windell de vera ch. 12
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TOP 10 LEARNING CONCEPTS
Ch. 12: Setting Product Strategy
Windell de Vera
May 11, 2012
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1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn Service Differentiation
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 3: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/3.jpg)
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6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 4: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/4.jpg)
www.windelldevera.blogspot.com
1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn Service Differentiation
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 5: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/5.jpg)
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Concept 1:
Know the Five Product Levels
Core benefit
Basic product
Expected product
Augmented product
Potential product
Reference: Philip Kotler, Marketing Management, 13th edition
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Concept 1:
Core benefit: It is the fundamental level. It is the benefit the customer is really buying.
Core benefit
Basic product
Expected product
Augmented product
Potential product
Reference: Philip Kotler, Marketing Management, 13th edition
e.g. A customer buys a cell phone in order to communicate.
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Concept 1:
The marketer has to turn the core benefit into the basic product.
Core benefit
Basic product
Expected product
Augmented product
Potential product
Reference: Philip Kotler, Marketing Management, 13th edition
e.g. A marketer sells a cell phone can be used to communicate with others.
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Concept 1:
Expected product is a set of attributes and conditions buyers normally expect when they purchase this product.
Core benefit
Basic product
Expected product
Augmented product
Potential product
Reference: Philip Kotler, Marketing Management, 13th edition
e.g. A customer buys a cell phone that can be used for call and text.
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Concept 1:
Augmented product is a product that exceeds customer expectations.
Core benefit
Basic product
Expected product
Augmented product
Potential product
Reference: Philip Kotler, Marketing Management, 13th edition
e.g. The cell phone also features camera, radio and internet.
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Concept 1:
Potential product encompasses all the possible augmentations and transformations the product or offering might undergo in the future.
Core benefit
Basic product
Expected product
Augmented product
Potential product
Reference: Philip Kotler, Marketing Management, 13th edition
e.g. A holographic cell phone that features the images in 3D and runs at 4G.
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1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn Service Differentiation
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
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Concept 2:
Distinguish the Product Classification Schemes
Reference: Philip Kotler, Marketing Management, 13th edition
Durability
Tangibility
Use
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Concept 2:
Non-durable goods are tangible normally consumed in one or a few uses.
Reference: Philip Kotler, Marketing Management, 13th edition
Durability
Tangibility
Use
The appropriate strategy is to make it available in many locations, charge a small markup and advertise heavily to induce trial.
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Concept 2:
Durable goods are tangible goods that survive many uses.
Reference: Philip Kotler, Marketing Management, 13th edition
Durability
Tangibility
Use
These normally require more personal selling and service, command a higher margin, and require more seller guarantees.
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www.windelldevera.blogspot.com
1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn Service Differentiation
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 16: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/16.jpg)
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Concept 3:
Compare the Consumer and Industrial Goods Classification
Reference: Philip Kotler, Marketing Management, 13th edition
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Concept 3:
Consumer Goods Classification are classified according to consumer shopping habits.
Reference: Philip Kotler, Marketing Management, 13th edition
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Concept 3:
Convenience goods are usually purchased frequently, immediately, and with little effort.
Reference: Philip Kotler, Marketing Management, 13th edition
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Concept 3:
Shopping goods are goods that the customer, in the process of selection and purchase, compares on the basis of suitability, quality, price and style.
Reference: Philip Kotler, Marketing Management, 13th edition
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Concept 3:
Specialty goods are goods with unique characteristics or brand identification for which consumers spend exceptional buying effort.
Reference: Philip Kotler, Marketing Management, 13th edition
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Concept 3:
Unsought goods are those products or services that consumers are not readily aware of or do not normally consider buying..
Reference: Philip Kotler, Marketing Management, 13th edition
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Concept 3:
Industrial goods are those products used in the production of other goods.
Reference: Philip Kotler, Marketing Management, 13th edition
Industrial Goods Classification
Materials and Parts
Capital Items
Supplies/business services
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Concept 3:
Raw material products include farm products and natural products, manufactured materials and parts include component materials and component parts.
Reference: Philip Kotler, Marketing Management, 13th edition
Industrial Goods Classification
Materials and Parts
Capital Items
Supplies/business services
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Concept 3:
Capital items: installations and equipments.
Reference: Philip Kotler, Marketing Management, 13th edition
Industrial Goods Classification
Materials and Parts
Capital Items
Supplies/business services
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Concept 3:
Supplies include maintenance and repair items and operating supplies. Business services include maintenance and repair services and business advisor services.
Reference: Philip Kotler, Marketing Management, 13th edition
Industrial Goods Classification
Materials and Parts
Capital Items
Supplies/business services
![Page 26: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/26.jpg)
www.windelldevera.blogspot.com
1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn the Service Differentiation
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 27: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/27.jpg)
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Concept 4:
Understand Product Differentiation
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:
Form: The size, shape, or physical structure of a product.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Features: Most products can be offered with varying features that supplement its basic function.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Customization: It refers to the tailoring of the campaign according to the needs of an individual or groups of individuals.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Performance: It is the level at which product’s primary characteristics operates.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Conformance: It is the degree to which all the produced units are identical and meet the promised specifications.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Durability: A measure of the product’s expected operating life under natural conditions, is a valued attribute for certain products.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Reliability: A measure of the probability that a product will not malfunction or fail within a specified time period.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
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Concept 4:Repairability: It is a measure of the ease of fixing a product when it malfunctions or fails.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
![Page 36: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/36.jpg)
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Concept 4:Style: It described the product’s look and feel to the buyer.
Reference: Philip Kotler, Marketing Management, 13th edition
Product Form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
![Page 37: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/37.jpg)
www.windelldevera.blogspot.com
1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn Service Differentiation
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 38: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/38.jpg)
www.windelldevera.blogspot.com
Concept 5:
Learn Service Differentiation
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease Delive
ry
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
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Concept 5:Ordering ease: It refers to how easy it is for the customer to place an order with company.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
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Concept 5:Delivery: It refers to how well the product or service is delivered to the customer.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
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Concept 5:Installation: It refers to the work done to make a product operation in its planned location.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
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Concept 5:Customer training: It refers to training the customer’s employees to use the vendor’s equipment properly and efficiently.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
![Page 43: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/43.jpg)
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Concept 5:Customer consulting: It refers to data, information systems, and advice services that the seller offers to buyers.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
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Concept 5:Maintenance and repair: It describes the service program for helping the customers keep purchased products in good working order.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
![Page 45: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/45.jpg)
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Concept 5:Returns: Sold merchandise returned by customers for refund.
Reference: Philip Kotler, Marketing Management, 13th edition
Ordering ease
Delivery
Installation
Customer
training
Customer consultin
g
Maintenance and repair
Returns
![Page 46: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/46.jpg)
www.windelldevera.blogspot.com
6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 47: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/47.jpg)
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Concept 6:
Consider Product Hierarchy
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
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Concept 6:Need family – the basic need underlying the existence of a product family.
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
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Concept 6:Product family – all the product classes that can satisfy a basic need effectively.
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
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Concept 6:Product class – a group of products within a product family.
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
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Concept 6:Product line – a group of products within a product class.
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
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Concept 6:Product type – a group of items within a product line that function in a similar manner.
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
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Concept 6:Item – a unit within a product line which is distinguished by size, price, orsome other characteristic of element.
Reference: Philip Kotler, Marketing Management, 13th edition
Item
Product Type
Product line
Product class
Product family
Need family
![Page 54: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/54.jpg)
www.windelldevera.blogspot.com
6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
![Page 55: Windell de vera ch. 12](https://reader035.vdocuments.site/reader035/viewer/2022062511/54be59f74a7959fa3b8b45e6/html5/thumbnails/55.jpg)
www.windelldevera.blogspot.com
Concept 7:
Deal with the Product Systems and Mixes
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7:A product system is a group of diverse but related items that function in a compatible manner.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7: A product mix is the sell of all products and items a particular seller offers for sale.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7: A company’s product assortment has a certain width, length, depth, and consistency.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7:The depth of a product mix refers to how many variants are offered of each product in the line.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7: The length of a product mix refers to the total number of items in the mix.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7: The width of a product mix refers to how many different product lines the company carries.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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Concept 7: The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way.
Reference: Philip Kotler, Marketing Management, 13th edition
Product system
Product mix
Product
assortmen
t
Depth
Length
Width
Consistency
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6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
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Concept 8:
Use the Product Line Analysis
Reference: Philip Kotler, Marketing Management, 13th edition
Core product
Staples
Specialties
Convenience items
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Concept 8:
Core product is the basic product.
Reference: Philip Kotler, Marketing Management, 13th edition
Core product
Staples
Specialties
Convenience items
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Concept 8:
Staples are items with lower salesvolume but not promoted.
Reference: Philip Kotler, Marketing Management, 13th edition
Core product
Staples
Specialties
Convenience items
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Concept 8:
Specialties are items with lowersales volume but highlypromoted.
Reference: Philip Kotler, Marketing Management, 13th edition
Core product
Staples
Specialties
Convenience items
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Concept 8:
Convenience items are peripheral items.
Reference: Philip Kotler, Marketing Management, 13th edition
Core product
Staples
Specialties
Convenience items
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6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
Master the 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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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
Product–line pricing is setting price steps between product line items.
Product –line
pricingOptional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
Optional-feature pricing is pricing optional or accessory products sold with the main product.
Product –line
pricingOptional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
Captive-product pricing is pricing products that must be used with the main product.
Product –line
pricingOptional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
Two-part pricing is a strategy in which price is broken into a fixed fee plus a variable usage rate.
Product –line
pricingOptional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
By-product pricing is pricing low-value by-products to get rid of them.
Product –line
pricingOptional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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Reference: Philip Kotler, Marketing Management, 13th edition
Concept 9:
Product-bundle pricing is pricing bundles of products sold together.
Product –line
pricingOptional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Outline: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
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Concept 10:
Emphasize Packaging
Reference: Philip Kotler, Marketing Management, 13th edition
Self-service
Consumer affluence
Company/brand image
Innovation opportunit
y
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Concept 10: Self-Service – customers would know about the product even without any person present.
Reference: Philip Kotler, Marketing Management, 13th edition
Self-service
Consumer affluence
Company/brand image
Innovation opportunit
y
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Concept 10: Consumer affluence – customers are willing to pay for better packages.
Reference: Philip Kotler, Marketing Management, 13th edition
Self-service
Consumer affluence
Company/brand image
Innovation opportunit
y
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Concept 10: Company/brand image – contributes to instant recognition.
Reference: Philip Kotler, Marketing Management, 13th edition
Self-service
Consumer affluence
Company/brand image
Innovation opportunit
y
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Concept 10: Innovation opportunity – innovative packaging helps improve sales.
Reference: Philip Kotler, Marketing Management, 13th edition
Self-service
Consumer affluence
Company/brand image
Innovation opportunit
y
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1. Know the Five Product Levels2. Distinguish the Product
Classification Schemes3. Compare the Consumer and
Industrial Goods Classification4. Understand Product
Differentiation5. Learn Service Differentiation
Summary: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
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6. Consider Product Hierarchy7. Deal with the Product
Systems and Mixes8. Use the Product Line Analysis 9. Master the Product-Mix
Pricing10. Emphasize Packaging
Summary: Top 10 Concepts of Product Strategy
To Market the Products Effectively:
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TOP 10 LEARNING CONCEPTS
Ch. 12: Setting Product Strategy
Windell de Vera
May 11, 2012