14 CE Chapter 12 - Setting Product Strategy

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Setting Product Strategy
Marketing Management
Canadian Fourteenth Edition
Copyright 2013 Pearson Canada Inc.
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Chapter Questions
What are the characteristics of products and how do marketers classify products? How can companies differentiate products? Why is product design important and what factors affect a good design?
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2013 Pearson Canada Inc.
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Chapter Questions
How can a company build and manage its product mix and product lines? How can companies combine products to create strong co-brands or ingredient brands? How can companies use packaging, labeling, warranties, and guarantees as marketing tools?
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What is a Product?
A product is 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.
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Figure 12.1 Components of the Market Offering
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Figure 12.2 Five Product Levels
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Product Classification Schemes

Durability Tangibility Use
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Durability and Tangibility

Nondurable goods
Durable goods
Services
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Consumer Goods Classification

Convenience Shopping
Specialty
Unsought
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Industrial Goods Classification

Materials and parts Capital items Supplies/business services
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Product Differentiation
Product form Features Customization Performance Conformance

Durability Reliability Repairability Style
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Service Differentiation
Ordering ease Delivery Installation Customer training Customer consulting Maintenance and repair Returns
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Design
Design is the totality of features that affect how a product looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides.
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The Product Hierarchy

Item Product type Product line Product class
Product family
Need family
Copyright 2013 Pearson Canada Inc.
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Product Systems and Mixes

A product system is a group of diverse but related items that function in a compatible manner.
The extensive iPod product system includes headphones and headsets, cables and docks, armbands, cases, power and car accessories, and speakers.
A product mix (also called a product assortment) is the set of all products and items a particular seller offers for sale.
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Table 12.2 Example of Product Mix and Product Line
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Figure 12.3 Product-Item Contributions to a Product Lines Total Sales and Profits
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Figure 12.4 Product Map for a Paper-Product Line
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Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
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Product-Mix Pricing
Product-line pricing Optional-feature pricing Captive-product pricing Two-part pricing By-product pricing Product-bundling pricing
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Co-branding and Ingredient Branding

In co-branding, two or more well known brands are combined into a joint product or marketed together in some fashion.
Ingredient branding is a special case of cobranding. It creates brand equity for materials, components, or parts that are necessarily contained within other branded products.
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What is the Fifth P?

Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product.
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Factors Contributing to the Emphasis on Packaging

Self-service Consumer affluence Company/brand image Innovation opportunity
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Packaging Objectives
Identify the brand Convey descriptive and persuasive information Facilitate product transportation and protection Assist at-home storage Aid product consumption
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Functions of Labels
1. Identifies the product or brand 2. Grade the product 3. Describe the product:
who made it, where and when, what it contains, how it is to be used, and how to use it safely.
4. Promote the product through attractive graphics
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Warranties and Guarantees

Warranties are formal statements of expected product performance by the manufacturer.
Guarantees reduce the buyers perceived risk. They suggest that the product is of high quality and the company and its service performance are dependable.
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12

Setting Product Strategy

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

Figure 12.1 Components of the Market Offering

2013 Pearson Canada Inc.

Figure 12.2 Five Product Levels

2013 Pearson Canada Inc.

Product Classification Schemes

2013 Pearson Canada Inc.

Durability and Tangibility

2013 Pearson Canada Inc.

Consumer Goods Classification

2013 Pearson Canada Inc.

Industrial Goods Classification

2013 Pearson Canada Inc.

Durability Reliability Repairability Style

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

The Product Hierarchy

Product Systems and Mixes

2013 Pearson Canada Inc.

Table 12.2 Example of Product Mix and Product Line

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

Figure 12.4 Product Map for a Paper-Product Line

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

Co-branding and Ingredient Branding

2013 Pearson Canada Inc.

What is the Fifth P?

2013 Pearson Canada Inc.

Factors Contributing to the Emphasis on Packaging

2013 Pearson Canada Inc.

2013 Pearson Canada Inc.

4. Promote the product through attractive graphics

2013 Pearson Canada Inc.

Warranties and Guarantees

2013 Pearson Canada Inc.

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