Designing and Managing Products

Mrs. Jocel D. Ripdos, MBA

Product and Its Classification

Objectives: Design your own product. Define the term product. Determine the different classification of product by giving examples each.

Product?
A physical object A service A place An organization An idea like pro-life or the preservation of the ozone layer A personality

Product define:
A product is anything offered for sale by a firm to buyers to satisfy their physical, social, symbolic, and psychological wants and needs

Classification of Products

Consumer goods
Rate of consumption and tangibility Consumers shopping habits

Industrial goods
Installations Accessory equipment Raw materials Component parts and materials Supplies Services

Consumer Goods

Rate of Consumption and Tangibility

Durable goods are tangible goods which normally survive many uses. Nondurable goods are tangible products which are consumed in one or a few users. Services are intangible goods like activities, benefits, or satisfactions which are offered for sale

Consumer Goods

Consumers Shopping Habits

Convenience goods are those which are purchased with a minimum of effort. Shopping goods are those that are bought only after an effort to compare with other goods is made. Specialty goods are those that the consumers seek to buy and they are not willing or they are not able to accept substitutes. Unsought goods are those that are not yet wanted by or are still unknown to the consumer.
New unsought goods are really new ideas or products that the consumer still have to know to be motivated to buy. Regular unsought goods are those that stay unsought but not unbought forever.

Industrial Goods
Installations are industrial products with long life, are generally expensive, and they form part of the major capital equipment of an industrial firm. Accessory Equipment are industrial goods that are used as aids in the production process. Raw Materials - are unprocessed goods that will become part of another product.

Industrial Goods
Component Parts and Materials are processed industrial goods that will still be used and become an actual part of the finished product. Supplies are items that are used as aids in the operating process but do not become part of the finished goods. Services are expense items that assist in the operations.

Quiz: 1/4
Identification:
1.
2.

3.

4.

5.

These are tangible goods which normally survive many uses. These are industrial products with long life, are generally expensive, and they form part of the major capital equipment of an industrial firm. These are processed industrial goods that will still be used and become an actual part of the finished product. These are items that are used as aids in the operating process but do not become part of the finished goods. These are unprocessed goods that will become part of another product.

Enumeration
A. B.

Industrial goods (6 pts.) Consumer goods - Consumers Shopping Habits (4 pts.)

Answers
Identification: 1. Durable goods 2. Installations 3. Component Parts and Materials 4. Supplies 5. Raw materials A 1.Installations
2. Accessory equipment 3. Raw materials 4. Component parts and materials 5. Supplies 6. Services B. 1. Convenience goods 2. Shopping goods 3. Specialty goods 4. Unsought goods

Enumeration

Quiz: 1 whole
How are you going to differentiate your product?

Tools in Product Differentiation

Branding Quality Image Product features Packaging Location Promotion Innovation Different service levels

Branding
- a marketing action which identifies and helps differentiate the goods and services of one seller from those of another. Brand is a name, term, sign, symbol, or design, or a combination of these elements, that is intended to identify the goods or services of one seller or a group of sellers. a. Legally registered are provided with legal protection called trademark. b. Not legally registered

Distinct Parts: 1. Brand Name refers to that part of a brand consisting of words, letters, and/or numbers that can be vocalized. 2. Brand Mark refers to that part of a brand that appears in the form of a symbol, design, or distinctive coloring or lettering, and which cannot be vocalized.

Criteria for a Good Brand

It should suggest something about the products benefits and qualities. 2. It should easy to pronounce, recognize, spell, and remember. 3. It should be distinctive. 4. It must be adaptable to additional product lines. 5. It must be capable of being legally registered. Names that sound like an already registered name is no longer acceptable for copyright registration.
1.

Branding Strategies
Manufacturing branding Reseller branding Mixed branding Generic branding

Manufacturing Branding
- Is a branding strategy in which the brand name for a product is designated by the manufacturer. Alternative Approaches: 1. Multiproduct approach referred to as blanket or family branding strategy, uses the same brand name to cover a group of products. 2. Multibrand approach requires a firm to provide each product with a distinctive name.

Reseller Branding
- referred to as private labeling or private branding, refers to the branding strategy of a firm which manufactures products but sell them under the brand name of a reseller. - an advantage is the shifting of promotional costs from manufacturer to reseller.

Mixed Branding
- refers to the use of the manufacturer and reseller brands in a product. - it is expected that market segments attracted to the manufacturer and to the seller will patronize the mixed branded product.

Generic Branding
- is a branding strategy which lists no product name, only a description of contents - this approach is applicable to rice, salt, sugar, and charcoal.

Packaging
- refers to all activities involved in designing and producing the container or wrapper for a product.

Reasons for Packaging

1.

2. 3. 4. 5.

It provides protection to products before and after they are in the possession of the intended users. It provides convenience to the user. It provides safety. It provides economy to both the seller and the user. It allows sellers to effectively promote the product.

Labelling
- it provides information about the product and the manufacturer. - it may be a part of the package, or a tag attached to the product. Types of Label 1. Brand label 2. Descriptive label 3. Grade level 4. Promotional label

Product Warranty
- a warranty is a statement explaining what the seller promises about the product. - it is a manufacturers written promise as to the extent of the repair, replacement, or otherwise compensation for defective goods. Variations of Warranty 1. Express warranties are manufacturers written statement for product deficiencies.
a. b.
2.

Limited-coverage warranty is a manufacturers statement indicating the bounds of coverage and noncoverage of any deficiency found in the product. Full warranty a statement of liability by a manufacturer that has no limits of noncoverage.

Implied warranties an assign responsibility for product deficiencies to a manufacturer even if the item was sold by a retailer.

Product Life Cycle

- the period between the birth and the death of a product.

Introduction Stage
Characteristics: Slow growth of sales Heavy promotional expenditures in relation to sales Relatively high prices for the products Limited product offerings, like limited variations in sizes, color, and the like.

Growth Stage
Characteristics: Sales start climbing rapidly. The ratio of promotional expenditures to sales decreases. Prices tend to remain high except when demand stimulation is required and entry of competitors is discouraged. New forms of the product appear, like new colors, new models, and new

Maturity Stage
Characteristics: Sales settle down as the product becomes well-known Price reductions are used as a tool of competition Competition is intensified The market becomes saturated

Decline Stage
Characteristics: A pruning of product models and variations to eliminate those not producing profit. Promotional expenses are reduced Plans for phasing out the product is made

Quiz: (20 pts.)

Identification: 1. The period between the birth and the death of a product. 2. Is a branding strategy of a firm which manufactures products but sell them under the brand name of a reseller. 3. A statement explaining what the seller promises about the product. 4. A marketing action which identifies and helps differentiate the goods and services of one seller from those of another. 5. Is a branding strategy which lists no product name, only a description of contents. 6. It refers to that part of a brand consisting of words, letters, and/or numbers that can be vocalized. 7. Is a branding strategy in which the brand name for a product is designated by the manufacturer. 8. It may be a part of the package, or a tag attached to the product. 9. It refers to all activities involved in designing and producing the container or wrapper for a product. 10. It refers to the use of the manufacturer and reseller brands in a product.

Illustration: (10 pts.)

Draw and label the product life cycle.

Answers
Identification 1. Product life cycle 2. Reseller branding 3. Warranty 4. Branding 5. Generic branding 6. Brand name 7. Manufacturing branding 8. Labelling 9. Packaging 10. Mixed branding