Assignment 1 marketing management

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12
Setting Product Strategy

Chapter Questions

What are the characteristics of products and how do marketers classify products?
How can companies differentiate products?
Why is product design important and what factors affect a good design?

Chapter Questions

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?

What is a Product?

A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

Figure 12.1 Components of the
Market Offering

Figure 12.2 Five Product Levels

Product Classification Schemes

Durability

Tangibility

Use

Durability and Tangibility

Nondurable goods

Durable goods

Services

Consumer Goods Classification

Convenience

Shopping

Specialty

Unsought

Industrial Goods Classification

Materials and parts
Raw materials
Farm products
Natural products
Manufactured materials and parts.
Component materials
Component parts
Capital items
Installations
Buildings and heavy equipment
Equipment
Portable factory equipment, tools, office equipment
Supplies/business services

Product Differentiation

Product form
Features
Customization
Performance
Conformance

Durability
Reliability
Repairability
Style

Service Differentiation

Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns

Design

The Product Hierarchy

Product Systems and Mixes

Figure 12.3 Product-Item Contributions to a Product Line’s Total Sales and Profits

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BCG Matrix

STARS

CASH COWS

QUESTION MARKS

DOGS

RELATIVE MARKET SHARE

MARKET GROWTH RATE

Products with high growth and high market share. Require significant investment to maintain market leadership. e.g. Apple AirPods

Not known yet whether the product will become a star or a dog. May require a lot of investment to become a star. e.g. Apple HomePod

Mature, well-established products. Not much new investment is required. Just keep milking the product! e.g. Apple iPad

Products that don’t generate much ROI and just waste money. Best to remove the product. e.g. Apple iPod Shuffle

High

Low

High

Figure 12.4 Product Map for a Paper-Product Line

Line Stretching

Down-Market Stretch

Up-Market Stretch

Two-Way Stretch

Product-Mix Pricing

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

Ingredient Branding

What is the Fifth P?

Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product.

Factors Contributing to the
Emphasis on Packaging

Self-service
Consumer affluence
Company/brand image
Innovation opportunity

Packaging Objectives

Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at-home storage
Aid product consumption

Functions of Labels

For Review

What are the characteristics of products and how do marketers classify products?
How can companies differentiate products?
Why is product design important and what factors affect a good design?

Also For Review

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?