Chapter 5

Product Decision

ALLPPT.com _ Free PowerPoint Templates, Diagrams and Charts

 Learning Outcomes

Define the term product

Classify consumer products
Explain Product item, product line, product mix
Define what is branding
Elaborate what is Packaging and Labeling
 What Is a Product?
o The product offering, the heart of an organization’s
marketing program. It is the starting point in creating
a marketing mix.
o Firm needs a product to sell, then only the marketing
manager can determine the price, design the promotion
strategy, or create a distribution channel.
o A product everything that a person receives in an
exchange that may be both favourable and unfavourable.
o Basically, a product may be a tangible good such as
a pair of pants; Intangible such as a service for instance a
haircut, an idea for example “don’t litter,”
Levels of Product and Services
o Core customer value is defined as the benefit
that the product brings to the customer.
o Actual product refers to the tangible object and
relates to the physical quality and the design.
o Augmented product consists of the measures
taken to help the consumer put the actual product
to use.
By using a mixture of the three levels
of product in research and development,
business firms can better understand their customer,
better position themselves in the market
and create a more successful product.
 Types of Products
Products can be classified as
either business (industrial) or consumer products,
depending on the buyer’s intentions.

o Business product is used to manufacture other goods

or services, to facilitate an organization’s operations,
or to resell to other customers.
o Consumer product is bought to satisfy an
individual’s personal wants and for consumer
personal consumption

An effective way of
categorizing consumer products is
according to how much effort is normally
used to shop for them
Types of Consumer Products
 Types of
Consumer
Products
• Convenience
Products
is a relatively low-cost
item that requires
little shopping effort
—that is, a consumer
is reluctant to shop
extensively for such
an item.
o Consumers buy convenience products regularly,
usually without much planning.
o Consumers are familiar with the brand names of the
popular convenience products
o Convenience products normally require wide
distribution in order to sell abundant quantities to
meet profit goals.
o Convenience products are available everywhere,
including Giants, Tesco, gas stations, newsstands,
and vending machines
 Shopping Products
o is usually more expensive than a
convenience product and is found only in
fewer stores
o Consumers usually buy a shopping product
only after comparing several brands or
stores on style, practicality, price, and
lifestyle compatibility
o They are willing to invest some effort into
this process to get the desired benefits.

There are two types of shopping products:

homogeneous and heterogeneous
 Homogeneous

Consumers perceive homogeneous shopping products as

basically similar or lookalike —for example, washers,
dryers, refrigerators, and televisions where consumers
usually look for the lowest-priced brand that has the
desired features. For example, they might compare
different brand of refrigerators

GE Refrigerator Whirlpool Refrigerator

Heterogeneous

In contrast, consumers perceive heterogeneous

shopping products as essentially different—for example,
furniture, clothing, housing, and universities

Consumers often have trouble comparing heterogeneous

shopping products because the prices, quality, and
features vary so much

The benefit of comparing heterogeneous shopping

products is “finding the best product or brand for me”;
this decision is often highly individual
For example, it would be difficult to compare a small
private university with a large, public university.
 Specialty Products
Consumers will search extensively for this kind of
product and are very reluctant to accept any substitutes.

Marketers of specialty products often use selective,

status-conscious advertising to maintain their product’s
exclusive image.

Distribution is often limited to one or a very few outlets

in a geographic area.

Emphasizing brand names and quality of service are often

very important elements to the firms
 Examples

Rolex watch Rolls Royce Car

Unsought Products

The product is unknown to the potential buyer or a known

product AND the buyer does not actively search.

New products fall into this category until advertising and

distribution increase consumer awareness of them.

So, aggressive personal selling and highly persuasive

advertising are needed to create awareness.

Firms using salespeople, direct mail, or direct-response

advertising to sell unsought products to potential buyers
Examples

Insurance

Smoke Detector
Product Item, Lines and Mixes
Often companies sell various of products. Rarely the company
only sells one product.

 Product item is a specific version of a product that can

be labelled as a distinct offering among an organization’s products
.
 Product line is a group of closely related product items.

 Product mix includes all the products company sells.

Each product item in the product mix may require a separate

marketing strategy. But Nike promotes all its product items and
lines with the theme “Just Do It.”
Product
Lines

Product
Items
Branding

To be successful, marketers of business or

consumer product depends on the target market’s
ability to distinguish one product from competitor.

So, through branding as the main tool, marketers

will use to distinguish their products from
the competitions
 Brand is a name, term, symbol, design, and
combination of the things just mentioned that identifies
a seller’s products and differentiates them from
competitors’ products.
Brand name is that part of a brand
that can be spoken, including letters (GM, YMCA),
words (Chevrolet), and numbers (WD-40, 7-Eleven).
Brand mark is the elements of a brand that
cannot be spoken—for examples
Brand equity refers to the value of
company and brand names. A brand that has
high awareness, perceived quality, and brand
loyalty among customers has high brand
equity. Starbucks, Volvo, and Dell are
companies with high brand equity.

Brand loyalty a consistent preference

for one brand over all others. Brand
identity is essential to developing brand
loyalty. Many students come to college
and purchase the same brands they used at
home

Brand identity
is essential to developing brand loyalty
 Product identification
Branding allows marketers to distinguish their products from
competitors.. Many brand names are familiar to consumers and
indicate quality.
Benefits of Branding
New product sales
Repeat sales Company and brand names like
The best generator of repeat Coca-Cola, Toyota and Nokia are
sales is satisfied customers. extremely useful when introducing
Branding helps consumers new products. The Internet provides
identify products they wish to firms with a new alternative for
buy again and avoid generating brand awareness,
those they do not want to promoting a desired brand
purchase image, stimulating new and repeat
brand sales, enhancing brand loyalty
and building brand equity
Branding Strategies
 Manufacturer’s brand - the brand
name of a manufacturer

 Private brand - a brand name owned by

a wholesaler or a retailer. Also known as
store brand

 Individual branding - using different brand

names for different products
 Family branding –
Marketing several
different products
under the same brand
name
 

Cobranding - Placing two or more brand names

on a product or its package
Types of cobranding:
Ingredient branding identifies the brand of a part
that makes up the product. Examples of ingredient branding
are Intel (a microprocessor) in a personal computer, such as IBM
Cooperative branding occurs when two brands
receiving equal treatment (in the context of an advertisement)
borrow from each other’s brand equity. A promotional contest
jointly sponsored by Ramada Inns and American Express,
is an example of cooperative branding. Guests at Ramada
who paid with an American Express card were automatically
getting discount by10%.
Complementary branding products are advertised or
marketed together to suggest usage, such as Procter & Gamble
will promote the use of Tide Total Care and Downy
Total Care to clean clothing and cut down on dry cleaning bills.
 Trademark
is the exclusive right to use a
brand or part of a brand.
Others are prohibited from
using the brand
without permission

Generic product name - Identifies a

product by class or type and cannot be trademarked
such as include aspirin, cellophane, thermos,
kerosene, monopoly, cola, and shredded wheat.
Packaging
Packages — they hold contents together and protect
goods as they move through the distribution channel

in g
kag ns Containing and Protecting Products
c
Pa nctio Contain products that are liquid, granular, or
Fu otherwise divisible. It enables manufacturers,
wholesalers, and retailers to market products
in specific quantities.
Physical protection as many products are
shipped,
stored, and inspected several times between
production and consumption.
Packages protect products from breakage,
evaporation, spillage, spoilage, light, heat, cold,
infestation, and many other conditions
 Promoting Products
It differentiates a product from
competing products
Packages use designs, colours,
shapes, and materials to
try to influence consumers’
perceptions and buying behavior.
For example, goods come in
green packaging can attract health
conscious consumers
Packaging can also influence
consumers’ perceptions of quality
and/or prestige.
 in g
a g s Facilitating Storage, Use, and
ack ion
P nc t Convenience
Fu Wholesalers and retailers prefer
packages that are easy to ship, store,
and stock on shelves. They also like
packages that protect products,
prevent spoilage or breakage, and
extend the product’s shelf life.
Consumers are constantly seeking
items that are easy to handle, open,
and reclose. Easy openings are
especially important for kids and
aging baby boomers. Different-size
packages appeal to heavy, moderate,
and light users.
Facilitating Recycling
and Reducing Environmental
Damage
This last function of packaging is becoming
increasingly important. Some firms use this
type of packaging to target environmentally
concerned market segments.
Many beverages companies recently
introduced TetraPak cartons to offer
consumers a playful and eco-friendly
alternative to glass bottles.
Groups like the Sustainable Packaging
Coalition assist companies in creating
continuously recycled packaging so that
materials don’t ever end up in landfills,
damaging the ecosystem.
 Labeling
An important part of any package is its label.
Labeling generally takes one of two forms
♣ Persuasive labeling – focuses on
promotional theme or logo and consumer information is
secondary

♣ Informational labeling - is designed to help

consumer make proper product selections and lower their
cognitive dissonance after the purchase

Informational Persuasive
Labeling Labeling