Product Management

Unit 3
What Is a Product?
A product is anything that can be offered to a
market to satisfy a want or need, including
physical goods, services, experiences, events,
persons, places, properties, organizations,
information, and ideas.
http://www.ipeindia.org/virtual-tour
Five Product Levels
Customer Value Hierarchy
Product Classification Schemes
Marketers classify products on the basis of durability, tangibility,
and use (consumer or industrial). Each type has an appropriate
marketing-mix strategy.

Durability

Tangibility

Use
Durability and Tangibility
Nondurable goods

Durable goods

Services
 Nondurable goods
• Consumed in one or few uses
• Purchased frequently
• Make them available in many location,
charge small mark up, advertise heavily
to induce trial and build preference.
Durable goods
• Tangible goods, survive for many
uses
• Require more personal selling
and service
• Command higher margin and
require more seller guarantees.
Services
• Intangible, Inseparable, Variable,
and Perishable
• Require more quality control,
supplier credibility and
adaptability.
Consumer Goods Classification
(Classification based on shopping habits)
Convenience

Shopping

Specialty

Unsought
Convenience goods: purchased frequently, immediately
and with minimal effort (soft drinks, soaps, newspaper)
• Staples: purchase on regular
basis.
• Impulse goods: purchased
without any planning
• Emergency goods: purchased
when need is urgent
Shopping goods: consumer compares based
on suitability, quality, price, style
• Homogeneous shopping goods are similar in quality but different in
price
• Heterogeneous shopping goods differ in product feature that may be
more important than price.
Speciality goods
• Unique characteristics or brand identification for which enough
buyers are willing to make a special purchasing effort.
Unsought goods: consumer does not know
about or normally think of buying
Industrial Goods Classification
• Materials and parts
• Capital items
• Supplies/business services
Product Mix
Starbucks
• The first Starbucks coffee shop was at Pike Place Market in
Seattle in 1971. The concept was successful, and 165
Starbucks locations were open in 1992 when the company
went public. The chain now has more than 9,000 retail
locations in the United States and internationally.
Product Mix
A product mix is the total assortment
Product Mix of products and services marketed by
a firm.

A product line is a group of individual

Product Line products that are closely related in
some way.

An individual product is any brand

Individual Product
or variant of a brand in a product line.

• Thus a product mix is a combination of product lines,

which are combinations of individual products.
Product Mix Characteristics
• Any product mix can be defined in terms of width, length,
and consistency.

The number of product lines in the

Product Mix
Width
product mix. The more product lines,
the wider the product mix.

Product Mix Product mix length refers to the

Length number of products in a product line.

Product mix consistency refers to

Product Mix
Consistency
the relatedness of the different
product lines in a product mix.
Product Mix Characteristics
Product Mix Characteristics / Product Line
Decision Strategies
• Firms marketing multiple products and services must devise strategies for
individual products, specific product lines, and the overall product mix. Key
strategies at each level are presented below:
Product Life Cycle
• The product life cycle (PLC), like the biological life cycle,
describes the advancement of products through identifiable
stages of their existence as shown below:
 Diffusion Process
• When a new product form is first introduced to the market, consumers go
through a process in determining whether to adopt it. Some consumers
adopt a new product when it is first introduced; others wait until the
innovation has been on the market for some time. These different adoption
rates mean that it typically takes time for an innovative new product form to
diffuse throughout a market. The diffusion process describes the adoption of
an innovation over time.
PLC Stages and Characteristics
• The interaction of the diffusion process and firm
competition means that marketers face a different
situation at each stage of the product life cycle.
PLC Length and Shape
• Life cycle curves for styles, fashions, and fads differ from
traditional product life cycle curves:
PLC Marketing Strategies
• Shortening lengths of product life cycles and their different
shapes increase the complexity of marketing decisions.
Firms respond to these trends by developing marketing
strategies to take advantage of each life cycle stage.
Limitations of the PLC
1. The life cycle concept applies best to product forms rather than to
classes of products or specific brands.
2. The life cycle concept may lead marketers to think that a product
has a predetermined life, which may produce problems in
interpreting sales and profits.
3. It is only a descriptive way of looking at the behavior of a product
and the life cycle can not predict the behavior of a product.
Increasing the Product Line
A downward-stretch strategy is an
Downward Stretch attempt to add products to the lower end
of the product line. Luxury car makers
are introducing lower-priced cars to get
new customers.

An upward-stretch strategy is just the

Upward Stretch opposite: Products are added at the
higher end of a product line. This has
been a favorite approach for Japanese
companies in the U.S. market.

more
Increasing the Product Line (con’t)
A two-way-stretch strategy entails
Two-way Stretch adding products at both the high and low
ends of the product line. Firms that have
focused on the mass market might use
this strategy to appeal to both price-
conscious and luxury-seeking consumers.

A line-filling strategy involves adding

Line Filling
products in different places within a
product line. A firm might use this strategy
to fill gaps in its product line that are not at
the high or low end.

more
Increasing the Product Line (con’t)
Cannibalization occurs when a new
Cannibalization
product takes sales away from existing
products. A great deal of cannibalization
shifts sales from one product to the new
product, with little overall gain for the firm.
Product-Mix Strategies
• The product mix consists of all product lines and individual products
marketed by a firm.
• Most firms market multiple product lines with many products in each
line.
• However, sometimes companies can be very successful by having a
limited product mix.
Branding Strategies
• As firms expand product mixes and extend product lines,
brand decisions become more complicated. Companies
marketing multiple products and services need a strategy to
guide branding decisions. The basic options are:
Ethical Issues
• Is the product safe when used as intended?
• Is the product safe when misused in a way that is foreseeable?
• Have any competitors’ patents or copyrights been violated?
• Is the product compatible with the physical environment?
• Is the product environmentally compatible when disposed of?
• Do any organizational stakeholders object to the product?
Summary
• After studying this chapter, you should be able to:
• Understand the different characteristics of a product mix.
• Recognize the stages and characteristics of the product life
cycle.
• Identify appropriate marketing strategies for products in
different life cycle stages.
• Describe the limitations of the product life cycle concept.
• Discuss different product-mix and product-line strategies.