Product And Pricing .pptx

Product and pricing strategies

Product concepts and classifications • Product refers to anything that is capable of or can be offered to satisfy a need or want. • Based on the tangibility goods are classified into two groups 1. Tangible goods referred to as products 2. Intangible goods referred to as services Based on the purpose of use 1. Consumer goods 2. Industrial/agricultural goods based on the functional life of the products 1. Consumables 2. Durables Based on product development 1. Innovation 2. Imitation

Concept and significance of product strategy • Concept – product strategy refers to the longrange competitive plan involving decisions on products, product line and product mix to make proper utilisation of resources and achieve marketing goals.

significance • • • •

Achieve product-market fit Encourages innovativeness Provides competitive edge Makes better use of resources

Scope of product strategy • Product strategy embraces decisions at three levels 1. Product mix • Width extension – new product lines • Length extensions – new product items • Depth extensions – new product variants 2. Product line • Stretching – upward, downward, both ways line pruning – line modernisation 3. Product item • Quality, features, design, brand and package. • augmentation

Product mix decisions • Product mix is a set of all product lines and items offered by the company. Horizon one

Horizon two

Horizon three

Soaps and detergents Beverages Oil and dairy fats Speciality chemicals Animal feeds Profitable growth

Popular foods Culinary products Personal products Ice creams Home care products New beverages Top line growth

Direct-to-home products Value added foods Bread and biscuits Development and learning

Product line • Product line is a group of closely related products priced within a range and distributed the same channels to the same customer groups. It has two dimensions 1. Length – refers to the total number of items in the line. 2. Depth – refers to the total number of variants to product items.

Line stretching • Line stretching is lengthening the product line beyond its current range. The stretch can be in three directions 1. Downward – adding lower end items 2. Upward – adding high end items 3. Both ways – adding items at both higher and lower ends

Reasons for line stretching • Reaction – as a reaction to competition, innovative product items are added. • Opportunity – to utilise the existing market gap, new items are introduced. • Image – to have a full line company image, rolling upward or downward or both ways is done. • Pressure – yielding to pressure of sales force and dealers, new product items is introduced. • Strength – to use the available excess capacity, line stretching is done. • Desire – to fulfil the desire of a top executive or product manager, to introduce a new product item, line stretching is done.

Line pruning • Product lines tend to lengthen over time. Some times they are stretched on rational rounds. At other times, they are lengthened because of emotional reasons. In either case, some dead wood will accumulate. It is weeded out based on periodical review of the contribution of product items. The product items can be classified as 1. Traffic builders – which attract customers but generate marginal incomes 2. Bread winners – which generate major share of incomes 3. Parasites – which incur losses and depend on bread winners • Product line pruning may be done when 1. It is identified that dead wood is depressing profits 2. It is found that the production capacity is limited and cannot handle all the existing products

Line modernisation • When technological developments change the products, a decision to amp the old line and design a modern line become inevitable. • In modernisation the aspects to be considered are 1. Timing 2. approach

Product item decisions • The product line at three levels 1. Core product development 2. Tangible product development 3. Augmented product development

Core product • Core product refers to the benefits, which are specified by consumer needs. Needs

Old products

New products

Brushing

Neem sticks, charcoal, ash

Tooth paste, tooth power and liquids.

Washing vessels

Rock salt, husk, powder mixture

Washing soaps, powers and liquids

Transport

Bullock cart, horse, donkeys, chariots, palanquins

Tractors, Mopeds, scooters, motor cycles, trains, buses.

Irrigation

Wells, canalas, water lifters, Bore wells, motors, power windmills. generators, pump sets.

Tangible product • When psychological needs are specified in physical terms, product concept becomes visible and operational. Any product/service has five characteristics 1. Quality – durability, capacity, efficiency economy reliability 2. Features – 1. rational, problem solving 2. emotional, fancy 3. Style design 4. Packaging- primary package, secondary package, shipping package 5. Branding

Augmented product • •

Marketers should have vision to look at the specific needs of consumers and also their related requirements Augmentation required fortifying the product strategy with additional force drawn from other products as a result, the product offers make buying and using a pleasant and exciting experience. Product related

Service related

Channel related

Quality

ordering

Design/style

Delivery and credit

expertize

features

installation

Performance

packaging

Customer tracking

courtesy

Competitive product strategies for rural markets • • • •

Leader Challenger Follower nicher

Leader • • • • • •

Product innovation strategy Quality improvement strategy Multi-brand strategy Brand extension strategy Superior service strategy Image building strategy

Challenger • • • •

Cheaper goods strategy Prestige goods strategy Economy goods strategy Reacting or pro-acting

Follower • Innovative imitation strategy • Other strategies of leader and challenger maintaining low profile

Nicher • • • • 1. 2. 3. 4. 5. 6.

High quality strategy Narrow product line Superior service Indifference to other companies as none of them is competitor Identity strategies – commodity strategy, branding strategy Customer value strategies – mass product strategy, premium product strategy Innovation strategies – rural common, special for rural Quality strategies – quality improvement strategy, spurious goods strategy Packaging strategy Brand strategy –brand extension strategy, multi brand strategy, cobranding strategy, brand image

Selling In rural India • With 128 million households, the rural population is nearly three times the urban. • MNCs – Hindustan lever, Coca-Cola,LG electronics, Britania, standard life, Philips, colgate palmolive and foreign invested telecom companies. • 4As approach 1. Availability 2. Affordability 3. Acceptability 4. Awareness

Marketing strategy • The four Ps of the marketers are 1. Product resemblances 2. Low prices 3. Silent promotion 4. Limited and anonymous distribution

• Product resemblances – copy cats resemble the original in many ways 1. brand:phonetics – Loveboy for Lifebuoy, Nirbha for Nirma, Teta for Tata. 2. Package :visuals 3. Quality :intangible

Packaging strategies • Small packs – affordability, usage, storability, benefits to retailer, display, implications to marketers. • Combi-packs – related products are racked together and sold at economy prices, the consumer finds it a better option to buy. • See-through packs – the transparent packing of new palmolive naturals is not lust a matter of aesthetics.

Brand strategies 1. 2. 3. 4.

Brand extension Multi-branding Co-branding Brand image/equity management

• Three brand extensions s.No Product

Category related

Image related

unrelated

1

Godrej Shaving cream

Godrej shaving cake

Godrej hair dye

Godrej refrigerator

2

T-Series folk music audio cassettes

T-Series film music audio cassettes

T-Series video cassettes

T-series washing powder

3

Usha ceiling fan

Usha table fan

Usha sewing machine

Usha industrial pumps

• Multi-branding: a company may introduce several brands in a product line with different features to appeal to different categories in the same customer group. Example- FMGC companies Company

Product group

Multi-brands

HLL

soaps

Lifebuoy, Liril, Lux

Godrej

soaps

Cinthol, Ganga, Marvel, Fair flow

• Co-Branding: when the marketer offers one brand with another brand of same company or another company. Two different forms of co-branding are 1. Ingredient co-branding 2. Product co-branding

• Brand image management – involves enhancing brand personality and protecting brand identity. Brand

Sensory

Emotional

Rational

image

Onida

Ugly male devil

Greed, irritation

Quality

Hi-tech

Lux

Beautiful, Feminine

Aspiration Soft, high and quality achieveme nt

Star with charisma

TAFE

Sturdy , rugged male

Macho, tough

working

Fuel efficient, comfort

Interaction of consumer with brand at the three levels Level

Feature

Image

Celebrity

Product

Sensory

Attractiveness

Beautiful

Madhuri Dixit

Lux

Emotional

Trustworthines s

Reliable

Kapil Dev

Boost

Rational

expertise

Knowledge

Sachin Tendulkar

Rocker Shoes