Unit 3

Product management
Attractiveness of Market Offering
Value-Based Prices

Attractiveness
of the
Market
Offering
Product Services
Features Mix
and Quality
Product Levels: The Customer Value
Hierarchy
Core Product

Basic Product

Expected Product

Augmented Product

Potential Product
Product Classification
On the Basis of Durability and Tangibility

 Non-durable Goods
 Durable Goods
 Services
On the Basis of Users
Consumer Goods
 Convenience Goods
 Staples
 Impulse Goods

 Emergency Goods

 Shopping Goods
 Specialty Goods
 Unsought Goods
 Industrial Goods
 Materials and Parts
 Farm Products (Wheat, Cotton, Fruits)
 Natural Products (Crude Oil, Iron Ore)

 CapitalItems (Building Material)

 Supplies and Business Services (Lubes,
Paper, Pens)
Product Mix
 Product Mix is the set of all Products and
Items a particular seller offers for sale.

 Product Line: Different categories of products

in product mix form product lines. A product
line consists of different brands in one product
category.
 Product Mix

L
e
n
g
t
h
 Width of product mix: refers to the number of
different product lines that a company carries
 Length of product mix: refers to the total
number of items in the mix
 Depth of product mix: refers to the number of
variants in each brand
 Consistency of product mix: Product mix is
consistent if various product lines are closely
related in end use, production requirements,
distribution channels or some other way.
Having more products in Product Mix is
beneficial for marketers:
 Up-selling and Cross-selling
 High market share
 High turnover and low Cost of operations
 Risk reduction
 Products for different customer segments
Lengthening Product Line
 Line Stretching: A company lengthens its
product line beyond its current range

 Down-Market Stretch
 Up-Market Stretch
 Two-Way Stretch
 Line Filling: Adding more items within the
present range
 Line Modernization: Adding more
advanced/modern variant and
discontinuing the older one
 Line Pruning: Eliminating variants from
product line
Co-Branding
 Two or more well-known brands/products
are marketed together in some fashion

 IngredientBranding: A special type of co-

branding. A brand/product is used as
component or part in another product.
Packaging
 All the activities of designing and producing
the container for a product. Usages are…
 Identificationof brand
 Convey Information
 Storage
 Protection
 Facilitate Transportation
 New Product Development include-
 Products which are new-to-the-world and
create an entirely new market
 Minor improvements or revisions in existing
products
Why NPD
• Marketers need to develop new products to
maintain their positions or to grow
 Drivers of NPD
 Change in customers’ preference
 New technologies
 PLC
 Competition
 Gap at a price level or for a customer segment
Challenges in NPD
 Shortage of ideas
 Cost of development
 Capital shortage
 Social and Government constraints
 Shorter required development time
 Fragmented markets and needs
Steps in NPD process
 Idea Generation
 Idea Screening
 Concept Development and Testing
 Marketing Strategy Development
 Business Analysis
 Product Development
 Market Testing
 Commercialization
 Idea Generation: Brain storming and looking
for latent needs
 Idea Screening: Two possible errors- Go
error for a poor idea and
- Drop error for a good idea
Overall Probability Probability Probability
Probability = of technical X of commer- X of econom-
of success completion cialization ic success
 Concept Development and Testing
 Gap level
 Perceived value
 Purchase intention
 Purchase frequency and occasions
 Conjoint analysis
 Package design
 Brand name

 Price

 Services
 Marketing Strategy Development

 Business Analysis:
 Estimate total sales
 Estimate costs and profit
 Product Development
 Physical prototypes
 Customer tests
 Market testing
 TestMarket: A few representative cities are
chosen and sales force tries to sell the
product in real market conditions.
 The characteristics of representative cities are
similar to the whole market
 The ad and promotion campaign is also similar to

the proposed full market campaign

 Commercialization: Marketing (Production,
Sales, Distribution and Promotion) of the
product on large scale to cater a large
area of market. For commercialization
marketer may have to invest heavily in
plant, machinery, logistics, distribution and
promotion
Adoption of Innovation
Adoption of Innovation
 An innovation is an idea, practice or object that is
perceived as new by individuals or organizations
 Attributes of innovation
 Relative advantage
 Compatibility
 Complexity
 Trialability
 Observability
 Adoption is a mental process through which
an individual passes from hearing about an
innovation to final adoption
 Diffusion is a social process while adoption
is individual and mental process
 Diffusion and adoption are closely
interrelated processes
 Adoption follows AIDA model
 Innovators: Risk takers and eager to try new
ideas. Interests lead them out of peer group.
Financially resourceful and technically
sound. Play important role in diffusion.
Purchase products in introduction stage
 Early adopters: Greatest degree of opinion
leadership in social system. Help products to
enter in growth stage.
 Early majority: Purchase new products in growth and
maturity stage. Avoid taking risk but also tend not to
be the last
 Late majority: Purchase products in Maturity and
decline stages. Wait for price cut and other
promotional offers. Purchase to avoid network
pressure
 Laggards: Purchase products in decline stage.
Possess almost no opinion leadership. Near isolated
in social network. Point of reference for them is the
Past.
Product Life Cycle
 Products have a Limited Life
 At Different Stages of Life Cycle the
Challenges, Opportunities and Problems
are Different
 Profits Rise and Fall at Different
Stages
 Products Require Different Strategies at
Different Stages
Product Life Cycles
 Introduction: Low
sales, Generally no
profits
 Growth: Improvement
in Sales & Profits
 Maturity: Slowdown in
growth, Profit may
decline
 Decline: Decline in
Sales & Profits
Style, Fashion and Fad
Alternate Patterns
Strategies: Introduction Stage
 Establish Distribution Network
 Target Innovators
 Inform Potential Customers
 Induce Trials
 First Mover Advantage or
 Play Safe by Launching Later with Better
Technology
Strategies: Growth Stage
 Change in Price
 Increase Promotion
 Add Variants
 Enter New Markets
 Strengthen Distribution Network
 Persuasive Advertising
Strategies: Maturity Stage
 Add Benefits
 Reminding & Reinforcement
Advertising
 Reduce Price
 Sales Promotion
 Personal Selling
 Improve Services
 Diversify
Strategies: Decline Stage
 Cut Promotion Budget
 Reduce Prices
 Sell off Business
Brand
 Name, Term, Sign, Symbol or Design or
a Combination of them Intended to
Identify the Goods and Services of a
Seller to Differentiate them from
Competitors.
Benefits of Branding:
 For Marketer
Premium Price
Awareness
Increased Market Share
Customer Retention & Loyalty
Legal Protection
Brand Expansion (Product & Geographical)
Licensing Opportunity (Short Term)
Benefits:
 For Customer
Risk Reduction
Identification of Source
More Satisfaction
Disadvantages
 Higher price
 Impact of poor performance on other
products
 High cost of brand establishment
 Need time to develop brand
 Less flexibility
 Fake products may tarnish company’s
reputation
 Brand Revitalization
The Process of Creating New Sources of
Brand Equity or Refreshing Old Sources
of a Fading Brand.
Reasons for Fading:
 Change in Customers’ Taste & Preference
 Emergence of New Competitors
 New Technology
 Other Developments in Marketing
Environment
Brand Elements

 Attributes which Differentiate Brand.

Name, Logo, Packaging, Spokesperson,
Trade-character, Jingle, Slogan etc.

Brand Elements give the flexibility to change

its positioning by changing B.E.
Core Brand Associations
Abstract Associations (Attributes & Benefits)
that Characterize the 5 to 10 Most
Important Aspects or Dimensions of a
Brand
Brand Extension
 The process in which marketers launch
new product with an existing established
brand name
 Marketers launch new products with
existing brand name in current market or
in a new market
Advantages of Brand Extension

 Facilitate New Product Acceptance

 Improve Brand Image
 Reduce Risk Perceived by Customer
 Increase the Probability of Trial
 Increase Promotion Efficiency
 Avoid Cost of Developing a New Brand
 Bring New/Variety Seeking Customers
 Revitalize the Brand
Disadvantages of Brand Extension

 Can Encounter Retailer’s Resistance

 Can Fail and Hurt Brand Image
 Cannibalization of Existing Brands
 Company can Rely More on a Single
Brand
Following Points Should be Taken into
Consideration while Extending the Brand

 Perceived Similarity
 Perceived Risk
 Reputation
 Innovativeness
Competitive Frame of
Reference
Define the Brands or Set of Brands With
Which the Brand Would Compete i.e.
Category Membership

 POP

 POD
Brand Awareness: Depth
 High Brand Awareness
 Brand Recall
 Brand Recognition
 No Awareness

Brand Awareness: Breadth

Purchase and Consumption Situations
(Frequency & Quantity) that Customers’
are Aware of
Brand Personality
The Human Characteristics or Traits that
Consumers can Attribute to a Brand

SINCERITY -(Down-to-earth, Honest, Cheerful)-

Peter England
EXCITEMENT -(Daring, Spirited, Imaginative, Up to
date)- HH Passion
COMPETENCE -(Reliable, Intelligent, Successful,
Knowledgeable)- BOB, Raymond, Sprite
SOPHISTICATION -(Upper class, Charming)-
Mercedes
RUGGEDNESS -(Outdoorsy, Tough)- HH Hunk,
Levis
Brand Portfolio

The Brand Portfolio is the Set of All

Brands and Brand Lines that a Particular
Firm Offers for Sale to Buyers in a
Particular Category
While each of these brands maintains its
own operational structure, they benefit
from shared resources and cross-
promotional opportunities with other
brands in the portfolio
Brand Equity
Customers’ Subjective and Intangible
Assessment of the Brand, Above and
Beyond its Objectively Perceived Value.
Key Drivers are:
 Customer Brand Awareness
 Customer Brand Attitudes (Perceived
Quality, Loyalty
 Customer Perception of Brand Ethics
(Associations)
Brand Sponsorship
 A marketer pays to the organizers of an
event to display/ announce its brand name,
logo etc. during the event an other related
communications
 This marketer is called sponsor
 Sponsor may pay in cash or kind
 Sponsorship persuades indirectly by linking
the sponsor’s message to an event or an
organization although the sponsor's contract
may include advertising at the event
 Brand and event/organization should be
related and reputed
Advantages
 Awareness
 Positive customer attitude
 Exclusive merchandising rights
 Brand associations
 Build relationship
 Enhance employee motivation
Hierarchical
Communication
Model
Brand Name Selection
 Consider target segment
 Other similar brand names
 Uniqueness
 Easy to recall
 Should reflect product benefits
 Consider meaning