12Setting Product

Strategy

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Chapter Questions What are the characteristics of products and how

can they be classified? How can companies differentiate products? How can a company build and manage its

product mix and product lines? How can companies combine products to create

strong co-brands or ingredient brands? How can companies use packaging, labeling,

warranties, and guarantees as marketing tools?

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ProductAnything that can be offered to a market to

satisfy a want or need.

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Figure 12.2 Five ProductLevels

Core benefit Basic product Expected product Augmented product Potential product

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Product Classification Schemes

Durability Tangibility Use

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Durability and Tangibility

Nondurable goods Durable goods Services

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Consumer Goods Classification

Convenience Shopping Specialty Unsought

(e.g., smoke detectors)

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Industrial Goods Classification

Materials and parts Capital items Supplies/business services

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Product Differentiation

Product form Features Performance Conformance Durability Reliability Reparability

Style Design Ordering ease Delivery Installation Customer training Customer consulting Maintenance

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The Product Hierarchy Need family (e.g., security) Product family (e.g., savings and income) Product class (e.g., financial instruments) Product line (e.g., life insurance) Product type (e.g., term life insurance) Item (SKU or product variant)

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Product Systems and Mixes

Product system Product mix Product assortment

Depth Length Width Consistency

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Product Line Analysis (i.t.o. sales, profit, & market profile)

Core product Staples Specialties Convenience items

Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, and divest.

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Line Stretching

Down Market Stretch Up-Market Stretch Two-Way Stretch

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Product-Mix Pricing

Product-line pricing Optional-feature pricing Captive-product pricing Two-part pricing By-product pricing Product-bundling pricing

Ingredient Branding

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Packaging: The 5th P

All the activities of designing and producingthe container for a product.

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Branding a commodity via packaging

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Packaging has been influenced by:

Self-service Consumer affluence Company and brand image Innovation opportunity

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Functions of Labels

Identifies Grades Describes Promotes

Creative packaging designs (1)

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Shorts with Meat Patterns

Reebok Extra Grip Packaging

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Wine CanThis unusual wine packaging, designed by Jens Andersson and Jonas Forsman, has won the 2006 Swedish packaging design award.

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Milk PackagingIncredible milk packaging concept designed by Julien De Repentigny and Gabriel Lefebvre.

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Banana Guard PackagingA robust case that ensures your banana survives your travels in perfect condition.

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Resealable Soda CanCreative packaging concept that allows for a soda can to be resealed called Soda-Seal.

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Nike Stadium PackagingLimited number of Nike shoeboxes were transformed to house a stadium within by inserting a printed sheet of the stadium interior with embedded sound chips. So you could hear the crowd go wild when the box was opened.

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Anti-Theft Lunch BagsSandwich bags that have green splotches printed on both sides, making your freshly prepared lunch look spoiled. Don’t suffer the injustice of having your sandwich stolen again!

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