MODULE 4 PRODUCT DECISIONS

23.1 MANAGING THE PRODUCT

What is a Product?
Any tangible thing, having some utility, is called a PRODUCT. All the
products cater to & satisfy some needs of some people. Hence, a product
is a need satisfying entity. Marketing starts with the identification of
human needs & culminates with the satisfaction of those needs. It is by
offering something that the marketing man achieves this. And this
offering is the product. The job of marketing is to make product &
customer meet. When the product wins over the customer, it marks the
consummation of marketing.

Product Personality & Its Components

Each product has a personality. Products carry meanings with them &
project distinctive images. These meanings & images arise out of the
many components that make up the product personality.

Components of Product Personality

The core or the basic constituent
The associated features
The brand name & logo AND
The package & label

Core or the basic constituent

Mysore Sandal soap, as an ex, has the fragrance of sandal oil, the oval
shape, the sandal color, the brand name, the price, the positioning as
luxury soap; everything has gone into the product personality build-up.
The core component is the soap, the generic constituent. Other
components are superimposed on this basic constituent to develop the
total personality of Mysore Sandal soap.

Associated features
In the ex of Mysore Sandal soap, the fragrance of sandal oil, the oval
shape, the sandal color etc., are its associated features. They actively
contribute to the total product personality.
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23.2 MANAGING THE PRODUCT (CONTD)
Brand name
A brand is defined as a name, term, symbol, design or a combination of
them, which is intended to identity the goods & services of one seller & to
differentiate them from those of competitors. A trademark is a brand
that has been given legal protection, thus ensuring its use exclusively by
one seller. Trademark is a legal term, while brand is a marketing term.
In marketing, the brand name is a major selling tool & one of the most
important components of the total product personality. The intensive
brand promotion undertaken by marketers of various products has made
consumers extremely brand-conscious. The brand image, developed through
advertising & other ASPs, creates strong brand awareness & loyalty among
consumers.

Packaging & label

The package performs 2 essential roles:
(1) Giving protection to the product &
(2) Adding to its aesthetics & sales appeal.

Traditionally, packaging was intended to protect the product to

prevent deterioration en route & to facilitate handling at the various
points of distribution. The material of the packaging, the color, the
shape & size of the package, its finish, the labeling on it, the possibilities
of reuse etc., came to be utilized in building the total sales appeal of the
product. The power of good packaging in prompting on-the-spot
purchases is found to be very substantial.
Label is a part & parcel of a package. A label provides written information
about the product. Labeling helps the buyer to understand the nature of the
product, its distinctive features, its composition, its performance etc. There are
grade labels & descriptive labels. In grade labeling, product classifications are based
on standards of quality. Products are classified into A, B, C or 1, 2, 3 categories
based on quality. But, for branded products, mostly descriptive labeling is used,
furnishing detailed information about the product attributes & qualities. For
several products, statutory labeling requirements are laid down & the marketers
are bound to follow them.

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23.3 MANAGING THE PRODUCT (CONTD)

Product offer can range from generic to potential

A product has a personality consisting of several components the basic
material, associated features, brand name, the package & the labeling,
the price range, the positioning, specialty of the sale outlets, the quality
of promotion & the corporate image & prestige. A product that is
finally offered in the market is a combination of all these elements.
According to Levitt, a product offer can be conceived at 4 levels: the
generic product, the expected product, the augmented product & the
potential product.
The Generic product: Unbranded & undifferentiated commodities
(rice)
The Branded product: Identity through a name (Modern bread)
The Differentiated product: Marketer endows his brand with some
special attributes/ qualities & claims uniqueness for his offer (Maggi
Noodles)
The Customized product: Individual customization (Barbie doll)
The Augmented product: Involves voluntary improvements brought
about by the manufacturer in order to enhance the value of the product.
The firm goes beyond all expectations of the consumers. It finds out
through MR how the value of its product can be enhanced. Using the
insights so gathered, the firm augments the product by adding extra
features & functions to it (VIP Trolley).
The Potential product: Tomorrows product, carrying all the
improvements & finesse that is possible under the given technological,
economic & competitive conditions (Robots)
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23.4 MANAGING THE PRODUCT (CONTD)
Classification of Products
Product may take different forms, meet different purposes & serve
different types of buyers. And only based on these dimensions, strategies
governing the product can be formulated. In other words, the broad
entity called Product needs to be classified suitably so as to facilitate
the strategy formulation task.
Traditionally, products have been classified into consumer goods &
industrial goods, based on the usage. Products meant for direct
consumption/personal use of consumers were termed consumer goods
& those that went into manufacture of other products were termed
industrial products. Presently, a modified classification has emerged,
classifying products into consumer goods & business goods, based on
who buys the goods & for what purpose.
Consumer goods & Business goods
Consumer goods are purchased for personal/household consumption by
individual consumers. And, business goods are products purchased for
either reselling, remaking, manufacturing other products or for
consuming as utilities in the running of a business enterprise.
According to this classification, a bottle of Dettol purchased by an individual for his
personal use is a consumer product & a carton of Dettol purchased by a hospital is a
business product. The marketer will apply one strategy for selling Dettol to
individual consumer & another to sell it to the business buyer.

Classification of consumer goods

Consumer goods are divided into consumer softs, durables & services. A
can of Coke is a soft, a TV is a durable & air travel is a service.
Classification of business goods
Based on their nature of use, these have been broadly grouped into 5
categories: raw materials, fabricating materials & parts, installations,
accessories & operating supplies.
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23.5 PRODUCT MIX & PRODUCT LINE
Product mix & product line are 2 expressions denoting the range &
variety of the products of a firm. Product mix, which is the larger entity,
denotes the complete set of all products offered for sale by a firm. The
product mix is composed of several product lines. A group of closely
related products constitutes a product line.

Width of product mix: Denotes the # of product lines.

Length of product line: Decided by the # of products/brands in the line.
Depth of product line: Denotes the total # of products under each brand.

Example of HLL
(HLL has more product lines. This list is only illustrative, not exhaustive)

PRODUCT MIX WIDTH

Pdt Line 1
Bath Soaps

PR
O
D
UC
T
LI
NE
LE
N
G
TH

Dove
Liril
Pears
Rexona
Lifebuoy
Hamam
Breeze
Jai
Moti

Pdt Line 2
Fabric
Wash

Pdt Line 3
Beverages

Surf
Rin
Wheel
Sunlight
Ala
501

Pdt Line 4
Line 5, etc.

Bru
BB Red label
BB 3 Roses
Taaza
Deepam
Taj Mahal
Super dust
Ruby Dust
A1

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23. 6 PRODUCT MIX & PRODUCT LINE
Main tasks in product management
Product management means managing the various product lines & the
overall product mix of the company. Product management is also known
by the terminology, product policy.
Product management raises many issues & involves many intricate tasks
How many different product lines should the firm accommodate?
How can the different lines be grouped for effective management?
Within a product line, what should be the composition like?
What should be the relationship among the various members?
How to position these products in the market?
What is the distinction the product should be endowed with?
What should be the brand policy?
Should there be individual brands or family brands?
What should be the approach to brand extensions?
How to develop brand equity?
How to plan for new products so that in the long run the firm retains
a healthy product portfolio?
How to handle the products going through different stages of their
lifecycle?
What are the strategic treatments they require?

Main tasks in product management

Appraisal of each product line & each product/brand in the line

Decisions on packaging
Product differentiation & positioning
Managing brands & developing brand equity
New product development
Managing the PLC of product/brands
Managing product quality
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23.7 PRODUCT MIX & PRODUCT LINE
Product Line Appraisal by HLL
HLLs sales income had registered a growth of 4.5% in the calendar
year 2000. But in the first half of 2001, the growth slumped to 1.8#.
A product appraisal revealed the following trends:
Sales of FMCG products as a group grew 3.2%.
Among FMCG, skin care, hair care & home care lines performed well.
The power brands in the personal care & home care lines grew by 9%.
The Fair & Lovely relaunch & new Ponds talcum range fuelled a 30% +
growth in skin care line.
The relaunches of Sunsilk & Clinic, coupled with the introduction of value
packs in Lux, resulted in a 15% growth in shampoos.
The fabric wash line grew by 4%, with Wheel & Rin Shakti registering
strong volume gains.
While the overall sales of bath soaps declined by 2.8%, power brands in the line
have grown by 6.3%; Lux was relaunched with a superior mix & Lifebuoy
Activ introduced. Fair & Lovely soap & Pears variant also added volumes.
A successful relaunch of Pepsodent helped arrest decline in the Oral Care Line
Foods line sales declined by 7.3%; the power brands in this category saw sales
fall by 3.3%
Ice cream sales were flat due to the early onset of monsoon
In the Beverages line, tea sales fell by 15%
Coffee sales showed good growth
HLL could not wait for things to go out of control. During the first quarter of the
year itself, it had noticed the negative trends setting in & it had already initiated
control measures.
In fact, the brand rationalization programs of HLL were propelled by such trends.
Particular attention was given to enhancing the profitability of the Foods line. Here,
the overall cost of materials was brought down from Rs 1802 crore to Rs 1720 crore.
Appraisal of product lines & corrective measures were taking place concurrently.
By the end of the 3rd quarter of 2001, the already initiated rationalization & cost
control measures helped HLL improve gross margins in Foods line by about 5%.