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Chapter 11
Setting Product Strategy
 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.

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 Product Levels

 Core Benefit: The service or benefit the

consumer is really buying.

 Basic Product: Marketers are turning the core

benefit into a basic product.

 Expected Product: A set of attributes and

conditions buyers normally expect when they
purchase the product.

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  Augmented Product: Attributes that exceed
customer expectations.

 Potential Product: Attributes that

encompasses all the possible augmentations
and transformations the product might
undergo in the future.

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 Product Classification Schemes

Durability: Durable OR Non-Durable

Tangibility: Tangible OR Intangible

Use: Consumer OR Industrial

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 Durability and Tangibility

Nondurable goods

Durable goods

Services

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 Consumer Goods Classification

Convenience:
Staple/Impulse/Emergency

Shopping:
Homogeneous/Heterogeneous

Specialty

Unsought

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 Industrial Goods Classification
 Materials and parts: Goods that enter the
manufacturer’s product completely. Ex: Cotton, wheat,
vegetables, small motors etc.

 Capital items: Long lasting goods that facilitate

developing or managing the finished product. Ex:
factory, generator, elevator etc.

 Supplies/business services: Short-term goods and

services that facilitate developing or managing the
finished product. Ex: paint, window cleaning, legal
consultation etc.

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 Product Differentiation
 Product form  Durability
 Features  Reliability
 Customization  Repairability
 Performance Quality
 Style
 Conformance
Quality

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 Service Differentiation
 Ordering ease
 Delivery
 Installation
 Customer training
 Customer consulting
 Maintenance and repair
 Returns

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 Design
 It refers to the totality of features that affect
how a products looks, feels, and functions to a
customers.
 A well-designed product is pleasant to look at
and easy to open, install, use, repair, and
dispose of.

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 The Product Hierarchy
 Need Family: The core need that underlies
the existence of a product family. Ex:
Communication.

 Product Family: All the product classes that

can satisfy a core need with reasonable
effectiveness. Ex: Technology and Income.

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 The Product Hierarchy (cont…)
 Product Class: A group of products within the
product family recognized as having a certain
functional coherence, also known as product
category. Ex: Communication devices.

 Product Line: A group of products within a

product class that are closely related because
they perform a similar function, are sold to the
customer groups, are marketed through the
same outlets or channels, or fall within given
price ranges. Ex: Tab, Land/Cell Phone,
Desktop, Laptop etc.
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 The Product Hierarchy (cont..)
 Product Type: A group of items within a
product line that share one of several possible
forms of the product. Ex: Smart phone.

 Item: A distinct unit within a brand or product

line distinguishable by size, price, appearance,
or some other attribute. Ex: Samsung Galaxy
S6

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 Product Systems and Mixes
 A product system is a group of diverse but
related items that function in a compatible
manner.

 A product mix is a set of all products and items

a particular seller offers for sale. A product mix
consists of various product lines.

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 Product Mix: Width, Length,
Depth, Consistency
 Width: How many different product lines

 Length: Total number of items in the mix/line

 Depth: How many variants of each product in

the line

 Consistency: how closely related different

product lines in terms of production
requirement, distribution channels etc.
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 Product Line Length:
Line Stretching

Down-Market Stretch

Up-Market Stretch

Two-Way Stretch

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 Product-Mix Pricing
 Product-line pricing
 Optional-feature pricing
 Captive-product pricing
 Two-part pricing
 By-product pricing
 Product-bundling pricing

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 Co-Branding
 Co-Branding (Dual Branding/Brand Bundling)
occurs when 2 or more well-known brands are
combined into a joint product and marketed
together in some fashion.
 Same company co-branding
 Joint-venture co-branding
 Retail co-branding

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 Ingredient Branding
 When materials, components or parts that are
necessarily contained within other branded
products.
Example: Carl Zeiss lenses in Nokia mobile
phones or in Sony Digital cameras.

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 What is the Fifth P?

Packaging, sometimes called the 5th P,

is all the activities of designing and
producing the container for a product.

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 Factors Contributing to the
Emphasis on Packaging
 Self-service
 Consumer affluence
 Company/brand image
 Innovation opportunity

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 Packaging Objectives
 Identify the brand
 Convey descriptive and persuasive
information
 Facilitate product transportation and
protection
 Assist at-home storage
 Aid product consumption

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 Labeling
 Label is a simple tag or elaborately designed
graphic that is part of the package.
 Labels help to identify, describe and promote
the product.

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 Warranties and Guarantees
 Warranties are formal statements of expected
product performance by the manufacturer.
Products under warranty can be repaired,
replaced or refunded within a specific time
period.
 Guarantees are formal assurance that a
certain condition will be fulfilled, specially in
case of product quality.

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