By: Prof.Shilpa Chadichal

Product and Price

Out line

Product and Product MixProduct Line, Levels of productProduct life cycle StrategiesNew Product development Branding, Types of brands, Brand BuildingMeasuring Brand equityPackaging and labelingPricing , pricing approaches, new product

pricing strategiesPublic policy and pricing

Product Physical Goods Ideas Services Organizations Persons Places

Product

Anything that can be offered to a market to satisfy a want or need

– Philip Kotler

Product Items, Lines, and Mixes

Product ItemProduct Item

Product LineProduct Line

Product MixProduct Mix

A specific version of a product that can be designated as a

distinct offering among an organization’s products.

A specific version of a product that can be designated as a

distinct offering among an organization’s products.

A group of closely-related product items.

A group of closely-related product items.

All products that an organization sells.

All products that an organization sells.

Example - Product Item and Line

Product ItemA specific version of a product

Product LineA group of closely related product

items viewed as a unit because of marketing, technical, or end-use considerations

WholeMilk

a

SkimMilk

2%Milk

Product Mix

The sum of all the products and variants offered by an organisation.

A product mix (also called product assortment) is the set of all products and items that a particular seller offers for sale.

A company product mix has four important dimensions Width Length Depth and Consistency.

Product Mix

Width : width refers to the number of different product lines the company Carries.

Example: Procter & Gamble consisting of many product lines-

Fabric care, Hair care, Baby care.

Product Mix

Length Product mix : length refer to the total number of items the Company carries within its products lines.

Procter & Gamble typically carries many brands with in each lines, for example, it sells- Hair care: Pantene Pro V Head & Shoulders Rejoice

Product Mix

Depth Product mix : depth refer to the number of versions, offered of each product in the line.

Procter & gamble’s detergents Tide and Ariel and further Ariel has two Two Fragrances – Ariel Spring Clean & Ariel Fresh Clean.

Product Mix

Consistency of product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. Suppose a company is selling toothpaste, mouthwashes,

gargles etc.. then the product lines are said to be consistent. Since all these are useful to the same set of people, and require a similar distribution chain.

On the other hand if the company sells, say, wrist watches, refrigerators, detergents etc... the supply chain for these differs, and the products are said not to have consistency.

Product Mix Width and Depth Applied to . Procter & Gamble Products

Fabric Care Hair Care Baby Care

Ariel Front-O-Mat (1993)Ariel 2 Fragrances Tide Detergent(2000)Tide Bar(2004)

Pantene Pro V(1995)Head & Shoulders(1997) Rejoice(2004)

Pampers (2003)

Width

dept

h

Product Life Cycle

Product Life CycleThe progression of a

product through four stages: introduction, growth, maturity, and decline

The Four Stages of the Product Life Cycle

Product Life Cycle Introduction

The initial stage of a product’s life cycle—its first appearance in the marketplace—when sales start at zero and profits are negative

Why new products fail Lack of resources, knowledge, and marketing

skills to successfully launch the product High pricing to recoup research and

development costs

Product life Cycle Introduction and the Pioneer Advantage:

The initial stage of a product’s life cycle—its first appearance in the marketplace—when sales start at zero and profits are negative or low, and promotional expenditures are at their highest ratio to sales because of the need to:

Inform potential consumers Induce product trialSecure distribution in retail outlets

The Pioneer Advantage-Example

The Pioneer Advantage-Example WIKIPEDIA.ORG Launched in Jan 2001, the collaborative internet

encyclopedia Wikipedia has ridden its pioneer advantage to become as familiar as eBay and Google.

Its 5 million pages of content are created entirely by volunteers and are available, free, to users in 250 languages.

It might seem that no other Internet encyclopedia could hope to eclipse Wikipedia's reach and brand equity at this point.

Long-Range Product Market Expansion Strategy

Product Life Cycle Growth

The stage of a product’s life cycle when sales rise rapidly and profits reach a peak and then start to decline More competitors enter the market Product pricing is aggressive Brand loyalty becomes important Gaps in market coverage are filled Promotion expenditures moderate Production efficiencies lower costs

Marketing strategies It improves product quality and adds new

product features and improved styling. It adds new models. It enters new market segments. It increase its distribution coverage and enters

new distribution channels. It shifts from product-awareness advertising to

product –preference advertising. These market –expansion strategies strengthen the

firm’s competitive position . Example :How Yahoo! Has fueled growth.

Example –Emami Fair and handsome fairness cream

The men’s cosmetic market in south Asia in general and men’s fairness (skin-lightening) cream market in India in particular is at this stage of product life cycle.

With the changing attitude of men toward what is considered as “good looks”, the men’s cosmetic market in south Asia is currently in a growth phase. Market research indicated that many men use fairness creams targeted for women, led by HUL’s Fair & Lovely.

Emami launched the Fair and Handsome brand of men’s fairness cream in India in2005.

Product Life Cycle Maturity

The stage of a product’s life cycle when the sales curve peaks and starts to decline and profits continue to fall Intense competition Emphasis on improvements and differences in

competitors’ products Weaker competitors lose interest and exit the

market Advertising and dealer-oriented promotions

predominate Distribution sometimes expands to the global

market

Marketing Product Modifications

Quality improvements

Feature improvements

Style improvements

Product Life Cycle Decline

The stage of a product’s life cycle when sales fall rapidly Pruning items from the product line Cutting promotion expenditures Eliminating marginal distributors Planning to phase out the product

Strategic choices Harvesting the product’s remaining

value Divesting the product when losses are

sustained and a return to profitability is unlikely

A Product in Decline

Marketing strategies In handling aging products, a company faces a

number of tasks and decisions. The first task is to establish a systems for

identifying weak product. Companies focuses on R&D Unfortunately, most companies have not developed

a policy for handling aging products.

Advertising Objectives

Informative advertising

Reminderadvertising

Reinforcementadvertising

Persuasiveadvertising

Maruti Suzuki Corporate Commercial.flv

Product Modification Product Modification is an attempt by

companies to extend the length of the Product Life Cycle by making small, or big changed to a product to keep customers interested in the product, or cause them to buy accessory items to keep the product popular.

Product Differentiation

Product form Features Customization Performance Conformance Durability Reliability Repairability Style

Product differentiation

Form :Many products can be differentiated in form- the size, shape, or physical structure of a product.

Example: Doy Soap

Product differentiation

Features: Most products can be offered with varying

features that supplement their basic function. A company can identify and select

appropriate new features by surveying recent buyers and then calculating customer value versus company cost for each potential feature.

Example: Auto companies often manufacture cars at several “trim level”.

Product differentiation

Customization: Marketers can differentiate products by

making then customized to an individual. Mass customizations is the ability of a

company to meet each customer’s requirements-to prepare on a mass basis individually designed products and services programs and communications.Example: Levi’s and Lands End were among

the first clothing manufacturers to introduce custom jeans.

Product differentiation

Performance quality : Most products are established at one of

four performance levels :Low, average, high or superior.

Performance quality is the level at which the product’s primary characteristics operate.Example: From 2003-2006, Mercedes-Benz

suffered a 72% of drop in sales for 1,000 errors found in the new S-Class.

Product differentiation

Conformance Quality: Buyers expect products to have a high

conformance quality, which is the degree to which all the produced units are identical and meet the promised specifications.Example: suppose a Porsche 911 is designed to

accelerate to 60 miles per hour within 10 seconds. If every Porsche 911coming off the assembly line does this, the model is said to have high conformance.

Product differentiation

Durability : Durability, a measures of the product’s expected operating life under natural or stressful conditions, is a valued attribute for certain products.

Example: Duracell advertise itself as a long lasting

battery and the brand commands a premium price.(video).

Nokia phones are also known for their durability.

Product differentiation

Reliability : Buyers normally will pay a premium for

more reliable products. Reliability is measure of the profitability

that a product will not malfunction or fall within a specified time period.Example: “Toyota” describes how that

company has excelled at making and selling high-quality, dependable automobiles. (video)

Product differentiation

Repairability : Repairability is a measure of the ease of fixing

a product when it malfunctions or fails. Ideal repairability would exists if users could fix

the product themselves with little cost in money or time.

Some products include a diagnostic feature that allows service people to correct a problem over the telephone or advise the user how to correct it. Example :Many computer hardware and software companies

offers technical support over the Phone, by fax or e-mail.

Product differentiation

Style: Style describes the product’s look and feel to

the buyers. Example : Car buyers pay a premium for

Jaguars because of extraordinary looks. Apple computers.

Ginger Hotels has carved a

profitable niche

through its innovative

service configuratio

n

Personnel Differentiation: Singapore Airlines

Image Differentiation

What is New Product? A Product that opens an entirely a new

market. A Product that adopts or replaces the

existing product. A old Product introduced in a new

market. A Product which is new to a company.

New product development Process

New product development (NPD) is the term used to describe the complete process of bringing a new product or service to market.

New product development is a process which is designed to develop, test and consider the viability of the products which are new to a market in order to ensure growth or survival of the organization.

New Product Development Process-stages

INTRODUCTION :- Gujrat Co-operative Milk Marketing

Federation Ltd which owns amul brand to give boost to its ice cream business with the launch of two innovative ice cream . The new product AMUL PROLIFE PROBIOTIC WELLNESS ICE CREAM

NEED OF NPDP

Rapidly changing health scenario and awareness among the people, & business environment:

future trends in consumer tastes and preferences .

Health conscious people .Market conditions.

1. Idea Generation In a function a small group of people

( over weighted , diabetes patients ) avoiding to have ice cream inspite of request made by their kids.

GCMMF observed this & conducted a survey for sugar free low fat ice cream.

The idea worth considering?)-------yes

2. Idea screening -Is the product idea will be successful

. -Yes The large number of people suffering

from diabetes & obesity. The company is already running

business of milk product & ice cream .

The cost of machinery & labour can be minimize .

The company segmented probiotic culture calorie conscious consumers .

3. Concept development and Testing

Can we have a good tasty, low fat, less calories ice cream , consumers say that they would like to taste .

Yes The idea is good, There will be a

revolution in the ice cream business. Can People afford. yes . They would definitely try for taste .

4. Marketing Strategy development

Can we find a cost effective, affordable marketing strategy?

Yes . GCMMF company is already running business of milk product & ice cream .

Existing labour & machinery will do the needful .

No extra manpower & outlet required for new product .

Selective Specialization Product Specialization Market Specialization Full Market Coverage

5. Business analysis

Will this product meet our profit goal?

Yes. Because there is a huge market in

India . More than sixty million people over

the world suffering from diabetes & obesity.

6. Product Development

Have we got a commercially sound product.

Yes. The product contains 50% less fat

than NML ice cream . The sugar free range was

supplemented with probiotic culture to aid digestion & health improvement .

7. Market Testing

Have product sales meet the expectations.

YES. A group of people at whom the

organization specially intends to aim its marketing efforts.

The company first tested in Bombay, Bangalore

and some parts of Gujarat, before going in full-scale production and marketing

8. Commercialization

Are product sales meeting expectations.

Yes . The product became popular among

calories conscious consumer , diabetic patient low- calorie sweeteners & over weighted people.

Grouping buyers into different category having common desire or needs.

The company received several awards for these product innovation

Product Modification Product Modification is an attempt by

companies to extend the length of the Product Life Cycle by making small, or big changed to a product to keep customers interested in the product, or cause them to buy accessory items to keep the product popular.

Brand extension

Companies resort to brand extension for greater market coverage.

Brand extension is the practice of extending an existing band name across a range of products.

Brand A product is a physical entity that lives in

the real world. A brand is a perceptual entity that lives in

the consumer’s mind. Brands are drivers of competitive edge. A successful brand is a name, symbol,

design or some combination, which identifies the “product” of a particular organization as having a sustainable differential advantage.

Branding A brand is a complex symbol that can

convey up to six levels of meaning: Attributes: A brand brings to mind certain

attributes. Example : Mercedes suggests expensive , well

built, well-engineered, durable, high-prestige automobiles.

Benefits: Attributes must be translated into functional and emotional benefits. The attribute “durable” could translate into the functional benefit.

Branding

Values: The brand also says something about the producer’s values. Example: Mercedes stands for high

performance, safety, and prestige. Culture: The brand may represent a

certain culture. Example: The Mercedes represents German

culture: organized, efficient, high quality.

Branding

Personality : The brand can project a certain personality . Example : Mercedes may suggest a no-

nonsense boss (person), a reigning lion (animal).

User : The brand suggests the kind of consumer who buys or uses the product. Example : we would expect to see a 55 year-

old top executive behind the wheel of a Mercedes, not a 20- year-old secretary.

Branding Decisions• Brand

• No Brand

• Repositioning• No repositioning

• Manufacturer brand• Distributors brand

• Licensed brand

• Individual names• Blanket family

name

• Line extensions• Brand extensions

• Multi brands• New brands• Co brands

Branding Decision

Brand-Sponsor decision

Brand –Name Decision

Brand-Strategy decision

Brand-Repositioning decision

Branding Decisions

Branding Decision : To brand or Not to Brand? The first decision is whether to develop a

brand name for a product. Why do sellers brand their products when

doing so clearly involves costs?

Branding Decisions Branding gives the seller several

advantages : The brand name makes it easier for the seller to

process orders and track down problems. The seller’s brand name and trademark provides

legal protection of unique product features. Branding gives the seller the opportunity to attract

a loyal and profitable set of customers. Brand loyalty gives sellers some protection from competition.

Branding helps the seller segment markets. Consumer want brand names to help them

identify quality difference and shop more efficiently.

Brand –Sponsor Decision

Brand Sponsor Decision

Manufacturer brand Distributor brand

• A company has several options with respect to brand sponsorship.• The product may be launched as a manufacture brand or as a distributor

brand.

Brand –Name decision Manufacturers and service companies who

brand their products must choose which brand names to Use.

Four strategies: Individual names: A major advantage of an

individual-names strategy is that the company does not tie its reputation to the product’s.

If the product fails or appear to have low quality, the company’s name or image is not hurt. Example: seiko, can introduce a lower-quality line of watches

called pulsar without diluting the seiko name. Titan _sonata watches

Brand –Name decision

Blanket family names: A blanket family name also has advantages.

Development cost is less because there is no need for “name” research or heavy advertising expenditures to create brand-name recognition.

Furthermore, sales of new products are likely to be strong Example: Tata Group-steel, automobiles,

information technology, communication, power, tea and hospitality.

Brand –Name decision Separate family names for all products:

where a company produces quite different products, it is not desirable to use one Blanket family name.

Example: Raymond- Park Avenue- for professionals of today. Parx is a 'premium casual lifestyle‘. ColorPlus is one of India's premium and most

respected casual wear. Zapp! -The burgeoning children's wear market

Brand Strategy Decision

Brand Strategy will vary with whether the brand is a functional brand, image brand or an experiential brand.

1. Consumers buy a functional brand to satisfy a functional need such as to shave, to clean clothes or to relieve a headache.

Hence Functional Brands rely heavily on “product” and or “price” features.

Brand Strategy decision

Brand strategy will vary with whether the brand is a : Functional brands : consumers purchase a

functional brand to satisfy a functional need such as to shave, to clean clothes, to relieve a headache.

Functional brands rely heavily on product and or price features.

Example –Tide, Gillette Shave Care

Brand Strategy Decision

2. Image Brands arise with products or services that are difficult to differentiate or to assess quality, or convey a statement about the user.

Strategies include creating a distinctive design, associating them with celebrity users or creating a powerful advertising image.

Also Image brands include B2B products such as Intel.

Hence these brands rely heavily on “advertising creativity” and “high advertising expenditures”.

Brand Strategy decision

Image brands arise with products or services that are difficult to differentiate, or to assess quality, or convey a statement about the user.

Strategies include creating a distinctive design, associating them with celebrity users.

Raymond, Hyundai Santro. Experiential brands involves the

consumer beyond simply beyond simply acquiring the product.

Example –Coffee day.

Brand Strategy Decision

3. Experiential brands involve the consumer beyond simply acquiring the product.

Consumers encounter People and Place with these brands ….like CCD, Theme Parks, Spas etc.

Line Extension:- Line extension consist of introducing additional items in the same product category and the same brand name ,such as New Flavors , Forms , Colors , Added Ingredients and Package Size

Brand ExtensionsA company may use its existing brand name to launch new products in other categories.

Multi Brand StrategyA company will often introduce additional brands in the same product category. Eg HUL Soaps

New Brand Strategy- When a company launches product in new category , it may find that none of its current brand name

are appropriate

Co- Branding Strategy- When two or more well known brands combined in an offer

Joint Venture Co BrandingExample:-Sony Ericsson

Umbrella Branding Strategy

An umbrella brand is an overarching brand used across multiple related products.

Umbrella branding facilitates new product introductions by providing by evoking a familiar brand name, which can lead to trial purchase, product acceptance, or other advantages.

Umbrella branding may impose on the brand owner a greater burden to maintain consistent quality. If the quality of one product in the brand family is compromised, it could impact on the reputation of all the others. For this reason umbrella branding is generally limited to product lines that consist of products of similar quality.

Brand Repositioning

A company will occasionally discover that it may have to reposition the brand because of changing customer preferences or new competitors.

Example-Fiat Palio

Branding

Creates and communicates a three dimensional character of a product that is not easily duplicated by competitors.

Benefits of branding

Figure 7.4

Product Classification

Product

Durability And

Tangibility

Consumer good

classification

Industrial goods

classification

Durability and Tangibility

Nondurable

goods

ServicesDurable

goods

Durability and Tangibility

Durability – Durable goods are tangible goods that survive many uses. Ex: Refrigerators, Machine tools, Clothing

Services – Services are intangible, inseparable, variable and perishable products. Ex: Haircuts, Repairs

Non Durable goods – Non Durable goods are tangible goods that are consumed in one or a few uses. Ex: Soaps, Detergents, Toothpaste

Consumer Goods Classification

Convenience

Unsought

Shopping

Specialty

Consumer Goods Classification Convenience goods : are those the customer

usually purchase frequently, immediately, and with a minimum of efforts Example : soaps, toothpaste, newspaper etc.

Shopping goods: are goods that the customer, in the process of selection an purchase, characteristically compares on such bases as suitability, quality, price, an style. Example : furniture, used cars, major appliances.

Consumer Goods Classification

Specialty goods : have unique characteristics or brand identification for which a sufficient number of buyers is willing to make a special purchasing effort. Example: Cars, Photographic equipment

etc. Unsought goods : are those the consumer

does not know about or does not normally think of buying. Example : smoke detectors, life insurance etc.

Unsought goods require advertising and personal-selling support.

Industrial Goods Classification

Materials and parts

Supplies/

business servicesCapital items

Industrial Goods Classification

Material and parts : are goods can be classified in terms of how they enter the production process. Example Raw materials.

Capital items : are long-lasting goods that facilitate developing or managing the finished product. Example : generators, elevators etc.

Supplies and business services: are short-lasting goods an services that facilitate developing or managing the finished product. Example :paint, lubricants, coal. Example for business services : legal,

management consulting etc.

Listening to Radio

Internet Connectio

ns

Cafeterias

Counseling

Services

Home Delivery Service

Laundry Service

Placement

Service

Photocopying

Service

Traveling Service

Courier Service

Getting a Hair – Cut

Talking on

Telephone

Classification of Services1.The Degree of Tangibility of Services

Restaurant Services V/S Consultant Services2.Whether the Service is Directed to the Customer or

His Possessionhaircut or hotel check – in v/s car or TV repair

3.The Time & Place of Service DeliveryPest control has to be on site, but software services can be provided via internet in any location

4.Level of Customization V/S StandardizationSome services are more customized like lawyers, doctors. On the other hand few services are standardized like a computer course, Mc Donald’s menu etc.

Classification of Services5.Formal or Informal Relationship with Customers

Clubs require formal membership whereas Disneyworld, or a movie theatre only requires people to buy a ticket

6.Extent to which Demand & Supply FluctuateSome services have steady demand – example a downtown restaurant and some services have highly fluctuating demand on the basis of time of the day, season etc.

7.Interaction with People or Inanimate objects/EnvironmentSome transactions could be done on phone while others require physical presence like taking a flight

Questions

What is new product? Explain the various stages in its development.-10mks

Explain the classification of product and services.

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