By- Prof.

Swati Singh

 Anything that can be offered to the market. Product = Goods / Services Tangible/ Intangible or Tangible + Intangible It is the basis offering around which other Marketing

strategies revolve. Eg. Pricing, Promotion, Place etc.

 Products are almost always combinations of the

tangible and intangible. The entire package is sometimes referred to as the augmented product.
The mix of tangibles and intangibles in the

augmented product varies from one product or service to another.

 Product is a key element in the market offering.

Marketing mix planning begins with formulating an offering to meet target customers needs and wants. The customer will judge the offering by three basic elements : product features and quality, services mix and quality, and price appropriateness

 In planning its market offering, the marketer

needs to think through five levels of the product. Each level adds more customer value, and the five constitute a customer value hierarchy. ( Contd. )

(5) Potential Product

(1) Core Benefit (2) Basic Product

(4) Augmented Product

(3) Expected Product

 (1) Core Product / Core Benefit : The

fundamental service or benefit that the customer is really buying. (2) Basic Product : At the same level, the marketer has to turn the core benefit into a basic product. (3) Expected Product : A set of attributes and conditions buyers normally expect when they purchase this product.

 (4) Augmented Product : The marketer prepares an

augmented product that exceeds customer expectations. Todays competition essentially takes place at the product-augmentation level. ( In less developed countries, competition takes place mostly at the expected product level ). ( Contd... )

( Augmented Product ) According to Levitt : The new competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.

Some things should be noted about productaugmentation strategy : First, each augmentation adds cost. The marketer has to ask whether customers will pay enough to cover the extra cost. Second, augmented benefits soon become expected benefits. For gaining competitive advantage one will have to search for still other features and benefits.

( product-augmentation strategy ) Third, as companies raise the price of their augmented product, some competitors can offer a Stripped-down version at a much lower price. Thus alongside the growth of fine products we see the emergence of lower-cost products for the clients who simply want the basic product. Ex ; MP3 in Chinese Mobile

(5) Potential Product : encompasses all the

possible augmentations and transformations the product might undergo in the future. Companies search for new ways to satisfy customers and distinguish their offer. ( Successful Companies add benefits to their offering that not only satisfy customers but also surprise and delight them. ) The best way to hold customers is to constantly figure out how to give them more for less. Gitanjalis Gold Coin & Jewelry by vending Machine.

 A product mix (also called product assortment) is the

set of all products and items that a particular seller offers for sale. A total group of products that an organization markets. A companys product mix has a certain width, length, depth and consistency.

 A product line is a group of products that are closely

related, because they perform a similar function, are sold to the same customer groups, are marketed through the same channels or fall within the given price ranges. The product mix may be composed of several product lines. For eg. Soap, Shampoo, Detergents are different Product Lines of HUL For Eg. Mobile, Home Appliances, TV Audio- video, Camera & Camcorders, PC Peripherals & Printers.

 The width of companys (say HULs) product mix refers

to how many different product lines the company carries, such as bathing soap, detergents, shampoos,

toothpaste, food products.

for Samsung it is: 7

 The length of a companys product mix refers to the total

number of items in its product mix. Thus in each of the product line HUL has a number of product items. Eg., in the product line of bathing soaps, HUL has several product items like Lux, Liril, Lifebuoy, Pears. For foods it has Knorr, Annapurna, Kisan . Length will be the sum of all items present under different lines.
For Samsung , in case of mobile phones they have different

items, eg. Qwerty, Smart Phones, Touch Phone, Dual Sim etc. For Home appliance they have Refrigerator, Microwave oven etc. Product Mix length would actually be the sum of all items available under different Product lines.

 The depth of a companys product mix refers to how many

variants are offered of each product in the line. Thus if close up toothpaste comes in three formulations and in three sizes, Close up has a depth of nine (3x3). The average depth

of HUL product mix can be calculated by averaging the

number of variants within the brand groups.
In case of Samsung : Product line depth would actually be

the sum of all models available under different categories. For eg. At present Samsung offers 15 variants under Smartphone category.

 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. HULs product lines are consistent insofar as they are consumer goods that go through the same distribution channels. Samsung Product Lines are found consistent as they go through same distribution channel and also use same type of materials to large extent for production.

These four dimensions of the product mix

provide the handles for defining the companys product strategy. The company can expand its business in four ways. 1. The Co. can add new product lines, thus widening its product mix. 2. The Co. can lengthen each product line. 3. The Co. can add more product variants to each product and deepen its product mix. 4. The Co. can pursue more product-line consistency or less, depending upon whether it wants to acquire a strong reputation in a single field or participate in several fields.

 Idea Generation and Screening Concept Development and Testing

Marketing Strategy
Business Analysis Product Development

Test Marketing
Commercialization

 The Major Product Line Decision involves the decision

related to PRODUCT LINE LENGTH

Product Line Length : Is the no. of items in the product

line.
The Co. has the option of increasing the length by adding

new items, or decrease the length by dropping items.

When a Co. adds new item to the existing Product line, it

can go for two strategies Line Stretching or Line Filling.

 Line stretching occurs when Co. adds items beyond existing

range. For eg. If a Co. is offering a Product which caters to

Lower income segment it may stretch its line by adding a

new item which may cater Middle or high income group.
A Co. can go for Upward Stretching ie. Entering and

reaching high-end market from lower- end market with distinct items(Continues to exist in Low-end). For eg. Tata Motors added TATA-Aria as a luxury car. Samsung did upward stretching of Mobile Product line by launching

Galaxy range.

 Downward Stretching : Launching new items for low-end

market. For Eg. Sampoorna T.V launched for rural markets by L.G Electronics in India. Tata Motors launched Tata Nano. Wheel by HUL.
Two- Way Stretching : Launching items for both high- end

as well as low- end market. Eg. Titan launched Xylus, Nebula, Edge for High-end market. For economy and low end market it launched Sonata range of watches.

 Line Filling : Adding more items within present range of line.

For eg. HUL launched Lux Shampoos for its existing middle- end shampoo market for Its hair care product line. Other brands present in this line were Sunsilk and Clinic Plus. However later it was positioned as low-end product for rural India, positioned mainly on price.
The major threat is of self cannibalization. Eg. Nokia

The phenomenon very prominent in Electronic Goods.

To avoid such a situation JND( Just noticeable Difference) should

be highlighted.

 Different Brands with Perceivable difference for Different

Consumers: NAKSHATRA is one of Indias most reputed diamond jewellery brands : High End SANGINI Jewellery is based on the Twist and Turns, signifying the ups and downs encountered in a growing relationship, eventually resulting in a strong special bond : Couples. GILI : leads the Indian market in casual-wear jewellery today, it shifted the paradigm "from occasional need...to a need for every occasion ASMI : Jewellery has a contemporary delicate and feminine look that is distinctly evocative of strength & grace. In brief Asmi is for the woman of spirit.

New Product Development Process

Step 1. Idea Generation

Systematic Search for New Product Ideas Internal sources Customers Competitors Distributors Suppliers

New Product Development Process

Step 2. Idea Screening

Process to spot good ideas and drop poor ones

Criteria Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return

New Product Development Process

Step 3. Concept Development & Testing
1. Develop Product Ideas into Alternative Product Concepts

2. Concept Testing - Test the Product Concepts with Groups of Target Customers

3. Choose the Best One

New Product Development Process

Step 4. Marketing Strategy Development

Marketing Strategy Statement Formulation

Part One - Overall: Target Market Planned Product Positioning Sales & Profit Goals Market Share

Part Two - Short-Term: Products Planned Price Distribution Marketing Budget

Part Three - Long-Term: Sales & Profit Goals Marketing Mix Strategy

New Product Development Process

Step 5. Business Analysis Step 6. Product Development

Business Analysis
Review of Product Sales, Costs, and Profits Projections to See if They Meet Company Objectives

If No, Eliminate Product Concept

If Yes, Move to Product Development

New Product Development Process

Step 7. Test Marketing

Standard Test Market

Full marketing campaign in a small number of representative cities.

Controlled Test Market

A few stores that have agreed to carry new products for a fee.

Simulated Test Market

Test in a simulated shopping environment to a sample of consumers.

Sales and Profits ($) Sales

Profits Time Product Development Losses/ Investments ($) Introduction Growth Maturity Decline

Sales
Costs Profits
Marketing Objectives

Low sales
High cost per customer

Negative Create product awareness and trial

Product Price Distribution Advertising

Offer a basic product

Use cost-plus

Build selective Distribution

Build product awareness among early adopters and dealers

Growth Stage of the PLC

Sales Costs Profits

Marketing Objectives

Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty

Product Price Distribution Advertising

Price to penetrate market

Build intensive distribution Build awareness and interest in the mass market

Maturity Stage of the PLC

Sales Costs Profits

Marketing Objectives

Peak Sales/Leveling sales Low cost per customer High Profits/Leveling profits Maximize profit while defending market share Diversify brand and models

Product Price Distribution Advertising

Price to match or best competitors

Build more intensive distribution Stress brand differences and benefits

Decline Stage of the PLC

Sales Costs Profits

Marketing Objectives

Declining sales
Low cost per customer Declining profits

Reduce expenditure and milk the brand Phase out weak items

Product Price Distribution Advertising

Cut price
Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers

 American Management Association defines

brand as follows : A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors.
Must Read : The 22 Immutable Laws of

Branding Al Reis & Laura Reis.

 Assets for the companies.

In case of successful Brands, Brand value is

more than the value of Land and Plant. They represent Consumer Perception and feeling about the product. They give opportunity to charge Premium.

The Important Branding Decisions are : 1. Brand Positioning 2. Brand Name Selection 3. Brand Sponsorship 4. Brand Development

Brand Positioning

The Brand can be positioned on the basis of

Attributes : Detergent Powder (Washing Clothes) : Fena , Ghari Detergent. b) Benefits : Brighter Clothes. : Tide c) Beliefs and Values / Intangibles Daag Achhe Hain (Stains Are Good, If they build Relationship Surf Excel), Ariel : The Chef & the mother ad. Ariel is Positioned as the trust of the mother who knows that she would be able to remove all stains from her sons apron.
a)

Brand Name Selection : Following Important Things should be kept in mind : . Name Should Suggest the benefit the brand is Providing Barista, Madame. b. Easy to Pronounce Parle-G , Surf, Nokia, Idea. v/s Chevrolet, Alpenleibe. c. Distinctive Oreo, Neutrogena. d. Extendable Lux, Cello, Amazon. e. Should Not have Bad Meaning in Different Languages Eg. Ford Had a problem in Promotion of Fierra in Spain because Fierra means Ugly and Cruel in Spanish.

Individual Names Each Product is given Independent Brand Name HUL Dove, Sunsilk, Lux and Clinic Plus ( Corporate Branding becomes difficult) Blanket Family Names Here different groups of related products of a company are marketed under one Brand Name eg. Knorr (HUL) : Soups, Noodles, Chinese Meal Maker Range ( Manchurian, Schazwan Paneer), Indian Meal Maker (Matar Paneer, Paneer Butter Masal etc.) Company Trade : name combined with individual product names. Samsung, Sony, Cadbury, Philips.

Brand Sponsorship How a Brand is Launched and

Managed A Product could be launched as a Manufacturers Brand eg. Philips, Amul, Bajaj etc Few Manufacturers sell their Products to Resellers who give it a private brand name also called Store Brand- eg Big Bazar (Tasty Treat) Pantaloons Utsav. Some Manufacturers Market Licensed Brands. Eg- Sellers of Small Kids Item use various Licensed names to sell many Items eg- Batman, Benton, Mickey Mouse. Co- Branding Sometimes two companies Join together and use co-branding with two established brand names- Maruti- Suzuki, Idea- HDFC Bank.

 Brand Development : It may Include Four Strategies

Brand Extension: Extending A established and successful Brand Name to new Product Category eg Dove-: Shampoo, Conditioner. Fastrack :Eye Care and Bags. Saffola : Oils, Oats, Salt b. Line Extension Introduction of additional Items under same brand name in a given Product Category like new Flavours, Forms, Colors etc . Eg- Maggi Noodles : Thrilllin Curry, Tricky Tomato and Romantic Capasica. c. Multi Brands Launching Additional Brands in Same Category Nestle : Kit-kat, BarOne, Milky Bar, Munch. d. New Brands Launching new Brand for New Category eg Titan Fast Track Teenagers., Cadbury : BournevilleDark Chocolate Lovers.
a.

Brand
Existing

Name

Line Extension

Brand Extension New Brand Names

New

Multibrand

Existing

New

 Brand Equity is the Positive Differential Effect that a brand name has on consumer response towards a product / service. A measure of brand equity is the extent to which the customer is ready to pay more for the brand. Eg As compared to 15000/- for a unknown brand TV, customer would be ready to pay 25000/- for a Sony TV. With High Brand equity brand extension becomes easy eg. Coca Cola Launching Diet Coke, Tata in Telecom, Reliance in Retail.

Involves the Activities of Designing and producing the container of the product. Packaging as Marketing Tool : a. Induces Impulse Purchases b. Indicates Quality. (Parle-g, Dairy Milk) c. Consumer Affluence Ready to pay Extra for Good Packaging. (Indian Festive Season) d. Protection for the Product e. Point Of Differentiation : The Yellow Packaging of Maggi Noodles, The Unique Packaging of Heinz Ketchup

 Helps in Recall.

Packaging As a Silent Salesman

It Communicates Quality / Weight Contents Ingredients Marketers Identity Instructions to Use Price (MRP) Usage Pattern , Dosages