THE PRODUCT

1. THE PRODUCT • Products are almost always combinations of the tangible and intangible. The entire package is sometimes referred to as the augmented product. • The mix of tangibles and intangibles in the augmented product varies from one product or service to another.

2. THE PRODUCT • Product is a key element in the market offering. Marketing mix planning begins with formulating an offering to meet target customers’ needs or wants. • The customer will judge the offering by three basic elements : product features and quality, services mix and quality, and price appropriateness.

3. COMPONENTS OF THE MARKET OFFERING Value based pricing Attractiveness of the market offering Product features and quality Services mix and quality

4. PRODUCT LEVELS • In planning its market offering, the marketer needs to think through five levels of the product. • Each level adds more customer value, and the five constitute a customer value hierarchy. ( Contd…. )

5. FIVE LEVELS OF THE PRODUCT (1) Core Product (5) Potential Product (2) Basic Product (3) Expected Product (4) Augmented Product

6. FIVE LEVELS OF THE PRODUCT • (1) Core Product / Core Benefit : The fundamental service or benefit that the customer is really buying. • (2) Basic Product : At the same level, the marketer has to turn the core benefit into a basic product. • (3) Expected Product : A set of attributes and conditions buyers normally expect when they purchase this product.

7. FIVE LEVELS OF THE PRODUCT • (4) Augmented Product : The marketer prepares an augmented product that exceeds customer expectations. • Today’s competition essentially takes place at the product-augmentation level. ( In less developed countries, competition takes place mostly at the expected product level ). ( Contd.….. )

8. FIVE LEVELS OF THE PRODUCT ( Augmented Product ) • According to Levitt : The new competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, delivery arrangements, warehousing, and other things that people value.

9. FIVE LEVELS OF THE PRODUCT Some things should be noted about product-augmentation strategy : • First, each augmentation adds cost. The marketer has to ask whether customers will pay enough to cover the extra cost. • Second, augmented benefits soon become expected benefits. For gaining competitive advantage one will have to search for still other features and benefits.

10. FIVE LEVELS OF THE PRODUCT ( product-augmentation strategy ) • Third, as companies raise the price of their augmented product, some competitors can offer a “ Stripped-down ” version at a much lower price. Thus alongside the growth of fine products we see the emergence of lower-cost products for the clients who simply want the basic product.

11. FIVE LEVELS OF THE PRODUCT • (5) Potential Product : encompasses all the possible augmentations and transformations the product might undergo in the future. Companies search for new ways to satisfy customers and distinguish their offer. • ( Successful Companies add benefits to their offering that not only satisfy customers but also surprise and delight them. ) “ The best way to hold customers is to constantly figure out how to give them more for less. ”

12. PRODUCT DIFFERENTIATION The challenge before the product marketers is to create relevant and distinctive product differentiation. The product differentiation may be based on : • Physical Differences ( eg., features, performance, conformance, durability, reliability, design, style, packaging ) • Availability Differences ( eg., available from stores or orderable by phone, mail, fax, internet )

13. PRODUCT DIFFERENTIATION • Service Differences ( eg., delivery, installation, training, consulting, maintenance, repair ) • Price Differences ( eg., very high price, very low price ) • Image Differences ( eg., symbols, atmosphere, events, media )

14. CHALLENGES FOR PRODUCT INNOVATORS Any successful differentiation will tend to draw imitators. The innovator faces three choices : • Lower the price to protect market share and accept lower profits. • Maintain a reasonable price and lose some market share and profits. • Find a new basis to differentiate the product and maintain current price.

15. PRODUCT CLASSIFICATION ON THE BASIS OF PRODUCT CHARACTERISTICS :DURABILITY, TANGIBILITY AND USE (consumer or industrial ) (1) NON-DURABLE (2) DURABLE (3) SERVICES ( CONTD . )

16. (1) NON-DURABLES • These are tangible goods normally consumed in one or few uses. Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available at many locations, charge only a small mark up and advertise heavily to induce trial and build preference.

17. (2) DURABLES • These are tangible goods that normally survive many uses. Normally require more personal selling and service, command a higher margin, and require more seller guarantees.

18. (3) SERVICES These are intangible, inseperable, variable and perishable products. Normally require more quality control, superior credibility, and adaptability.

19. PRODUCT CLASSIFICATION ON THE BASIS OF CUSTOMER SHOPPING HABITS : (1) CONVENIENCE GOODS (2) SHOPPING GOODS (3) SPECIALITY GOODS (4) UNSOUGHT GOODS

20. (1) CONVENIENCE GOODS • are goods that the customer usually purchases frequently, immediately, and with a minimum of efforts. • (A) Staples: Consumers purchase on a regular basis. • (B) Impulse Goods: are purchased without any planning or search efforts. • (C) Emergency Goods: are purchased when a need is urgent.

21. (2) SHOPPING GOODS • are goods that the customer , in the process of selection and purchase, characteristically compares on such basis as suitability, quality, price and style. • (A) Homogeneous Shopping Goods: are similar in quality but different enough in price to justify shopping comparisons. • (B) Heterogeneous Shopping Goods: differ in product features and services that may be more important than price.

22. (3) SPECIALITY GOODS • are goods with unique characteristics or brand identification for which buyer is willing to make a special purchasing effort.

23. (4) UNSOUGHT GOODS • are goods the consumer does not know about or does not normally think of buying. These goods require advertising and personal selling support.

24. PRODUCT STRATEGY • Calls for coordinated decisions on : • (1) Product Mix • (2) Product Line • (3) Individual Product • (4) Service Product

25. PRODUCT MIX • A product mix (also called product assortment) is the set of all products and items that a particular seller offers for sale. • A total group of products that an organization markets. • A company’s product mix has a certain width, length, depth and consistency.

26. DIMENSIONS OF PRODUCT MIX • The width of company’s (say HLL’s) product mix refers to how many different product lines the company carries, such as bathing soap, detergents, shampoos, toothpaste, food products.

27. DIMENSIONS OF PRODUCT MIX • The length of a company’s product mix refers to the total number of items in its product mix. Thus in each of the product line HLL has a number of product items. Eg., in the product line of bathing soaps, HLL has several product items like Lux, Liril, Lifebuoy, Pears.

28. DIMENSIONS OF PRODUCT MIX • The depth of a company’s product mix refers to how many variants are offered of each product in the line.

29. DIMENSIONS OF PRODUCT MIX • The Consistency of the product mix refers to how closely related the various product lines are in end-use, production requirements, distribution channels, or some other way. HLL’s product lines are consistent insofar as they are consumer goods that go through the same distribution channels.

30. DIMENSIONS OF PRODUCT MIX • These four dimensions of the product mix provide the handles for defining the company’s product strategy. The company can expand its business in four ways. • 1. The Co. can add new product lines, thus widening its product mix. • 2. The Co. can lengthen each product line. • 3. The Co. can add more product variants to each product and deepen its product mix. • 4. The Co. can pursue more product-line consistency or less, depending upon whether it wants to acquire a strong reputation in a single field or participate in several fields.

31. PRODUCT LINE • A product line is a group of products that are closely related, because they perform a similar function, are sold to the same customer groups, are marketed through the same channels or fall within the given price ranges. • The product mix may be composed of several product lines.

32. PRODUCT LINE ANALYSIS • Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest,, or divest. They also need to understand each product’s market profile, i.e. how their product line is positioned against competitors’ product lines (The Product Map).

33. PRODUCT PORTFOLIO MANAGEMENT • Product Line Length : . Downward Line Stretching . Upward Line Stretching . Two Way Stretching High New Present Product New Price Present Present New Product New Low Low High Quality (Downward) (Upward) (Two Way)

34. PRODUCT PORTFOLIO MANAGEMENT • Filling in the Product Line ( adding more items within the present range of line ) • Product Line Modernization • Product Line Featuring • Product Line Pruning

35. INDIVIDUAL PRODUCT DECISIONS • Product Attribute Decisions • Brand Decisions • Brand Positioning • Packaging and Labeling

36. DEFINITION OF BRAND • American Management Association defines brand as follows : “ A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. ”

37. BRAND NAME DECISIONS • Individual Names • Family Names • Company Trade name combined with individual product names.

38. BENEFITS OF BRAND AWARENESS • First, awareness provides the brand with a sense of familiarity, and people like the familiar. • Second, name awareness can be a signal of presence and commitment. The logic is that if a name is recognized, there must be a reason. • Third, the salience of a brand will determine if it is recalled at a key time in the purchasing process.

39. BRAND LOYALTY • First, brand loyalty reduces the marketing costs of doing business, since existing customers are relatively easier to hold. • Second, brand loyalty represents a substantial barrier to competitors. Excessive resources are required when entering a market in which existing customers must be enticed away from an established brand that they are loyal to. • Third, a relatively large, satisfied customer base provides an image of a brand as an accepted, successful, and enduring product.

40. Branding strategy - Emami • The inception of Emami Group took place way back in mid seventies when two childhood friends, Mr. R.S. Agarwal and Mr. R.S. Goenka left their high profile jobs with the Birla Group to set up Kemco Chemicals, an Ayurvedic medicine and cosmetic manufacturing unit in Kolkata in 1974. It was an extremely bold step in the early seventies when the Indian FMCG market was still dominated by multinationals

41. Branding strategy - Emami • Emami’s FMCG business is currently split into two divisions: personal care and healthcare, and both contribute equally to the total turnover of its FMCG business which is currently about Rs 350 crore. Kolkata-based personal and healthcare major Emami Group is now planning to manufacture and market a range of ayurvedic medicines under their brand name Himani. The move will bring Emami closer to the turf of ayurvedic majors like Dabur India and Himalaya Herbal. Emami’s new foray will include a range of products like digestives, memory booster, cough syrups, blood purifiers and others

42. Navratan oil • . The mid-1990s saw actors Govinda and Rambha endorse the brand (the ‘ThandaThanda, Cool Cool’ campaigns), which enjoyed a high media presence. However, in 2004, Himani executives decided to lend stature and salience to the brand, and roped in the Big B, in the hope that he would break geographical barriers for them and appeal to the masses. Thus followed a commercial which had Bachchan talking into the camera about how the ‘cool’ oil helped him counter stress and headaches in his days of struggle.

43. Navratan oil • That ad did quite well for us,” says Probal Bhattacharya, senior brand manager, Himani Navratna. So, it came as a surprise to watch actor Shah Rukh Khan endorse the brand next in 2006, cast in an ad. “This was done to make the brand even more relevant and full of life to the younger lot,” Bhattacharya remarks. Sadly, the replica communication didn’t work; King Khan failed to appeal to Himani Navratna’s TG: 25-45 year old males. Having learnt their lesson, the Himani Navratna executives have revived Big B in their communication, as “people still largely associate him with the brand”.

44. DEFINITION OF BRAND EQUITY • Brand equity is a set of assets and liabilities linked to a brand’s name and symbol that add to or substract from the value provided by a producer or service to a firm and / or that firm’s customers. • Brand equity generates value to the customer that can emerge either as a price premium or enhanced brand loyalty.

45. BRAND EQUITY Brand Awareness Brand Identity Brand Equity Perceived Quality Brand Loyalty ( Powerful brands have high brand equity, higher brand loyalty.)

46. TOOLS FOR BUILDING BRAND • Advertising • Sponsorship of games and events • Social Causes • Public Facilities • Founder’s personality

47. BRAND STRATEGY DECISIONS • Line Extensions • Brand Extensions • Multibrands • New brands • Co-brands

48. BRAND STRATEGY DECISIONS Product Category Existing New Line Extension Existing Brand Extension Brand Name Multibrands New Brand Names New

49. LINE EXTENSION • Line extension occurs when a company introduces additional items in the same product category under the same brand name, usually with new flavours, forms, colours, added ingredients, package sizes and so on. • Line extensions generally have a higher chance of survival than new products. • On the down side extensions may lead to the brand name losing its specific meanings; Ries and Trout call this “ Line Extension Trap .”

50. BRAND EXTENSION • Brand Extension occurs when a company decides to use an existing brand name to launch a product in the new category. • Brand Extension offers a number of advantages. -Instant recognition and earlier acceptance -Saves considerable advertisement costs