ch 12 - setting product strategy (del mundo)

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Setting Product Strategy

Adjust or Perish…

Jennick Soleil C. Del Mundo

Ateneo School of Medicine and Public Health

Masters in Business Administration

Chapter 12


• What is a Product?• Product characteristics and classification• Product and Services Differentiation• Product design• Building and managing product mix and

product lines• Combining products• Packaging, Labeling, Warranty and Guarantees

as Marketing Tools

Outline


Concept 1

What is a product?

• 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.

• Examples:– Kotler example: Ford Motor Company– Local example: Jollibee Food Company– Medical application: Littmann Stethoscopes


Concept 2Product characteristics and classification

• Product Levels– Core benefit – the service or benefit

the customer is really buying– Basic product– Expected product – a set of attributes

and conditions buyers normally expect when they purchase the product

– Augmented product – exceeds customer expectations

– Potential product – encompasses all possible augmentations and transformations Figure 1. Product Levels


Concept 2Product characteristics and classification

• Product Levels– Examples:

• Kotler example: Hotels• Local example: Cellular

phones• Medical example:

Dermatologic products

Figure 1. Product Levels


Concept 3

Product characteristics and classification

Classification Types of Products Kotler Example Local Example Medical Application

Durability and

Tangibility

Nondurable goods Beer and shampoo Fruit juice, bread Face masks, micropore

Durable goods Refrigerator, machine tools, clothing

Printers, television MRI and CT scan machines

Services Haircuts, legal advice, appliance repairs

Massage, pest control Consultation services

Consumer Goods

Convenience goods Soft drinks, soaps, newspapers Canned goods Medications

Shopping goods Furnitures, clothing, major appliances

Shoes, rugs, kitchen utensils

Crutches and canes

Specialty goods Mercedes Broadband connection Prostethic devices

Unsought goods Smoke detectors, life insurance, cemetery plots, gravestones

CCTV cameras Health insurance

Industrial-Goods

Materials and parts Farm products, iron, yarn, cement, wires

Tires, seat covers BP cuff

Capital items Generators, drill presses, hand tools, lift trucks

Tow trucks, escalators Dialysis machines

Supplies and business services

Paint, nails, brooms, lubricants, coal, writing paper, pencils

Ink, whiteboard markers Batteries for penlights and other tools


Concept 4

Product and services differentiationProduct

DifferentiationKotler Example Local example Medical Application

Form Aspirin Ballpens Most medications

Features None Cellular phone features Xray machines

Customization Levi’s and Land’s End Flower arrangements Personalized treatments

Performance quality Mercedes-Benz Rubber shoes Infectious disease control

Conformance quality Porsche 911 Fastfood restaurants (McDonalds, Jollibee, KFC)

Treatment guidelines

Durability Vehicles, kitchen appliances

Entertainment appliances (television, radio, video

players)

Diagnostic machines

Reliability Maytag Home appliances Wheelchairs, patient beds

Repairability Computer hardware or software

Cellular phone hardware and software

Diagnostic machines, Ventilators

Style Apple computers, Godiva chocolates

Vehicles Medications


Concept 5

Product and services differentiation

Services Differentiation

Kotler Example Local example Medical Application

Ordering Ease Baxter Healthcare supplies

Lazada, oshopping Appointment booking

Delivery Pizza delivery Fedex, DHL Laboratory results

Installation None Broadband connection Ventilator settings

Customer Training General Electric, McDonald’s

Foreign exchange stock holders

Asthmatics using nebulizers

Customer Consulting

IBM, Oracle BPO industries Medical representatives

Maintenance and repair

Hewlett-Packard Epson Diagnostic machines

Returns None Cellular phones Medications


• Design is the totality of features that affect how a product looks, feels, and functions to a consumer.

• Design offers a potent way to differentiate and position a company’s products and services

• Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides

• Examples:– Kotler example: Hewlett-Packard PCs– Local Example: Magnum Cafe– Medical application: GE healthcare electronics

Concept 6

Product design


• Product mix - set of all products and items a particular seller offers for sale– Width - how many different product lines the company carries– Length - total number of items in the mix– Depth - how many variants are offered of each product in the line – Consistency - how closely related the various product lines are in

end use, production requirements, distribution channels, or some other way

• Examples– Kotler example: Proctor & Gamble Products– Local example: Johnson & Johnson– Medical example: Hi-Precision Diagnostic Laboratory

Concept 7

Building and managing product mixes and product lines


• Product Line Length– Line stretching - occurs when a company lengthens its product

line beyond its current range, whether down-market, up-market, or both ways

• Down-Market stretch• Up-Market stretch• Two-way stretch

– Line Filling - adding more items within the present range – Line Modernization, Featuring and Pruning

• Examples - – Kotler example: Starbucks, BMW, Nike Air Force 1 basketball shoe– Local example: Sinangag express, CBTL, Limited edition Swiss

watches– Medical example: Subspecialty consultations

Concept 8

Building and managing product mixes and product lines


• Co-branding - two or more well-known brands are combined into a joint product or marketed together in some fashion

• Examples– Kotler example: Jointly owned Pizza Hut, KFC and

Taco Bell– Local example: SMART and Sun cellular– Medical Example: Mount General Memorial

Hospital and FiTs club

Concept 9

Combining products


• Ingredient branding - creates brand equity for materials, components, or parts that are necessarily contained within other branded products.

• Examples– Kotler example: Dolby noise reduction technology– Local example: Tide with Downy– Medical Example: Buscopan Venus

Concept 10

Combining products


• Packaging - all the activities of designing and producing the container for a product

• Examples:– Kotler example: Cool water cologne– Local example: Coca cola soft drinks– Medical application: Multivitamins

Concept 11

Packaging, Labeling, Warranty and Guarantee


• Labeling - can be a simple attached tag or an elaborately designed graphic that is part of the package

• Examples:– Kotler example: Sunkist stamped on oranges– Local example: DOLE tags on pineapples– Medical application: 3M in micropore tapes

Concept 12



• Warranty - formal statements of expected product performance by the manufacturer

• Examples:– Kotler example: Best buy– Local example: SM Appliances– Medical application: Welch Allyn

Concept 13



• Guarantee - reduce the buyer’s perceived risk

• Examples:– Kotler example: Hyundai and Kia– Local example: Money-back guarantee USANA

products– Medical application: Health and beauty products

Concept 14



• Product is the first and most important element of the marketing mix • Five levels of the product: the core benefit, the basic product, the

expected product, the augmented product, and the potential product • Products can be nondurable goods, durable goods, or services. In the

consumer-goods category are convenience goods (staples, impulse goods, emergency goods), shopping goods (homogeneous and heterogeneous), specialty goods, and unsought goods. The industrial-goods category has three subcategories: materials and parts (raw materials and manufactured materials and parts), capital items (installations and equipment), and supplies and business services (operating supplies, maintenance and repair items, maintenance and repair services, and business advisory services)

Summary (p.349)


• Brands can be differentiated on the basis of product form, features, performance, conformance, durability, reliability, repairability, style, and design, as well as such service dimensions as ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair.

• Design is the totality of features that affect how a product looks, feels, and functions.

• A product mix can be classified according to width, length, depth, and consistency.

• A company can change the product component of its marketing mix by lengthening its product via line stretching (down-market, up-market, or both) or line filling, by modernizing its products, by featuring certain products, and by pruning its products to eliminate the least profitable.

Summary (p.349)


• Brands are often sold or marketed jointly with other brands. Ingredient brands and co-brands can add value, assuming they have equity and are perceived as fitting appropriately.

• Physical products must be packaged and labeled. Well- designed packages can create convenience value for customers and promotional value for producers. Warranties and guarantees can offer further assurance to consumers.

Summary (p.349)


Setting Product Strategy

Adjust or Perish…

Jennick Soleil C. Del Mundo

Ateneo School of Medicine and Public Health

Masters in Business Administration

Chapter 12

ch 12 - setting product strategy (del mundo)

Education

product augmented product

product characteristics

product mix

basic product expected

product lines

comv65asmphmarkma concept

physical goods

hotels local example