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Products are almost always combinations of
the tangible and intangible. The entire
package is sometimes referred to as the
augmented product.
The mix of tangibles and intangibles in the
augmented product varies from one product
or service to another.
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Product is a key element in the market
offering. Marketing mix planning begins with
formulating an offering to meet target
customers’ needs or wants.
The customer will judge the offering by three
basic elements : product features and quality,
services mix and quality, and price
appropriateness.
Value based pricing
Attractiveness of the
market offering
Product features and
quality
Services mix and
quality

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In planning its market offering, the marketer
needs to think through five levels of the
product.
Each level adds more customer value, and the
five constitute a customer value hierarchy.
( Contd…. )
(5) Potential
Product
(1) Core
Product
(2) Basic
Product
(4) Augmented
Product
(3) Expected
Product
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(1) Core Product / Core Benefit : The
fundamental service or benefit that the
customer is really buying.
(2) Basic Product : At the same level, the
marketer has to turn the core benefit into a
basic product.
(3) Expected Product : A set of attributes
and conditions buyers normally expect
when they purchase this product.
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
(4) Augmented Product : The marketer
prepares an augmented product that exceeds
customer expectations.
Today’s competition essentially takes place at
the product-augmentation level. ( In less
developed countries, competition takes place
mostly at the expected product level ).
( Contd.….. )

( Augmented Product )
According to Levitt : The new competition
is not between what companies produce in
their factories, but between what they add
to their factory output in the form of
packaging, services, advertising, customer
advice, delivery arrangements,
warehousing, and other things that people
value.


Some things should be noted about
product-augmentation strategy :
First, each augmentation adds cost. The
marketer has to ask whether customers
will pay enough to cover the extra cost.
Second, augmented benefits soon become
expected benefits. For gaining competitive
advantage one will have to search for still
other features and benefits.

( product-augmentation strategy )
Third, as companies raise the price of their
augmented product, some competitors can
offer a “ Stripped-down ” version at a much
lower price. Thus alongside the growth of
fine products we see the emergence of
lower-cost products for the clients who
simply want the basic product.


(5) Potential Product : encompasses all the
possible augmentations and transformations
the product might undergo in the future.
Companies search for new ways to satisfy
customers and distinguish their offer.
( Successful Companies add benefits to their
offering that not only satisfy customers but
also surprise and delight them. ) “ The best
way to hold customers is to constantly figure
out how to give them more for less. ”


The challenge before the product marketers
is to create relevant and distinctive product
differentiation. The product differentiation
may be based on :
Physical Differences ( eg., features,
performance, conformance, durability,
reliability, design, style, packaging )
Availability Differences ( eg., available from
stores or orderable by phone, mail, fax,
internet )
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Service Differences ( eg., delivery, installation,
training, consulting, maintenance, repair )
Price Differences ( eg., very high price, very
low price )
Image Differences ( eg., symbols,
atmosphere, events, media )
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Any successful differentiation will tend to
draw imitators. The innovator faces three
choices :
Lower the price to protect market share and
accept lower profits.
Maintain a reasonable price and lose some
market share and profits.
Find a new basis to differentiate the product
and maintain current price.
ON THE BASIS OF PRODUCT
CHARACTERISTICS :DURABILITY,
TANGIBILITY AND USE (consumer or
industrial )
(1) NON-DURABLE
(2) DURABLE
(3) SERVICES
( CONTD . )

These are tangible goods normally
consumed in one or few uses. Because these
goods are consumed quickly and purchased
frequently, the appropriate strategy is to
make them available at many locations,
charge only a small mark up and advertise
heavily to induce trial and build preference.

These are tangible goods that normally
survive many uses. Normally require more
personal selling and service, command a
higher margin, and require more seller
guarantees.
These are intangible,
inseperable,
variable and
perishable products.
Normally require more quality control,
superior credibility, and adaptability.
ON THE BASIS OF CUSTOMER SHOPPING
HABITS :
(1) CONVENIENCE GOODS
(2) SHOPPING GOODS
(3) SPECIALITY GOODS
(4) UNSOUGHT GOODS
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are goods that the customer usually
purchases frequently, immediately, and
with a minimum of efforts.
(A) Staples: Consumers purchase on a
regular basis.
(B) Impulse Goods: are purchased without
any planning or search efforts.
(C) Emergency Goods: are purchased when
a need is urgent.


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are goods that the customer , in the process
of selection and purchase, characteristically
compares on such basis as suitability, quality,
price and style.
(A) Homogeneous Shopping Goods: are similar
in quality but different enough in price to
justify shopping comparisons.
(B) Heterogeneous Shopping Goods: differ in
product features and services that may be
more important than price.

are goods with unique characteristics or
brand identification for which buyer is willing
to make a special purchasing effort.

are goods the consumer does not know about
or does not normally think of buying. These
goods require advertising and personal
selling support.
 Calls
for coordinated decisions on
:
 (1)
Product Mix
 (2)
Product Line
 (3)
Individual Product
 (4)
Service Product
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A product mix (also called product
assortment) is the set of all products and
items that a particular seller offers for sale.
A total group of products that an
organization markets.
A company’s product mix has a certain width,
length, depth and consistency.

The width of company’s (say HLL’s) product
mix refers to how many different product
lines the company carries, such as bathing
soap, detergents, shampoos, toothpaste,
food products.

The length of a company’s product mix refers
to the total number of items in its product
mix. Thus in each of the product line HLL has
a number of product items. Eg., in the
product line of bathing soaps, HLL has
several product items like Lux, Liril, Lifebuoy,
Pears.

The depth of a company’s product mix refers
to how many variants are offered of each
product in the line.

The Consistency of the product mix refers to
how closely related the various product lines
are in end-use, production requirements,
distribution channels, or some other way.
HLL’s product lines are consistent insofar as
they are consumer goods that go through the
same distribution channels.
These four dimensions of the product mix
provide the handles for defining the
company’s product strategy. The company
can expand its business in four ways.
 1. The Co. can add new product lines, thus
widening its product mix.
 2. The Co. can lengthen each product line.
 3. The Co. can add more product variants to
each product and deepen its product mix.
 4. The Co. can pursue more product-line
consistency or less, depending upon whether
it wants to acquire a strong reputation in a
single field or participate in several fields.


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A product line is a group of products that are
closely related, because they perform a
similar function, are sold to the same
customer groups, are marketed through the
same channels or fall within the given price
ranges.
The product mix may be composed of several
product lines.

Product line managers need to know the sales
and profits of each item in their line in order
to determine which items to build, maintain,
harvest,, or divest. They also need to
understand each product’s market profile, i.e.
how their product line is positioned against
competitors’ product lines (The Product Map).

Product Line Length :
. Downward Line Stretching
. Upward Line Stretching
. Two Way Stretching
High
New
Present
New
Product
Price
Present
New
Product
Low
Low
Present
New
High
Quality
(Downward)
(Upward)
(Two Way)

Filling in the Product Line ( adding more
items within the present range of line )

Product Line Modernization

Product Line Featuring

Product Line Pruning

Product Attribute Decisions

Brand Decisions

Brand Positioning

Packaging and Labeling

American Management Association defines
brand as follows :
“ A brand is a name, term, sign, symbol, or
design, or a combination of them, intended
to identify the goods and services of one
seller or group of sellers and to differentiate
them from those of competitors. ”

Individual Names

Family Names

Company Trade name combined with
individual product names.

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First, awareness provides the brand with a
sense of familiarity, and people like the
familiar.
Second, name awareness can be a signal of
presence and commitment. The logic is
that if a name is recognized, there must be
a reason.
Third, the salience of a brand will
determine if it is recalled at a key time in
the purchasing process.

First, brand loyalty reduces the marketing costs of
doing business, since existing customers are
relatively easier to hold.

Second, brand loyalty represents a substantial
barrier to competitors. Excessive resources are
required when entering a market in which existing
customers must be enticed away from an
established brand that they are loyal to.

Third, a relatively large, satisfied customer base
provides an image of a brand as an accepted,
successful, and enduring product.

The inception of Emami Group took place way
back in mid seventies when two childhood
friends, Mr. R.S. Agarwal and Mr. R.S. Goenka
left their high profile jobs with the Birla
Group to set up Kemco Chemicals, an
Ayurvedic medicine and cosmetic
manufacturing unit in Kolkata in 1974. It was
an extremely bold step in the early seventies
when the Indian FMCG market was still
dominated by multinationals

Emami’s FMCG business is currently split into two
divisions: personal care and healthcare, and both
contribute equally to the total turnover of its FMCG
business which is currently about Rs 350 crore.
Kolkata-based personal and healthcare major Emami
Group is now planning to manufacture and market a
range of ayurvedic medicines under their brand
name Himani. The move will bring Emami closer to
the turf of ayurvedic majors like Dabur India and
Himalaya Herbal. Emami’s new foray will include a
range of products like digestives, memory booster,
cough syrups, blood purifiers and others

. The mid-1990s saw actors Govinda and
Rambha endorse the brand (the ‘Thanda Thanda,
Cool Cool’ campaigns), which enjoyed a high
media presence. However, in 2004, Himani
executives decided to lend stature and salience
to the brand, and roped in the Big B, in the hope
that he would break geographical barriers for
them and appeal to the masses. Thus followed a
commercial which had Bachchan talking into the
camera about how the ‘cool’ oil helped him
counter stress and headaches in his days of
struggle.

That ad did quite well for us,” says Probal Bhattacharya,
senior brand manager, Himani Navratna. So, it came as
a surprise to watch actor Shah Rukh Khan endorse the
brand next in 2006, cast in an ad. “This was done to
make the brand even more relevant and full of life to
the younger lot,” Bhattacharya remarks. Sadly, the
replica communication didn’t work; King Khan failed to
appeal to Himani Navratna’s TG: 25-45 year old males.
Having learnt their lesson, the Himani Navratna
executives have revived Big B in their communication, as
“people still largely associate him with the brand”.


Brand equity is a set of assets and liabilities
linked to a brand’s name and symbol that
add to or substract from the value provided
by a producer or service to a firm and / or
that firm’s customers.
Brand equity generates value to the
customer that can emerge either as a price
premium or enhanced brand loyalty.
Brand
Awareness
Brand
Identity
Brand
Equity
Perceived
Quality
Brand
Loyalty
( Powerful brands have high brand
equity, higher brand loyalty.)

Advertising

Sponsorship of games and events

Social Causes

Public Facilities

Founder’s personality

Line Extensions

Brand Extensions

Multibrands

New brands

Co-brands
Product Category
Existing
Existing
Brand
Name
New
Line
Extension
Multibrands
New
Brand
Extension
New Brand
Names
Line extension occurs when a company
introduces additional items in the same
product category under the same brand
name, usually with new flavours, forms,
colours, added ingredients, package sizes
and so on.
 Line extensions generally have a higher
chance of survival than new products.
 On the down side extensions may lead to the
brand name losing its specific meanings; Ries
and Trout call this “ Line Extension Trap .”

Brand Extension occurs when a company
decides to use an existing brand name to
launch a product in the new category.
 Brand Extension offers a number of
advantages.
-Instant recognition and earlier acceptance
-Saves considerable advertisement costs


Brand Extension also involves risks.
- The new product might disappoint
buyers and damage their respect for
company’s other products.
- The brand name may loose its special
positioning in the consumer’s mind
through over extension - a phenomenon
called “ brand dilution .”

A company will often introduce additional
brands in the same product category.
- One of the motives for multibranding is to
establish different features and/or appeal to
different buying motives.

When a company launches products in a new
category, it may find that none of its current
brand names are appropriate.

When the present brand image is not likely to
help the new product, companies are better
off creating new brand names.

Co-branding occurs when two different
companies pair their respective brands in a
collaborative marketing effort.

Each brand sponsor expects that other
brand name will strengthen brand
preference or purchase intention.

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Idea Generation and Screening
Concept Development and Testing
Marketing Strategy
Business Analysis
Product Development
Test Marketing
Commercialization
New Product Development Process
Step 1. Idea Generation
Systematic Search for New Product
Ideas
Internal sources
Customers
Competitors
Distributors
Suppliers
New Product Development Process
Step 2. Idea Screening


Process to spot good ideas and drop
poor ones
Criteria
◦
◦
◦
◦
Market Size
Development Time & Costs
Manufacturing Costs
Rate of Return
New Product Development Process
Step 3. Concept Development & Testing
1. Develop Product Ideas into
Alternative
Product Concepts
2. Concept Testing - Test the
Product Concepts with focus Groups
3. Choose the Best One
New Product Development Process
Step 4. Marketing Strategy Development
Marketing Strategy Statement Formulation
Part One - Overall:
Target Market
Planned Product Positioning
Sales & Profit Goals
Market Share
Part Two - Short-Term:
Product’s Planned Price
Distribution
Marketing Budget
Part Three - LongTerm:
Sales & Profit Goals
Marketing Mix Strategy
New Product Development Process
Step 5. Business Analysis
Step 6. Product Development
Business Analysis
Review of Product Sales, Costs,
and Profits Projections to See if
They Meet Company Objectives
If No, Eliminate
Product Concept
If Yes, Move to
Product Development
New Product Development Process
Step 7. Test Marketing
Controlled
Test Market
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
A few stores that have
agreed to carry new
products for a fee.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.

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


Overestimation of Market Size
Product Design Problems
Product Incorrectly Positioned, Priced or
Advertised
Costs of Product Development
Competitive Actions
To create successful new products, the
company must:
◦ understand it’s customers, markets and
competitors
◦ develop products that deliver superior value to
customers.
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Losses/
Investments ($)
Introduction
Growth
Maturity
Decline

Any tangible or intangible offerings that is
perceived as a bundle of benefits by the
customers and attempts to satisfy their
unsatisfied needs
Sales
Costs
Profits
Marketing Objectives
Low sales
High cost per
customer
Negative
Create
product
awareness
and trial
Growth Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Rapidly rising sales
Average cost per
customer
Rising profits
Maximize market share
Maturity Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Peak sales
Low cost per customer
High profits
Maximize
profit while
defending
market share
Decline Stage of the PLC
Sales
Costs
Profits
Marketing Objectives
Declining sales
Low cost per customer
Declining profits
Reduce expenditure
and milk the brand


Price is the monetary amount or
compensation given by one party to another
in return for goods or services.
The concept of value





Profit maximization
To achieve ROI
To increase sales volume
Survival
To address the competition


The degree to which the price of a product
affects consumers purchasing behaviors.
The degree of price sensitivity varies from
product to product and from consumer to
consumer.

Price of substitute product

Unique value effect

Switching cost

Price-quality effect

Difficult comparison effect

Corporate objective

Costs

Demand

Competitor

Cost based pricing
◦ Mark up or full cost pricing

Competitor based pricing
◦
◦
◦
◦



Going rate pricing
Sealed bid pricing
Pricing below the competition
Pricing above the competition
Skimming pricing
Penetration pricing
Bundle pricing

The packaging of the product is the outer
layer that assist an organization to protect
the product and make it more attractive for
the customers


Primary Packaging: It is the first material that
envelops the product. This is the initial
packaging of the Product and the smallest
unit of Packaging which is in direct contact
with the product.
Secondary Packaging: It is outside the
primary packaging, which helps in protecting
the primary-packed product.

Tertiary Packaging: It is the last Packaging
used for bulk handling, warehouse storage
and transport shipping. Palletized Unit Load
is the most common of the Tertiary
Packaging which is used to pack the
Secondary-packed products tightly into the
containers.



What is a brand?
Brand – A brand is a name, term, sign,
symbol, or design which is intended to
identify the goods or services of one seller or
group of sellers, create value and to
differentiate them from those of competitors.
Brand image refers to the perception of the
brand in the public's mind.


E Branding is the promotional and branding
activities planned by an organization in the
internet media
It should be noted that Indian markets are
growing in terms of usage of internet. Hence,
the organizations spreads awareness through
e banners, pop ups, pop unders, viral
marketing efforts etc