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Group Members

NC Ali Tanveer

NC Muhammad Ajmal

NC Umar Ehsan

NC Imran Azeem

Capt Zahid Jadune

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PRODUCT CONCEPTS

Product Classifications(Part 2 of 3)

Business Products used to create other products

1. Derived demand carsteelglass

2. Price elasticity industry vs. company

3. Volatility of demand inventoryfluctuation

4. Buyer expertise rational - - emotional

Characteristics of Business Products:

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ProductionBased

Installations(Capital Projects)

Raw Materials

ProcessMaterials

Component Parts

AccessoryEquipment

MRO Supplies

maintenance & repair

BusinessServices

OperationsBased

Business Products used to create other products

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Consumer Products end users.

Durable

goods

Non durablegoodsServices

Durable & Non Durable Consumer Products

Short Time of consumption

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The ProductClassification Sequence

CONSUMPTION BEHAVIOR

(Leads to)

PRODUCT CLASSIFICATIONLevel of effort Level of reward

Convenience

Shopping

Specialty(Which leads to)

MARKETING MIX STRATEGY

Conceptual

Model

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Consumer Product Goods

Classification (M. Copeland)

Convenience

ProductsShopping

Products

Specialty

Products

Is based on Level of Effort expended

. . To satisfy information needs & buying motives

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CONVENIENCE GOODS

Staples- goods purchased on aregular basis (ex. milk, eggs)

Emergency goods- purchased when theneed is urgent (ex. umbrella, boots)

Impulsepurchases no conscious preplanning

MILK

Convenience goodsconsumers useminimal effort for frequently purchased

low cost items

* Ordering a mixed drink in a bar

* 70 % of cheese purchases

(Donut)

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CONVENIENCE. . .

CONVENIENCE. . .

CONVENIENCE. . .

Segment Profile: Average supermarket

consumer (a woman) spends 21 min. to shop buys 18 items (average) out of 30-40,000

browse time decreased 25% over 5yrs.

doesnt bother to check prices

(Proctor + Gamble,WSJ/99)

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Convenience Products

Marketing Strategy Principles

- Intensive distribution Provideconvenient locations and hours of operation

- Self-Service/Pre sold Brand Name

- Low Markup- Substantial substitution

Open

24 hrs.

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Case Example: Ice Cream Rivals

UNILEVER 17% Mk Sh

Ben & jerrys

Good Humor, Breyers

Nestle(Dreyers)- 16%

Haagen Daz

Drum Stick Brands

WSJ, June,03

Nestl's task

Improve (intensive) distribution techniques

Introduce new branded vending machines &freezers in big gas stations & convenience stores.

(aim for 100,000 non grocer outlets) Create new novelty products & specialty items: ex.

Coffee Almond Crunch Bar at Starbucks

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Valued freezer space

Costs are up to 6x higher to keep food in thefreezers of non grocer venders because ofelectricity and maintenance costs

Ice cream covers 35% of convenience freezerspace but items offer 25% higher profit marginsthan super market tubs

Out of home consumption is growing 10% per year

compared to 8% in home (* 80% of ice creamconsumption is in home) (8%x80% volume)

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Shopping Products

Shopping goods- consumers make aconsiderable effort to evaluate

Consumers make product comparison(s),

They seek information before purchase,

they are not impulsive

Moderate substitutions are made

Products last a considerable time

Monetary & social costs may be high

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TVs As a Shopping Product(2007 ---- 1950s)

Attribute-based Price-based

PICTURE SIZE

WARRANTY

REMOTE CONTROL

LOW PRICE

Brand Name

PlasmaLCD screen

Homogeneous products select on price

Heterogeneous products select on benefits

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Marketing Strategy Principles

- Product Differentiation (Quality,design,etc.)

- Selective Distribution- Brand Name Focus

- Moderate Markup

- Somewhat Knowledgeable sales force

Homogeneous shopping goods have numerous

substitutes which are similar in quality and featuresbut they are different in price. Principle: you needto find a way to make your good stand out andmake people want it (product differentiaion)

Shopping Good Principles

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Specialty Products

infrequently (seldom) purchased

relatively expensive

little or no substitution

High involvement, well informed consumers High visibility to others

Specialty goods- consumers make asignificant effort to acquire the desired brand.

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Specialty Products

Marketing Strategy Principles- Havea knowledgeable sales force (pros)

- Exclusive Distribution

- High Markup/exceptional service

- Be Innovative/cutting edge

- Maintain a differential advantage

Tony M. drove a Ford explorer to a Mercedes showroom.

Where are the sales people? (2003)

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Consumer BehaviorProduct Classification

Market Strategy

Intensive Distribution (convenience)

Selective Distribution (shopping)

Exclusive Distribution (specialty)

Product

CategoryMarket Coverage

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WIDENING GULF THEORY

- Consumer behavior is so complex thatmarketers do not understand whatconsumers want

- Conclusion: Product classifications overlap& have limited influence on strategy

CAUSES:

- Rapid technological changes- Fierce Competition

- Changing consumer values

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What Do You Think?

Do you think the consumer productclassification sequence has an impact

on marketing strategy?

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LAMPSTableCeilingTrackDesk

Product Line - a group of

closely related products

Product Mix - the total

group of products offeredconsistency: relatednessof items

Product mix

Product line

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CONCEPTUALIZATION OFPRODUCT MIX

WIDTH

D

E

P

TH

# of lines = 4

# of items = 12

A wide product mix facilitates one stop shopping

Home

Depot,

Lowes

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PRODUCT MIX EXAMPLE

HAIR

CARE

SALTY

SNACKS

DENTAL

CARE

SOFT

DRINKS

Shampoo

Conditioner

Hair Spray

Brush

Chips

Nuts

Crackers

Tooth Brush

Tooth Paste

Dental Floss

Cola

Ginger Ale

Root Beer

Width (# of product lines)

Complimentary products peanut butter & jelly

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THEGILLETTEPRODUCT MIX

Selected Product Items Product Lines Product Mix

(% of Total 1985

Sales by line)

33

*Atra Razor & Cartridges

*Trac II Razor & Blades

*Disposable Razors

BLADES &

RAZORS

TOILETRIES &

COSMETICS31

*Foamy Shaving Cream

*Adorn Hair Spray

*Silkience Shampoo

*Right Guard Deodorant

*Toni Hair Preparation

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Product Portfolio Concept

. . The sales revenue (cash flow) for thecomplete mix of products is emphasized ratherthan (isolated) problems of individual products

. . Focus on the interrelatedness among products

Issue: Cannibalism

A smallpercentage of the organizations productscontribute to a large% of profits.(80/20 rule)

Principles: Protect best sellers

Delete marginal products

Reallocate marketing support

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PRODUCT MANAGEMENT BYTELENOR COMMUNICATIONS,

PAKISTAN

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Muhammad Shoaib Khattak

Company Regional Manager,

Telenor Communications,

Rawalpindi,

Pakistan.

MBA (Booth School of Business, University of Chicago)

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Other professionals justcontacted over cellphone

Product Development - Data Services Executive at Telenor Pakistan

Products Development Executive (VAS) - Internet and

Messaging at Telenor Pakistan

ADIL FARHAD

Graduate from NUST, Islamabad

ARFAN AFZAL

Manager Marketing - Postpaid Services, Telenor

Graduate from COMSATS, Lahore

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This is how Telenor managesproduct

To achieve operational excellence one mustunderstand the challenges involved indesigning, implementing and streamlining abest in class process.

Initial Problem faced by Telenor was to adjustthemselves in Pakistani market with differenttrends comparing one in Norway

Th i l l h d i

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The main goals were also the design

criteria for the process:

Opportunity and customer driven

product development

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The Importance of aSupporting

Environment to createan

ecology of innovation

Importance of a Supporting Environment to

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Importance of a Supporting Environment tocreate an

ecology of innovation

Pause processing of old methods

when new fix it all emerges

means appreciation of innovation

Professional product development and

portfolio management need to take a

long term view, as well as keeping

ahead in finding and commercialising

new business opportunities.

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Products by Telenor

TALK~SHAWK Telenor Business

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Any questions?