Professional Documents
Culture Documents
Chapter 7 Setting Product Strategy
Chapter 7 Setting Product Strategy
Setting
Product Strategy
Learning Outcomes
1. What are the characteristics of products, and how do marketers
classify product?
2. How can companies differentiate products?
3. Why is product design important, and what are the different
approaches taken?
4. How can marketers best manage luxury brands?
5. What environmental issues must marketers consider in their
product strategies?
6. How can a company build and manage its product mix and
product lines?
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
Components of The Market Offering
Product Levels
Product Classifications
(i) Durability
(ii) Tangibility
(iii) Use
(consumer or industrial)
(i), (ii) Durability and Tangibility
Nondurable goods
Durable goods
Services
(iii) Use
Convenience
Shopping
Specialty
Unsought
(b) Industrial-Goods Classification
Capital items
Supplies and
business services
Product Differentiation
• Form • Reliability
• Features • Reparability
• Performance quality • Style
• Conformance quality • Customization
• Durability
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
The Product Hierarchy
6. Item
5. Product
type
4. Product
line
3. Product
class
2. Product
family
1. Need
family
Product Line and Mix Decisions
Product Systems and Mixes
• Product system
• Product mix/assortment
– Width
– Length
– Depth
– Consistency
Honda Product Mix
• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
Business Standard, Mumbai, 1 October 2019
Product Mix Pricing
• The firm searches for a set of prices that maximizes
profits on the total mix
Optional-
Product line
feature
pricing
pricing
Product- Captive-
bundling product
pricing pricing
By-product Two-part
pricing pricing
Co-Branding
• Two or more well-known brands are combined
into a joint product or marketed together in
some fashion
Same-company
Joint-venture
Multiple-sponsor
Retail
Business Standard, Mumbai, 24 September 2019
Business Standard, Mumbai, 24 September 2019
Ingredient branding
Market modification
Product modification
Marketing program
modification
Market Modification
(iv) Decline Stage
Attribute Forced
listing relationships
Mind Morphological
mapping analysis
Reverse-
New contexts assumption
analysis
Forces Fighting New Ideas
(ii) Using Idea Screening
Using Idea Screening
• The company can monitor and revise its estimate of
the product’s overall probability of success, using the
following formula:
(iii) Concept development
Communicability &
Perceived value
believability
– Physical prototypes
– Consumer-goods market
testing
– Business-goods market
testing
Methods of Consumer-Goods Market Testing
Sales-wave research
Test markets
(viii) Commercialization
– Where (Geographic Strategy)
– To Whom (Target-Market Prospects)
– How (Introductory Market Strategy)
– When (Timing)
First entry
Parallel entry
Late entry
The Consumer-Adoption Process
• Adoption
– An individual’s decision to become a regular
user of a product
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Factors Influencing the Adoption Process
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
Diffusion process