Chapter 9: Setting Product Strategy and Introducing New Offerings

Chapter 9: Setting Product Strategy and Introducing New Offerings

Product Characteristics and Classifications

o   Product- anything that can be offered to a market to satisfy a want or need.

Product Levels: The Customer-Value Hierarchy

o   The marketer needs to address five product levels, each level adds more customer value, and together the five constitute a customer-value hierarchy.

·         Core benefit (the fundamental level) - the service or benefit the customer is really buying.

·         Basic product (the second level) - the marketer must turn the core benefit into a basic product.

·         Expected product (the third level) - the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product.

·         Augmented product (the fourth level) - the marketer prepares and augmented product that exceeds customer expectation.

·         Potential product (the fifth level) - with all of the possible augmentations and transformations the product or offering might undergo in the future.

Product Classifications

o   Marketers classify products on the basis of durability, tangibility, and is.

o   Each type has an appropriate marketing-mix strategy:

·         Durability and tangibility-

§  Tangible- nondurable goods are normally consumed in one or a few uses (shampoo).

§  Durable goods- are tangible goods that survive many uses (refrigerators).

§  Services- are intangible, inseparable, variable, and perishable products that normally require more quality control, supplier credibility, and adaptability (haircuts).

·         Consumer-good classification

§  Convenience goods- are purchased frequently, immediately, and with minimal effort (soft drinks).

§  Shopping goods- consumers compare on such bases as suitable, quality, price, and style (furniture).

§  Specialty goods- unique characteristics or brand identification for which enough buyers are willing to make a special purchasing effort (cars).

§  Unsought goods- the consumer does not know about or normally thinks of buying (smoke detectors).

·         Industrial-goods classification

§  Materials and parts are goods that enter the manufacturer’s product completely.

·         Raw materials- can be either farm products (wheat) or natural products (iron ore).

·         Manufactured materials and parts fall into two categories:

o   Component materials (wires)

o   Component parts ( small motor)

·         Capital Item- long-lasting good that facilitate developing or managing finished product, including:

o   Installations (factories)

o   Equipment (tools)

§  Supplies and business services- short-term goods and services that facilitate developing or managing the finished product.

Differentiation

o   To be branded, product offerings must be differentiated.

Product Differentiation

o   Means for differentiation include:

o   Form- refers to size, shape, or physical structure of a product

o   Features- Most products can be offered with features that supplement their basic function.

o   Performance quality- the level at which the product’s primary characteristics operate.

o   Conformance- the degree to which all produced units are identical and meet promised specifications.

o   Durability- a measure of a product’s expected operating life under natural or stressful conditions.

o   Reliability- a measure of the probability that a product will not malfunction or fail within a specific period.

o   Repairability0 measures the ease of fixing a product when it malfunctions or fails.

o   Style- the product’s look and feel to the buyer and creates distinctiveness that is hard to copy, although strong style does not have to mean high performance.

o   Customization- customized products and marketing allow firms to be highly relevant and differentiating by finding out exactly what a person wants and delivering on that.

Service Differentiation

o   When the physical product cannot be easily differentiated, the key competitive success my lie in adding valued services and improving their quality.

o   The main service differentiations are:

o   Ordering ease

o   Delivery

o   Installation

o   Customer training

o   Customer consulting

o   Maintenance and repair

Design Differentiation

o   Design- the totality of features that affect the way a product looks, feels, and functions to a consumer.

o   As holistic marketers recognize the emotional power of design and the importance to consumers of look and feel as well as function, design is exerting a stronger influence in categories where it once played a small role.