7/30/2019 Product Types 1mm
1/28
PRODUCT MANAGEMENT
Core product - Principal benefit offered
- , , ,
brand name, quality
Augmented product - Delivery, credit, warranty,service, installation
7/30/2019 Product Types 1mm
2/28
Types of Consumer Goods
Convenience - frequently purchased, minimumeffort, low priced
Staples - bread, gasoline, milkImpulse - chewing gum, snacks, soft drinks
-
,
Shopping - Purchased after comparison shopping
Clothing, furniture, appliances, shoes
Speciality - Unique characteristics, buyer makesspecial effort
Porsche cars, Carter watches
Unsought goods - Insurance, cemetery plots
7/30/2019 Product Types 1mm
3/28
Types of Industrial Goods
Supplies -
Maintenance - brooms, bulbsRepair - nuts, nails, screws
O eratin - oil electricit as
Raw Materials - Steel, chemicals corn (Kelloggs)
Components - Crankshafts, wheels
Accessory Equipment - Typewriters, computers,handtools
7/30/2019 Product Types 1mm
4/28
Types of products
Durable goods Nondurables
7/30/2019 Product Types 1mm
5/28
PRODUCT LIFE CYCLE (PLC)Theory applies toproducts, not brands.
4 Stages: Introduction, growth, maturity, & declineIntroduction: e.g., Caller ID service
- slow sales rowth
- near zero profits
- heavy expenses in educating the customer
Price High: If volumes are small, production costs
high, R&D costs high, high tech.
Price Low: Low tech product, no patent protection,
high volumes.
7/30/2019 Product Types 1mm
6/28
Growth: e.g., mobile phones- Rapid growth in acceptance
New product features - expand market
- Increase in sales and profits
Increase distribution
Improve quality
7/30/2019 Product Types 1mm
7/28
Maturity:
- Sales growth slows down
Differentiate your product
- Increase in competition/decrease in profits
Modify market, product, mix- Exit of weak companies
Decline: e.g., oatmeal, video arcade games
- a es a ng o qu c y an pro s ec neSell off business
- Exit from market
Reduce product line. Drop markets, segments,channels. Reposition.
Some studies show PLC applies to brands, fashions,and fads. Similar to BCG analysis in some aspects.
7/30/2019 Product Types 1mm
8/28
PRODUCT QUALITY
What is quality?
- Consists of attributes and superiority on these
attributes.
AND
- Also the ability to perform as specified (i.e.,it
depends on perception of the customer).
7/30/2019 Product Types 1mm
9/28
How to communicate quality:
- signs and product cues (fine coats - lining)
- price
- packaging, distribution, advertising,promotion.
- association with manufacturer IBM with
countries (Japanese automobiles, Italianclothing).
Does higher quality lead to higher profitability?
Strategic Planning Institute found a significant
positive relationship.
7/30/2019 Product Types 1mm
10/28
Product features:
Can be standard or extras
Cars
Cameras
What features to add?
Balance customer value to cost.
7/30/2019 Product Types 1mm
11/28
7/30/2019 Product Types 1mm
12/28
Product line length, width, and depth
WIDTHDetergent Toothpaste Soaps Diapers
L Bold Gleem Ivory PampersE Cheer Crest Zest Luvs
G Oxydol Camay
T
H
7/30/2019 Product Types 1mm
13/28
Branding:
Know what is meant by:
brand
brand name
brand mark
trademark
copyright
7/30/2019 Product Types 1mm
14/28
To brand or not?
Generics: 30-50% cheaper- threat to established brands
- sell better where perceived quality difference is
less.
How did companies react?
- increase quality, segment markets (e.g., RalstonPurina)
- introduce cheaper line (e.g., P&G Banner line
of paper products)- cut prices
- open special shops (Ralph Lauren, Benneton)
- demonstrate superiority (Kraft taste tests)
7/30/2019 Product Types 1mm
15/28
Advantages of branding:
- Easy to process orders and track problems
- Legal protection
- Attract loyal and profitable set of cusotmers
- Hel s in se mentation
- Distribution leverage
- Signal of quality
- Leads to innovation through generatingcompetition
- Premium price
7/30/2019 Product Types 1mm
16/28
Types of brands:
Manufacturers brands:
Campbell, Heinz, Kellogg, Goodyear
Private brands:
Sears, J.C. Penney
Licensed Brands: Christian Dior, Pierre Cardin, Coca Cola clothing
Battle of the Brands: between manufacturer
and middleman
7/30/2019 Product Types 1mm
17/28
Categories of branding:
Individual brand names (e.g., Tide, Cheer, Camay, Folgers)Adv: Does not tie companys reputation to one brand.
Disadv: Dilute your companys resources such as
advertising. No brand may be dominate. Blanket family name: (e.g., Heinz, Campbell)
Adv: Costs less to introduce new products, no
name research required.
Separate family brand names for each product.
e.g., Diehard, Craftsman, Kenmore
Combination of 1 and 2.
e.g., Kelloggs Raisin Bran
7/30/2019 Product Types 1mm
18/28
Brand Strategy decisions
Line extensions Brand extensions
New brands
Co-brands
7/30/2019 Product Types 1mm
19/28
Desirable qualities for brand name:
- could convey product benefits:Coldspot, Coppertone, Craftsman
- could convey product qualities such as action
or colorSunkist, Firebird
- ,7-Up, Puffs
- distinctive
Kodak, Exxon- translate easily
Enco - Standard Oil
- pronunciation problems - EZ
7/30/2019 Product Types 1mm
20/28
Tests done before deciding on a name
Association tests: what images come to mind?
Learning tests: how easily is the name
pronounced?
Memory tests: how well remembered?
Preference tests: which one preferred?
7/30/2019 Product Types 1mm
21/28
Name lab and interbrand: top consulting firms
(Acura, Compaq)
Good brand becomes associated with the
product category eg:
Problem: can be made common names eg:
7/30/2019 Product Types 1mm
22/28
BRAND EQUITY: It is the added value that a
brand endows a product (that something extra).
How do you measure that value?
It depends upon which perspective one is considering.
1. Firm ers ective -
Brand equity is the incremental cash flow from theassociation of the brand with the product.
Sources: Increased market share
Premium pricing
Reduced promotional expenses
7/30/2019 Product Types 1mm
23/28
*Brand equity also imparts a differential advantage
over competitors from a loyal customer base.
Sources: Platform for new products and extensions
Momentum to carry through difficult
periods
Resistance from competitive attack
2. Trade perspective -
*Brand equity gives brand leverage over otherproducts in a category.
Sources: Easier acceptance and wider distribution
Ability to negotiate better terms
Protection against private labels
7/30/2019 Product Types 1mm
24/28
3. Customer perspective -
*Brand equity is the increase in attitude strength acustomer has for a product using the brand.
How do you get brand equity?
Build: begin with a quality productdevelop accessible attitudes
Borrow: line extensions (different favor, form,
application)
category extension (same core benefit,
usage situation, customer base)
7/30/2019 Product Types 1mm
25/28
Brand Extensions:
Adv: Instant recognition
Low ad costs e.g., Honda lawn mower
Disadv: can fail and hurt original name
. ., ,
may be inappropriate and may diluteimage
Buy: License
Acquire
7/30/2019 Product Types 1mm
26/28
BRAND LOYALTY: Attitude + repeatpurchase
Three levels of loyalty:
- Brand recognition
- Brand preference- Brand insistence
Wh multibrand:
- Combined sales higher- Get greater shelf space
- Helps brand switchers
- Motivates organization
- Can target different segments
Problems: small shares for each, none may beprofitable
7/30/2019 Product Types 1mm
27/28
Packaging:
primary secondary
Earlier function- to contain and protect product.
Other functions -
- as a sales tool (attract, inform, persuade)- instant recognition
- convenience
7/30/2019 Product Types 1mm
28/28
Labelling:
Functions - identify, grade, describe, promote
Fair Packaging and Labeling Act 1966
Unit pricing
O en datin
Nutrition labeling
Other social issues:
Excessive cost Scarce resources
Pollution