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Amity School of Business

Marketing Management - II

Module - I

Ms. Manita Matharu

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Module I : Product Mix Strategy

1. Product: Concept and levels.

2. Classification of products: Consumer and Industrial3. Product Differentiation & Product Mix.

4. Packaging and Labeling: Concept and Importance.

5. Product Life Cycle: Stages and Strategies.

6. Branding:

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Layers/ Levels of Product Concept The Customer Value Hierarchy:

Core benefit

Basic product

Expected product

Augmented product

Potential product

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Product levels Description

Core benefitsThe fundamental need or want that consumerssatisfy by consuming the product or service.

Generic product

A version of the product containing only thoseattributes or characteristics absolutely necessaryfor it to function.

Expectedproduct

The set of attributes or characteristics that buyersnormally expect and agree to when they purchase aproduct.

Augmentedproduct

Inclusion of additional features, benefits, attributes

or related services that serve to differentiate theproduct from its competitors.

Potential productAll the augmentations and transformations aproduct might undergo in the future.

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Product Classification

1. Durability & Tangibility

2. Consumer Goods Classification3. Industrial Goods Classification

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1. Durability & Tangibility

Non durable goods

Durable goods

Services

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2. Consumer Goods Classification Convenience goods

Frequently purchase, little planning, little comparison orshopping effort, low customer involvement

Shopping goods Less Frequently purchase, much planning and shopping

effort, low customer involvement, comparison of brandson price, quality and style

Specialty goods

Strong brand preference and loyalty, special purchaseeffort, little comparison of brands and low price sensitivity

Unsought goods

Little product awareness or knowledge, (or, if aware, little

or even negative interest)

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2. Consumer Goods Classification

Convenience goods

Toothpaste, laundry detergent, magazines

Shopping goods Major appliances, furniture, clothing

Specialty goods

Luxury goods such as Rolex watches, fine crystals,

refrigerators Unsought goods

Life insurance, preplanned funeral services, donationsfor charity, blood donations to hospitals or the Red Cross

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3. Industrial Goods Classification

Material and parts

Capital Items

Supplies and Business services

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Industrial Goods Classification

Material and parts Raw materials

Farm products (wheat, cotton, fruits and vegetables)

Natural products (crude petroleum, iron ore)

Manufactured materials and parts

Component materials (iron, cement, wires) Component parts

(small motors, tires)

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Industrial Goods Classification

Capital Items Installations

Consists of major purchases such as buildings andfixed equipments (factories and offices, large

computer systems, elevators)

Accessory Equipments Portable factory equipment, tools and office

equipment (hand tools, lift trucks, computers, fax

machines, desks)

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Industrial Goods Classification

Supplies and Business services Supplies

Maintenance and repair items (paints, nails, brooms)

Operating supplies (lubricants, coal, paper, pencil)

Business services Maintenance and repair services

(Window cleaning, computer repair) Business advisory services

(legal, management consulting, advertising)

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DifferentiationDifferentiation is the act of designing a set of meaningfuldifferences to distinguish the company's offering fromcompetitor's offerings.

In marketing, product differentiation (also known simply as"differentiation") is the process of distinguishing a product oroffering from others, to make it more attractive to a particulartarget market. This involves differentiating it from competitors'products as well as a firm's own product offerings.

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Kinds of Product Differentiation1. Form2. Features3. Customization4. Durability5. Reliability6. Reparability

7. Style/ Status

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Product Hierarchy

Product hierarchy ranges from the basic needsto the specific item that satisfy those needs.

1. Need Family2. Product family

3. Product class

4. Product Line

5. Product type6. Brand

7. Item / SKU

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There are two other terms that are used withrespect to the product hierarchy.

Product System

Product Mix

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Product System

It refers a group of diverse but related items thatfunction in a compatible manner.

E.G. Home theatre systems

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Product Mix Set of all the products and items a particular seller has

for sale. (total group of products offered) It consists of various product lines.

GE Consumer Appliances has product lines like refrigerators,washing machines. HUL has skin care products, Hair care products, cosmetics, oral

care.

In each line companies has different brands andvariants.

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Companys product mix has a certain width, length, depth and

consistency.

Width: How many different product lines the company carries.

Length: Total number of items in a mix

Depth:

How many variants are offered of each product in a product line

Consistency: How closely related the various product lines are in end use, production

requirement, distribution channel etc.

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Product Life Cycle

Products have limited life

Product sales pass through distinct stages, each posing

different challenges, opportunities to the seller

Profits rise and fall at different stages of the PLC

Products require different marketing, financial,manufacturing, purchasing and human resource

strategies in each life-cycle stage.

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Product Life Cycle

Time

Product

Develop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

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BRAND

A name, term, sign, symbol or a design, or acombination of them, intended to identify the goodsor services of one seller or a group of sellers and todifferentiate them from those of competitors.

American Marketing Association

Thus a brand identifies the seller or maker.

Under Trademark Law, the seller is grantedexclusive rights to the use of a brand name inperpetuity.

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The Role of Brands

Identify the maker

Simplify product handling

Organize accounting

Offer legal protection

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Signify Quality

Create barriers to entry

Serve as a competitive advantage

Secure price premium

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6 Levels of Meaning1. Attributes2. Benefits3. Values

4. Culture5. Personality6. User (Primary Target)

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Package Physical container or wrapping for a product Represents size, shape, and final appearance 10% of retail price is packaging

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Functions of Packaging

Define product identityPromote and sell the productProvide information

Direction, guarantees, and hazardsEnsure safe useProtect the product during shipping, storage, and display

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Labeling

Label informational tag, wrapper, seal or imprintedmessage that is attached to a product of its package

Helps the customer decide if the product is right for them.

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Functions of Labeling

Informs customers about a products contents

Gives directions

Protects businesses from liability

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Kinds of Labels

1. Brand label

2. Descriptive label

3. Grade label