Dr. S. BornaDr. S. BornaMBA 671MBA 671

Lecture OutlineLecture Outline

1. Some basic terminology1. Some basic terminology related to productrelated to product

A. Meaning of ProductA. Meaning of ProductB. Product vs. Product OfferingB. Product vs. Product OfferingC. Core, Formal, and AugmentedC. Core, Formal, and Augmented ProductsProducts

D. D. Product ClassProduct Class, Product Line,, Product Line, Item or BrandItem or Brand

E. Product Mix, Product Depth,E. Product Mix, Product Depth, Product Width andProduct Width and ConsistencyConsistency

Lecture OutlineLecture Outline

Lecture Outline cont.Lecture Outline cont.

2. Classification of Consumer 2. Classification of Consumer GoodsGoods

A. AMA’s ClassificationA. AMA’s Classification

B. Aspinwall’s ClassificationB. Aspinwall’s Classification

3. Developing a Product Policy:3. Developing a Product Policy:

Product Mix DecisionsProduct Mix Decisions

Product Line DecisionsProduct Line Decisions

Item DecisionsItem Decisions

Lecture outline cont.Lecture outline cont.

A. Mass MarketingA. Mass Marketing

B. Target MarketingB. Target Marketing

Product Strategy ConstraintsProduct Strategy Constraints

single segment vs. multi-single segment vs. multi-

segmentsegment ((One product forOne product for multiple segments)multiple segments)

imitative strategyimitative strategy

Effect of Positioning StrategiesEffect of Positioning Strategieson Product Decisionson Product Decisions

(introduction of a fighter(introduction of a fighterbrand to discourage brand to discourage competitors from enteringcompetitors from enteringthe market.the market.

anticipatory strategyanticipatory strategy

defensive strategydefensive strategy

Product Life-Cycle Product Life-Cycle ConstraintsConstraints

WHAT DO WE MEAN BY WHAT DO WE MEAN BY PRODUCT?PRODUCT?

NEED-SATISFYING NEED-SATISFYING ““OFFERING” OF A FIRMOFFERING” OF A FIRM

INCLUDED IN THE OFFERING INCLUDED IN THE OFFERING OF A FIRM:OF A FIRM:

PHYSICAL AND NON-PHYSICALPHYSICAL AND NON-PHYSICALATTRIBUTES OF A PRODUCT ATTRIBUTES OF A PRODUCT ANDAND CONDITIONS CONDITIONS SURROUNDING ITS SALES.SURROUNDING ITS SALES.

Kotler’s DefinitionKotler’s Definition

A product is anything that can A product is anything that can be offered to a market forbe offered to a market forattention, use, acquisition attention, use, acquisition or consumption that mightor consumption that mightsatisfy a want or need.satisfy a want or need.

Examples:Examples:

PosterPoster

Pepsi Cola (consumed)Pepsi Cola (consumed)Car (used)Car (used)Lawyer (performance)Lawyer (performance)Florida, London (attention)Florida, London (attention)

TangibleTangible

ServiceServicePlacesPlaces

(acquisition, attention)(acquisition, attention)

OrganizationOrganization (performance)(performance)

Three Levels of ProductThree Levels of Product

Core benefitCore benefit

WarrantyWarranty

FreeFreeDeli-Deli-veryvery

Serv.Serv.Maint.Maint.Syst.Syst.

InstallationInstallation

Augmented ProductAugmented ProductFormal ProductFormal Product Core ProductCore Product

PackagingPackagingBrandBrandNameName

Quality Styling FeaturesQuality Styling Features

Kotler adds two more levelsKotler adds two more levelsKotler adds two more levelsKotler adds two more levels

Potential product

Augmented product

Expected product

Basic product

Core benefit

Expected ProductExpected Product

A set of attributes andA set of attributes andconditions that buyersconditions that buyersnormally expect from a normally expect from a productproductIn a hotel: clean towelsIn a hotel: clean towelsand rooms etc.and rooms etc.

Potential ProductPotential Product

All the augmentations andAll the augmentations andtransformations the producttransformations the productmight ultimately under gomight ultimately under goin thein the future.future.

CLASSIFICATION OF PRODUCTSCLASSIFICATION OF PRODUCTS

NEED FOR A TAXONOMY OFNEED FOR A TAXONOMY OFPRODUCTSPRODUCTS

NOTE: CLASSIFICATION OF CONSUMERNOTE: CLASSIFICATION OF CONSUMERPRODUCTS IS BASED ON CONSUMPTIONPRODUCTS IS BASED ON CONSUMPTIONBEHAVIOR OF THE CONSUMERS.BEHAVIOR OF THE CONSUMERS.PHYSICAL CHARACTERISTICS OF PRODUCTSPHYSICAL CHARACTERISTICS OF PRODUCTSARE NOT A DETERMINANT FACTOR ARE NOT A DETERMINANT FACTOR

PRODUCTSPRODUCTS

CONVENIENCE P.CONVENIENCE P.

SHOPPING P.SHOPPING P.

SPECIALTYSPECIALTY

UNSOUGHT P.UNSOUGHT P.

STAPLESSTAPLES

IMPULSE P.IMPULSE P.

EMERGENCY P.EMERGENCY P.HOMOGENEOUS HOMOGENEOUS HETEROGENEOUSHETEROGENEOUS

NEWNEWREGULARREGULAR

THE CHARACTERISTICS OF GOODSTHE CHARACTERISTICS OF GOODSTHEORYTHEORY

PPrroodduuccttss

CharacteristicsCharacteristics

redred

oranorangege

yel-yel-lowlow

repl.repl.raterate

grossgrossmarginmargin

adj.adj. time/time/cons.cons.

srchsrchtimetime

HH

MM

LL

LL

MM

HH

LL

MM

HH

LL

MM

HH

LL

MM

HH

Conceptual Representation of a Conceptual Representation of a Product MixProduct Mix

Prod. line 1Prod. line 1

Prod. line 2Prod. line 2

Prod. line 3Prod. line 3

Prod. line 4Prod. line 4

lengthlength

wwiiddtthh

1a1a 1b 1c1b 1c

2a2a

3a 3b 3c 3d 3e3a 3b 3c 3d 3e

4a 4b 4c4a 4b 4c

Number of Items: 12Number of Items: 12Number of lines: 4Number of lines: 4 Average: 3Average: 3

Product-Mix Decisions Product-Mix Decisions

Width (how many product lines)Width (how many product lines)

Length (number of items in theLength (number of items in theline)line)

Internal Consistency (how Internal Consistency (how closely product lines are relatedclosely product lines are relatedin end use, production,in end use, production,distribution and so one.distribution and so one.

Detergents Toothpaste Bar SoapDetergents Toothpaste Bar Soap

Ivory Snow ‘30Ivory Snow ‘30Dreft 1933Dreft 1933Tide 1946Tide 1946Cheer 1950Cheer 1950Oxydol 1952Oxydol 1952Dash 1954Dash 1954Bold 1965Bold 1965Gain 1966Gain 1966Era 1972Era 1972Solo 1979Solo 1979

Gleem 1952Gleem 1952Crest 1955Crest 1955Denquel 1980Denquel 1980

Ivory 1879Ivory 1879Kirk’s 1885Kirk’s 1885Lava 1893Lava 1893Camay ‘26Camay ‘26Zest 1952Zest 1952SafeguardSafeguard19631963Coast 1974Coast 1974

Disposable Diapers Tissue Disposable Diapers Tissue

Pampers 1961Pampers 1961Luvs 1976Luvs 1976

Charmin 1928Charmin 1928White Cloud ‘58White Cloud ‘58Puffs 1960Puffs 1960Banner 1982Banner 1982

Product Mix DecisionsProduct Mix Decisions

It is mainly a portfolio It is mainly a portfolio Decision:Decision:To add a new product line orTo add a new product line ordelete an existing one,delete an existing one,shorten its product line, etc.shorten its product line, etc.

Product Line DecisionsProduct Line Decisions

Product Line Analysis:Product Line Analysis:

1. Sales and Profit analysis1. Sales and Profit analysis 2. Product Line Market2. Product Line Market Profile (Product’s positionProfile (Product’s position relative to the competingrelative to the competing brands). brands).

Product Line DecisionsProduct Line Decisions

Product Line Length DecisionsProduct Line Length Decisions--Upward StretchUpward Stretch--Downward StretchDownward Stretch--Two Way StretchTwo Way Stretch--Line FillingLine Filling((adding itemsadding items

within the present range)within the present range)

--PositioningPositioning (repositioning)(repositioning) Product Drop DecisionsProduct Drop Decisions

Individual Product DecisionsIndividual Product Decisions

1. Product Quality1. Product Quality

2. Product Features2. Product Features

3. Product Design3. Product Design

(Item Decisions)(Item Decisions)

Branding Strategies and Branding Strategies and DecisionsDecisions

Some basic definitions (brand,Some basic definitions (brand,brand name, brand mark, tradebrand name, brand mark, trademark)mark)

A brand is a name, termA brand is a name, termsign, symbol, or design or asign, symbol, or design or acombination of them, intendedcombination of them, intendedto identify the goods andto identify the goods andservices of one seller or a services of one seller or a group of sellers, and to group of sellers, and to differentiate them from thosedifferentiate them from thoseof the competitors.of the competitors.

A Definition of BrandA Definition of Brand

Brand Mark, Brand NameBrand Mark, Brand Nameand Trade Markand Trade Mark

Sounds as trademarks!Sounds as trademarks!Branding in illicit marketsBranding in illicit markets

A brand is a complex symbolA brand is a complex symbol::

ItIt may say somethingmay say somethingabout the attributes of aabout the attributes of aproduct, its values, culture of product, its values, culture of the country, and personalitythe country, and personalityof producer andof producer and user.user.DeepDeep vsvs shallowshallow brandsbrands

Benefits of BrandingBenefits of Branding

1. Provides useful information1. Provides useful information for the consumerfor the consumer2. Helps the seller to segment2. Helps the seller to segment its marketits market3. Legal protection3. Legal protection

The Concept of Brand EquityThe Concept of Brand Equity

Brand equity is the valueBrand equity is the valueconsumers assign to a brandconsumers assign to a brandabove and beyond any specificabove and beyond any specificfunctional characteristics of functional characteristics of of the product.of the product.

refers to:refers to:capitalizing on brand equitycapitalizing on brand equityby placing the existing brandby placing the existing brandname onto new products.name onto new products.(family branding, brand(family branding, brandextension etc.)extension etc.)

Brand Leverage:Brand Leverage:

Coca Cola $36 BillionCoca Cola $36 BillionMarlboro $33 BillionMarlboro $33 Billion

Advantages of brand equityAdvantages of brand equity

The world’s valuable brands:The world’s valuable brands:

Branding DecisionsBranding Decisions

Brand-sponsor DecisionBrand-sponsor Decision

Manufacturers brands vs. Manufacturers brands vs. Distributors brandsDistributors brands

(The battle of brands)(The battle of brands)

Individual brand vs Family brandIndividual brand vs Family brand(P&G and GE)(P&G and GE)Separate Family brand namesSeparate Family brand names (Sears for example)(Sears for example)

Company Trade name combinedCompany Trade name combinedwith individual brand nameswith individual brand names(Kellogg for example)(Kellogg for example)

Brand Name DecisionsBrand Name Decisions

Types of brandsTypes of brands

Manufacture RetailerManufacture RetailerPromotionalPromotionalActivitiesActivities

Promotes Promotes the brandthe brand

Does not Does not promotepromotethe brandthe brand

Sources of brand identificationSources of brand identification

NationalNationalBrandBrand

ControlledControlledBrandBrand

GenericGenericBrandBrand

PrivatePrivateBrandBrand

Brand Identification StrategiesBrand Identification Strategies

Brand Name Corp. NameBrand Name Corp. Name

SingleSingleBrandBrand

MultibrandMultibrand

IndividualIndividualBrandBrand

CorporateCorporateBrand Brand NameName

Product-Product-linelineBrandingBranding

Family Family NameName

Good Brand Names:Good Brand Names:Good Brand Names:Good Brand Names:

SuggestProductBenefits

Distinctive

Lack PoorForeign

LanguageMeanings

SuggestProductQualities

Easy to:PronounceRecognizeRemember

Packaging Strategy and Decisions Packaging Strategy and Decisions

Advantages:Advantages:1. Aid new product strategy1. Aid new product strategy2. Provide access to channels2. Provide access to channels3. Support pricing strategy3. Support pricing strategy4. Serve as part of promotion4. Serve as part of promotion5. Provide protection and 5. Provide protection and containmentcontainment66. . Provide information to consumersProvide information to consumers

PackagingPackaging

Functions of packaging:Functions of packaging:

1. Containment - hold for1. Containment - hold for transportationtransportation

2. Protection (from content:2. Protection (from content: acid)acid)

3. Facilitating Function (usage3. Facilitating Function (usage assistance and information. assistance and information.

3. Promotion3. Promotion

4. Miscellaneous, reusability of4. Miscellaneous, reusability of package, ecologicalpackage, ecological requirements legal regulations.requirements legal regulations.

Functions of packaging:Functions of packaging:Cont.Cont.

Packaging ConceptPackaging Concept

The packaging concept definesThe packaging concept defineswhat the package shouldwhat the package shouldbasically be or do for the basically be or do for the particular product.particular product.

A note on:A note on:Planned ObsolescencePlanned Obsolescence

2. Planned Functional Obsolesce-2. Planned Functional Obsolesce- enceence3. Planned Style Obsolescence3. Planned Style Obsolescence

1. Planned Material Obsolescence1. Planned Material Obsolescence