Download Product Line Decisions

Principles of
Marketing
“ Product, Services, and Branding
Strategy”
The meaning of product
1.
2.
3.
4.
5.
6.
A product is the key element of a market offer. This offer becomes
the basis upon which a company build profitable customer
relationships.
In a narrow sense a product is a set of attributes assembled in an
identifiable form. In marketing’s definition however customers are
not buying a set of attributes but rather benefits that satisfy their
needs.
A PRODUCT is anything that can be offered to a market for
attention, acquisition, use or consumption that might satisfy a
need or a want.
A product may be tangible or intangible in nature and may include
physical objects, services, events, persons, places, organizations,
ideas or mixes of these entities.
A service is a product which is any activity or benefit that one party
can offer to another that is essentially intangible and does not result
in the ownership of anything.
Irrespective of whether a product is purely tangible or pure service ,
in order to differentiate their offers companies are staging, marketing
and delivering memorable customer experiences.
To move a step ahead in building
profitable relationships,
customer-centered companies
try and market superior
experience because they
understand that the customers
are not just buying marketing
offers , they are buying what
those offers will do for them
Levels of Products and Services

Product planners need to think if products and service on three levels
because each level defines what can be done for the customer and
henceforth it adds more value.
3.Augmented product
2. Actual product
Created by offering
additional consumer
services and benefits – like
Flyer miles in airlines or
after sales service for cars
Created by developing
product/service features,
design, quality level, a
brand name and packaging
1. Core Benefit
This answers the question
i.e. What is the customer
really buying, for e.g.. A
man buying a Lexus is not
just looking for a car, he is
looking for prestige
Classification of products and
services

These may be classified broadly into Consumer
products and Industrial products.

Consumer products are those which are bought by
final consumers for personal consumption, based on
how consumers purchase them, they are classified
further into categories as:
Convenience goods
Shopping goods
Specialty goods
Unsought goods
-
Marketing
Convenience
Considerations
Shopping
Specialty
Unsought
Customer
Buying Behavior
Frequent purchase
with little planning
and low customer
involvement
Less
frequent
purchase
with more
planning and
effort and
more
comparison
Strong
brand
preference
and loyalty
and little
brand
comparison
Little
product
awareness
or
knowledge
Price
Low price
Higher Price
High Price
Varies
Distribution
Widespread
distribution
Selective
Distribution
Exclusive
Distribution
Varies
Promotion
Mass promotion
Advertising
and personal
Selling
More
carefully
targeted
promotion
Aggressive
advertising
and personal
selling
Examples
Salt, toothpaste,
detergent
Mobiles,
kitchen
appliances
Afghani
carpets,
Rolex
watches
Life
Insurance,
blood
donations
Industrial Products


These are products that are purchased by
individuals and organizations for further
processing or for use in conducting a
business. Thus the distinction between
consumer and industrial product is based on
‘the purpose of purchase’
The three groups of industrial products are as
under
- Materials and parts (Raw materials,
Manufactured materials and items)
- Capital items (Installation and Accessory
equipment)
- Supplies and Services (Operating supplies,
Repair and maintenance,)

Price and service are major factors as far as
Materials and parts are concerned, branding
and advertising tend to be less important.

Capital items are industrial products that aid
the buyer’s production process or operations.

Supplies are the convenience products of the
industrial field because they are usually
purchased with minimum effort or comparison
Marketing Offering Organization

Organization marketing consists of activities
undertaken to create , maintain or change the
attitudes and behavior of target customers
towards an organizations. Corporate image
Advertising is carried out – e.g. Shell which
propagates the message that they excavate
looking for fuel resources and they also
contribute to conserving and protecting the
environment.
Marketing Offering - Persons
Person marketing consists of activities
undertaken to create , maintain or
change the attitudes towards particular
people e.g. Donald Trump, Oprah.
 Creating or associating with well known
personalities often helps organizations
achieve their goals better e.g. Michele
Jordan, Tiger Woods

Marketing Offering - Place
 Place
marketing consists of
activities undertaken to create ,
maintain or change the attitudes
towards particular places e.g.
Tourism programs or projects or
slogans attached to cities as in
‘Karachi – city of lights’
Marketing Offering – Ideas

Ideas can be marketed , specially
through societal marketing which is
the design , implementation and
control of programs seeking to
increase the acceptability of a social
idea, cause ort practice amongst a
target groups. E.g. Total’s ‘Drive
safe’ campaign, Shield’s ‘Change
your toothbrush’ campaign.
Product and Service Decisions

Decisions are made at three levels by
marketers.
1.
Individuals Product and Service Decisions
2.
Product Line Decisions
3.
Product Mix Decisions.
Individuals Product and Service
Decisions

This is a five step process which goes as
follows:Product
Attributes
Branding
Packaging
Labeling
Product
Support
Services
Product
Attributes


Product Quality – focus here is on how much value
and satisfaction the customer gets after using
product, henceforth product quality is as the ability
of a product to perform its functions (durability,
reliability, precision, ease of operation and repair)
Quality has two dimensions level and consistency –
its level should support the position of the product in
the target market and there should be conformance
quality – freedom from defects and consistency in
delivering a targeted level of performance.
Product
Attributes


Product Features – These define how the
customer would like his/her product, features
are competitive tool for differentiating the
company's product from competitors
products.
Product Style & Design – Style describes the
appearance of a product and Design is
shaping a customer product and service
experience. E.g. a car with leather seats (
style) but bad engine (design)
Branding
Which of these soap bars would you buy
and why?

Soap
PEARS
Branding

A brand is a name, term, sign, symbol or
design, or a combination of these that
identifies the maker or seller of a product or
service.

A brand is a name and or mark intended to
identify the product of one seller or group of
sellers and to differentiate the product from
competing products.
Branding

Brand names help consumers identify
products that might benefit them, they tell the
buyer something about the product quality.

Branding helps to protect the products
unique features( through trade mark), and it
helps to segment markets.
Packaging




The activities of designing and producing the
container or wrapper for a product.
There can be a primary package (tube of
toothpaste)
There can be a secondary package (box in
which tube is kept)
There can be a shipping package (corrugated
box carrying dozens of toothpastes)
Packaging

1.
2.
3.
4.
Packaging helps to do the following
Protects the product on its way to the consumer
Protects the product after it has been purchased
Helps gain acceptance of the product from the
middlemen.
Helps persuade consumers to buy the product
Innovative packaging can give a company an advantage
over competitors, the supermarket is a highly
competitive environment where packaging is the last
chance to influence buyers.
Labeling


1.
2.
3.
A label is the part of the product that carries
information about the product and the seller.
There are three type of labels:
A brand label is simply the brand alone
applied to the product or package.
A descriptive label gives information about
the products use.
A grade label identifies the products judged
quality
Labeling

a)
b)
c)

1.
2.
3.
A label helps to :
Identify the product
Describe the product
Promote the product
Labeling is affected by the following:Unit pricing
Open dating
Nutritional label
Product
Support
Services
1.
2.
Survey customers periodically to assess the
value of current services and obtain ideas
for a new ones.
Assess the cost of providing these services.
A good e.g. of support service would be ‘Rabta’
‘which is associated with Dalda, in addition
to this customer complaint centers that
different brands have.
Product Line Decisions

a)
b)
c)
d)
A product line is a group of
products that are closely related
because:They function in a similar manner
Are sold to the same customer
groups
Are marketed through the same
type of outlets
Or fall within given price ranges.
Product Line Decisions


1)
2)
Product line length are the number
of items in the product line. This
length in influenced by the
company objectives and
resources.
Product line length can be
increased in two ways
Line stretching
Line filling
Product Line Decisions
1)
2)
Product Line Stretching – this takes place when
a company lengthens its product line beyond its
current range, it may be upward , downward or
both ways e.g. Toyota making Lexus, Mercedes
making its C-class cars and Marriott Hotels
having its expensive line of hotels and its low
priced inns.
Product Line Filling – Adding more items within
the current product range , this is done
particularly to reach for extra profits, satisfying
dealers, using excess capacity, being the
leading full line company and plugging holes to
keep out competitors. e.g. LUX bringing out its
many variations.
Product Mix Decisions

A product mix or product assortment
consist of all the product lines and items
that a particular seller offers for sale.
Personal
care
Fabri-care
detergents softener
starch
Hair
care
Skin
fragrance
care
Hard surface
care
Machine
dishwashing
Product Mix Decisions

The four different dimensions are as follows:-
1.
Product mix width refers to the number of
different product lines the company carries.
Product line length refers to the number of
products within the lines.
Product line depth is the number of variations
/versions of products.
Product line consistency refers to how closely
related the various product lines are in end
use, production requirements, distribution
channels
2.
3.
4.
Product Mix Decisions

1.
2.
3.
4.
The company can increase its business in four
ways:It can add new product lines widening the
product mix.
It can lengthen its existing product lines by
adding more products to become a more full
line company.
It can add more versions of each product and
thus deepen its product mix
Finally the company can use more or less line
consistency depending on the kind of
reputation it wants to have in the field.
Building Strong Brands



What's in a brand? – it represents
consumer perceptions and feelings.
Brands exist in the minds of consumers.
Strong brands survive the tests of time
and become larger than life icons through
the generations, they become part of the
culture.
A powerful brand has brand equity – this is
the value a brand adds to a product, it is
the positive differential effect knowing the
brand name has on customer response.
The advantages of brand equity:





A powerful brand enjoys a high-level of
customer loyalty and awareness
Consumers expect stores to carry the brand,
henceforth the company has more leverage in
bargaining with resellers
Since brand name carries high credibility, the
company can easily launch line and brand
extensions.
Because it is expensive and time consuming to
build brand equity , it create a barrier for
competitors
Brand equity can help a product survive
through cultural shifts and changes in
consumer tastes.
How to Build Strong Brands
Brand
Positioning
Brand name
selection
Brand
Sponsorship
Brand
Development
Brand Positioning

a)
b)
c)
Marketers need to position their products
clearly in the minds of the consumers , they can
do so by positioning brands at these levels
Product attributes – here the marketer talks
about the products innovative attributes, but
customers are not interested in attributes as
such, they are interested in what these
attributes will do for them.
Positioning by Benefits – The marketers here
go beyond the ingredients of a product and talk
about the resulting benefits from use.
Positioning by strong beliefs and values – you
cannot just talk about attributes and benefits, in
fact you need to touch the customers at a much
deeper level.
Brand Positioning



When positioning a brand a marketer
should establish a mission for the brand
and vision of what the brand must be and
do.
A brand is the company’s promise to
deliver a specific set of features, benefits
and service consistently to buyers.
A brand is a contract to the customer
regarding how the product or service will
deliver value and satisfaction. The
contract must be honest and simple.
Brand name selection

1.
2.
3.
4.
5.
6.
Brand-name is an important part of a
products success, it should have the
following attributes:
Suggest something about product
Easy to pronounce, remember, recognize
Distinctive
Easily extendable
Easily translatable in other languages
Capable of registration and legal
protection.
Brand Sponsorship

1.
2.
3.
4.
There are four options at how a product
should be launched:
Manufacturer’s Brand (national brand)
Private Brand (store brand)
Licensing
Co-Branding
Manufacturer’s Brand Vs
Private Brand


Retailers have many advantages, they
control what goes on the shelf, where it goes
and what price they will charge for it .
Private brands are hard to establish and
costly to stock and promote, however they
give resellers exclusive products that cannot
be bought from competitors resulting in
greater store traffic and loyalty
Licensing

Under a licensing agreement , the owner of a
trademark grants permission (a license) to
other firms to use its brand name and brand
mark their products. A licensee which is the
company that receives the license ordinarily
pays a royalty of the wholesale price of each
item bearing the licensed trademark. The
royalty percentage depends upon the amount
of equity connected with the brand offered by
a licensor, which is the company that owns it.
Co-Branding


1.
2.
The practice of using established brand
names of two different companies on
the same product.
Advantages of co-branding are as under
Combined brands create greater appeal
and equity
It allows a company to expand its
existing brand into un-chartered territory
Brand Development
Product Category
Existing
Existing
New
Line
Extension
Brand
Extension
Multi-brands
New
Brands
Brand Name
New
Line Extension



This occurs when a company introduces additional
items in a given product category under the same
brand name.
Line extensions are low cost, low risk ways to
introduce new products to meet desire for variety,
use of excess capacity or simply to get more shelf
space, over extended lines may cause the brand to
loose its positioning
A line extension works best when it takes sales
away from competing brands, not when it
cannibalizes the company’s other items.
Brand Extension


This involves the use of successful brand
name to launch new or modified product.
Brand extension gives the product instant
recognition and acceptance, but an extension
should not be too far away from the current
line of business otherwise confusion
regarding brand image may occur ( brand
association is very important)
Multi-brands



When companies introduce additional brands
in the same category
Multi-branding offers a way to establish
different features and appeals to different
buying motives.
A drawback could be that each brand may
contain only a small market share and the
company may end up spreading its resources
over many brands instead of the profitable
ones.
New Brands

A company might believe that the power of its
existing brand name is waning and a new
brand name is needed, a company also
creates a new brand name when it enters into
a new product category.
Managing Brands
1.
2.
The brand's positioning must be continually
communicated to the end users – this
happens through advertising which is
merely a touch point but it is not as great as
‘personal experience’
Everyone in the company must live the
brand credo
Services Marketing

1.
2.
3.
4.
Services are
Intangible – they cannot be seen, tasted,
felt, heard or smelled
Inseparability – They cannot be separated
from their providers
Variability – Quality depends on who
provides them and when , where and how
Perishability – they cannot be stored for
later use or sale
Services Marketing

1.
2.
3.
4.
5.
The service profit chain
Internal service quality
Satisfied productive service employees
Greater service value
Satisfied and loyal customers
Healthy service profits
Services Marketing Tasks
1.
2.
a)
b)
1.
Managing Service Differentiation – through
delivery and imaging
Managing Service Quality
Through good service recovery
Empowering front line employees
Managing Service Productivity – through
training current employees
Principles of
Marketing
“ Product Life-Cycle Strategies”
Product Life Cycle (PLC)


1.
2.
3.
4.
5.
The course of a product’s sales and profits
over its lifetime.
It involves five stages:
Product Development
Introduction
Growth
Maturity
Decline
Product Life Cycle (PLC)

a)
b)
c)
The concept is applicable to :
A product class ( laundry soaps) – here the
PLC is the longest and stay for long in the
mature phase.
A product form (powdered detergents) –
They have the standard PLC shape.
Brands (Ariel) – Here the LC can change
quickly due to the market environment and
competitors.
Product Life Cycle (PLC)

a)
b)
c)
The concept is applicable to :
Styles – ‘ A basic and distinctive mode of
expression’ ; i.e. in homes, art and décor. A style
may last for generations.
Fashion – ‘ a currently accepted or popular style in
a given field’ ; fashions tend to grow slowly ,
remain popular for a while and then die. E.g. the
80s and the 90s fashion.
Fad – ‘a temporary period of unusually high sales
driven by consumer enthusiasm and immediate
brand or product popularity’ E.g. the band ‘Noorie’
(enjoy it while it lasts), Pokemon.
Product Development
 The
company develops a new
product
 Sales are zero
 Investment costs keep
increasing
Introduction




The product is first distributed and made
available for purchase.
Profits are negative due to low sales and high
distribution costs
There is no product refinement here, the most
basic product version is to be sold henceforth
firms focus their selling on buyers who are most
ready to buy.
It is advisable not too start off with too large an
agenda in the beginning because it may not be
easy to maintain in the future.
Growth





Here the product starts to climb quickly.
Sales start to ‘grow’
Early adopters ( buyers guided by respect
and are opinion leaders in their circle) will
continue to buy and the late majority will
follow suit.
New opportunities attract more competitors,
bringing innovation and henceforth expanding
the market.
The focus is now on build more and sell more
to meet competition.
Growth







Profits go up as cost is now spread over a
larger volume and per unit cost falls.
Prices remain where they are or slightly fall
when needed.
BUILDING A BETTER PRODUCT ( quality,
features, models)
Building product conviction and purchase
Educating the customer
Entering new markets or segments
Drawing a line on how much will be spent on
innovation and refining the product is
necessary to have adequate funds available
to sustain the product in the maturity phase.
Maturity




Sales growth slows down or levels off
This stage lasts longer than the other stages
and is a tough area foe the marketers.
After the growth stage, the firm maybe
dealing with overcapacity, when they push to
sell off their products now they are met with
greater competition.
Once again to deal with a market that may be
bored of the product , the firm needs modify
the market, product or marketing mix.
Maturity



Modify the market: the company may look for
new users or market segments ( Life Buoy
tapped the upper market segment), reposition
the brand (like HBL did) or increase usage
amongst users ( Energile with their instant
drink)
Modify the product – Change the product
characteristics such as quality, features to
inspire more usage e.g. National Sqeezy, Fair
and Lovely
Modify the marketing mix – changing one or
more marketing mix elements. E.g. Pakistan
Post
Decline






Sales decline in this stage sometimes slowly or
and sometime rapidly.
They decline because of technological advances,
shifts in consumer tastes and increased
competition.
A weak product may be sucking the life out of
healthier products because a weak product
becomes a high maintenance problem.
The firm may decide to maintain its weak product
if the competition leaves the industry
The firm may decide to harvest the product by
cutting on the various costs associated with it
hoping that profits will increase
Last of all the firm may decide to drop the product
from the line or sell it off to another at salvage
value.
Characteristics
Introduction
Growth
Maturity
Decline
Sales
Low sales
Rapidly rising
Peak
Declining
Costs
High
Average
Low
Low
Profits
Negative
Rising
High
Declining
Customers
Innovators
Early adopters
Middle Majority
Laggards
Competitors
Few
Growing Number
Stable number
declining
Declining
Marketing
Objectives
Create Product
awareness
Maximize market
share
Maximize profit while
defending market
share
Reduce
expenditure and
milk brand
Product
Offer basic
product
Offer product
extensions
Diversify brand and
models
Phase out weak
items
Price
Use cost plus
Price to penetrate
market
Price to match
competitors
Cut Price
Distribution
Selective
Intensive
More intensive
Go selective
Advertising
Product
awareness
among early
adopters and
dealers
Awareness in the
mass market
Stress brand
differences and
benefits
Reduce to
maintain hard
core loyals
Sales
Promotion
Heavy to entice
trial.
Reduce to take
advantage of heavy
consumer demand
Increase to encourage
brand switching
Reduce to
minimal level
Strategies