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    5 mark questions

    Feb 2005

    In planning its market offerings, the marketer needs to think through five levels of a

    product- elaborate.

    In planning the marketing offering, the marketer needs to think through five levels of the

    product. Each level adds more customer value, and the five constitute a customer valuehierarchy. The five levels include.

    1. Core benefit:

    The fundamental service or benefit that the customer is really buying. A hotel guest is

    buying rest and sleep the purchaser of the drill is buying holes. Marketers must seethemselves as benefit providers.

    2. Basic product:

    At the second level, the marketer has to turn the core benefit into a basic product. Thus ahotel room includes a bed, bathroom, towels, desk, dresser, and closest

    3. Expected product:

    At the third level, the marketer prepares an expected product, a set of attributes and

    conditions that buyers normally expect and agree to when they purchase this product. Forexample, hotel guests expect a clean bed, fresh towels, working lamps, and a relative

    degree of quite. Since most hotels can meet this minimum expectation, the traveler

    normally will have no preference and will settle for whichever hotel is most convenientor least expensive.

    4. Augmented product:

    At the fourth level the marketer prepares an augmented product that meets thecustomers desires beyond their expectations. A hotel can augment its product by

    54321

    1 = Core benefit2 = Basic product3 = Expected product4 = Augmented product5 = Potential product

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    including a remote-control television set, fresh flowers, rapid check-in express checkout,

    fine dining and room service, and so on .Elmer Wheeler once observed, Dont sell the

    steak-sell the sizzle Todays competition essentially takes place at the product-augmented level. Product augmentation leads the marketer to look at the buyers total

    consumption system: the way a purchaser of a product performs the total task of whatever

    it is that he or she is trying to accomplish when using the product. In this way marketerwill recognize many opportunities for augmenting its offer in a competitively effective

    way.

    5. Potential Product:

    At the fifth level potential product, which encompasses all the augmentations and

    transformations that the product might ultimately undergo in the future. While the

    augmented product describes what is included in the product today, the potential product

    points to its possible evolution. Here is where companies search aggressively for newways to satisfy customers and distinguish their offer. Some of the most successful

    companies add benefits to their offerings that not only satisfy customers but also surprise

    and delight them. Delighting is a matter of exceeding the normal expectations and desires

    with unanticipated benefits. Thus the hotel guests find candy on the pillow, or a bowl offruit, or a video recorder with optional video tapes.

    Feb 2002

    What is Brand Equity?

    A brand is name, term symbol or design or combination of these intended to identify,

    products & services of one seller from competitors

    Brand equity: The positive differential effect that knowing the brand name has oncustomer response to the product or service

    Brands vary in their amount of power or value they have in the market place. At one

    extreme are brands that are not known by most buyers. Then there are brands that are notknown by most buyers. Then there are brands for which buyers have a fairly high degree

    of brand awareness. Beyond this are brands that enjoy a high degree of brandacceptability. Then there are brands that enjoy a high degree ofbrandpreference. Finallythere are brands that command a high degree ofbrandloyalty.

    Few customers are brand loyal as OReilly hopes Heinzs customers will be. Aaker

    distinguished 5 levels of customer attitude towards his of her brand, from lowest tohighest;

    1. Customer will change brands, especially for price reasons. No brand loyalty

    2. Customer is satisfied. No reason to change the brand.

    3. Customer is satisfied and would incur costs by changing brand.4. Customer values the brand and sees it as a friend.

    5. Customer is devoted to the brand.

    Brand equity is highly related to how many customers are in classes 3, 4, or 5. It is alsorelated to the degree of brand- name recognition, perceived brand quality, strong mental

    and emotional associations, and other assets such as patents, trademarks, and channel

    relationships.High brand equity provides a number of competitive advantages:

    The company will enjoy reduced marketing costs because of consumer brand

    awareness and loyalty.

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    The company will have more trade leverage in bargaining with distribution and

    retailers because expect them to carry the brand

    The company can charge a higher price than its competitors because the brand hashigher perceived quality.

    The company can move easily launch extensions because the brand name carries

    high credibility. The brand offers the company some defense against price competition.

    A brand name needs to be carefully managed so that its equity doesnt depreciate. This

    requires maintaining or improving brand awareness, perceived quality and functionally,and positive associations. These tasks require continuous R&D investment, skillful

    advertising, and excellent trade and customer service.

    February 2002

    Name three products, which are in maturity and decline stages of the product life

    cycle.

    Maturity is a period of slow down in sales growth because the product has achieved

    acceptance by most potential buyers. Profits stabilize or decline because of increasedcompetition.

    Some of the products that come under this stage are,Picture tube Television: these are the normal televisions used by middle class people.

    Demand for these sets is at hike and no possibilities of still increase so they are in

    maturity stage.Chalk: Chalk is an item, which is used for writing on the black board. It is still broadly

    used in schools, so we can say that they are in maturity stage.

    Land lane phone: Landline telephonic connections are seen almost in the maturity stage.

    Declines stage is a period when sales show downward drift and profits erode. Someproducts which come under this stage are

    Black and white television: black and white televisions are not in demand now, so theycan be said to be under decline stage.Traditional clothes: traditional clothes like dhotis are not commonly used. They are used

    only in some religious functions, so their demand has come down. And thus industries

    producing these products run under loss.Cholesterol food: In US people have become very health conscious they prefer food

    which has low cholesterol level. So the demand for junk food or any other product which

    has high cholesterol level is reduced causing a decline in the firms producing them.

    Feb 2002

    Explain the following and name at least two products that can be sold through.

    (i) Specialty store

    (ii) Factory outlet

    (iii) Door to door marketing(iv) Automatic vending

    (v) Supermarket

    (vi) Convenience store(vii) Franchise

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    (i) Specialty Store:

    Focuses on a particular brand category, It offers narrow product lines, but good depth.Level of service is high. Examples, Walgreens, boots, crossword, Planet M

    (ii) Factory outlet:

    Stores, which sell branded merchandise at a discount. Example, Levis, Reebok.(iii) Door to door marketing: Companies selling products by meeting customers at their

    homes is called door to door marketing. FMCG companies like HLL organize door to

    door campaigns when a new offer is available.(iv) AutomaticVending:

    The coin-operated vending machines are used as complementary form of retailing many

    goods and services, e.g., sale of cigarettes, soft drinks, hot beverages, candy, chocolates,

    platform tickets, milk, etc., and services such as laundering and insurance policies. Thus,well known pre-sold, pre packed brands with a high rate of turnover can be sold

    successfully by vending machines.

    (v)Supermarket:

    A supermarket as a novel form of retail organization specializing in necessaries andconvenience goods. Usually it concentrates on all food articles- groceries, meat, fruits,

    vegetable and timed products. Non- food items sold by these stores should satisfy a fewconditions. Firstly, it must be widely used and must appeal to general consumers.

    Secondly, a non- food article must be a branded product, i.e., pre-sold to customers

    through intensive advertising. Thirdly, it should be a low- priced article

    (vi)ConvenienceStores:Usually located near residential areas& open long hours. Offers milk and bread.

    Examples, 7 eleven, speed mart, In & Out.

    (vii) Franchise:

    A franchise is a contractual agreement between the franchiser and franchisee, which

    allows the franchisee to conduct business under an established name, as per a particular

    business format in return of a fee or compensation.Ex Archies stores, Mc Donalds stores

    10 Marks Questions

    February 2002

    Explain the decisions that companies make when developing product lines and

    mixes.

    Or

    What is product mix? What are the different factors that are considered while

    making product line decisions? ( write only product mix decisions)

    PRODUCT MIX DECISIONS:

    A product mix (also called as Product Assortment) is a set of all products and items that a

    particular seller offers for sale to buyers.

    For example, Kodaks product mix consists of two strong product lines: informationproducts and image products. A companys product mix has a certain width, length,

    depth, and consistency

    The width of a particular mix refers to how many different product lines thecompany carries.

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    The length of a product mix refers to the total number of items in the mix.

    The depth of the product mix refers to how many variants are offered of each

    product in the line.

    The consistency of the product mix refers to how closely related the various

    product lines are in end use, production requirements, distribution channels, or

    some other way.PRODUCT LINE DECISIONS:

    A product line is 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 sametype of outlets or fall within given price ranges

    Each product line is usually managed by different executives. In General Electrics

    Consumer Appliance Division, there are product-line managers for refrigerators, stoves,washing machines, and other appliances.

    Product line length:

    An issue facing product- line managers is optimal product-line length. A product line istoo short if the manager can increase profits by adding items; the line is too long if the

    manager can increase profits by dropping items.Company objectives influence product-line length. Companies seeking high market share

    and market growth will carry longer lines. They are less concerned when some items failto contribute to profits. Companies that emphasize high profitability will carry shorter

    lines consisting of carefully chosen items.

    A company can enlarge the length of its product line in two ways; by line stretching andline filling.

    Line stretching:

    Every companys product line covers a certain part of the total possible range. Forexample, BMW automobiles are located in the upper piece range of the automobile

    market. Line stretching occurs when a company lengthens its product line beyond its

    current range. The company lengthens its product line beyond its current range. Thecompany can stretch its line downward, upward, or both ways.Downward stretch:

    Many companies initially locate at the upper end of the market and subsequently stretch

    their line downward. A company positioned in the middle market may want to introducea lower price line for any of three reasons:

    The company may notice strong growth opportunities in the downmarket as mass

    retailers such as Wal- Mart, Best Buy, and other attract a growing number ofshoppers who want value-priced goods.

    The company may wish to tie up lower-end competitors who might otherwise try

    to move up-market. If the company has been attacked by a low-end competitor, it

    often decides to counterattack by entering the low end of the market. The company may find that the middle market is stagnating or declining.

    Moving downward carries risks. Kodak introduced Kodak Funtime film to counter lower

    priced brands. But it didnt price Kodak Funtime low enough to match the lower pricedfilm. It also found some of its regular customers buying Furniture, thereby cannibalizing

    its core brand. So it withdrew Funtime.

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    Up market stretch:

    Companies may wish to enter the high end of the market for more growth, higher

    margins, or simply to position themselves as full-line manufacturers. Many markets havespawned surprising upscale segments such as Starbucks in coffee, Haagen-Dazs in ice

    cream, and Evian in bottled water.

    Two way Stretch:Companies serving the middle market might decide to stretch their line in both directions.

    Texas Instruments (T I ) introduced its first calculators in the medium- price- medium

    quality end of the market. Gradually, it added calculators at the lower end, taking marketshares away from Bowmar and in the higher end to complete with Hewlett Packard. This

    two way stretch won TI early market leadership in the hand- calculator market.

    Line filing:

    A product line can also be lengthened by adding more items within the present range.There are several motives for line filling: reaching for incremental profits, trying to

    utilize excess capacity, tying to be the leading full-line company and trying to plug holes

    to keep out competitors.

    Line filling is overdone if it results in self cannibalization and customer confusion. Thecompany needs to differentiate each item in the consumers mind. Each item should

    possess a just- noticeable difference. According to Webers law, customers are moreattuned to relative than to absolute difference. They will perceive the difference between

    boards 2 or 3 feet long but not between 29 and 30 feet long. The company should make

    sure that new products items have a noticeable difference.

    Feb 2002

    Explain different stages of product life cycle along with different marketing

    strategies

    or

    Explain the marketing strategies during introduction and growth stages of product

    life cycle.

    or

    A companys positioning and differentiation strategy must change as the product,

    market and competitors change over time. In this context, discuss the suitable

    marketing strategies for the various stages of product life cycle.

    Products life cycle can have a direct bearing on a companys survival. The life cycle of a

    product consists of four stages: introduction, growth, maturity, and decline. The conceptof product life applies to a generic category of product. A product life cycle consists of

    aggregate demand over an extended period of time for all brands comprising a generic

    product category.A life cycle can be graphed by plotting aggregate sales volume for a product category

    over time, usually years. It is also worth while to accompany the sales volume curve with

    the corresponding profit curve for the product category. After all a business is interestedultimately in profitability, not just sales. The shapes of these two curves vary from one

    another.

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    INTRODUCTION STAGE:

    During this stage, sometimes called pioneering stage, a product is launched into themarket in a full-scale marketing programme. It has gone through product development,

    including idea screening, prototype, and market tests. The entire product may be new,

    such as the zipper, the videocassette recorder, and the fast substitute for prepared foods.

    Or it may be well known but have a significant novel feature that, in effect, creates a newproduct category; microwave ovens and in line skates are examples.

    Marketing strategies in introduction stage:

    In launching a new product marketing management can set a high or a low level for eachmarketing variable. Considering only prices and promotion, management can perceive

    one of the four strategies shown below.

    A rapid- skimming strategy: consist of launching a new product at a high price andhigh promotion level. The firm charges a high price in order to recover as much profit per

    unit as possible. It spends heavily on promotion to convince the market of products

    merits even at the high price

    A slow-skimming strategy: consists of launching a new product at high price andpromotion. The high price helps to recover as much profit per unit as possible, and the

    low level of promotion keeps marketing expenses down. This combination is expected to

    skim a lot of price from the market.

    A rapid-penetration strategy: consist of launching a product at a low price and

    spending heavily on promotion. The strategy promises to bring about the fastest market

    penetration and the largest market share.

    Profit

    +

    $ 0

    Introduction Growth Maturity Decline

    Time

    Sales

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    A slow penetration strategy: consist of launching a new product at a low price and low

    level of promotion. The low price will encourage rapid product acceptance, and low

    promotion costs bring profits up.

    GROWTH STAGE:

    The growth stageismarked by a rapid climb in sales. The early adopters like the product,

    and additional consumers start buying the product. New competitors enter the market,attracted by the opportunities for large- scale production and profits. They introduce new

    product features and expand the distribution chain.

    Profits increase during the growth stage as (i) promotion cost are spread over a largevolume (ii) unit manufacturing cost fall faster than price declines owing to the producer

    learning effect.

    Marketing strategies in growth stage:

    During the growth stage, the firm uses several strategies to sustain rapid market growth

    as long as possible.

    It improves product quality and adds new product features and improved styling

    It adds new models and flanker products (i.e., product of different sizes, flavors,and so forth that protect the main product).

    It enters new market segment.

    It increases its distribution coverage and enters new distribution channels.

    It shifts from product awareness advertising to product preference advertising

    It lowers process to attract new layer of price sensitive buyers.

    MATURITY STAGE:

    At some point, a products rate of sales growth will slow down, and the product will enter

    a stage of relative maturity. This stage normally lasts longer than the previous stage, andit poses formidable challenges to marketing management.

    The maturity stage can be divided into three phases. in the first phase, growth maturity,

    the sales growth rate starts to decline. In the second phase, stable maturity, sales flattenon per capita basis because of market saturation. In the third phase, decaying maturity,the absolute level of sales starts to decline, and customers start switching to other product

    and substitutes.

    Market strategies in the maturity stage:

    In the maturity stage, some companies abandon their weaker products. They prefer to

    concentrate their resources on more profitable products and on new products.

    1. Market modifications:

    The company might try to expand the market for its mature brand by working with the

    two factors that make up sales volume.

    The company may try to expand the number of brand user in three ways,

    Convert nonusers:The company can try to attract non users of the product. For example, the key to the

    growth of air freight services in the constant search for new users to whom air carriers

    can demonstrate the benefits of using air freight rather than ground transportation

    Enter new market segment:

    The company can try to enter new market segments- geographic, demographic and so on

    that use the product but not the brand. For example, Johnson and Johnson successfullypromoted its baby shampoo to adult users.

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    Win competitors customers:

    The company can attract competitors customers to try to adopt the brand. For example,

    Pepsi-Cola is constantly tempting Cola-cola uses to switch to Pepsi-cola, throwing outone challenge after another.

    Volume can also be increased by convincing current brand users to increase their annual

    usage of the brand. Here are three strategiesMore frequent use:The company should try to get customers to use the product more frequently. For

    example, orange juice marketers try to get people to drink orange juice at occasions otherthan breakfast time.

    More usage per occasion:

    The company can try to interest the users in using more of the product on each occasion.

    Thus a shampoo manufacturer might indicate that the shampoo is more effective with tworinsings than one.

    New and more varied uses:

    The company should can try to discover new product users and convince people to use

    the product in more varied ways. Food manufacturers, for example list several recipes ontheir packages to broaden the consumers uses of the product.

    2. Product modification:

    Managers also try to simulate sales by modifying the products characteristics through

    quality improvement, features, or style improvement.

    A strategy of quality improvement aims at increasing the products functional

    performance its durability, reliability, speed, taste.Strategy of feature improvement aims at adding new features (for example size, weight,

    materials, additives, accessories) that expand the products versatility, safety, or

    convenience. For example, adding electric power to hand lawn mover s increased thespeed and ease of cutting grass.

    A strategy of style improvement aims at increasing the products aesthetic appeal. The

    periodic introduction of new car models amounts to style competition rather than qualityor feature competition.

    3. Marketing Mix Modification:

    Product managers might also try to stimulate sales by modifying other marketing-mixelements. They should ask following questions.

    Price: would a price cut attract new customers and users? If so, should the price be

    lowered, or should it be increased through price specials, volume or early-purchase

    discounts, freight cost absorption, or easier credit terms/ or would it be better to raise theprice to signal higher quality?

    Distribution: Can the company obtain more product support the display in the existing

    outlets? Can more outlets be penetrated? Can the company introduce the product intonew distribution channels?

    Advertising: Should advertising expenditure be increased? Should the advertising

    message or copy be changed?

    Sales promotion: Should advertising expenditures be increased? Should the advertising

    message or copy be changed?

    Personal selling: Should the number or quality of salespeople be increased? Should the

    basis for sales force specialization be changed?

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    Services: Can the company speed up delivery? Can it extend more technical assistance to

    customers? Can it extend more credit?

    DECLINE STAGE:

    The sales of most product forms and brands eventually decline. The sales decline might

    be slow, as in the case of oatmeal; or rapid, as in the case of Edsel automobile. Sales may

    plunge to zero, or they may petrify at a low level.Sales decline for a number of reasons, including, including technological advances,

    shifts, in consumer tastes, and increased domestic and foreign competition. All lead to

    overcapacity, increased price-cutting, and profit erosion.

    Marketing strategies during the Decline stage

    In handling its aging products, a company faces a number of tasks and decisions.

    1. Identifying the weak products

    The first task is to establish a system for identifying weak products. To this, many

    appoint a product-review committee with representatives from marketing, R and D,

    manufacturing, and finance. This committee develops a system for identifying weak

    products. A computer programmer then analyzes this information to help managersdecide which products are dubious. The manages responsible for dubious products fill out

    rating forms shoeing where think sales and profits will go, with and without any changesin marketing strategy. The product review committee examines this information and

    makes a recommendation for each dubious product, leave it alone, modify its marketing

    strategy, or drop it

    2. Determining marketing strategies

    In the study of company strategies in declining industries, Harrigan identified five decline

    strategies available to the firm

    Increasing the firms investment (to dominate the market or strengthen its

    competitive position)

    Maintaining the firms investment level until the uncertainties about the industryare resolved.

    Decreasing the firms investment level selectively, by dropping unprofitable

    customer groups, while simultaneously strengthening the firms investment in

    lucrative niches.

    Harvesting (milking) the firms investment to recover cash quickly.

    Divesting the business quickly by disposing of its assets as advantageously as

    possible.

    3. The drop decision:

    When a company decides to drop a product, it faces further decisions. If the product has

    strong distribution and residual goodwill, the company can probably sell to another firm.

    If the company cant find any buyers, it must decide whether to liquidate the brandquickly or slowly. It must also decide on how much parts inventory and service to

    maintain for past customers.

    Feb 2005

    Mention the reasons for new product planning and development. Explain the new

    product development process.

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    middle aged adults or older adults. Second, what primary benefit should this product

    provide? Taste, nutrition , refreshment, energy? Third, when will people consume this

    drink? Breakfast, mid morning, lunch, mid afternoon, dinner, late evening? By answeringthese questions, a company can form several concepts.

    Concept testing:

    Concept testing calls for testing product concepts with an appropriate group of targetconsumers, then getting those consumers reactions. The concepts can be presented

    symbolically or physically. At this stage, a word and/or picture description can suffice.

    4. Marketing Strategy Development:

    After testing, the new-product manager must develop a preliminary marketing strategy

    plan. The marketing strategy plan consists of three parts. The first part describes the

    target markets size, structure, and behavior, the planned product positioning; and the

    sale, market share and profit goals sought in the first few years.

    5 .Business Analysis:

    After management develops the product concepts and marketing strategy, it can evaluate

    the proposals of business attractiveness. Management needs to prepare sales, cost and

    profit projections to determine whether they satisfy the companys objectives. If they do,the product concept can move to the product development stage. As new information

    comes in, the business analysis will undergo revision and expansion.

    6. Product development:

    If the product concept passes the business test, it moves to R and D and/ or engineering to

    be developed into a physical product. Up to now it has existed only as a word description,

    a drawing, or a prototype. This step calls for large jump in investments that dwarfs theidea- evaluation costs incurred in the earlier stages. At this stage the company will

    determine whether the product idea can be translated into a technically and commercially

    feasible product. If it cannot, the companys accumulated project costs will be lost exceptfor any useful information gained in the process.

    7. Market Testing:

    After management is satisfied with the products functional and psychologicalperformance, the product is ready to be dressed up with a brand name, packaging and a

    preliminary marketing program. The goals are to test the new product in more authentic

    consumer setting and to learn how large the market is and how consumers and dealersreact to handling, using, and repurchasing the actual product.

    8. Commercialization:

    Market testing presumably gives management enough information to decide whether to

    launch a new product. If the company goes ahead with commercialization, it will face itslargest costs to date. The company will have to contract for manufacture or build or rent a

    full-scale manufacturing facility.

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    CLASSIFICATION OF CONSUMER GOODS:

    The vast array of goods consumers buy can be classified on the basis of shopping habits.

    We can distinguish among convenience, shopping, specialty, and unsought goods.

    1. Convenience goods:

    Convenience goods are goods that the customers usually purchase on a regular basis. A

    buyer might routinely purchase Heinz ketchup, Crest toothpaste and Ritz crackers.Impulse goods are purchased without any planning or search effort. Candy bars and

    magazines are placed next to check out counters because shoppers may not have thought

    of buying them until they spot them. Emergency goods are purchased when a need isurgent- umbrellas during rainstorm, boots and shovels during the first winter snowstorm.

    Manufacturers of emergency goods will place them in many outlets to capture the sale

    when the customer needs them.

    2. Shopping goods:

    Shopping goods are goods that the customer, in the process of selection and purchase,

    characteristically compares on such bases as suitability, quality, price, and style.

    Examples include furniture, clothing, used cars, and major appliances.Shopping gods can be further divided. Into

    Homogeneous shopping goodsHeterogeneous shopping goods

    Homogeneous shopping goods are similar in quality but different enough in price to

    justify shopping comparisons. Heterogeneous shopping goods carries a wide assortment

    to satisfy individual tastes and must have well trained sales people to inform and advisecustomers.

    3. Specialty goods:

    Specialty goods are goods with unique characteristics or brand identification for which a

    sufficient number of buyers are willing to make a special purchasing effort. Examples

    include cars, stereo components, photographic equipment, and mens suits.A Mercedes is a specialty good because interested buyers will travel far to buy one.

    Specialty goods do not involve making comparisons; buyers invest time only to reach

    dealers carrying the wanted products. Dealers do not need convenient locations; however,they let prospective buyers know their locations.

    4. Unsought goods

    Unsought goods are goods the consumer does not know about or does not normally thinkof buying. Smoke detectors are unsought goods until the consumer is made aware of

    them through advertising. The classic examples of known but unsought goods are life

    insurance, cemetery plots, gravestones, and encyclopedias. Unsought goods requireadvertising and personal-selling support.

    INDUSTRIAL PRODUCTS:

    Industrial products are those products which are intended for resale, for use in producing

    other products or for providing services in an organization.

    Industrial products may be classified as:

    1. Raw Materials

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    2. Fabricating Materials and Parts

    3. Installation

    4. Accessory Equipment5. Operating supplies,

    1. Raw materials:

    Business goods that become part of another tangible prior to being processed in any way(except as necessary to assist an handling the product) are considered raw materials. They

    include:

    Goods found in their natural state such as minerals, land and products of theforests and the seas, and

    Agricultural products such as cotton, fruits, livestock and animal products

    including eggs and raw milk.

    2. Fabricating materials and parts:

    Business goods that become part of the finished product after having been processed to

    some extend fit into the category of fabricating materials and parts. The fact that they

    have been processed distinguishes them from raw materials. Fabricating parts are

    assembled with no further change in form, they include such products as zippers inclothing and semiconductor chips in computers.

    3. Installations:

    Manufactured products that are an organizations major expensive long lived equipment

    are termed installations. Examples are, large generators in a dam, a factory building,

    diesel engines for rail roads and blast furnaces for a steel mill.

    4. Operating Supplies;

    Business goods that are characterized by low dollar value per unit and a short life and that

    aid in an organizations operations without becoming part of the finished goods are called

    operating supplies. Examples are, lubricating oils, pencils and stationary and heating fuel.

    ADDITIONAL IMPORTANT NOTES

    BRAND

    A brand is a name, term, sign, symbol, or design or a combination of these that identifies

    the maker or seller of product or service and to differentiate them from those ofcompetitors.

    Branding help buyers in many ways. Brand names help consumers identify products that

    might benefit them. Brand also tell the buyer something about product quality. Buyers

    who always buy the same brand know that they will get the same features, benefits andquality each time they buy, branding also gives the seller several advantages.

    According to American Marketing Association Brand name is a part of a brand

    consisting of a word letter group of or letters comprising a name which is intended toidentify the goods or services of a sellers or a group of sellers and to differentiate them

    from those of competitors.

    KINDS OF BRAND

    1. According to ownership:

    On the basis of ownership, brand may be of two types:

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    (I) Manufacturers brand:

    When brand is named after the name of the manufacturer of the product, it is known as

    manufacturer brand. For example use of Philips on all the products of Philips companylike Philips Radio, Philips T.V. Transistor, Bulbs etc., is an example of manufacturers

    brand.

    (ii) Combination device:Tata company is using a combination device. Under this device each product of the

    company has an individual brand name but it also has the name of the company brand to

    indicate the business producing the product, e.g., Tatas Tej.

    (iii) Middlemens brand:

    Under this type of brand, Manufacturer does not use any brand for his product. Instead,

    distributer like wholesalers, retailrers etc. sell the product under his own brand.

    2. According to market area:

    On this basis, the brand may be of the following five types:

    (i)Local brand:

    When the brand is used for local market, it is called local brand. Under this type of brand,

    different brands are used in different markets.(ii) Provincial brand:When one brand is used for a particular province or state it is called as provincial brand.Different brands are used in different states for the same product.

    (iii) Regional brand:

    Under this type of brand, manufacturer uses his brand names only id=s a particular

    region. Different names for different regions such as East, West, North, South and centralregion etc.

    National brand:

    When a manufacturer uses his products brand for selling his product throughout thecountry, it is called national brand.

    International brand:

    When the same brand is used for selling the product in all the countries it is called asinternational brand.

    3. According to the number of products:

    A brand may be of the following 3 types.

    (i) Family brand:

    When the manufacturer uses a single brand for all his products and all markets segments,

    it is known as family brand. For example, all the product of Bajaj Group are marketer

    with the brand name of Bajaj such as bulbs, tube light, Scooters, Pen, toaster, table andceiling fan, geyser etc.

    (ii) Product line brand:

    When the business or industrial houses, use different brand names for their differentproduct lines it is called product line brand.. for example Dalda is used foe vanaspati

    Ghee product line and Super Surf for detergent powder by the same manufacturer

    (iii) Individual brand:

    When individual product is marked different brand name for the product, produced by the

    same manufacturer, is called individual brand, for example toilet soaps produced by the

    Hindustan lever Ltd bear different brands for the different brands for the different product

    in the same product line e.g., lifebuoy, lux, supreme rexona.

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    4. According to use:

    Under this category brand may be of two types.

    (i)Fighting brand:

    When there is stiff competition n the market and the producer wants to introduce a new

    product which has quite different characteristics from that of competitors brand and

    which gives a impression of such a difference. It is called fighting brand. For example,ITC Ltd. has recently introduced NEW brand cigarette.

    (ii) Competitivebrand;

    When the brand introduced in the same market is almost similar to these of competitors,is known as competitors brand. For example, Modi Soap, Nirma soap, 555 soap etc. are

    all having similar characteristics.

    LABELLING:

    Label is also important in marketing a product a label provides all the important

    information to the consumer about the product and the producer. The important

    information provided b\y label is the name of the product, names of the producer, quality

    of the products, contents inside the package, weight, date of distribution, batch and lotnumber, expiry date and important instructions for the use of the product.

    Advantages of labeling:1. False claims are prevented by using labels

    2. It avoids variations by publishing the price on the label

    3. It helps advertising activity of the organization because label is the media to popularize

    the product.4. It helps the customer to assess the superiority of the product

    5. It gives all needed information to the buyers and avoids confusion.

    Disadvantages

    1. For an illiterate population this is of no use.

    2. It increases the cost of the product, since labeling involves expenditure on the part ofthe manufacturer.

    3. Labeling is effective only where standardization is compulsory

    4. It aims at mainly popularizing the product rather than giving information to theconsumers.

    5. it enables the customers to weigh and compare the advantages of products before they

    are used.

    PACKAGING:

    A good package is the representation of the artistic combination of the designers creative

    skills and the product and marketing and sales knowledge of the manufacturersmanagement team.

    Packaging may be defined as the general group of activities in production planning which

    involve designing and producing the container of wrapper for a product.

    Advantages:

    1. Packaging protects the contents on its route from the manufacturer to the user against

    breakages, spoilage, leakage, pilferage and so on.

    2. It facilitates branding and advertising products.

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    3. It serves as a silent salesman. It includes the buyer to make reorders.

    4. It has got display value

    5. It helps the seller to increase the sales and obtain higher prices than he could get fromunpacked goods.

    6. It protects the quality value.

    Disadvantages:1. Unless package is transparent, the buyer cannot judge the contents by appearance. If

    information of the quality on the package label is absent, the buyer has to buy almost

    blindly.2. If a consumer wants a specific quantity, he may not have that amount when goods are

    sold in packages.

    3. There is no way to check the weight and volume of the contents unless the buyer opens

    the package to ascertain the weight.4. During the period of rising prices, less contents are packed in the same package and

    apparently same prices are charged.

    5. Packaging may create health hazards for consumers. Certain plastic food packaging

    has been shown to cause cancer. Package stored in godowns are susceptible to infection.PRODUCT MIX STRATEGIESTo be successful in marketing, producers and middlemen need carefully planned

    strategies for managing their product mixes.

    Positioning the product:

    Managements ability to bring attention to a product and to differentiate it in a favorable

    way from similar products goes a long way toward determining that products revenues.Thus management needs to engage in positioning.

    Positioning in relation to a competitor

    For some products the best position the best position is directly against the competition.This strategy is especially suitable for a firm that already has a solid differential

    advantage or is trying to solidify such an advantage.

    Positioning in relation to a product class or attribute:

    Sometimes a companys positioning strategy entails associating its product with (or

    distancing it from) a product class or attribute. For example, some companies try to place

    their products in a desirable class, such as Made in the USA

    Positioning by price and quality

    Certain producers and retailers are known for their high-quality products and high prices

    in he the retailing field, Saks Fifth Avenue and Neiman Marcus are positioned at one end

    of the price- quantity continuum. Discount stores such as Kmart and Dollar General are atthe other end. Were not saying that discounters ignore quality, rather, they stress low

    prices.

    Product- Mix Expansion

    Product-mix expansion is accomplished by increasing the depth within a particular line

    and/or the number of lines a firm offers to customers When a company adds a similar

    item to an existing product line with the same brand name, this is termed a lineextension.The line-extensionstrategy is also used by organizations in services fields. For example,

    some years ago the Roman Catholic Church broadened its line of religious services by

    adding Saturday and Sunday evening masses, and universities offer programs to appeal to

    prospective older students.

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    Another way to expand the product mix, referred to as mixextensions .is to add a new

    product line to the companys present assortment. Under a mix-extension strategy, the

    new line may be related or unrelated to the present product.. Furthermore, it may carryone of the companys existing brand names or may be given an entirely new name.

    Alteration of existing productsRather than developing a completely new product, management might do well to take a

    fresh look at the organizations existing products. Often, improving an established

    product, termedproduct alteration, can be more profitable and less risky than developinga completely new one. Product alteration is not without risks. When Coca- Cola Co.

    modified the formula for its leading product and changed its name to new coke, sales

    plunged. As a result, the old formula was bought back three months later under coca- cola

    Classic name.

    Product mix contraction

    Another strategy, product mix contraction, is carried out either line or by simplifying the

    assortment within a line. Thinner and/ or shorter product line or mixes can weed out lowprofit and unprofitable products. The intended result of product-mix contraction is higher

    profits from fewer products. In services fields, some travel agencies have shifted fromselling all modes of travel to concentrate on specialized tours and trips to exotic places.

    And, to reduce their liability risks and insurance costs.

    Trading up and Trading down

    The product strategies of trading up and trading down involve a change in product

    positioning and expansion of the product line. Trading up means adding a higher price

    product to a line in order to attract a broader market. Also, the seller intends that the newproducts prestige will help the sale of its existing lower priced products.

    Trading down means adding a lower-price product to a companys product line. The firm

    expects that people who cannot afford the original higher-price product or who see it tooexpensive will buy the new lower price one.

    FOUR DIMENSIONS OF PRODUCT MIX

    A companys product mix has certain width, length, depth, and consistency.

    1. The width of a particular mix refers to how many different product lines the company

    carries.

    2. The length of a product mix refers to the total number of items in the mix.3. The depth of the product mix refers to how many variants are offered of each product

    in the line.

    4. The consistency of the product mix refers to how closely related the various productlines are in end use, production requirements, distribution channels, or some other way.