Chapter

13
Setting
Product Strategy

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 Product Characteristics
and Classifications
• Product
– 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

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 Figure 13.1
Components Of The Market Offering

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 Product Levels: The Customer-Value
Hierarchy
• Figure 13.2: Five Product Levels

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Consumer-Goods Classification

Convenience

Shopping

Specialty

Unsought

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 Product Differentiation
• Form
• Reliability
• Features
• Repairability
• Performance quality
• Style
• Conformance quality
• Customization
• Durability

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 Services Differentiation

 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Returns

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 Design
• Design
– The totality of
features that affect
the way a product
looks, feels, and
functions to a
consumer

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 Product Systems
and Mixes
• Product system
• Product
mix/assortment
– Width
– Length
– Depth
– Consistency

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 PRODUCT-MIX WIDTH AND PRODUCT-LINE LENGTH FOR
PROCTOR& GAMBLE PRODUCTS

Product-Mix Width
Disposable Paper
Detergents Toothpaste Bar Soap Diapers Tissue
Ivory Gleem (1952) Ivory Pampers Charmin
Snow (1879) (1961) (1928)
(1930) Crest (1955)
Kirk’s Luvs Puffs
PRODUCT-
Dreft (1885) (1976) (1960)
LINE
(1933)
LENGTH
Lava Banner
Tide (1893) (1982)
(1946)
Camay Summit
Cheer (1926) (1992)
(1950)

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 Product line length
• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
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 TWO-WAY PRODUCT-LINE
STRETCH: MARRIOTT HOTELS
Quality
Economy Standard Good Superior
Marriott
High Marquis
(Top
executives)
Price

Above Marriott
average (Middle
managers)

Average Courtyard
(Salespeople)

Fairfield Inn
Low (Vacationers)
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 Chapter
15
Introducing New
Market Offerings

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 New-Product Options
• Buy other companies
• Buy patents from other
companies
• Buy a license or franchise
from another company
• New-to-the-world items
• Improvine existing products

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 New-Product Failure

• Fragmented • Shorter
markets development time
• Social, economic, • Poor launch timing
and government • Shorter PLCs
constraints
• Lack of
• Development costs organizational
• Capital shortages support

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 Figure 15.1
New-Product Development Process

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 Generating Ideas
• Interacting with
employees
• Interacting with
outsiders
• Studying competitors
• Adopting creativity
techniques

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 Ways to Find New-Product Ideas
• Informal customer
sessions
• Time off for technical
people to putter
• Customer brainstorming
• Survey your customers
• “ Fly on the wall”
research
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• Iterative rounds with
customers
• Keyword search to scan
trade publications
• Treat trade shows as
intelligence missions
• Have employees visit
supplier labs
• Set up an idea vault
13-18
Ways to draw new ideas from
customers

 Observe customers using product

 Ask customers about product problems
 Ask customers about dream products
 Use customer advisory board
 Use Web sites
 Form brand community of enthusiasts
 Challenge customers to improve product

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 Concept to Strategy
• Concept testing responses

Communicability &
Perceived value
believability

Need level Purchase intention

User targets, purchase

Gap level
occasions & frequency

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 TEST MARKET DECISIONS
• Test Marketing is a limited geographic
introduction of a new product to gauge its
potential
• How many test cities?
• Which cities?
• Length of test?
• What information to collect?
• What action to take?
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Development to Commercialization

• Commercialization
– Where (Geographic
Strategy)
– To Whom (Target-
Market Prospects)
– How (Introductory
Market Strategy)

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 The Consumer-Adoption Process
• Adoption
– An individual’s decision to become a regular
user of a product

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 Stages in the
Adoption Process
Awareness

Interest

Evaluation

Trial

Adoption

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 Factors Influencing the Adoption
Process
• Readiness to try new products and personal
influence

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