Product mix Flashcards
Product Development Decision Process
- idea generation
- idea screening
- concept development and testing
- marketing strategy development
- business analysis
- product development
- market testing
- commercialization
is the heart of a great brand. A company can achieve market leadership when the market is offered a product with superior quality and excellent customer service.
Product
is anything that can be offered to a
market to satisfy a want and/or need
Product
Product Characteristics & Classifications
Level 1: Core Benefit
Level 2: Generic/Basic Product
Level 3: Expected Product
Level 4: Augmented Product
Level 5: Potential Product
- pertains to the benefit that a customer is buying
- Each product should be built on Level 1, otherwise, the product will have no benefit or with an unaligned benefit
- it is crucial to identify the benefit that a market is looking for to buy
Core benefit
- In pharmaceutical viewpoint this
pertains to choosing the correct dosage form to deliver the core benefit - product effectiveness and efficacy are more important factors than
customer wants
Basic/Generic Product
- the basic product concept is translated into a set of attributes that the markets expects
- the marketer avoids misalignment and focuses instead on market need. (Ex. When a market expects an herbal product, they would usually check if the offering contains a chemical/synthetic/non-herbal ingredient)
Expected Product
- In this level, brand positioning and competition take place.
- should have a strong USP (unique selling proposition) – reason for
buying despite numerous competitors - adds cost to the product but soon becomes expected benefits for customers to compare with others
Augmented Product
- encompasses all the possible
augmentations and transformations the
product or offering might undergo in the
future. Here is where companies search for new ways to satisfy customers and
distinguish their offering
potential product
is a group of diverse but related items that function in a compatible manner
Product System
A pharmaceutical company can have a full Cardiovascular portfolio offering CV drugs such as anti-hypertensives, anticholesterol drugs, anticoagulant drugs
Product System
(also called a product assortment)
is the set of all products and items a particular seller offers for sale
Product Mix
A pharmaceutical company can offer a full range of dosage form and strengths of a particular product. Atorvastatin 10mg, 20mg, 40mg, 80mg
Product Mix
A product mix consists of various
product lines
4 Dimensions of Product Mix
- width
- length
- depth
- consistency
refers to how many different product lines the company carries
width
term used when a company
decides to offer another line of products to its offerings (Ex. Colgate offering a mouthwash and toothbrush are product line extensions)
Brand extension
refers to the total number of items in the mix
Length
refers to the number of variants in each product line
Depth
term used when expanding an
offering of an existing product (Ex. Offering different flavors of am antibiotic syrup)
Line extension
describes how closely related the various
product lines are (Ex. Is it consistent with the store Healthy Options to offer sugary drinks and salty chips?)
Consistency
is an attribute that can be built into a product to distinguish it among several competing products that has the
similar value offering. This attribute makes your product stand
from the crowd
differentiation
Approaches to Product Differentiation
- Form & Style
- Features
- Durability
- Reliability
- Size, shape, or physical structure of a product.
- Consider the many possible ____ of Multivitamins with Iron. It can be differentiated by dosage size,
shape, color, coating, or action time.
form
describes the product’s look and feel to the buyer
style
- Most products can be offered with varying _______that supplement their basic function – through market
research/survey - Marketers should consider how many people want each _____, how long it would take to introduce it, and whether competitors could easily copy it
features
is a measure of the product’s expected
operating life under natural or stressful conditions
durability
- is a measure of the probability that a product will not malfunction or fail within a specified time period
(within declared shelf-life) - Buyers normally will pay a premium for more reliable products.
Reliability
The pharmaceutical company as a multi-billion peso industry faces strong competition. Because of this, differentiation becomes mandatory. Crucial part of a differentiation program is _________
Product Design
offers a potent way to differentiate and
position a company’s products
Product Design
is the totality of features that affect how a
product looks, feels, and functions to a consumer
Design
offers functional and aesthetic benefits and appeals to both our rational and emotional sides
design
includes all the activities of designing and
producing the container for a product
packaging
is the buyer’s first encounter with the
product. A good ______ draws the consumer in and encourages product choice. In effect, they can act as “five
second commercials” for the product
packaging
5 Objectives of packaging
- Identify the brand
- Convey descriptive and persuasive information
- Facilitate product transportation and protection
- Assist at-home storage
- Aid product consumption
Factors affecting growth in use of packaging
- Self-service – rise of self-service economy
- Consumer affluence – some consumers are willing to pay extra for elegance, appearance, and convenience
- Company & brand image - instant recognition
>Billboard effect – consumers attribute a specific color/branding to a specific product (Ex. GSK’s diamond pattern branding; Sandoz’ Giant “S” branding) - Innovation opportunity – unique packaging attracts consumers who are looking to try new products
can be a simple attached tag or an
elaborately designed graphic that is part of the package
labeling
functions of labeling
- It identifies the product or brand
- It grades the product – provide sense of being standard or premium
- It describes the product – manufacturer, importer, net content, warnings, precautions.
- It promotes the product through attractive graphics
Product Design Creativity Techniques
- Attribute listing
- Forced relationships
- Morphological analysis
- Reverse assumption analysis
list the attributes of product and
modify each attribute
Attribute listing
list several ideas and consider each in relationship to each of the others
Forced relationships
start with a problem, think of dimensions, and create different possible combinations of solutions to that problem
Morphological analysis
list all the normal assumptions about a product and then reverse them.
Instead of assuming that a consumer would always want a tablet form of a product, reverse them
Reverse assumption analysis
is a necessary but not sufficient
step for new product success. Marketers must also distinguish winning concepts from losing concepts
Concept development
a perceptual map is usually
prepared to show the position of a product or brand among
the competition
brand concept development
shows the place of the product
among other competing products
Product positioning map
shows the place of the brand among other competing brands
Brand positioning map
- The perceptual map helps the company to decide on how to design the product.
- Three segments (1–3) are well served by existing brands (A–C). The company would not want to position itself next to one of those existing brands, unless that
brand is weak or inferior or market demand was high enough to be shared. - Locate a segment on the perceptual map where your product will be distinctive.
Perceptual Map Key Concepts
how to market the product to the customer through a specific mix of programs
Product Commercialization
Dimensions of Product Commercialization
- Timing – answers the question: when?
- Geographic Strategy – answers the question: where?
- Target-Market Prospects – answers the question: to whom?
- Introductory Market Strategy – answers the question: how?
is the finding the most suitable period at which a product can be sold having favorable market response
Timing
Different Periods of Timing a Product Offering
- First entry
- Parallel entry
- Late entry
the first firm entering a market usually enjoys the “first mover advantages” of locking up key distributors and customers and gaining leadership. But rushing to early entry may backfire
First entry
the firm might time its entry to coincide with the competitor’s entry. The market may pay more attention when
two companies are advertising the new product
Parallel entry`
the firm might delay its launch until after the competitor has borne the cost of educating the market, and its product may reveal flaws the late entrant can avoid. The late entrant can also learn the size of the market
Late entry
Factors Affecting Geographic Strategy
- Market potential
- Company’s local reputation
- Cost of filling the pipeline
- Cost of communication media
- Competitive penetration
can the market afford the product in the short and long run?
Market potential
does the company/brand enjoy a positive
reputation
Company’s local reputation
can the company assure selling of entire product offering variants? (Ex. Selling orange-flavored Paracetamol only in rural areas while selling Orange, Strawberry, and Grape flavors to urban areas)
Cost of filling the pipeline
will it require light or heavy information
campaign?
Cost of communication media
will the consumers be swayed to try your product and leave their brand loyalty
Competitive penetration
the company must target initial distribution and promotion to the best
prospect groups
Target Market Prospects
- Ideally they should be early adopters, heavy users, and opinion leaders
- The company should rate prospects and target the best group.
- Aim = to generate strong sales as soon as possible to attract further prospects.
Target Market Prospects
are new product enthusiasts and enjoy tinkering with new products. They usually report on early weaknesses
Innovators
are opinion leaders. They are less price sensitive and willing to adopt the product if given personalized solutions and good service support.
Early adopters
consumers who adopt the new technology when its benefits are proven and a lot of adoption has already taken place. They make up the mainstream market.
Early majority
are skeptical conservatives who are risk averse, technology shy, and price sensitive.
Late majority
are tradition-bound and resist the innovation until the current product they are using is no longer defensible
Laggards
new-product launches often take longer and cost more than expected
Introductory Market Strategy
is an individual’s decision to become a regular user of a product and is followed by loyalty to the product
adoption
Steps in Consumer Adoption Process
- Awareness
- Interest
- Evaluation
- Trial
- Adoption
the consumer becomes aware of the
innovation but lacks information about it.
Awareness
the consumer is stimulated to seek information about the innovation
Interest
the consumer considers whether to try the
innovation
Evaluation
the consumer tries the innovation to improve his or her estimate of its value
trial
the consumer decides to make full and regular use of the innovation.
adoption
8 Major Causes of Product Failure
- Ignored or misinterpreted market research
- Overestimation of market size – product is good but there are few buyers
- High development costs – product is expensive to produce
- Poor design or poor product performance
- Incorrect positioning, advertising, or price – too expensive price
- Insufficient distribution support – cannot be seen on most channels
- Competitors who fight back hard – price war, brand war
- Inadequate payback (return profit) – product is good but return is non-attractive
