Marketing 2 summary
Unit 7 - product strategy and services marketing:
7.1.2 product levels:
Product: we can define it as a combination of tangible and intangible characteristics that enable an
object or a service to satisfy a customer need.
Product levels: a product is defend in three different levels, each one are adding more value to the
customer. These levels are:
1. The core product (the basic function of problem-solving benefits that a consumer is seeking
in the exchange).
2. The actual product (considering the buyers expectations, they must develop the product and
service’s features, design, quality level, brand name and packaging that, combined, deliver,
the core benefit to the customer).
3. The augmented product (its includes the intangible, psychological benefits and service-based
features that make the total product more attractive from the customer’s viewpoint).
Marketing mix:
Product: Product design & features, packaging, brand and warranty
Price: Translating perceived value into an attractive price
Promotion: Creating a brand image and communicating benefits
Place: Getting the product into the customers’ hands
Product attributes: product attributes and (derived) characteristics makes a difference in a purchase
decision or the choice between brands.
7.2 Types of consumer products:
Next to that products can be classified, could consumer products or business products be classified
either.
- Consumer goods: are sold to individuals and their families for their personal use or
consumption. These buyers are known as ultimate consumers or end users of the product.
Products such as: televisions sets, materials and candy.
- Business products and services or industrial goods are sold to organizations, including
companies, government agencies and non-profit institutions. Products such as: production
equipment, materials, suppliers, machine tools and software.
Consumer goods, depending on consumer buying attitudes and behavior are classified into three
classes:
- Convenience products
- Shopping products
- Specialty products
- Unsought products
, Marketing 2 summary
Convenience products: Shopping products:
Buy frequently & immediately Buy less frequently
- Low priced - In fewer stores
- Widely available - Compare on quality, price & style
Specialty products: Unsought products:
Special purchase effort New products
- Unique characteristics - Or products consumers ignore
- Brand performance - Requires special promotion/ selling effort
- For example: life insurance, burial plots
Other product classifications:
- Durable consumer goods
- Nondurable consumer products
- Services
Durable consumer goods (durables) are products such as cars, E-readers and dishwashers, which are
used repeatedly over an extended period high profit margins but slowly purchase process.
Knowledge and reliable services is important.
Non-durable consumer products (nondurables) have relatively short life cycle. Like clothing and
footwear, they rarely last longer than about three years relatively small profit margins, the
products are usually distributed intensively and advertised heavily to create brand awareness and
brand preferences.
Services are products like tax preparation and bicycle repairs that are intangible and provide benefits
that meet certain needs and wants.
7.3.1 product assortment strategies:
Product mix: is the total assortment of products and services that the company sells, including the
various product lines, products, product types and brands.
Product line is a group of closely related items in the Organisation’s assortment or product mix. For
instance Coca Cola: Coca Cola life, zero or light.
, Marketing 2 summary
Product type is an individual products or specific version of a service that differs from other types of
the same product. For example: Ground espresso coffee is a particular type of ‘coffee’, which, in turn
falls within the product line of ‘hot drinks’. A product type is also referred to as an article or product
item, if it can be designated as a distinct offering within the company’s products or is listed in the
firm’s catalogue or on its website with a specific article number.
7.3.2 Dimensions of the product mix:
When making strategic decisions, top management considers four dimensions:
- The width
- The length
- The depth
- Consistency of the product mix
The product mix width refers to the number of product lines that the company sells. The more
product lines, the wider the product mix.
The product mix length refers to the total number of articles that a company offers within all of its
product lines, and thus is a measure of the total number a company sells. The length of the
assortment, as a whole, can also be started in terms of the product line length; this is the number of
items in a product line.
The product line depth refers to the numer of product items (brands, types, models) in a product
line. The greater the number of versions offered of each product in the line, the depper the
assortment.
Product mix consistency: the product mix refers to the total number of product lines a company has
to offer. Consistency, in refenrence to a product mix, refers to how closely related the offered
product lines are to each other. The consistency is measured in terms of use, production and
distribution.
Assortment height refers to the same price range of the products.
7.3.3. Optimising the product portfolio:
Product mix pricing strategy: When a company is facing declining demand, it may have to expand
and modernise its product mix. Product mix pricing strategy, when deciding how the different
, Marketing 2 summary
products in the product lines should be priced to maximise profits on the total mix, there are serveral
options that should be considered.
Some companies implement a strategy of line pricing. This means, they offer all of the items in each
product line at a limited number of specific price points. When a firm creates a ‘price line’ by
establishing a series of prices for a type of merchandise, it reduces confusion for both the sales peron
and the customer. It helps customers link each product’s value to its selling price and to recognise
the relative differences among products in line.
Product line pricing are different parts of the product mix which are consumption related (such as
wine and cheese) or complementary in their use (such as computer hardware and software) are
priced in relation to one another.
What is the 20/80 rule?
20% of products carried 80% of total sales
20% = Core assortment 80% = Peripheral assortment
- High turnover Low turnover
- Low margin High margin
7.3.4 product line extension
To optimize their product mix, many companies turn to product line extension, which involves
adding a closely related product to the current product line, developed to satisfy a somewhat
different customer need, so as to compete more broadly in the industry. A company uses the existing
brand name for new product items in the same product line.
Brand extension is completely different strategy, since the existing, well established brand name is
now applied to a new product in a different product class or category.
Trading up: Increasing the number of features (and their associated benefits) of a product, improving
its quality, or backing it with a superior level of service to justify a higher price. Opposite of trading
down.
Up-market stretch (upward stretch): the product line is stretched upward beyond the original price
range.
Trading down: reducing the number of features (and their associated benefits) or the quality of a
product to suit the selling price demanded by its customers. Opposite of trading up.
Downgrading is imitating the price distribution formula and reducing the service level. Reduction in
extent, position, quality, rating, status, or value. Usually seen as a negative, it can have positive
connotations also such as in downgrading of a risk.
Line filling: an alternative to line stretching, refers to lengthening the product line beyond its original
range, is a strategy of line filling. This involves expanding the product line by adding more items
within the existing range of products and prices.
Brand stretching: when a new product has been well received by the target market, the company
may launch other products or products items under the same brand name, possibly in new market
segments.
Unit 7 - product strategy and services marketing:
7.1.2 product levels:
Product: we can define it as a combination of tangible and intangible characteristics that enable an
object or a service to satisfy a customer need.
Product levels: a product is defend in three different levels, each one are adding more value to the
customer. These levels are:
1. The core product (the basic function of problem-solving benefits that a consumer is seeking
in the exchange).
2. The actual product (considering the buyers expectations, they must develop the product and
service’s features, design, quality level, brand name and packaging that, combined, deliver,
the core benefit to the customer).
3. The augmented product (its includes the intangible, psychological benefits and service-based
features that make the total product more attractive from the customer’s viewpoint).
Marketing mix:
Product: Product design & features, packaging, brand and warranty
Price: Translating perceived value into an attractive price
Promotion: Creating a brand image and communicating benefits
Place: Getting the product into the customers’ hands
Product attributes: product attributes and (derived) characteristics makes a difference in a purchase
decision or the choice between brands.
7.2 Types of consumer products:
Next to that products can be classified, could consumer products or business products be classified
either.
- Consumer goods: are sold to individuals and their families for their personal use or
consumption. These buyers are known as ultimate consumers or end users of the product.
Products such as: televisions sets, materials and candy.
- Business products and services or industrial goods are sold to organizations, including
companies, government agencies and non-profit institutions. Products such as: production
equipment, materials, suppliers, machine tools and software.
Consumer goods, depending on consumer buying attitudes and behavior are classified into three
classes:
- Convenience products
- Shopping products
- Specialty products
- Unsought products
, Marketing 2 summary
Convenience products: Shopping products:
Buy frequently & immediately Buy less frequently
- Low priced - In fewer stores
- Widely available - Compare on quality, price & style
Specialty products: Unsought products:
Special purchase effort New products
- Unique characteristics - Or products consumers ignore
- Brand performance - Requires special promotion/ selling effort
- For example: life insurance, burial plots
Other product classifications:
- Durable consumer goods
- Nondurable consumer products
- Services
Durable consumer goods (durables) are products such as cars, E-readers and dishwashers, which are
used repeatedly over an extended period high profit margins but slowly purchase process.
Knowledge and reliable services is important.
Non-durable consumer products (nondurables) have relatively short life cycle. Like clothing and
footwear, they rarely last longer than about three years relatively small profit margins, the
products are usually distributed intensively and advertised heavily to create brand awareness and
brand preferences.
Services are products like tax preparation and bicycle repairs that are intangible and provide benefits
that meet certain needs and wants.
7.3.1 product assortment strategies:
Product mix: is the total assortment of products and services that the company sells, including the
various product lines, products, product types and brands.
Product line is a group of closely related items in the Organisation’s assortment or product mix. For
instance Coca Cola: Coca Cola life, zero or light.
, Marketing 2 summary
Product type is an individual products or specific version of a service that differs from other types of
the same product. For example: Ground espresso coffee is a particular type of ‘coffee’, which, in turn
falls within the product line of ‘hot drinks’. A product type is also referred to as an article or product
item, if it can be designated as a distinct offering within the company’s products or is listed in the
firm’s catalogue or on its website with a specific article number.
7.3.2 Dimensions of the product mix:
When making strategic decisions, top management considers four dimensions:
- The width
- The length
- The depth
- Consistency of the product mix
The product mix width refers to the number of product lines that the company sells. The more
product lines, the wider the product mix.
The product mix length refers to the total number of articles that a company offers within all of its
product lines, and thus is a measure of the total number a company sells. The length of the
assortment, as a whole, can also be started in terms of the product line length; this is the number of
items in a product line.
The product line depth refers to the numer of product items (brands, types, models) in a product
line. The greater the number of versions offered of each product in the line, the depper the
assortment.
Product mix consistency: the product mix refers to the total number of product lines a company has
to offer. Consistency, in refenrence to a product mix, refers to how closely related the offered
product lines are to each other. The consistency is measured in terms of use, production and
distribution.
Assortment height refers to the same price range of the products.
7.3.3. Optimising the product portfolio:
Product mix pricing strategy: When a company is facing declining demand, it may have to expand
and modernise its product mix. Product mix pricing strategy, when deciding how the different
, Marketing 2 summary
products in the product lines should be priced to maximise profits on the total mix, there are serveral
options that should be considered.
Some companies implement a strategy of line pricing. This means, they offer all of the items in each
product line at a limited number of specific price points. When a firm creates a ‘price line’ by
establishing a series of prices for a type of merchandise, it reduces confusion for both the sales peron
and the customer. It helps customers link each product’s value to its selling price and to recognise
the relative differences among products in line.
Product line pricing are different parts of the product mix which are consumption related (such as
wine and cheese) or complementary in their use (such as computer hardware and software) are
priced in relation to one another.
What is the 20/80 rule?
20% of products carried 80% of total sales
20% = Core assortment 80% = Peripheral assortment
- High turnover Low turnover
- Low margin High margin
7.3.4 product line extension
To optimize their product mix, many companies turn to product line extension, which involves
adding a closely related product to the current product line, developed to satisfy a somewhat
different customer need, so as to compete more broadly in the industry. A company uses the existing
brand name for new product items in the same product line.
Brand extension is completely different strategy, since the existing, well established brand name is
now applied to a new product in a different product class or category.
Trading up: Increasing the number of features (and their associated benefits) of a product, improving
its quality, or backing it with a superior level of service to justify a higher price. Opposite of trading
down.
Up-market stretch (upward stretch): the product line is stretched upward beyond the original price
range.
Trading down: reducing the number of features (and their associated benefits) or the quality of a
product to suit the selling price demanded by its customers. Opposite of trading up.
Downgrading is imitating the price distribution formula and reducing the service level. Reduction in
extent, position, quality, rating, status, or value. Usually seen as a negative, it can have positive
connotations also such as in downgrading of a risk.
Line filling: an alternative to line stretching, refers to lengthening the product line beyond its original
range, is a strategy of line filling. This involves expanding the product line by adding more items
within the existing range of products and prices.
Brand stretching: when a new product has been well received by the target market, the company
may launch other products or products items under the same brand name, possibly in new market
segments.
