PRODUCT

Session 1 Priya Rathi

Product

Definition: Anything that can be offered to a market to satisfy a want or need. This Includes: Physical Goods, Services, Events, Experiences, etc.

Product Levels (Levitt)

Product Levels ex.

Potential product all possible

Augmented product Fresh flowers

Expected product Clean bed Basic product Hotel room Core benefit - Sleep

Product Classification Schemes

Durability

Tangibility
Use (Consumer/ Industrial)

Durability and Tangibility

Nondurable goods
Services

Durable goods

Consumer Goods Classification

Convenience Specialty

Shopping Unsought

Industrial Goods Classification

Materials and Parts

Capital Items Supplies and Services

Product Differentiation
Form (Bajaj Pulsar) Features (Television sets) Performance Quality (Hyundai) Conformance Quality (Cadburys) Durability (Duracell) Reliability (Sony) Reparability (Ikea) Style (Apple)

Product Hierarchy
Need Family (Protection from elements) Product Family (Clothing) Product Class (Cotton Clothing) Product Line (Shirt) Product Type (Wrinkle free full sleeve) Item (Turtle Wrinkle Free)

Product Mix
Width - number of different product lines Length - total number of items within the lines
Depth - number of versions of each product Product Mix all the product lines offered

Product-Mix Width and Product-Line Length for Proctor& Gamble Products

Product-Mix Width Detergents Ivory Snow (1930) PRODUCTDreft LINE (1933) LENGTH Tide (1946) Cheer (1950) Toothpaste Gleem (1952) Crest (1955) Kirks (1885) Luvs (1976) Puffs (1960) Disposable Bar Soap Ivory (1879) Diapers Pampers (1961) Paper Tissue Charmin (1928)

Lava (1893)
Camay (1926)

Banner (1982)
Summit (1992)

Line Stretching
Down-Market Stretch

Up-Market Stretch

Two-Way Stretch

Two-Way Product-Line Stretch: Marriott Hotels

Quality
Economy High Standard Good Superior
Marriott Marquis (Top executives) Marriott (Middle managers)

Price

Above average

Average
Fairfield Inn Low (Vacationers)

Courtyard (Salespeople)

The Product Life Cycle

the concept of the product life cycle applies to product categories, not to brands; it is related to the concept of diffusion of innovation different products will have differently-shaped life cycle curves; will diffuse at different rates a product is normally perceived to pass through four stages over its life cycle; introduction, growth, maturity, and decline each stage requires different marketing strategies

Product Life Cycle Stages

Introductionmost risky and expensive. Growthboth sales and profits rise, often rapidly. Maturitysales increase at a decreasing rate and profits decline. Declinedemand drops, often because of another product development.

Strategic Implications of the Stages

introductory stage: developing the market, creating
awareness, reaching the innovators

growth stage: competition begins, sales grow

quickly, profits peak, market penetration

maturity stage: competition is intense, sales slow

down, differentiated product offerings, customers are brand loyal, few new entrants

decline stage: customers move to other options,

competitors leave, profits are low, consider exit

Product Life Cycle Curve

INTRODUCTION GROWTH MATURITY DECLINE

Sales Volume Dollars

Profit 0 Loss

Time in years

Introduction Stage of the PLC

Sales
Costs Profits
Marketing Objectives

Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Build product awareness among early adopters and dealers

Product Price Distribution Advertising

Growth Stage of the PLC

Sales Costs Profits

Marketing Objectives

Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Build intensive distribution Build awareness and interest in the mass market

Product Price Distribution Advertising

Maturity Stage of the PLC

Sales Costs Profits

Marketing Objectives

Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Build more intensive distribution Stress brand differences and benefits

Product Price Distribution Advertising

Decline Stage of the PLC

Sales Costs Profits

Marketing Objectives

Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items

Product Price Distribution Advertising

Cut price Go selective: phase out unprofitable outlets Reduce to level needed to retain hard-core loyal customers

Characteristics of Life Cycles

length of the life cycle will vary across markets; some are quite short and may be getting shorter some fads have very short life cycles, while other products stay at maturity for years in high-tech markets, life cycles are very short some products do not make it through all four stages; they may fail in introduction the life cycle must be considered in relation to a specific market; stage may vary across markets

Managing the Life Cycle

Successful life-cycle management requires predicting the shape of the curve and then successfully adapting strategies at each stage. when to consider entering the market how to manage to capitalize on growth it is possible to develop strategies that will extend the maturity stage; modify the product, devise new uses, or design new appeals greatest challenge comes at the decline stage which may result in product abandonment

Different Life Cycles

Aggregate sales Part a - Extended introduction stage Part b - Fad

Time in years

Time in years

Aggregate sales

Part c - Indefinite maturity stage

Time in years

Planned Obsolescence Fashion and Style

Planned Obsolescence:
Style:

Technological or functional obsolescence; other things do it better now. Style obsolescence: Still serviceable, but looks out of date now.

A distinctive manner of construction or presentation in any art, product or endeavour.

Fashion:

Any style that is accepted and purchased by successive groups of people over a long period of time.

Fashion-Adoption Process
Series of buying waves as a given style is popularly accepted by one group after another. Three theories of fashion adoption:

Trickle-downa given fashion flows down through several socioeconomic levels. Trickle-acrossthe fashion moves horizontally and simultaneously within several socioeconomic levels. Trickle-upa style first becomes popular at lower levels and then flows upward.

Fashion Adoption Theories in Action

Product offered first to upper socioeconomic group Product introduced at same time in all three types of stores:
TRICKLE-ACROSS
Exclusive high-priced specialty stores (boutiques)

TRICKLE-ACROSS

TRICKLEUP
Product adopted first by lower socioeconomic group

TRICKLEDOWN

Medium-priced department stores and specialty stores

TRICKLE-ACROSS
Discount stores

Extending the Product Life Cycle

Market Modification

1. Increase frequency of use by present customers 2. Add new users 3. Find new uses

Product Modification

4. Change product quality or packaging

Purpose: to sell more product and cover original investment

Extending the product Cycle

to prevent the product going into decline you modify the market MARKET MODIFICATION you look for new consumers by changing the product so it has new users - and then new customers (Baking soda, vinegar, Qtips, Avon Skin So Soft, vaseline

Extending the product Cycle

MARKET MODIFICATION examples Windex for cleaning jewelry Javex bleach for toilets Lemons for hair colouring beer for hair Bounce for in the garbage, gym bag etc.

Extending the product Cycle to prevent the product going into decline you modify the product
PRODUCT MODIFICATION adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users

Extending the product Cycle

PRODUCT MODIFICATION examples condoms - colours, features CD players chip flavours - many kinds flavoured tongue depressors couples seats at movie theatre

Extending the product Cycle PRODUCT MODIFICATION examples continued digital sound at theatres

Most people have a problems thinking this theory is relevant because they apply it to specific product brands - it should be applied only to a general product category

Packaging

All the activities of designing and producing the container for a product.

Functions of Labels
Identifies
Grades Describes

Promotes

Thank You, Class