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 2
Product 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 2
• Product Levels
– Examples:
• Kotler example: Hotels
• Local example: Cellular phones
• Medical example: Dermatologic
products
Figure 1. Product Levels

Concept 3
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 differentiation
Product Differentiation Kotler 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)

Ch 12 - Setting Product Strategy (Del Mundo)

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Ch 12 - Setting Product Strategy (Del Mundo)