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10
Setting Product Strategy
Framework for Marketing Management
International Edition
Chapter Questions
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What are the characteristics of products and
how do marketers classify products?
How can companies differentiate products?
How can a company build and manage its
product mix and product lines?
© 2012 Pearson Education
10-2
Chapter Questions
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How can companies use packaging, labeling,
warranties, and guarantees as marketing
tools?
What strategies are appropriate for new
product development and through the product
life cycle?
© 2012 Pearson Education
10-3
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.
© 2012 Pearson Education
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Figure 10.1 Five Product Levels
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Product Classification Schemes
Durability
Tangibility
Use
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Durability and Tangibility
Nondurable goods
Durable goods
Services
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Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
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Industrial Goods Classification
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Materials and parts
Capital items
Supplies/business services
© 2012 Pearson Education
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Product Differentiation
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Product form
Features
Customization
Performance
Conformance
© 2012 Pearson Education
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Durability
Reliability
Repairability
Style
Service Differentiation
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Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
© 2012 Pearson Education
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Design
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Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
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Product-Mix Pricing
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Product-line pricing
Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
© 2012 Pearson Education
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Ingredient Branding
© 2012 Pearson Education
10-15
What is the Fifth P?
Packaging, sometimes called the 5th P,
is all the activities of designing and
producing the container for a product.
© 2012 Pearson Education
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Factors Contributing to the
Emphasis on Packaging
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Self-service
Consumer affluence
Company/brand image
Innovation opportunity
© 2012 Pearson Education
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Packaging Objectives
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Identify the brand
Convey descriptive and persuasive
information
Facilitate product transportation and
protection
Assist at-home storage
Aid product consumption
© 2012 Pearson Education
10-18
Functions of Labels
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Figure 10.2 New-Product
Development Decision Process
© 2012 Pearson Education
10-20
Ways to Find Great New Ideas
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Run informal sessions with customers
Allow time off for technical people to putter on
pet projects
Make customer brainstorming a part of plant
tours
Survey your customers
Undertake “fly on the wall” research to
customers
© 2012 Pearson Education
10-21
More Ways to Find Great Ideas
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Use iterative rounds with customers
Set up a keyword search to scan trade
publications
Treat trade shows as intelligence missions
Have employees visit supplier labs
Set up an idea vault
© 2012 Pearson Education
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Drawing Ideas from Customers
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Observe customers using product
Ask customers about problems with products
Ask customers about their dream products
Use a customer advisory board or a brand
community of enthusiasts to discuss product
© 2012 Pearson Education
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Demand-First Innovation and
Growth (DIG) Framework
Demand Landscape
Opportunity Space
Strategic Blueprint
© 2012 Pearson Education
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Idea Generation:
Creativity Techniques
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Attribute listing
Forced relationships
Morphological analysis
Reverse assumption analysis
New contexts
Mind mapping
© 2012 Pearson Education
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Figure 10.3 Product and
Brand Positioning
© 2012 Pearson Education
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Concept Testing
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Communicability and believability
Need level
Gap level
Perceived value
Purchase intention
User targets, purchase occasions,
purchasing frequency
© 2012 Pearson Education
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Prototype Testing
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Alpha testing
Beta testing
 Rank-order method
 Paired-comparison method
 Monadic-rating method
Market testing
© 2012 Pearson Education
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Consumer Goods Market Testing
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Sales-Wave Research
Simulated Test Marketing
Controlled Test Marketing
Test Markets
© 2012 Pearson Education
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Test Market Decisions
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How many test cities?
Which cities?
Length of test?
What information to collect?
What action to take?
© 2012 Pearson Education
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What is Adoption?
Adoption is an individual’s decision to
become a regular user of a product.
© 2012 Pearson Education
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Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
© 2012 Pearson Education
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Figure 10.4 Adopter
Categorization on the Basis of
Relative time of Adoption
© 2012 Pearson Education
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For Review
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What are the characteristics of products and
how do marketers classify products?
How can companies differentiate products?
How can a company build and manage its
product mix and product lines?
© 2012 Pearson Education
10-34
Also For Review
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How can companies use packaging, labeling,
warranties, and guarantees as marketing
tools?
What strategies are appropriate for new
product development and through the product
life cycle?
© 2012 Pearson Education
10-35