strategies• Introduction Growth

Strategies• Maturity

Decline

BRAND:• American Marketing Association defines

a Brand as: a name, term, sign, symbol or design, or a combination of them, intended to identify the goods and services of one seller or a group of sellers and to differential them from those of competitors. Thus a brand identifies a seller or market.

Concept of branding:• Branding is a major issue in pdt

strategy well known brands like Sony, Coca cola, Pepsi, Maruti, levis. Developing a branded pdt requires a great deal of long term investment, advertising, promotion, packaging.

Brand can convey six levels of meaning:

• Attributes: Mercedes( expensive, well built, durable)

• Benefits: car of Mercedes can be used in several ways.

• Values: Performance, safety, prestige

Brand can convey six levels of meaning:

cont…• Culture: German culture –

organized, efficient, high quality.• Personality: Mercedes suggests a

no-nonsense boss• User: Executives who purchase the

pdt and use it several years.

Brand Equity:

• Brand equity is highly related to how many customers will pay more attention to a brand: brand awareness, brand acceptability, brand preference, brand loyalty.

Value of Brand Equity:• is the positive differential effect

that knowing the brand name has on customer’s response to the pdt or services. (Disney, Ford, Toyota, Reliance)

Managing Brand Equity:

• equity does not depreciate – maintaining and improving brand awareness, perceived quality, functions and positive associations – R&D, skillful advertising, excellent trade and consumer services. (Gillette, Coca cola, Heinz, Campbell soup)

Brand Perception:

• One of the desired associations a firm seeks for its brand is the customer’s perception of high quality

• Customers ready to pay premium for it• The firm will have greater trade leverage and

channel members would have greater interest in dealing in such brands.

• Perceived quality is not necessarily the same as manufacturing quality.- Perceived quality is how customers evaluate different brands

PACKAGING:• all activities of designing and

producing the container for a product. The container is the package, and it might include up to three levels: primary package; secondary package; shipping package.

Packaging as a Marketing Tool:

• Self Service: • Consumer Affluence: consumer

willingness to pay a little more for the convenience, appearance, dependability and prestige of better package

• Company and Brand Image: instant recognition of the brand or company.

• Innovation Opportunity:

Requirement of Good Packaging:

• Establish the packaging concept: defining what the package should basically be or do for the particular pdt.

• Decision on additional elements: shape, size, material, text and brand mark.

• Color: must be carefully chosen: blue – cool, red – active and lively.

• Amount of text, cellophane paper or other transparent films.

• Tamperproof devices:

Labeling:• is simple tag attached to the pdt or

an elaborately designed graphics that is the part of the package. Label may carry only the brand name or a great deal of information. Seller prefers simple label, law may require addition info.

Role of Labeling in packaging:

• Identifies the pdt or brand:• Grade the pdt:• Describe the pdt: • Promote the pdt: