Ch-13-S-Setting Product Strategy

At the Heart of a Great Brand Is a
Great Product.
1
13
Setting Product Strategy
16/e Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 13-2 7-2
Components of the Market Offering What is a Product?
• Anything tangible or
intangible that can be
offered to a market to
satisfy a want or need
− Product is the key element Examples: Goods,
of market offering services, experiences,
events, persons,
places, properties,
organizations, ideas,
information, etc.
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 13-3 7-3 Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 13-4 7-4
What is a Service? What is Experience?
• Any act or performance − A form of product • What buying a product • Marketers create CV
through creating and
one party can offer to − Characteristics: will do for the
managing customer
another that is intangible, inseparable, customer experiences with their
essentially intangible perishable, and brands or company
and does not result in variable, • Most products and
services have become • Starbucks does not
the ownership − Examples: banking, sell just coffee, it sells
commoditized
of anything hotel, airline travel, etc. “The Starbucks
Experience”
1
Krispy Kreme Goods, Services and Experiences
• Goods are tangible,

services intangible, and
experiences memorable
• Goods and services are

external but experiences
are personal that take
place in the minds of
individual consumers
A Krispy Kreme isn’t just a doughnut, but a truly sweet experience.

Five Levels of Product Product Classifications
Future augmentation
Customer-value Hierarchy
Free Internet and breakfast

Clean bed , fresh towels
Bed, bathroom, towels
Consumer Goods
Sleep and rest
Industrial Goods
Each level adds some more CV
Marketing Consideration of Consumer

Consumer Goods Goods
• Staples Specialty goods

• Impulse goods
• Emergency goods
Convenience goods
Shopping goods Unsought goods

2
Industrial/Business Goods Product and Services Differentiation
To be branded,
products must
be differentiated
Product Differentiation Service Differentiation
Form Features
Customer
Customization Durability Consulting
Ordering Ease Delivery &
Returns
Performance Conformance
Reliability Repairability
Training
Style Installation Maintenance &

Repair
Style and Design Luxury Brands

Functional • Characteristics  Marketing luxury brands
Benefits ̶ Significantly higher priced ̶ “The bigger and gaudier
• Style describes the the logo, the better”
̶ Relates to social status (Russia and China)
appearance of the
̶ Common denominators: ̶ Selling a dream anchored
product
quality and uniqueness in product quality, status,
• Design contributes to a ̶ A winning formula: and prestige
• Craftsmanship ̶ Wrap personal
product’s usefulness as
• Heritage experiences around the
well as to its looks
• Authenticity products
• History ̶ Find appropriate online
Aesthetic selling/communication
Benefits strategies
3
Guidelines for Marketing Luxury Brands Product and Brand Relationships
1. Maintain a premium image Product Hierarchy
6. Use a premium pricing
2. Create intangible brand strategy with strong quality
associations & an aspirational cues and few discounts and Product Systems/Mixes
image markdowns
3. Align all aspects of the marketing 7. Manage brand architecture
Product Line Analysis
program to ensure quality and very carefully
pleasurable experiences
8. Define competition broadly as
4. Choose the mix of brand it often comes from other
Product Line Length
elements to create brand equity categories
5. Leverage secondary associations 9. Legally protect all trademarks Product Mix Pricing
from personalities, events, and aggressively combat
countries, and other entities counterfeits.
Co-Branding
Product Hierarchy Product Systems and Mixes
Need Family Security

Width
Savings &
Product Family income
Financial
Product Class instruments
Length
Product Consiste
Life
Mix ncy
Product Line insurance A product system is a
group of diverse but
Term life related items that
Product Type insurance function in a
compatible manner Depth
Term life insurance
Item with premium price
Proctor & Gamble Product Mix Product Line Analysis

Product Mix Width
• A product line is a group • Sales and profits

of related products within a ̶ Determine which
product class items to build,
maintain, harvest, or
̶ Produced by a company divest
̶ Used for similar purposes
• Market profile and
̶ Sold to similar customer image
groups
̶ How the line is
̶ Sold in similar types of shops positioned against
competitors’ line
̶ Use product map
4
Product Line Analysis Product Line Analysis
Product-Item Contributions
Market Profile
Figure: Product Map for a Paperboard-Product Line
Product Line Length Line Stretching
• Product line length is influenced by:

̶ Company objectives— inducing up-selling
or cross selling
̶ Excess manufacturing capacity
̶ Pressures from sales force/distributors for
a complete line
Line Filling Product-Mix Pricing Strategies
Line filling is adding Product line pricing

more items within the • Searching for a set of prices
present range of line that maximizes the profits Optional product pricing
on the total mix
• Challenging job Captive product pricing
̶ Demand and cost
interrelationships Two-part product pricing
̶ Different degrees of
competition By-product pricing
Line modernization, featuring, and pruning Product-bundling pricing
5
Co-Branding Ingredient Branding
• Creating brand equity for

• A strategy of combining • Same-company co- components, or parts that
two or more brands branding are necessarily contained
into a joint product or within other branded
• Joint-venture co-branding
marketing together in products
some fashion • Multi-sponsor co-branding
(Taligent-Apple, IBM, ̶ A special type of co-branding
̶ Called dual branding or
Motorola)
brand bundling
• Retail co-branding
Requirements for the Successful

Ingredient Branding Packaging and Labeling
Packaging Objectives
1. Brand identification
1. Consumers must 3. A distinctive symbol or logo
2. Persuade
believe the must signal that the host 3. Protection
ingredient matters product contains the 4. At-home storage
to the performance ingredients 5. Aid consumption
and success
4. A coordinated “pull” and
2. Consumers must “push” program must help
be convinced that consumers understand the Labeling Objectives
the ingredient is advantages of branded
superior ingredient 1. Identify
2. Grade
3. Describe
4. Promote
Packaging and Labeling Innovative Packaging
• Engineering test- ensures that the

package stands up under normal
conditions Dutch Boy
recently came
• Visual test- ensures that the script is up with a long
legible and the color is harmonious overdue
• Dealer test- ensures that dealers find innovation—
package attractive and easy to handle paint in plastic
containers with
• Consumer test- ensures favorable twist-off caps.
consumer response
6
Warranties and Guarantees
• Unlike guarantees,
warranties are a
formal statement of
expected product
performance by the
manufacturer which is
legally enforceable
Copyright © 2020 Pearson Education, Inc. Publishing as Prentice Hall 13-37 7-37

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At the Heart of a Great Brand Is a

Components of the Market Offering What is a Product?

What is a Service? What is Experience?

• Goods are tangible,

• Goods and services are

A Krispy Kreme isn’t just a doughnut, but a truly sweet experience.

Five Levels of Product Product Classifications

Free Internet and breakfast

Each level adds some more CV

Marketing Consideration of Consumer

• Staples Specialty goods

Shopping goods Unsought goods

Product Differentiation Service Differentiation

Style Installation Maintenance &

Style and Design Luxury Brands

Product Hierarchy Product Systems and Mixes

Need Family Security

Proctor & Gamble Product Mix Product Line Analysis

• A product line is a group • Sales and profits

Figure: Product Map for a Paperboard-Product Line

Product Line Length Line Stretching

• Product line length is influenced by:

Line Filling Product-Mix Pricing Strategies

Line filling is adding Product line pricing

Line modernization, featuring, and pruning Product-bundling pricing

• Creating brand equity for

Requirements for the Successful

Packaging and Labeling Innovative Packaging

• Engineering test- ensures that the

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