Chapter 12: Product Strategy

STUDY
PLAY
Product-Customer Value Hierarchy
1. core benefit
2. basic product
3. expected product
4. augmented product
5. potential product
the service or benefit the customer is really buying. A hotel guest is buying rest and sleep. Marketers must see themselves as benefit providers.
core benefit
Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and closet.
basic product
a set of attributes and conditions buyers normally expect when they purchase this product. Hotel guests minimally expect a clean bed, fresh towels, working lamps, and a relative degree of quiet.
expected product
that exceeds customer expectations.
In developed countries, brand positioning and competition take place at this level.
augmented product
which encompasses all the possible augmentations and transformations the product or offering might undergo in the future.
potential product
durability and tangibility
1. nondurable goods
2. durable goods
3. services
are tangible goods normally consumed in one or a few uses, such as beer and shampoo. Because these goods are purchased frequently, the appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily to induce trial and build preference.
Nondurable goods
are tangible goods that normally survive many uses: refrigerators, machine tools, and clothing. Durable products normally require more personal selling and service, command a higher margin, and require more seller guarantees.
durable goods
are intangible, inseparable, variable, and perishable products that normally require more quality control, supplier credibility, and adaptability. Examples include haircuts, legal advice, and appliance repairs.
services
CONSUMER-GOODS CLASSIFICATION
1. convenience goods
2. shopping goods
3. speciality goods
4. unsought goods
INDUSTRIAL-GOODS CLASSIFICATION
1. materials and parts
2. Capital items
3. Supplies and business services
Product differentiation 9 ways
1. form
2. feature.
3. customization
4.performance quality
5. conformance quality
6. durability
7. reliability
8 repairability
9. style
the size, shape, or physical structure of a product.
form
that supplement their basic function. Marketers should consider how many people want each ___, how long it would take to introduce it, and whether competitors could easily copy it.
features
is the ability of a company to meet each customer's requirements—to prepare on a mass basis individually designed products, services, programs, and communications.
customization
is the level at which the product's primary characteristics operate (low, average, high, or superior) Companies should provide higher quality for less money. Firms should design a performance level appropriate to the target market and competition, however, not necessarily the highest level possible
performance quality
is the degree to which all produced units are identical and meet promised specifications. A product with low conformance quality will disappoint some buyers.
conformance quality
is a measure of the product's expected operating life under natural or stressful conditions, The extra price for durability must not be excessive.
durability
is a measure of the probability that a product will not malfunction or fail within a specified time period.
reliability
measures the ease of fixing a product when it malfunctions or fails.
repairability
describes the product's look and feel to the buyer. It creates distinctiveness that is hard to copy.
style
Service differentiation:
___ ___refers to how easy it is for the customer to place an order with the company.
___ refers to how well the product or service is brought to the customer.
___ refers to the work done to make a product operational in its planned location.
___ ____ helps the customer's employees use the vendor's equipment properly and efficiently.
__ ___ includes data, information systems, and advice services the seller offers to buyers
___ ___ __ programs help customers keep purchased products in good working order. ____ are an unavoidable reality of doing business, especially with online purchases.
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Returns
Is the set of all products and items a particular seller offers for sale
Product Mix
__ of a product mix refers to how many different product lines the company carries.
width
__ of a product mix refers to the total number of items in the mix.
length
__ of a product mix refers to how many variants are offered of each product in the line.
depth
__ of the product mix describes how closely related the various product lines are.
consistency
A company lengthens its product line in 2 ways
1)Line stretching 2) line filling
Line stretch 3 ways
1) down market
2) up market
3) two- way (both)
A company positioned in the middle market may want to introduce a lower-priced line for any of three reasons:
down market stretch
Companies may wish to enter the high end of the market to achieve more growth, realize higher margins, or simply position themselves as full-line manufacturers
Up market stretch
Companies serving the middle market might stretch their line in both directions
Two way stretch
A firm can also lengthen its product line by adding more items within the present range. The company needs to differentiate each item in the consumer's mind with a just-noticeable difference.
Line filling
the firm searches for a set of prices that maximizes profits on the total mix.
Product mix pricing
Companies normally develop product lines rather than single products and introduce price steps. A men's clothing store might carry men's suits at three price levels: $300, $600, and $900, which customers associate with low-, average-, and high-quality
Product line pricing
consisting of a fixed fee plus a variable usage fee. Cell phone users pay a minimum monthly fee plus charges for calls that exceed their allotted minutes.
Two-part pricing
also called dual branding or brand bundling—two or more well known brands are combined into a joint product or marketed together in some fashion.
Co-branding
A special case of co branding that involves creating brand equity for materials, components and parts contained within product or brand.
Ingredient branding
5 packaging objectives
1. identify the brand
2. Convey descriptive and persuasive info
3. Facilitate product transportation and protection
4. Assist at home storage
5. Aid product consumption
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