Shaping the Market Offerings

Prof. Suvendu Pratihari

suvendupratihari@gmail.com

Prof. Suvendu Kr. Pratihari

LESSON PLAN
Session-3: Concept of Product Difference between products and services Levels of product Customer value hierarchy Classification of products Session-4: Product Differentiation Building and Managing product mix and product lines Product and Brand Relationship Session-5: Packaging, labeling, Warranties and Guarantees.

Prof. Suvendu Kr. Pratihari

Session-3: Shaping the Market Offerings

Product

characteristics and classifications Difference between goods and services Product Levels: The Customer Value Hierarchy

Prof. Suvendu Kr. Pratihari

What is a Product?

It is a need Satisfying entity. More than a physical object. It is a complex cluster of value satisfaction i.e. it is the total package of benefits the customer receives when he buy and use it.

Prof. Suvendu Kr. Pratihari

Product Levels
Core Product Basic Product Expected Product Augmented Product Potential Product

Prof. Suvendu Kr. Pratihari

Core Product: It is the unbranded and undifferentiated commodity like rice, flour or cloth. Here the product doesnt have any identity as it is not linked with any owner or maker. Basic Product: When the product gets an identity through a name, it is called Branded Product. E.g. Annapurna Atta, Tata Salt etc. Expected Product: These products enjoy further distinctions from other similar products/brands with special attributes or qualities and claim uniqueness for its offer. Example- Maggie for its two minutes preparation, Dettol for its Total protection against germs, Tata Nano Car for its Small Car, Nokia Handset for its Battery Life etc. The Customized Product: A product that is adopted to the requirement of the individual customer, Example IT and Telecom Products, Industrial Products etc.
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Augmented Product: It is the result of voluntary improvement brought by the manufacturer in order to enhance the value of the product by adding extra features or functions. Here the firm goes beyond the expectation of the customer/consumer. Example- Bluetooth technology inside the car for easy telephonic conversation as well as accessing songs from your handset.

Internet TV was a kind of augmented product before few years and now it is a successful product.

Potential Product: It is the Product of Tomorrow, carrying all the improvement and fineness that is possible under the given technological, economic and competitive conditions. ExampleElectric Car, Solar Car, Car which can fly, Robot for domestic Use.

Prof. Suvendu Kr. Pratihari

Classification of Goods

Classification of Goods on the basis of Durability

Durable Goods: Example TV set, Car etc. Non-Durable : Example Tooth Paste, Cold Drinks etc. Raw Material Exp Iron Ore, Crude Oil etc. Fabricating materials and Parts Exp Paints, Gas Cylinders etc. Installations Exp Heavy Machinery for production facilities Accessory Equipments Exp Not-Bolts, Car Tires and Wheels etc. Operating Supplies Exp Safety Gloves, Measurement instruments etc.
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Business Goods

Classification of Consumer goods, Ref: Panda-p-30

Convenience Goods

Staple Goods: Consumer purchase on regular basis. E.g. Tooth paste, Soap etc. Impulse Goods: Consumer purchase without any planning. E.g. Magazine, Chocolate etc. Emergency Goods: Consumer purchase on an urgent need. E.g. Umbrella, Antiseptic Cream etc. It is a tangible product for which a consumer wants to compare quality, price and perhaps style in several stores before making a purchase is considered as a shopping goods Example: Fashionable apparel, Furniture, Automobiles etc. With shopping goods, buying habits affects the distribution and promotion strategies of both manufacture and middle man.
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Shopping Goods:

Specialty Goods: Goods with unique characteristics

or brand identification for which the buyer need to make a special purchasing effort. Exp- TV, Music System, Mobile Set, Wrist Watch etc.

Unsought Goods: Goods the consumer does not know about or does not normally think of buying. Exp Health Insurance Products, Fire alarm etc.

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LESSON PLAN
Session-3: Concept of Product Difference between products and services Levels of product Customer value hierarchy Classification of products Session-4: Product Differentiation Building and Managing product mix and product lines Session-5: Product and Brand Relationship Packaging, labeling, Warranties and Guarantees.

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Session-4: Shaping the Market Offerings

How

companies can differentiate products? How a company can build and manage its product mix and product line?

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Product Differentiation
Tangible Product Attributes

Intangible Product Differentiation

Ingredient /formula Functional Features Additional Features Packaging Design / Styling Product Quality / Technology Durability Reparability

Customer Care / Service Delivery Customer Training Customer Consulting Prestige / Status

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Product Mix Elements @ HUL

Product Line-1 Product Line-2 Product Line-3 Product Line-4

Bathing Shop
Dove Lux Pears Liril Rexona Lifebouy Breez Moti Hamam Jai

Laundry Products
Surf Rin Sunlight Wheel 501

Beverage
Lipton Brookebond Taj Mahal Bru Super Dust X X X X X X X X X

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Product Mix and Product Line

Product Mix: It denotes the complete set of all products offered for sale by a company. The product mix compose of several product lines. Product Lines: A group of closely related products constitute a product line. Width of Product Mix: It is the total number of product lines exist in a product mix Length of Product Line: It is the total numbers of items/brands present in a product line. Depth of Product Line: It denotes the total no of items under each brand in the line, in terms of variant, models, size etc.
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Product Line Decision

New Product New Product

Price

Price

Present Product

Price

Present Product

Present Product

New Product

New Product

Quality

Quality
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Quality
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Product Management and task involved

Product management means managing the product lines and product mix of the company Tasks for Product Management

How many different product lines should the firm accommodate? How can the different lines be grouped for effective management? What should be the relationship among the various members in the same product line? How to position these products in the market? How do they distinguish themselves from other competing products/brands? Should there be individual brand or family brand? How to develop a brand equity? How to plan a new product so that in the long run the firm retains a healthy product portfolio. How to handle the products going through different stages of their life cycle? What are the strategic treatment they require?
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Packaging and Labeling

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Function of Packaging and Labeling

Physical protection of goods Information Transmission Security Convenience

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Components of Packaging

Package Material Package Aesthetics Handling Convenience Package Size

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Package Material:

Changing Trend From Wood to Paper Metal Container are more popular Plastics Innovation in packaging Tetra packs/Aseptic Packaging: It is used for food packaging. It is sterilized and easy to handle. The package consists of several thin layers of polyethylene foul and paper. It has a good shelf life. Exp-Fruit Juice, Oil etc.

Package Aesthetic: It is used for enhancing the sales appeal of the product. It include package material, package size and shape etc.

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Handling Convenience: In many cases it functions as a useful differentiator. The various attributes of the packaging material, design, shape, size, shape etc together should make the handling and use the product convenient for the customers.

Example: Ponds cold cream in tubes Application convenience of Harpic The Bee Can Economy Pack/Family Pack- It makes the product available in larger size. Households with larger family size buy economic packs and avoid the inconvenience of repeat purchase Refill pack: Reusable Container Exp. Horlicks in Bottle, Amul in Tin Container, Nescafe in Glass Bottle container The Sachet Sweep

The Package Size:

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Managing Brand and Brand Equity

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Role and Significance of Brand

Definition of Brand: It is a name, term &/or symbol to identify the goods and services of one seller from the offers of other competitors. It is a Asset of the Firm Brand Represents the value delivered to customers. Brand offers strategic move to the firm.

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Categorization of Brands Based on Types of Value they Offer

Functional Brand

Emphasize the functional value of their offer. Exp: Nano Car, Maruti 800, Hero Honda for Mileage They offer image value to the user. Exp-Parker, Mercedes car, Parkavenue These offer unique experience the user gets by interacting with the brands. Exp-Kingfisher, Thomas Cook, ICICI etc.
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Image Brand

Experience Brand

Brand Strategies

In developing the brand Strategies, an organization can pursue one of four approaches:

Corporate umbrella Branding

Exp: Kellogg's, Cadbury's, Amuls etc. Exp: ITC, reliance, Exp: Lifebouy Soap & Liquid Marie Gold Biscuits

Family Umbrella Branding

Range Branding

Individual Branding

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Product Life Cycle

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Market Pioneering Stage

Sales are Low Profit is either negative or negligible. Demand has to create and developed / High investment in Consumer awareness and Promotion. Customers have to be prompted to try out the product. Success of this stage depends on

Nature of the product Its Price Technological Newness Consumers view of this product

Price Strategy : Market Skimming / Market Penetration

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Market Growth Stage

Demand increases Size of the market grows Sales and Profit go up Competitor may enter with similar or slightly improves version of the product. The company need to make its product distinct and different in the eyes of the consumer and stay ahead of his competitors. Incremental product improvement based on market feedback and competitor product is needed. Price shifting may be worked out with respect to the competition Marketing and distribution efficiency now become an important factor.
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Market Maturity Stage

Relatively low price, increased marketing cost, keener competition, less profits. Demand tends to reach at a saturation point Enough supply from the competition sources Marketing trade/channel may become more powerful in this stage and they become multi branded now. More product differentiation and Building brand loyalty is required. Sales and Trade promotional initiatives may be worked out for maintaining the sales volume.
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Market Decline Stage

Sales begin to fall and Demand shrinks due to the new and functionally improves products availability. Price and margin get decreased resulting decrease in total sales and profit. Some company starts linking these declining products with other premium products they have developed to stretch the life of the declining products.

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Thank You
Prof. Suvendu Kr. Pratihari suvendupratihari@gmail.com

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