PowerPoint PresentationAmity Business School
What is a Product?
A product is any tangible, intangible offering that might satisfy
the needs or aspirations of a consumer.
A product has 3 basic levels
Core Product: This answers WHY the buyer should have it. It is also
called as Generic Requirement.
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“Purchasing agents do not buy drills, they actually buy its ability
to make same size holes”
Theodre Levit
Its consumers view of what a given product represents.
The aspiration of consumer differ from place to place and time to
time.
Eg. For someone Washing Machine would be: comfort in washing the
cloths, some, tough wash, some complete dryer…
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Tangible Specifications
Tangibility is added to the core product in the form of features,
style, color, design, efficiency etc.
Eg. The Color of the machine
The Electricity consumption
Eg. Brand Name
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Classification of Products
The classification of the product depends upon the TANGIBILITY and
DURABILITY found in an offering.
Typical classification of Product:
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Non Durable Products
Products that are consumed fast and are purchased on a regular
basis. The consumer here spends minimum time and effort in
comparing and buying the item.
Consumer Products are further classified according to its use:
Personal, Family and Household as Convenience, Shopping and
Specialty.
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FMCG
Fast Moving Consumer Goods are the Non Durable Goods. Eg. Sot
Drinks, Chips, Ice Creams etc…. The consumer shows minimum effort
in buying these articles.
FMCG is further sub divided into 3 Classes…
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Staples
These are goods purchased on a regular basis. Eg. Soap, Pulses,
Toothpaste etc…
Whenever the stock is about to end the consumer buys these products
again.
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Impulse Goods
These are the goods which are purchased without planning or search…
Our external stimuli provokes us to buy these products. Eg. Cold
drinks, Chocolates, Chips….
Most of the time the consumers aim is not buying the product solely
but when spots them, feels, attracted and ends up in buying
them.
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Emergency Goods
These goods are purchased when the need arises. Eg. Umbrellas in
rainy season, Pullovers in winters etc..
The marketers tries for a very good distribution chain, as the
sales is not the same throughout and whenever the need arises, the
product should be available at maximum places…
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Characteristics of FMCG
1. Frequent Purchases: Salt, Rice, Chocolates
2. Low Involvement: The consumer will buy an alternative if the
brand ask for is not available….
Exceptions to the rule: Products like Cigarettes, Personal Hygiene
Products, Brand Loyalty.
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Characteristics of FMCG
The volume of the product required is very high.
Eg. An average family may require 3-4 Soaps a month… Imagine No. of
family using it in the whole country???
If the organization cannot ensure high sales volume, they will have
difficulties in surviving.
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Low Margins
As the product is required in high volume, there is an intense
competition which makes the marketer sell the product with very
less margin.
They earn through high volume sales to maximize their
turnover.
The Key Becomes High Volumes Low Margins.
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Extensive Distribution Networks
Recall plays a very important role.
Brand Loyalty is not very high.
Consumer allows shopkeeper to decide for him.
Due to all this it becomes very important for the marketer to make
its product available at maximum place possible.
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High Stock Turnover
It is a characteristic feature of FMCG. It is because these
products are bought frequently or on a regular basis.
Which in turn allows the marketer to rotate the capital
invested.
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Product Mix
It is the set of product lines and items that a particular company
offers to buyers.
The Width of product mix refers to how many different product lines
a company carries.
Product Line: It is a group of products that is closely related
because they perform a similar function, targeted at the same
customer groups, marketed through same channel.
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Detergents
Disposable Diapers etc.
If, Pantene comes in 4 variants in 3 different sizes, the depth of
the product mix becomes 4 X 3 = 12. This can also be referred as
Stock Keeping Units (SKU’s)
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Consistency of a product mix refers to how closely related the
various product lines are to the end user.
The Width, Depth and consistency of product mix enables the company
to define the Product Portfolio.
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Product Line
Line Stretching
Downward Stretch : It takes place when the company finds a
particular segment (Lower) which is un-attended by the existing
product. And introduces a product to cater that lower
segment.
Upward Stretch : It is when company a company enters Upper market
through Line Extension.
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Line Filling : A product line can be extended by adding more items
to the existing range.
Reasons:
Reaching for more profits
Trying to satisfy dealers who complain about lost sales due to
missing items in the line
Trying to utilize excess capacity
Trying to offer a full line of the production
Trying to plug holes in the positioning map.
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Line Modernization : Modernization is carried out continuously as
competitors are constantly growing and coming out with new products
and ideas.
In this process an Organization should not be too early, if so, It
can harm the existing product or late so that competitors already
have a hold in the market.
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Line Featuring
Its about featuring a particular product of the product line, so as
to increase foot falls and then making the consumer exposed to
other products too.
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Multi-brand Strategy
When a company nurtures number of brands in a single
category.
Strategy: To capture as much market share as possible by trying to
cater as much possible segments.
Eg. HUL Bathing Soaps:
Product Flanking
Basically offering same product in different and price combinations
to tap diverse market opportunities.
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Brand Extensions
This enables the company to enter new product categories more
easily.
Eg. Lifebuoy: Lifebuoy Plus, Lifebuoy Liquid, Lifebuoy Gold.
Eg. Amul: Amul Butter, Amul Ghee, Amul cheese, Amul Milk, Amul
Chocolates
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Building Product Lines
Companies add related new product line to the existing Line.
Eg. Britannia: It has all Baked food items which are increasing.
Have also added milk products to its kitty.
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New Product Development
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Innovations in Core Product
The life of a FMCG product is short. The marketer continuously
tries to introduce new products and a consumer is also open to try
new products.
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Long Term Outlook
Encouraging more consumption.
Wide distribution Network
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Sales Promotion
Sales Pomotions offer a direct incentive to buy more in the short
term.
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