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8/3/2019 Chapter 12-Final Setting Product Category
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Chapter 12
8/3/2019 Chapter 12-Final Setting Product Category
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Product characteristics and
Classifications Product can be anything; Goods, event, person,
properties, organization and idea.
1. Product Level: It is the customer value hierarchy PotentialProduct
AugmentedProduct
ExpectedProduct
BasicProduct
CoreBenefit
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i. Core benefit: The service or benefit a customer is really buying e.g. Hotel guest is buying rest and sleep in a hotel.
ii. Basic Product: At this level a marketer turn the core benefitinto a basic product e.g. Hotel room includes a bed, bathroom,towel etc.
iii. Expected Product: A set of attributes and conditions buyersnormally expect when they purchase this product e.g. a hotelguest expects a clean bed, fresh towels, working lamps etc.
iv. Augmented Product: The product that exceeds customerexpectations.
v. Potential Product: Which encompasses all the possibleaugmentation and transformation the product or offeringmight undergo in future.
Each augmentation adds cost but becomes expected and necessary
point of parity.
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2. Product Classification
a. Durability and Tangibility i. Non Durable: These are fastly consumed tangible
goods which are frequently purchased, small mark upsand heavy advertising e.g. soap, cold drink etc.
ii. Durable Goods: these are tangible goods that survivemany uses, require more personal selling, high marginsand involve guarantees e.g. refrigerator, clothing etc.
iii. Services: These are intangible goods, inseparable, variable, perishable in nature. Require more quality control, suppliers credibility and adaptability e.g. haircut, legal advice etc
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b. Consumer Good Classification
i. Convenience Goods: Frequently purchased, bought withminimum effort and further divided into Staple products i.e.regular buy, Impulse that is without buying plan andEmergence buying that is urgently needed.
ii. Shopping Goods: Comparison required on suitability
quality, price etc and further divided into Homogenousshopping goods that is similar quality but different price andHeterogeneous shopping goods that has different productfeatures and services.
iii. Specialty Goods: A special effort is required e.g. car, stereo
components, photographic equipments etc.
iv. Unsought Goods: Customer don’t know about or don’t
require it at the given time e.g. smoke detector, lifeinsurance, encyclopedia etc.
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c. Industrial Goods Classifications
i. Materials and Parts: The goods that enter intomanufacturers product completely further classified as RawMaterials, that is farm products and natural products andManufactured Materials and parts further classified asComponent Materials which are further fabricated e.g.cement, wires etc and Component Parts that are finished but
used in some product e.g. battery, tires etc.
ii. Capital Items: Long lasting and used for making productsfurther classified as Installations e.g. building, heavy equipment etc and Portable Factory Equipment e.g. handtools, fork lifting trucks etc.
iii. Suppliers and Business Services: Further classified asMaintenance and repair items e.g. paint, nails, rooms etc.Operational supplies is lubricants, pencil etc and Businessservices that is AC Maintenance, legal Advisory etc.
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v. Conformance Quality: Degree to which all producedunits are identical and meet the promised specifications.
vi. Durability: Product expected operation under natural orstressful condition.
vii. Reliability: A measure of probability that a product will
not malfunction or fail in said time period.
viii. Repair ability: It is ease of fixing a product when itmalfunctions.
ix. Style: The product looks and feel to buy e.g. aesthetic s,distinctiveness.
x. Design: It is the totality of features that effect how theproduct looks feel and functions in term of customerrequirement. Country of origin effect.
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2. Service Differentiation
If physically it is difficult to differentiate adding value servicesand improved quality is used.
i. Ordering Ease: Means how easy it is for customer to place
order.
ii. Delivery: How well the product is brought to customer e.g.speed, accuracy, care etc
iii. Installation: Work done to make a product operational in itsplanned location that is ease of installment.
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iv) Customer Training: Training the customers employee touse vendor equipment properly.
v) Customer Consulting: It is the data information advice which is offered to buyers.
vi) Maintenance and Repair: Helping customers to keepproduct in good working relation.
vii) Returns: Accepting back the sold things.
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Product Brand Relationship1. Product Hierarchy: Six Levels
• The core need that underlies the existence of product family.1. Need Family
• These are the substitutes.
2. Product Family
• That is a product category.
3. Product Class
• Closely related products having same price, features,
distributions etc.
4. Product Line
• A group of items within a product line.
5. Product Type
• Also called as stock keeping unit or product variant.
6. Item
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2. Product System and Mixes:
Product system is a group of diverse but related items that functions in acompatible manner. Product mix is set of all product items a particularseller offers for sale. The product width is existence of different product
lines. The product length is total items in a mix. Product depth is variantin a line. And consistency is relation of various products to a user.
Product Mix Width
Home and Personal Care Foods
Product – LineLength
Personal Wash
Laundr y
SkinCare
HairCare
OralCare
Deodorants
AyurvedicPersonal &HealthCare
ColorCosmetics
Tea Coffee Foods IceCream
Lux Surf Excel
Fairand
Lovely
Sunsilk Pepsodent
Axe Ayush Lakme BrookeBond
BrookeBond
Bru
Kissan Kwailty
Lifebuo y
Rin Ponds Clinic Close – up
Rexona Lipton Knorr Wall`s
Liril Wheel Vaseline
Annapurna
Hamam
Dove
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3. Product Line Analysis
Company provide a basic platform that can be added tomeet different customer requirement ( a modularapproach). There are different margins of profit and
variation in sales in different product. The product linemanager must review how the line is positioned againstdifferent competitors.
4. Product System and Mixes:
Companies objective influence product line length.
Company objectives: a product line to induce up selling,cross selling and create a product line that projectsagainst economic ups and down or sell excess capacity.
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Line Stretching:It occurs when a company lengthen its product line beyond its current
range.
a) Down Market Stretch:
Offering product to a lower price line. Reasons may include growth
potential, current market is dealing and engaging low endcompetitors but risks are damage quality image and self
cannibalization.
b) Up Market Stretch:
Enter into high end of market. Reasons more growth, high margins
and fulltime manufacturers.
c) Two way Stretch:
In both direction and helps in gaining market dominance.
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ii) Line Filling:
Adding more items in present range reasons more profit, satisfiesdealers and utilize excess capacity but it should satisfy the market
need.
iii) Line Modernization, Featuring and Pruning:Continuous modernization with due consideration of time that is
neither too early nor too late.
A periodic review require for lines that is having depressing profit
(Sale Cost Analysis).
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3. Product Mix PricingIn product mix pricing the firm searches for a set of price thatmaximize profit on the total mix.
i) Product Line Pricing:Develop product lines rather than single product e.g. shirts Rs.
500, 1000, 1500.ii) Optional Feature Pricing:Offering optional products features and services e.g. power
window, remote mirrors etc.iii) Captive Product Pricing:
Use of captive products e.g. razors, cameras etc on low prices andset high mark ups on razor blades and films.iv) Two Part Pricing:Service firm, a fix fee plus a variable usage fee e.g. amusementpark admission fee plus fee for rides.
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v) By Product Pricing:Those products have a by product that can be sold and a company
can change even low prices for core products e.g. petroleum.
vi) Pure Bundling Pricing:Pure bundling is tour package offered by tour operators.
Mix bundling is goods are sold individually and in bundles.
Customer may ask about unbundling or re-bundling.
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Co – Branding and Ingredient branding:i. Co – Branding:Combining the company product from other companies in
various ways that is two or more well known brands joined andmarketed together. Advantages include convincingly position,greater sales and reduced cost of product introduction where as
disadvantages include lack of control in alignment in the mindof consumers and lack of focus on existing brands.
ii. Ingredient Branding:It creates brand equity for materials components and parts
necessarily containing within other branding product e.g. Intel,DuPont, Exide Battery. Ingredient brands try to create apreference so customers do not buy the host product withoutthem.
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Packaging Labeling Warranties and
GuaranteesPackaging is the 5th P of marketing mix and packaging
and labeling are the elements of product strategy.
1. Packaging: All activities of designing and producing the container for the
product that can be a primary package that is bottle,
secondary package is a card board and shipping package
contain six dozen boxes in corrugated box. Factors for
growing use of packaging include self service, consumer
affluence, company and brand image, and innovation
opportunity.
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Packaging Objective Include:
Identify the Brand Convey Descriptive and persuasive information
Facilitate product transportation and protection
Assist at home storage
Aid product consumption
Aesthetic side include size, shape, material colour etc. where
As Functional side include structured design material etc.
Packaging changes can have immediate impact on sales.Packaging must be tested that the engineer test, visual test,
dealer test plus consumer test.
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Labeling: It can be a simple tag or elaborated design graphic that is
part of package.
Function: Identify the product
Grade the product
Describe the product Promote the product
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Warranties and Guarantees: Warranties are formal statement of expected product
performance by the manufacturer e.g. return, repair,
replace, refund.
Guarantees reduces buyers perceived risks and suggests
product is of high quality and company is dependable.