Setting Product Strategy

1. Setting Product Strategy Dr. RushdyWady

2. Objectives Identify the product and the various characteristics of products. Level of products.  Learn how companies build and manage product lines and mixes. Understand how companies make better brand decisions.  Comprehend how packaging and labeling can be used as marketing tools. Warranties & guarantees can offer further assurance to consumers.

3. The Product Product is a key element in the market offering. Is the first and the most important element of the marketing mix. Product strategy calls for making coordinated decisions on product mixes, product lines, product brands, packaging and labeling. Who should ultimately design the product? The customer of course.

4. What is a Product ? The product is any thing that can be offered to market to satisfy a want or a need.

5. What Is a Product? Products include more than just tangible objects such as cars, computers or cell phones. Products, Services, and Experiences

6. What Is a Product? The offer may consist of a pure tangible good such as soap, toothpaste or salt. At the other extreme are the pure services for which the offer consists primarily of a service. Products , services and experiences

7. Information Type Of Product Places Goods Organizations A Product can be Properties Services Experiences Events Persons Ideas

8. What Is a Product? Experiences represent what buying the product or service will do for the customer Experiences have always been an important part of marketing for some companies Products , services and experiences

9. Companies that market experiences realize that customers are really buying much more than just products and services, they are buying what those offers will do for them

10. What Is a Product? Organization marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization Both profit and non profit organization practice organization marketing Business firms sponsor public relations or corporate image advertising campaign to market themselves and polish their images Organizations, Persons, Places, and Ideas

11. What Is a Product? Person marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people. People use person marketing to build their reputation Organizations, Persons, Places, and Ideas

12. What Is a Product Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular places Social marketing is the use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society Organizations, Persons, Places, and Ideas

13. What Is a Product Social marketing programs include public health campaigns to reduce smoking , alcoholism, drug abuse, and obesity Other social marketing efforts include environmental campaign to promote clean air and conservation Still others address issues such as family planning and human rights and racial equality Organizations, Persons, Places, and Ideas

14. What Is a Product? Product planners need to think about products and services on three levels, each level adds more customer value. The most basic level is the core customer value, which addresses the question “ what is the buyer really buying ? “ When designing products, marketers must first define the core, problem solving benefits or services that consumers seek Levels of Product and Services

15. What Is a Product? At the second level, product planners must turn the core benefits into an actual product, they need to develop product and service features, design, a quality level or a brand name and packaging. For Ex. The BlackBerry is an actual product. Its name , parts, styling, features have all been combined to deliver the core customer value Levels of Product and Services

16. What Is a Product? Finally , product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits. For ex. The BlackBerry solution offers more than just a communication device, it provides customers with a complete solution to mobile connectivity problems. Levels of Product and Services

17. The Product Levels Potential Product Augmented product Expected product Basic Product Core benefit

18. Levels of Product and Services

19. The Product and Product Mix The customer value hierarchy:  Core benefit The service or benefit the customer is really buying.  Basic product The marketer has to turn the core benefit into basic product.  Expected product A set of attributes and conditions buyers normally expect when they purchase the products.  Augmented product The product exceeds customer expectation.  Potential product All possible augmentations and transformations the product or offering might undergo in the future.

20. Example

21. Product and Service Decisions Individual Product and Service Decisions

22. Product and Service Decisions Product attributes are the benefits of the product or service Quality Features Style and design Individual Product and Service Decisions

23. Product and Service Decisions Quality has a direct impact on product or service performance, thus , its closely linked to customer value and satisfaction. Quality can be defined as “ freedom from defects” The American society for quality defines quality as the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs Individual Product and Service Decisions

24. Product and Service Decisions Product quality includes level and consistency Quality levelis the level of quality that supports the product’s positioning Conformance qualityis the product’s freedom from defects and consistency in delivering a targeted level of performance Individual Product and Service Decisions

25. Product and Service Decisions Product featuresare a competitive tool for differentiating a product from competitors’ products Product features are assessed based on the value to the customer versus the cost to the company Individual Product and Service Decisions

26. Product and Service Decisions Style describes the appearance of the product Design contributes to a product’s usefulness as well as to its looks. It goes to the very heart of a product

27. Product and Service Decisions Customer service is another element of the product strategy. A company’s offer usually includes some support services, which can be a minor or a major part of the total offering. Individual Product and Service Decisions

28. Services Marketing Government Private not-for-profit organizations Business services Types of Service Industries

29. Services Marketing Nature and Characteristics of a Service

30. Services Marketing In addition to traditional marketing strategies, service firms often require additional strategies Service-profit chain Internal marketing Interactive marketing Marketing Strategies for Service Firms

31. Services Marketing Service-profit chainlinks service firm profits with employee and customer satisfaction Internal service quality Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service profits and growth

32. Services Marketing Internal marketing means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction Internal marketing must precede external marketing

33. Services Marketing Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter Service differentiation Service quality Service productivity

34. Product Classification 1. Durability and Tangibility. 2. Consumer Goods. 3. Industrial Goods.

35. Nondurable goods • Tangible • Rapidly consumed in one or a few uses. • Example: Milk - Soap • Durable goods • Tangible • Lasts a long time • Example: Oven – electronics-Refrigerators • Clothes • Services • Intangible • Example: Appliance repairs, Transportation Services Product Classification 1. Durability and tangibility

36. 2. Consumer Goods ClassificationsConsumer products are products and services for personal consumption Classified by shopping habits Convenience goods  Shopping goods  Specialty goods  Unsought goods

37. 2. Consumer Goods Classifications

38. 2. Consumer Goods Classification 2.1 Convenience goods : are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort  Staples Goods: Goods consumers purchase on a regular basis (Toothpast). Impulse Goods: Purchased without any planning or search efforts (Magazines). Emergency Goods: Are purchased when a need is urgent (umbrellas during a rainstorm)

39. 2. Consumer Goods Classification 2.2 Shopping goods : are consumer products and services that the customer compares carefully on suitability, quality, price, and style Homogeneous shopping goods: Are similar quality but different enough in price to justify shopping comparisons.  Heterogeneous shopping goods: Offer in product features & services that maybe more important than price.

40. Comparative Between Convenience & Shopping Goods

41. 2.3 Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort • Medical services • Designer clothes • Buyers normally don’t compare specialty products, they invest only the time needed to reach dealers carrying the wanted products

42. 2.4 Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying • Life insurance • Funeral services • Blood donations • Unsought products require a lot of advertising, personal selling, and other marketing efforts

43. Industrial goods classification

44. 3. Industrial goods Classifications Are goods that enter the manufactures product completely 3.1 Materials and parts  Farm products ( Wheat, Cotton, Fruits …)  Natural products (Fish, Crude petroleum …)  Component materials (Iron, cement, wires…)  Component parts ( Small motors, tires …) 3.2 Capital items  Installations (Factories, offices)  Equipment (drill presses, personal computer, elevators). 3.3 Supplies and business services  Maintenance and repair (paint, window cleaning, copier repair…)  Advisory services (Legal, management consulting, advertising)

45. The Product Hierarchy: Need family The core need that underlies the existence of a product family (Security). Product family All the product classes that can satisfy a core need with reasonable effectiveness (Saving, income) Product class A group of products within the product family recognized as having a certain functional coherence (financial instruments) Product line A group of products within a product class that are closely related because they perform a similar function. Product type A group of items within a product line that share one of several possible forms of the product. Item. A distinct unit within a brand or product line distinguishable by size, price, appearance or some other attribute.

46. Product Mix Decision • Product mix consists of all the products and items that a particular seller offers for sale • Width • Length • Depth • Consistency

47. The set of all products and items that a particular seller offers for sale.  A Product mix consists of various product lines. Product mix Product mix dimensions:: The Width: Number of product lines. The Length: Total number of items in mix. The Depth: How many variants are offered of each product in the line. Consistency: Degree to which product lines are related. (Production requirements, distribution channels)

48. Product mix Width = 4 Depth L1 = 3 Length = 12 The Depth The Width

49. Product Line Decisions • Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges

50. Product-Line Decisions Product-Line Analysis Product line managers need to know the sales and profit itemsin their lines in order to determine which items to built, maintain, harvest and divest.