Product Decisions

kanishgeorge@gmail.
com
PRODUCT DECISIONS
9/29/2015
Product
2
A product is anything that can offered to market for

attention, acquisition, use, consumption that might
satisfy a want or need.
A bundle of attributes, offering for use/consumption
by the final customer.
Everything the purchaser gets in exchange for his
money.
kanishgeorge@gmail.com
9/29/2015
Product Levels The Customer Value Hierarchy

3
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Core Product
4
Indicate core benefit or service

Explains what the buyer really buys
Basic step in designing products
Defines problem solving benefits/ services that
consumers seek
Standardization of technology does not lead to
much of difference from competing firms
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Basic Product
5
At this level, the core benefit is turned into a basic

product.
Unbranded, plainly packaged, less expensive
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Expected Product
6
Expected/ formal/ tangible product

Represents basic requirements, a customer finds
essential to buy a product
Attributes & conditions required by the customers
identified-built into products
Includes brand name, features, design, packaging,
quality level, styling, styling, attributes, instructions
manual
As inter-firm rivalry intensifies, differentiation on basis
of formal product ceases
Marketer searches for a possible differentiation
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Augmented product
7
Marketer prepares an augmented product that

exceeds customer expectations.
Intangible component of the product along with
formal & core components
Product built by adding consumer services &
benefits
These are added intangibles looked for when
technology fails to differentiate
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Potential product
8
Future product
Includes all possible improvements under given
technological, economical, competitive conditions
Helps to attract & retain customers
These offerings differ from one market to another
because of varying competitive conditions
Driving force- to retain competitive advantage.
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NIVEA Product Levels

9
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Product concept
10
Developed by Theodore Levitt

Product refers to augmented product or aggregate
of satisfactions that a user obtains.
Three dimensions
Managerial
Dimension
Consumer Dimension
Social Dimension
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Managerial Dimension
11
Physical attributes of a product which distinguish it

from other products
Related product features such as brand name,
package, product life cycle, safety components etc.
Related product services such as delivery,
installation, maintenance and repairs, warranty etc.
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Consumer Dimension
12
Bundle of utilities consisting of product features and

accompanying services.
Purchase to satisfy needs and expectations.
Repurchase only if satisfied.
Bundle of satisfaction of needs.
Three dimensional:
Tangible
product ( Basic/Expected)
Extended Product (Augmented)
Generic Product (Core)
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Social Dimension
13
Products should fulfil the expectation of social

welfare and social interests.
Salutary products and desirable products.
Best utilisation of available limited resources.
Safety to consumers using the product.
Long run satisfaction and welfare of consumers.
Improving the quality of consumers life.
Concern for better environment.
Durability, quality, and reasonable price.
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Product Classification
14
Durability & Tangibility
Nondurable goods
Durable goods
Services
Use
Consumer Goods
Convenience
Shopping
Specialty
Unsought
Industrial Goods
Materials and parts

Capital items
Supplies/business services
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Convenience Product
15
Bought frequently, immediately with minimum

comparison and buying effort.
Are low priced
Available in many locations
FMCG
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Shopping Product
16
Characteristically compared on the basis of

suitability, quality, price and style while selection
and purchase.
Distributed through fewer outlets.
Expend time and effort to select right product.
Durable Goods.
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Specialty Products
17
Has unique characteristics or brand identification

for which a significant group of buyer is willing to
make a special purchase effort.
People travel even long distances to buy them.
No comparison is involved in buying.
Distribution is limited.
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Unsought Product
18
Consumer either does not know about/ knows about

but does not normally think of buying it.
Require a lot of advertising, personal selling and
marketing efforts.
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Materials and Parts

19
Raw materials & parts:

Farm
products (wheat, cotton, livestock, fruits,

vegetables)
Natural products (fish, wood, crude oils, iron ore)
Manufactured materials & parts:

Component
materials (iron yarn, cement, wires)

Component parts (small motors, tires, castings)
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Capital items
20
Aid in buyers production or operations

Installations:
Major
purchases (factories, offices)

Fixed equipment (generators, elevators)
Accessory equipment:
Portable
factory equipments and tools (hand tools, lift
trucks)
Office equipments (computers, fax machines, desks)
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Supplies/ Business Services

21
Supplies
Operating
supplies (Lubricants, coal, paper, pencil)

Repair and maintenance (paint, nails, brooms)
Services
Maintenance
and repair services (window clearing,

computer repair)
Business advisory services ( legal, management,
consulting, advertising)
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Product Policy
22
Policies adopted by the firm to bring the prospective buyers closer

to the product.
Sets the objectives to be achieved.
Policy regarding new product or for retaining existing product.
Consideration of product mix.
Changes in demand for existing products.
Product elimination and Ne product Development Decisions
Product policy of the competitors.
Formed in Three Levels:
Product Mix
Product Item
Product Line
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Product Mix
23
List of All the products offered for sale by a

company.
Composite of products offered for sale by a firm or
business.
Product portfolio/ Product range/ Product
assortment.
Four Dimensions: Length, Breadth, Depth and
Consistency
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24
Length : Total number of items in the product mix of

the company.
Width : Number of different product lines carries
by the company.
Depth : Assortment of size, colour and models
offered in each item of a product line.
Consistency : It refers to the relationship of various
product line either in their end use, production
requirement, distribution channel or other way.
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25
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Factors influencing Product Mix

26
Changes in demand
Change in population
Change in consumers Income
Change in consumer Behaviour
Marketing influences
Production efficiencies
Financial influences
Use of waste
Competitors Strategy
Profitability
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Product Item
27
A specific version of a product that has a separate

designation in the sellers list.
Specific model, brand or size of a product that a
company sells.
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Product Line
28
A group of products that are closely related

because they satisfy a class of needs, are used
together, are sold to the same customer groups, are
marketed through the same type of outlets or fall
within a given price range.
A group of closely related products or product
items that are physically similar or are intended for
a similar market.
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Factors Affecting Product Line Decision

29
Consumers Preferences
Strategies and tactics of competitors
Firms cost Structure
Change in demand
Buying habits and patterns
Marketing influences
Production efficiencies
Company objectives
Line modernisation
Product specialisation
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Product Mix Alteration

30
Product Modification
Product Elimination
Product line Modification
Product
line Contraction/ Simplification

Product Line Expansion/ Diversification
Changing Models or Styles of Existing product
Quality Variations
Trading
Up
Trading Down
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Product Life Cycle

31
The stages through which a product passes.

The period during which a product lives in the
market.
Theodore Levitt in 1965
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Premises
32
The products have limited life.

Sales of products pass through distinct stages, each
posing different challenges to the seller.
Profits rise and fall at different stages.
Products require different strategies in each stage
of life cycle.
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33
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Introduction Stage
Sales
Low sales
Costs
High cost per customer
Profits
Negative
Marketing Objectives
Create product awareness

and trial
Product
Offer a basic product
Price
Use cost-plus
Distribution
Build selective distribution
Advertising
Build product awareness among early

adopters and dealers
Growth Stage
35
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Maximize market share
Product
Offer product extensions, service,

warranty
Price
Price to penetrate market
Distribution
Build intensive distribution
Advertising
Build awareness and interest in the

mass market
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Maturity Stage
36
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits
Maximize profit while defending
market share
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits

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Decline Stage
37
Sales
Declining sales
Costs
Low cost per customer
Profits
Declining profits
Reduce expenditure and milk the brand
Product
Phase out weak items
Price
Cut price
Distribution
Advertising
Go selective: phase out unprofitable

outlets
Reduce to level needed to retain
hard-core loyal customers
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Factors affecting PLC

38
Rate of technological changes.

Rate of market acceptance.
Position of competitive entry.
Patent protection.
Economic forces
Risk bearing capacity
Customers attitude
Government policy
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Uses of PLC
39
Helps in planning new products.

Enables the firm to estimate the earnings in different stages
of PLC.
Helps in determining the cost of product development.
Enables marketers to prepare appropriate marketing
programmes and look for innovations or new markets.
Helps in allocation of resources among different products.
Helps in setting prices.
Helps in making plans regarding improvement, modification
and elimination of products at different stages.
Helps in product differentiation decision.
Helps in sales promotion and marketing control.
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Limitations of Life Cycle model

40
It is impossible to determine the particular stage in

which a product is.
The determination of length of each stage in the life
cycle is a complicated process.
It is not necessary that all stages can be applicable to
every product.
Product life cycle alone can not be a device for
marketing success.
Some products remain in market without being
outdated.
PLC does not consider the PEST factors.
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New Products Development

41
Enhancing Product Mix.

Involve a number of decisions.
Concerned with development and commercialisation
of new products according to product planning.
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Stages in New Product Development

42
Exploration (Generating Product Ideas)

Screening
Business Analysis
Development
Testing
Commercialisation
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Exploration
43
Determining the product fields of interest to the

company
Establishing a programme for planned idea
generation
Collecting ideas through an organised work
Internal and External Sources of ideas
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Screening of Ideas
44
Ideas scrutinised to eliminate those inconsistent with

product policies and objectives of the firm.
Expanding each idea into full product concept.
Collecting facts and opinions to decide whether the
product idea could be converted into a business
proposition.
Assessing each idea for its potential value to the
company.
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Business Analysis
45
Further study on each idea in a detailed manner.

Determining the desirable market features for the
product and its feasibility.
Developing specifications and establishing a
definite programme for the product.
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Product Development/Technical Development

46
Idea is converted into a product that is producible

and demonstrable.
Decide whether a product should be developed on
a commercial scale or not.
Establishing development project for each product.
Building the product with changed specifications if
any.
Laboratory evaluation and realising the product for
testing.
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Testing
47
Concept Testing
Kind
of research in which the product idea is screened

before any money, time or labour are committed to
making the prototype products.
Product Testing
Test
whether the product performs as expected.
Test Marketing
Post-launching
survey
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Commercialisation
48
Submitting to the market and commence lifecycle.

Completing final plans for product and marketing.
Initiating coordinated production and selling
programmes.
Checking results at regular intervals.
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Forms of New Product Introduction

49
Facelift: small changes in the product; Rest of marketing mix remains the
same.
Inconspicuous Technological Substitution: Technology changes, but not
promoted.
Remerchandising: Change in Marketing Mix elements except Product.
Relaunch: All elements of marketing mix change.
Conspicuous Technological Substitution: New Technology, consumers
are encouraged to try new product.
Intangible Repositioning: Basic Product same, but target market and
other elements change.
Tangible repositioning: Product and Target market are changed.
Innovation: Fundamental Changes in technology of the product.
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Product Failure
50
Defects in the product

Design of Product
Higher price
Introduced Untimely
Wrong selection of channel of distribution
Inefficient and insufficient marketing efforts
Ignorance of consumer preferences
Higher cost of production
Keen competition
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How to Overcome
51
Identify and ensure a potential market

Make the product suitable for the market
Satisfy consumer needs and wants
Taking effective promotion and demand creation
activities
Selecting Good system of distribution
Select a product which keeps the image of the
company
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Brand
52
Name, Term, Symbol or design, or a combination of

them which is intended to identify the goods or
services of one seller and to differentiate them from
those of competitors.
Brandr to burn (Norwegian)
Symbol of trust, warmth, value and loyalty.
9/29/2015
Brand Name
53
Combination of words used to identify a product

and to differentiate it from other rival products.
Brand Mark
Part of the brand which appears in the form of a

symbol, design or distinctive colouring or lettering.
Could be recognised only by sight and may not be
pronounceable.
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Branding
54
Management process by which a product is

branded.
Include giving a brand name, designing brand
mark, establishing and popularising it.
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Trade Mark
55
Registered brand names or brand marks.

A brand or part of a brand that is given legal
protection because it is capable of exclusive
appropriation.
Trade Name
Name of business, preferably the name of the

organisation.
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Functions of Branding
56
Helps in product identification and gives

distinctiveness to a product.
Indirectly denotes quality or standard of a product.
Eliminates imitation of a product.
Ensures legal right on the product.
Helps in advertising and packaging.
Helps to create and sustain brand loyalty to
particular products.
Helps in price differentiation of products.
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Types of Brands
57
Manufacturers brands:
National
Brands- Same brand for the nation

Regional Brands- Brand for particular region
Advertising Brands- Brands stressing symbols
Blanket brands or Single Brands or Family Brands- One
brand name for all the products of the manufacturer
Multiple Brands or Individual Brands- Brand name given
for each variety of product
Distributers brands:
Private,
Dealer, Store or House Brand

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Essentials or Characteristics of a Good Brand

58
Word selected must be simple and easy to

pronounce.
Should be memorable.
Must be attractive to the eyes and pleasing to ears.
Better to provide necessary suggestion about
products benefits.
Should be appropriate and suitable for the product.
Should be distinctive from other brands.
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Advantages of Brand Names

59
To the Manufacturers
To identify and differentiate product from competing
products.
Saves advertisement cost if the brand name is popular.
Creates confidence and goodwill.
Widens the market for the product.
Helps in introduction of new product.
To the Consumers
Easy identification of the product.
Assures certain quality.
Unvarying price.
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60
To the Distributors
Popular
brands ease selling and lead to large sales.

Helps in advertising and sales promotion programmes.
Find out quick moving products.
Reduces price flexibility and thus reduce risks.
No need of special selling efforts. Reduces cost of
distribution.
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Arguments against/ Limitations

61
Brand monopoly
Huge expense
Brand names do not always assure quality
Brand loyalty discourage new products
Create confusion among consumers
Unfair competition
Higher prices for branded products
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Brand Loyalty
62
A favourable attitude and consistent purchase of a

particular brand.
Strong attachment of a buyer to a brand.
Three levels
Brand
Recognition
Brand Preference
Brand Insistence
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Determinants of Brand/ Consumer Loyalty

63
People
Product and Service Delivery
Product Plan
Product Features
Price
Policies and procedures
Promotion and advertising
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Brand Equity
64
Value associated with a brand

A set of assets and liabilities linked to a brands
name and symbol that add to or subtract from the
value provided by a product or service to a firm
and/or that firms customers.
Brand Rejuvenation
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Elements of Brand Equity

65
Brand awareness- measures how many consumers in

the market are familiar with the brand
Perceived Quality or Perceived Value- relationship
between a products benefits and its costs
Brand Associations- mental links that consumers
make between a brand and its key product
attributes
Brand Loyalty
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Packing and Packaging

66
Packing:
The
process of covering, wrapping or crating the goods

into a package.
Done for the purpose of delivering the articles to the
consumer or for the purpose of transport.
Packaging:
General
group of activities in a product planning which

involve designing and producing the container or
wrapper for the product.
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Functions of Package
67
To assemble and arrange the contents in the desired form.

Product differentiation.
To protect the contents from production to final use.
Provide suitable product mix including sizes, weights, prices,
grades and packages.
To facilitate retailers functions.
To facilitate transporting, storing and warehouse handling.
To enable the display of contents.
To encourage repurchases.
To help in complying with legal requirements.
To provide opportunity and space for advertising.
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Objectives
68
Protection from various kinds of damages

Damage
by mechanical handling
Product loss
Pilferage
Contamination by dirt or dust
Moisture gain and loss
Chemical change
Insect attack
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69
Convenience
Storage
convenience
Convenience in use
Economy
Prevent
loss in quantity and thus monetary loss

Provides opportunity for re-use
Creates an opportunity to communicate with customers
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70
Promotion
Self
service
Consumer difference
Integrated Branding
Innovational opportunity
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Kinds of Packaging
71
Family Packaging
Products
of a manufacturer packed in an identical
manner
Re use packaging
Multiple Packaging
Placing
several units in one container
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Requisites of a good Package

72
Should suit the product

Protect the contents
Meet the requirement of different segments of
consumers
Must be attractive
Must be durable
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Problems in packaging
73
Cost of packaging
Appearance
Kinds of designs
Convenience
Re-use purpose
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Advantages
74
To the Marketer
Protects
from damage
Promotes product
Provides information
Facilitate storage and transportation
Helps in branding
Enhances goodwill
Acts as silent salesman
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75
To middlemen
Facilitate
transportation and storage

Easy display
Keeps product fresh and clean
Self advertising
Advantage to Consumer
Convenient
handling
Less possibility of adulteration
Information regarding use and upkeep
Easy identification
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Labelling
76
Informative tag, wrapper or seal attached to a

product or products package
Part of a product which carries a verbal information
about the product
Packaged Commodities (Regulation)Order 1975
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Functions
77
Helps in identification of the product

Stresses the standard and other special features of
the product
Enables the manufacturer to give clear instructions
to the consumer
Price is recorded, registered and maintained
Ensure standard /quality
Establish contact between manufacturer and
consumer
9/29/2015
Kinds of labels
78
Brand labels
Grade Labels
Descriptive Labels
Informative Labels
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Advantages of labelling
79
Social service to consumers

Avoids price variations
Helps advertising activity
Helps the consumers to assess superiority of product
Provides guarantee for the standard of the product
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Disadvantages
80
No use for illiterate persons

Increases cost of the product
Effective only when the standardisation is
compulsory
Discarding certain products by consumer by
comparing with others
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Marketing Myopia
81
Theodore Levitt- Marketing myopia 1960

Main reason for failure of large business firms is Lack
of foresight.
Short sighted, narrow minded view of marketing.
Occurs when the marketer focuses on the product rather
than customers requirements.
Marketing Myopia is narrow minded approach to a
marketing situation where only short-range goals are
considered or Where the marketing focuses on only one
aspect out of many possible marketing attributes
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82
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Causes
83
Narrow minded approach to marketing

situation where only short ranged goals are
considered.
Product oriented rather than customer oriented.
Stepchild treatment to marketing.
Selling
focuses on needs of the seller, marketing on the

needs of the buyer.
Excessive focus on Research and Development.

9/29/2015
How to Prevent?
84
Customer Orientation
Focus on Marketing
Look for future opportunities
Retention of existing customers
9/29/2015

Product Decisions

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kanishgeorge@gmail.

A product is anything that can offered to market for

Product Levels The Customer Value Hierarchy

Indicate core benefit or service

At this level, the core benefit is turned into a basic

Expected/ formal/ tangible product

Marketer prepares an augmented product that

NIVEA Product Levels

Developed by Theodore Levitt

Physical attributes of a product which distinguish it

Bundle of utilities consisting of product features and

Products should fulfil the expectation of social

Durability & Tangibility

Materials and parts

Bought frequently, immediately with minimum

Characteristically compared on the basis of

Has unique characteristics or brand identification

Consumer either does not know about/ knows about

Materials and Parts

Raw materials & parts:

products (wheat, cotton, livestock, fruits,

Manufactured materials & parts:

materials (iron yarn, cement, wires)

Aid in buyers production or operations

purchases (factories, offices)

factory equipments and tools (hand tools, lift

Supplies/ Business Services

supplies (Lubricants, coal, paper, pencil)

and repair services (window clearing,

Policies adopted by the firm to bring the prospective buyers closer

List of All the products offered for sale by a

Length : Total number of items in the product mix of

Factors influencing Product Mix

A specific version of a product that has a separate

A group of products that are closely related

Factors Affecting Product Line Decision

Product Mix Alteration

line Contraction/ Simplification

Product Life Cycle

The stages through which a product passes.

The products have limited life.

High cost per customer

Create product awareness

Offer a basic product

Build selective distribution

Build product awareness among early

Rapidly rising sales

Average cost per customer

Maximize market share

Offer product extensions, service,

Price to penetrate market

Build intensive distribution

Build awareness and interest in the

Low cost per customer

Diversify brand and models

Price to match or best competitors

Build more intensive distribution

Stress brand differences and benefits

Low cost per customer

Reduce expenditure and milk the brand