Marketing Department
Marketing in English
CHAPTER 7
PRODUCT DECISIONS
Learning Objectives
2
Study how companies develop and manage products and brand
Get to know the concept of product in marketing, levels of product
and product classifications
Have overall knowledge about product attributes, packaging,
branding,…; product lines and product mixes
Product, Services, and Branding Strategy
Topic Outline
What Is a Product?
Product and Services Decisions
Branding Strategy: Building Strong Brands
PLC
What Is a Product?
Products, Services, and Experiences
Product is anything that can be offered in a
market for attention, acquisition, use, or
consumption that might satisfy a need or want
Service is a product that consists of activities,
benefits or satisfaction that is essentially
intangible and does not result in the ownership
of anything.
Experiences represent what buying the product
or service will do for the customer.
What Is a Product?
Levels of Product and Services
What Is a Product?
Product and Service Classifications
Consumer Industrial
products products
What Is a Product?
Product and Service Classifications
Consumer products are products and services
for personal consumption
Classified by how consumers buy them
Convenience products
Shopping products
Specialty products
Unsought products
What Is a Product?
Product and Service Classifications
Convenience products
consumer products and services that the
customer usually buys frequently,
immediately, and with a minimum comparison
and buying effort
What Is a Product?
Product and Service Classifications
Shopping products
consumer products and services that the
customer compares carefully on
suitability, quality, price, and style
What
Product andIs a Product?
Service Classifications
Specialty products
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
What Is a Product?
Product and Service Classifications
Unsought products
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
What Is a Product?
Product and Service Classifications
Industrial products
products purchased for further processing or for
use in conducting a business
Classified by the purpose for which the product is
purchased
Materials and parts
Capital items
Supplies and services
What Is a Product?
Product and Service Classifications
Capital items are industrial products that aid in the
buyer’s production or operations.
Materials and parts include raw materials and
manufactured materials and parts usually sold
directly to industrial users.
Supplies and services include operating supplies,
repair and maintenance items, and business
services.
What Is a Product?
Organizations, Persons, Places, and Ideas
Organization marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward an organization
What Is a Product?
Organizations, Persons, Places, and Ideas
Person marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward particular people
What Is a Product
Organizations, Persons, Places, and Ideas
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
Product and Service Decisions
Individual Product and Service Decisions
Product and Service Decisions
Individual Product and Service Decisions
Product or service attributes
communicate and deliver the benefits
Quality
Features
Style and design
Product and Service Decisions
Individual Product and Service Decisions
Product quality is the characteristics of a
product or service that bear on its ability to
satisfy customer needs
Product Quality Level is the level of quality
that supports the product’s positioning
Product Conformance Quality is the product’s
freedom from defects and consistency in
delivering a targeted level of performance
Product and Service Decisions
Individual Product and Service Decisions
Product features
are a competitive tool
for differentiating a
product from
competitors’ products
are assessed based on
the value to the
customer versus the cost
to the company
Product and Service Decisions
Individual Product and Service Decisions
Style describes the
appearance of the product
Design contributes to a
product’s usefulness as
well as to its looks
Product and Service Decisions
Individual Product and Service Decisions
Brand is the name, term, sign, or design—or a
combination of these—that identifies the maker
or seller of a product or service
Product and Service Decisions
Individual Product and Service Decisions
Packaging involves designing and producing the
container or wrapper for a product
Product and Service Decisions
Individual Product and Service Decisions
Labels identify the product or brand, describe attributes, and provide
promotion
Product and Service Decisions
Individual Product and Service Decisions
Product support services augment actual products
Product and Service Decisions
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
Product and Service Decisions
Product Line Decisions
Product linelength is the number of items in the product line
Line stretching
Line filling
Product and Service Decisions
Product Mix Decisions
Product mix consists of all the products and items
that a particular seller offers for sale
- Width
- Length
- Depth
- Consistency
Branding Strategy: Building Strong Brands
Branding Strategy: Building Strong Brands
Brand Positioning
Brand strategy decisions
include:
Product attributes
Product benefits
Product beliefs and values
Branding Strategy: Building Strong Brands
Brand Name Selection
Desirable qualities
1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and
remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal
protection
Branding Strategy: Building Strong Brands
Brand Sponsorship
Manufacturer’s brand
Private brand
Licensed brand
Co-brand
Branding Strategy: Building Strong Brands
Brand Development Strategies
Managing Brands
Brand positioning must be continuously
communicated to consumers
Band maintain through customers’ brand
experiences
Companies must care about customers’
touch points
Everyone in the company must live the
brand
Companies need to periodically audit their
brands’ strengths and weaknesses
New-Product Development and Product Life-
Cycle Strategies
Topic Outline
New-Product Development
Strategy
New-Product Development
Process
Managing New-Product
Development
Product Life-Cycle Strategies
New-Product Development Strategy
Two ways to obtain new products
Acquisition refers to the buying of a whole
company, a patent, or a license to produce
someone else’s product
New product development refers to original
products, product improvements, product
modifications, and new brands developed
from the firm’s own research and
development
New-Product Development Process
Major Stages in New-Product Development
New-Product Development Process
Idea generation is the systematic search for new-product ideas
1. Idea Generation
Sources of new-product ideas
Internal
External
New-Product Development Process
Idea Generation
Internal sources refer to the
company’s own formal research
and development, management
and staff, and intrapreneurial
programs
External sources refer to sources
outside the company such as
customers, competitors,
distributors, suppliers, and
outside design firms
New-Product Development Process
Crowdsourcing
Inviting broad communities of people—
customers, employees, independent
scientists and researchers, and even the
public at large—into the new-product
innovation process.
New-Product Development Process
2. Idea Screening
Identify good ideas and drop poor ideas
R-W-W Screening Framework:
Is it real?
Can we win?
Is it worth doing?
New-Product Development Process
3. Concept Development and Testing
Product idea is an idea for a possible product that the
company can see itself offering to the market
Product concept is a detailed version of the idea
stated in meaningful consumer terms
New-Product Development Process
Concept Development and Testing
Concept testing refers to testing new-product concepts
with groups of target consumers
New-Product Development Process
4. Marketing Strategy Development
Marketing strategy development refers to the initial
marketing strategy for introducing the product to the
market
New-Product Development Process
Marketing Strategy Development
Marketing strategy statement includes:
Part 1:Description of the target market, Value
proposition, Sales and profit goals of first few years
Part 2: Budget and marketing mix for the first year
Part 3: Planned long-run sale, profit goals and
marketing mix
New-Product Development Process
Business analysis involves 5. Business
a review of theanalysis
sales, costs, and profit projections to
find out whether they satisfy the company’s objectives
New-Product Development Process
6. Product development
R&D or engineering develops the product
concept into a physical product.
Requires an increase in investment
Shows whether the product idea can be turned
into a workable product.
Often involve actual
cutomers in product testing
New-Product7. Test
Development
marketing
Process
Test marketing is the
stage at which the
product and marketing
program are
introduced into more
realistic marketing
settings
Provides the marketer with
experience in testing
the product and entire
marketing program
before full
introduction
New-Product Development Process
Test marketing
When firms test When firms may
market not test market
• New product • Simple line
with large extension
investment • Copy of
• Uncertainty competitor
about product product
or marketing • Low costs
program • Management
confidence
New-Product Development Process
Types of Test Markets
Standard test markets
Controlled test
markets
Simulated test markets
New-Product Development Process
Test marketing
Advantages of simulated test markets
Less expensive than other test methods
Faster
Restricts access by competitors
Disadvantages
Not considered as reliable and accurate due to the
controlled setting
New-Product Development Process
Commercialization is the introduction
8. Commercialization
of the new product
When to launch
Where to launch
Planned market
rollout
Product Life-Cycle Strategies
Product Life Cycle
Product Life-Cycle Strategies
Product development
Sales are zero and investment costs mount
Introduction
Slow sales growth and profits are nonexistent
Growth
Rapid market acceptance and increasing profits.
Maturity
Slowdown in sales growth and profits level off or
decline
Decline
Sales fall off and profits drop
Product Life-Cycle Strategies
Introduction Stage
Slow sales growth
Little or no profit
High distribution and promotion expense
Product Life-Cycle Strategies
Growth Stage
Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain
economies of scale
Product Life-Cycle Strategies
Maturity Stage
Slowdown in sales
Many suppliers
Substitute products
Overcapacity leads to competition
Increased promotion and R&D to support sales
and profits
Product Life-Cycle Strategies
Maturity Stage Modifying Strategies
Market modifying
Product modifying
Marketing mix
modifying
Product Life-Cycle Strategies
Decline Stage
Maintain the product
Harvest the product
Drop the product
Conclusions
60
This chapter reviewed some main points:
Study how companies develop and manage products and brand
Get to know the concept of product in marketing, levels of product
and product classifications
Have overall knowledge about product attributes, packaging,
branding,…; product lines and product mixes
Video Case
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