Chapter 12-Final Setting Product Category

8/3/2019 Chapter 12-Final Setting Product Category

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Chapter 12



Product characteristics and

Classifications Product can be anything; Goods, event, person,

properties, organization and idea.

1. Product Level: It is the customer value hierarchy PotentialProduct

AugmentedProduct

ExpectedProduct

BasicProduct

CoreBenefit



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

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

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

iv. Augmented Product: The product that exceeds customerexpectations.

v. Potential Product: Which encompasses all the possibleaugmentation and transformation the product or offeringmight undergo in future.

Each augmentation adds cost but becomes expected and necessary

point of parity.



2. Product Classification

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

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

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

iii. Services: These are intangible goods, inseparable, variable, perishable in nature. Require more quality control, suppliers credibility and adaptability e.g. haircut, legal advice etc



b. Consumer Good Classification

i. Convenience Goods: Frequently purchased, bought withminimum effort and further divided into Staple products i.e.regular buy, Impulse that is without buying plan andEmergence buying that is urgently needed.

ii. Shopping Goods: Comparison required on suitability

quality, price etc and further divided into Homogenousshopping goods that is similar quality but different price andHeterogeneous shopping goods that has different productfeatures and services.

iii. Specialty Goods: A special effort is required 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, lifeinsurance, encyclopedia etc.



c. Industrial Goods Classifications

i. Materials and Parts: The goods that enter intomanufacturers product completely further classified as RawMaterials, that is farm products and natural products andManufactured Materials and parts further classified asComponent 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 productsfurther classified as Installations e.g. building, heavy equipment etc and Portable Factory Equipment e.g. handtools, fork lifting trucks etc.

iii. Suppliers and Business Services: Further classified asMaintenance and repair items e.g. paint, nails, rooms etc.Operational supplies is lubricants, pencil etc and Businessservices that is AC Maintenance, legal Advisory etc.



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

vi. Durability: Product expected operation under natural orstressful 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 itmalfunctions.

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

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



2. Service Differentiation

If physically it is difficult to differentiate adding value servicesand 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 itsplanned location that is ease of installment.



iv) Customer Training: Training the customers employee touse vendor equipment properly.

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

vi) Maintenance and Repair: Helping customers to keepproduct in good working relation.

vii) Returns: Accepting back the sold things.



Product Brand Relationship1. Product Hierarchy: Six Levels

• The core need that underlies the existence of product family.1. Need Family

• These are the substitutes.

2. Product Family

• That is a product category.

3. Product Class

• Closely related products having same price, features,

distributions etc.

4. Product Line

• A group of items within a product line.

5. Product Type

• Also called as stock keeping unit or product variant.

6. Item



2. Product System and Mixes:

Product system is a group of diverse but related items that functions in acompatible manner. Product mix is set of all product items a particularseller offers for sale. The product width is existence of different product

lines. The product length is total items in a mix. Product depth is variantin a line. And consistency is relation of various products to a user.

Product Mix Width

Home and Personal Care Foods

Product – LineLength

Personal Wash

Laundr y

SkinCare

HairCare

OralCare

Deodorants

AyurvedicPersonal &HealthCare

ColorCosmetics

Tea Coffee Foods IceCream

Lux Surf Excel

Fairand

Lovely

Sunsilk Pepsodent

Axe Ayush Lakme BrookeBond

BrookeBond

Bru

Kissan Kwailty

Lifebuo y

Rin Ponds Clinic Close – up

Rexona Lipton Knorr Wall`s

Liril Wheel Vaseline

Annapurna

Hamam

Dove



3. Product Line Analysis

Company provide a basic platform that can be added tomeet different customer requirement ( a modularapproach). There are different margins of profit and

variation in sales in different product. The product linemanager must review how the line is positioned againstdifferent 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 projectsagainst economic ups and down or sell excess capacity.



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 endcompetitors 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, satisfiesdealers and utilize excess capacity but it should satisfy the market

need.

iii) Line Modernization, Featuring and Pruning:Continuous modernization with due consideration 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 thatmaximize 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. razors, cameras etc on low prices andset high mark ups on razor blades and films.iv) Two Part Pricing:Service firm, a fix fee plus a variable usage fee e.g. amusementpark admission fee plus fee for rides.



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.



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 andmarketed together. Advantages include convincingly position,greater sales and reduced cost of product introduction where as

disadvantages include lack of control in alignment in the mindof 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 apreference so customers do not buy the host product withoutthem.



Packaging Labeling Warranties and

GuaranteesPackaging 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.



Labeling: It can be a simple tag or elaborated design graphic that is

part of package.

Function: Identify the product

Grade the product

Describe the product Promote the product



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.

Chapter 12-Final Setting Product Category

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