Chapter 12

Product characteristics and ClassificationsProduct can be anything, goods, event,

person, properties, organization and idea.

1.Product Level: It is the customer value hierarchy

i. Core benefit: The service or benefit a customer is really buying e.g total guest is buying rest and sleep in a hotel.

ii. Basic Product: At this level a marketer turn the core benefit into a basic product e.g Hotel room includes a bed, bathroom, towel etc.

iii. Expected Product: A set of attributes and conditions buyers normally expect when they purchase this product e.g a hotel guest expects a clean bed, fresh towels, working lamps etc.

iv. Augmented Product: The product that exceeds customer expectations.

v. Potential Product: Which income passes all the possible augmentation and transformation the product or offering might undergo in future. Each augmentation adds cost but becomes expected and necessary point of parity.

2. Product Classification

a. Durability and Tangibilityi. Non Durable: These are fastly consumed tangible

goods which are frequently purchased, small mark ups and heavy advertising e.g soap, cold drink etc.

ii. Durable Goods: these are tangible goods that survive many uses, require more personal selling, high margin and involve guarantees e.g refrigerator, clothing etc.

iii. Services: These are intangible goods, inseparable, variable, perishable products. Require more quality control, suppliers, credibility and adoptability e.g hair cut, legal advice etc

b. Consumer Good Classificationi. Convenience Goods: Frequently purchased bought

with minimum effort and further divided into staple products that is regular buy, impulse that is without buying plan and emergence buying that is urgently needed.

ii. Shopping Goods: Comparison required on suitability quality, price etc and further divided into homogenous shopping goods that is similar quality but different price and heterogeneous shopping goods that has different product features and services.

iii. Specialty Goods: A special effort is require e.g car, stereo components, photographic equipments etc.

iv. Unsought Goods: Customer don’t know about or don’t require it at the given time e.g smoke detector, life insurance, encyclopedia etc.

c. Industrial Goods Classificationsi. Materials and Parts: The goods that enter into

manufacturers product completely further classified as raw materials, that is farm products and natural products and manufactured materials and parts further classified as component materials which are further fabricated e.g cement, wires etc and component parts that are finished but used in some product e.g battery, tires etc.

ii. Capital Items: Long lasting and used for making products further classified as installations e.g building, heavy equipment etc and equipments portable factory equipment e.g hand tools, fork lifting trucks etc.

iii. Suppliers and Business Services: Further classified as maintenance and repair items e.g paint, nails, rooms etc. Operational supplies is lubricants, pencil etc and business services that is AC maintenance, legal Advisory etc.

DifferentiationFor branding differentiation is required. That can

be a little degree e.g shampoo or a high degree e.g automobile.1. Product differentiation:

i. Form: That is size shape or physical structure.

ii. Feature: These are basic functions and there is a need for prioritizing (feature benefit analysis)

iii. Customization: The product is customized to individuals.

iv. Performance Quality: Four performance level that is low average high or superior and performance quality is the level at which the product characteristic is operating at.

v. Conformance Quality: Degree to which all produced units are identical and meet the promised specifications.

vi. Durability: Product expected operation under natural or stressful condition.

vii. Reliability: A measure of probability that a product will not malfunction or fail in said time period.

viii. Repair ability: It is ease of fixing a product when it malfunctions.

ix. Style: The product looks and feel to buy e.g aesthetic distinctiveness.

x. Design: It is the totality of features that effect how the product looks feel and functions in term of customer requirement. Country of origin effect.

2. Service DifferentiationIf physically it is difficult to differentiate

adding value services and improved quality is used.

i. Ordering Ease: Means how easy it is for customer to place order.

ii. Delivery: How well the product is brought to customer e.g speed, accuracy, care etc

iii. Installation: Work done to make a product operational in its planned location that is ease of installment.

iv. Customer Training: Training the customers employee to use vendor equipment properly.

v. Customer Consulting: It is the data information advice which is offered to buyers.

vi. Maintenance and Repair: Helping customers to keep product in good working relation.

vii. Returns: Accepting back the sold things.

Product Brand Relationship1. Product Hierarchy: Six Levels

2. Product System and Mixes: Product system is a group of diverse but related items that functions in a compatible manner. Product mix is set of all product items a particular seller offers for sale. The product width is existence of different product lines. The product length is total items in a mix. Product depth is variant in a line. And consistency is relation of various products to a user. Product Mix Width

Home and Personal Care Foods

Product – LineLength

Personal Wash

Laundry

Skin Care

Hair Care

Oral Care

Deodorants

Ayurvedic Personal & Health Care

Color Cosmetics

Tea Coffee Foods Ice Cream

Lux Surf Excel

Fair and Lovely

Sunsilk

Pepsodent

Axe Ayush Lakme Brooke Bond

Brooke Bond Bru

Kissan Kwailty

Lifebuoy

Rin Ponds Clinic Close – up

Rexona

Lipton Knorr Wall`s

Liril Wheel Vaseline

Annapurna

HamamDove

3. Product Line AnalysisCompany provide a basic platform that can be added to meet different customer requirement ( a modular approach). There are different margins of profit and variation in sales in different product. The product line manager must review how the line is positioned against different competitors.

4. Product System and Mixes: Companies objective influence product line length. Company objectives: a product line to induce up selling, cross selling and create a product line that projects against economic ups and down or sell excess capacity.

i. Line Stretching:It occurs when a company lengthen its product line beyond its current range.

a. Down Market Stretch:Offering product to a lower price line. Reasons may include growth potential, current market is dealing and engaging low and competitors but risks are damage quality image and self cannibalization.

b. Up Market Stretch:Enter into high end of market. Reasons more growth, high margins and fulltime manufacturers.

c. Two way Stretch:In both direction and helps in gaining market dominance.

ii. Line Filling:Adding more items in present range reasons more profit, satisfies dealers and utilize excess capacity but it should satisfy the market need.

iii. Line Modernization, Featuring and Pruning:Continuous modernization with due contradiction of time that is neither too early nor too late. A periodic review require for lines that is having depressing profit (Sale Cost Analysis).

3. Product Mix PricingIn product mix pricing the firm searches for a set of price that maximize profit on the total mix.

i. Product Line Pricing:Develop product lines rather than single product e.g shirts Rs. 500, 1000, 1500.

ii. Optional Feature Pricing:Offering optional products features and services e.g power window, remote mirrors etc.

iii. Captive Product Pricing:Use of captive products e.g lasers cameras etc on low prices and set high mark ups on razor blades and films.

iv. Two Part Pricing:Service firm a fix fee plus a variable usage fee e.g

amusement part and admission fee plus fee for rights.

v. By Product Pricing:Those products have a by product that can be sold and a company can change even low prices for core products e.g. petroleum.vi. Pure Bundling Pricing:Pure bundling is tour package offered by tour operators. Mix bundling is goods are sold individually and in bundles. Customer may ask about unbundling or re-bundling.

6.Co – Branding and Ingredient branding:i. Co – Branding:

Combining the company product from other companies in various ways that is two or more well known brands joined and marketed together. Advantages include convincingly position, greater sales and reduced cost of product introduction where as disadvantages include lack of control in alignment in the mind of consumers and lack of focus on existing brands.

ii. Ingredient Branding:it creates brand equity for materials components and parts necessarily containing within other branding product e.g. Intel, DuPont, Exide Battery. Ingredient brands try to create a preference so customers do not buy the host product without them.

Packaging Labeling Warranties and Guarantees

Packaging is the 5th P of marketing mix and packaging and labeling are the elements of product strategy.

1. Packaging:All activities of designing and producing the container for the product that can be a primary package that is bottle, secondary package is a card board and shipping package contain six dozen boxes in corrugated box. Factors for growing use of packaging include self service, consumer affluence, company and brand image, and innovation opportunity.

Packaging Objective Include: Identify the Brand Convey Descriptive and persuasive information Facilitate product transportation and protection Assist at home storage Aid product consumption

Aesthetic side include size, shape, material colour etc. where as functional side include structured design material etc. packaging changes can have immediate impact on sales. Packaging must be tested that the engineer test, visual test, dealer test plus consumer test.

2.Labeling:It can be a simple tag or elaborated design graphic that is part of package.i. Function:

Identify the product Grade the product Describe the product Promote the product

3. Warranties and Guarantees:Warranties are formal statement of expected product performance by the manufacturer e.g. return, repair, replace, refund.Guarantees reduces buyers perceived risks and suggests product is of high quality and company is dependable.