PRODUCT CONCEPTSSMITU MALHOTRA

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What is a Product?2

Promotion

Product Product is

the “heart” ofMarketing

Mix

Place (Distribution)

Price

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CONCEPT OF A PRODUCT3

PEOPLE DON’T BUY PRODUCTS – THEY BUY THE EXPECTATION OF A BENEFIT

…………Levitt

Expected

Augmented

Potential

Product Hierarchy Levels –Theodore Levitt

Core

Basic Product

Product Levels

Customer Value Hierarchy Core benefit: the benefit the customer buys Basic product: provides the core benefit Expected product: attributes that customers

normally expect with the product Augmented product: features / benefits

beyond what is expected Potential product: anything possible for the

future to satisfy the customer

Product Augmentation

Each augmentation adds cost Augmented benefits soon become

expected and necessary ‘point-of-parity’ Competition offers ‘stripped down’ versions Competition level and competitive

strategies depend upon PLC stage

PRODUCT VS SERVICES

HOW ARE THEY DIFFERENT ?7

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Goods and Services: Scale of Elemental Dominance

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1. Intangibility - “u can’t touch this”

2. Production (or performing the service) and Consumption (using the service) - happens at the same time3. Heterogeneity - services are not always delivered the same way

4. Perishability - cannot be put in inventory or stored for later useie. You can’t buy 2 haircuts

4 Characteristics of Services

THREE MORE P’s PEOPLE PROCESSESS PHYSICAL EVIDENCE

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CONCEPT OF PRODUCT MIX11

PRODUCT LINE PRODUCT WIDTH PRODUCT DEPTH

PRODUCT MIX12

WidthWidth - number of different product lines

LengthLength - total number of items

within the lines

Depth Depth - number of versions of each

product

Product Mix - Product Mix - all the product

lines offered

Con

sist

ency

Product Items, Lines, and Mixes

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Product Item

Product Line

Product Mix

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A group of closely-related product items.

All products that an organization sells.

Benefits of Product Lines14

Equivalent Quality

Efficient Sales andDistribution

Standardized Components

Package Uniformity

Advertising Economies

Why Form Why Form Product Lines?Product Lines?

Product Mix Width15

Diversifies risk Capitalizes on established reputations

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The number of product lines an organization offers.

Product Line Depth16

Attracts buyers with different preferencesIncreases sales/profits by further

market segmentation Capitalizes on economies of scaleEvens out seasonal sales patterns

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The number of product items in a product line.

PRODUCT CLASSIFICATIONSMITU MALHOTRA

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PRODUCT: CLASSIFICATION

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Degree of Tangibility/Durability Nondurable good -- an item consumed in one or

a few uses. Durable good -- one that usually lasts for an

extended number of uses. Type of User Consumer goods -- products purchased by the

ultimate consumer. Industrial goods -- products used in the

production of other products for ultimate consumers.

Five Factors influencing Decisions

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1. Level of consumer involvement2. Length of time to make decision3. Cost of good or service4. Degree of information search5. Number of alternatives considered

Types of Consumer Products

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ConvenienceProduct

ShoppingProduct

SpecialtyProduct

UnsoughtProduct

A relatively inexpensive item that merits little shopping effort.

A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.

A particular item that consumerssearch extensively for and are reluctant to accept substitutes.

A product unknown to the potential buyer or a known product that the buyer does not actively seek.

BRANDSA BRIEF OVERVIEW

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History of brands Means “to burn”

Mark of trust

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Brand: name, term, sign, symbol, or design intended to identify the products or services and to differentiate them from the products offered by competitors.

• Brand: a psychological concept (or set of associations)

• Brand(ing): The art of taking something common and improving on it in ways that make it more valuable and meaningful.

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WHY BOTHER WITH BRANDING?

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Customer’s viewpoint

Authenticates the source of goods and promises value

Reduces risksFunctional PhysicalFinancialSocialTime

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Firm’s viewpoint

Differentiates the product Creates barriers to entry Simplifies product handling ,

inventory management Brand building decreases

customer sensitivity to price Brand loyalty assures demand for

the product Speeds up process of decision

making

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Classification Functional brands – superior economy

and/or superior performance Example

Gillette razors Ariel and tide McDonald’s Dell Computers

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Image brands – offer unique set of associations

Example Colas Cigarettes Parker pens Nike shoes Lux

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Experiential Brands – focus on how consumers feel when interacting with the brand

Example Disney Barista , CCD PVR cinemas

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Branding strategy No brand Corporate brand Family brand Individual brand Private brands vs Manufacturers brand

Can anything be branded?

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An Overview ofBranding Decisions

BrandingDecision

•Brand•No brand

Brand-SponsorDecision•Manu-facturerbrand

•Distribu-tor(private)brand

•Licensedbrand

Brand-Name

Decision•Individualbrandnames•Blanketfamilyname•Separatefamilynames•Company-individualnames

Brand-Repositioning

Decision

•Reposi-tioning

•Noreposi-tioning

Brand-StrategyDecision•Lineextension•Brandextension•Multi-brands•Newbrands•Cobrands

Brand Strategies

BrandExtension-Dettol

New

Bra

nd N

ame

Product Category

LineExtension-

lays chips,Zen

Existing

Existing

Multibrands-HUL soaps

New NewBrands- Sunfeast

Brand Image

The set of beliefs about a brand (Kotler) The set of associations – tangible /

functional + soft attributes, product category, corporate parentage, user profile (Alex Biel)

Sum of all impressions + perceptions – features, benefits, packaging, user profile, advertising, events etc

Brand Personality

Correspond to user personalities (Kotler) The brand ‘as a person’ – symbols,

endorsers, lifestyles, types of users Sub-set of brand image – emotional,

intangible factors created mainly through advertising; brands take on human characteristics