Product Mix Strategy

What is a Product?
• A product is anything that can be offered to a
market to satisfy a want or need, including
physical goods, services, experiences, events,
persons, places, properties, organizations,
information, and ideas.
Five Product Levels
The Five Product Levels model was introduced by marketing expert Philip Kotler and
provides a way to understand the different layers of a product. Each level represents a
distinct aspect of the product offering. The five levels are:
1. Core Product
This is the fundamental benefit or need that the customer is seeking. It represents what
the customer is truly purchasing, rather than the physical product itself.
Example: For a smartphone, the core product is communication and connectivity.
2. Basic Product
The basic version of the product that delivers the core benefit. It includes all the
essential features needed for the product to function.
Example: A basic smartphone would include the ability to make calls, send messages,
and access basic apps, without any extra features.
3. Expected Product
This is the set of attributes or characteristics that buyers typically expect in a product
within a specific category. It encompasses the minimum standards the customer
expects.
Example: For a smartphone, the expected product would include a good camera, decent
battery life, and a reliable operating system.
4. Augmented Product
This level includes additional features, services, or benefits that differentiate
the product from competitors. These are added to exceed customer
expectations and provide extra value.
Example: A smartphone with premium features such as wireless charging,
enhanced camera quality, exclusive apps, or a superior warranty.
5. Potential Product
This refers to all the possible augmentations or transformations the product
could undergo in the future. It represents future improvements or
developments that could make the product even more appealing or
innovative.
Example: A smartphone with potential product upgrades might include
features like foldable screens, holographic displays, or fully integrated AI
assistants.
In summary, these five levels help marketers understand how to enhance the
value of their product offering, starting with the basic function (core product)
and adding layers of features and services to create differentiation and meet
customer needs more effectively.
Product Classification
Consumer products are products and services
for personal consumption
 Classified by how consumers buy them
• Convenience products
• Shopping products
• Specialty products
• Unsought products
Consumer Goods Classification

Convenience Shopping

Specialty Unsought
 Convenience products
• Convenience products are consumer
products and services that the customer
usually buys frequently, immediately, and
with a minimum comparison and buying
effort
• Newspapers
• Candy
• Fast food
• Strategy:
• High Availability: Ensure products are widely distributed and
easy to find, especially in locations like supermarkets,
convenience stores, and online platforms.
• Brand Recognition: Invest in building strong brand awareness to
influence purchase decisions at the point of sale.
• Pricing Strategy: Competitive pricing with discounts, bulk offers,
or loyalty programs to encourage repeat purchases.
• Promotions: Use short-term promotions, in-store displays, and
digital advertising to push impulse purchases.
• Subscription Services: Offer subscription models for recurring
needs (e.g., toiletries, food) to create customer loyalty.
 Shopping products
• Shopping products are consumer products
and services that the customer compares
carefully on suitability, quality, price, and
style
• Furniture
• Cars
• Appliances
Strategy:
• Product Differentiation: Emphasize unique features, quality, and benefits to
distinguish the product from competitors.
• Detailed Information: Provide comprehensive product descriptions, reviews,
comparisons, and demonstrations to help consumers make informed
decisions.
• Pricing Strategy: Offer value through promotions, bundles, or seasonal
discounts, but maintain premium pricing for high-quality or brand-name items.
• Retail Partnerships: Collaborate with trusted retailers or ecommerce platforms
for better distribution and customer service.
• Customer Experience: Ensure excellent pre- and post-purchase customer
service, such as easy returns, warranties, or technical support.
• Omnichannel Strategy: Ensure the product is available both online and in
physical stores, with consistent pricing and promotions.
 Specialty products
• Specialty products are consumer products
and services with unique characteristics or
brand identification for which a significant
group of buyers is willing to make a special
purchase effort
• Medical
• Designer clothes
• High‐end electronics
• Strategy:
• Brand Prestige: Focus on building and maintaining a high-end brand
image through exclusive marketing, events, and influencer partnerships.
• Scarcity and Exclusivity: Leverage the scarcity principle by creating
limited-edition products or offering products through invitation-only or
VIP access.
• Personalized Marketing: Provide tailored marketing messages and
experiences to appeal to the individual tastes and desires of high-net-
worth consumers.
• Premium Pricing: Maintain premium pricing strategies, justifying the
high cost with quality, heritage, or uniqueness.
• Exceptional Customer Service: Provide a luxury buying experience,
including personalized service, free shipping, and special packaging.
 Unsought products
• Unsought products are consumer products
that the consumer does not know about or
knows about but does not normally think of
buying
• Funeral services
• Strategy:
• Aggressive Marketing: Use direct-response advertising, content marketing,
and educational campaigns to raise awareness when the consumer needs it
most.
• Urgency and Need-Based Appeals: Highlight the importance of the product in
emergency situations or future planning to drive immediate action.
• Partnerships: Collaborate with industries or organizations that encounter
these products frequently (e.g., auto dealerships for warranties, hospitals for
health insurance).
• Customer Trust: Establish credibility with clear explanations of the product's
importance, backed by testimonials, guarantees, or industry certifications.
• Easy Access: Make the purchasing process as easy as possible, such as
simplifying contracts, offering online purchasing, and providing instant quotes.
• Industrial products are products purchased
for further processing or for use in
conducting a business
Classified by the purpose for which the product is
purchased
• Materials and parts
• Capital
• Raw materials
• Capital items are industrial products that aid
in the buyer’s production or operations,
including installations and accessory equipment.
Installations consist of major purchases such as
buildings (factories, offices) and fixed equipment
(generators, drill presses, large computer
systems, elevators).
• Materials and parts include raw materials and manufactured
materials and parts usually sold directly to industrial users
• Supplies and services include operating supplies, repair and
maintenance items, and business services
• New Product Development
– Development of original products, product
improvements, product modifications, and new
brands through the firm’s own R & D efforts
New-Product Development Reasons for
new product failure
Major Stages in New-Product
Development
New Product Development Process
• Stage 1: Idea Generation
– Internal idea sources:
• R&D
– External idea sources:
• Customers, competitors, distributors, suppliers
• Stage 2: Idea Screening
– Product development costs increase substantially in
later stages so poor ideas must be dropped
– Ideas are evaluated against criteria; most are
eliminated
• Stage 3: Concept Development and Testing
Concept development creates a detailed version of the idea stated in meaningful
consumer terms.
Concept testing asks target consumers to evaluate product concepts.

• Stage 4: Marketing Strategy Development

The marketing strategy helps in deciding pricing, positioning, and promoting

the product. A marketing strategy statement includes three parts:
The first part of the statement describes the target market, the firm’s
planned value proposition, and its sales, market share and profit goals for the
first few years.
The second part of the statement includes the product’s planned price, its
distribution, and marketing budget for the first year.
The last part of the statement consists of the planned long-run sales,
marketing mix strategy, and profit goals.
• Stage 5: Business Analysis
– Once the marketing strategy has been developed it is important to
assess the worth of the product from a business point of
view. An assessment of the sales projections, estimated expenses,
and anticipated profits are included in the business analysis.
• Stage 6: Product Development
– In this stage, the R&D or engineering department converts a product
concept into a physical product. This step involves a huge jump in
investment as it shows whether or not the product idea can be turned
into a workable product.
• Stage 7: Test Marketing
– Test Marketing refers to the process of testing the product and
marketing program in realistic market settings. Eg. a cosmetics
company might launch a new skincare product in a particular area
and collect information on consumer reaction, usage trends, and
sales.
• Stage 8: Product Launch
 The Product Life Cycle (PLC)
The Product Life Cycle (PLC) refers to the stages a
product goes through from its initial development
and introduction to its eventual decline and removal
from the market. It provides a framework for
understanding the typical progression of sales,
profits, and marketing strategies that a product
undergoes over time. The goal of studying the PLC is
to help businesses plan and manage their products
more effectively, anticipate challenges, and apply the
right strategies at each stage.
 Introduction Stage

Characteristics: The product is launched into the market, and the

focus is on creating awareness and establishing a market
presence.
Sales: Low and growing, but often slow.
Profit: Negative or low due to high development and marketing
costs.
Marketing Strategy:
• Promotion: Heavy promotion and advertising to educate customers.
• Pricing: Can be high (skimming strategy) or low (penetration
strategy) depending on market conditions.
• Distribution: Limited distribution channels, as the focus is on getting
the product into the hands of early adopters.
 Growth Stage

Characteristics: The product gains acceptance, sales grow

rapidly, and competitors begin to enter the market.
Sales: Rapidly increasing.
Profit: Increasing as the company begins to recover its initial
costs.
Marketing Strategy:
• Promotion: Continue to build brand awareness and
differentiation from competitors.
• Pricing: May start to adjust to be more competitive, depending
on market demand.
• Distribution: Expanded distribution to reach a broader audience.
 Maturity Stage

Characteristics: The product’s growth slows as it reaches market

saturation. Most potential customers have purchased the
product, and competition is intense.
Sales: Peak, but growth slows and eventually stabilizes.
Profit: High but starts to decline due to increased competition
and price reductions.
Marketing Strategy:
• Promotion: Focus on brand loyalty and maintaining market share.
Promotions might include discounts or loyalty programs.
• Pricing: Competitive pricing to maintain a competitive edge.
• Distribution: Extensive distribution through various channels, often
globally.
 Decline Stage

Characteristics: Sales and profits start to decline as the product

becomes obsolete or less desirable. New technologies, changing
tastes, or market saturation can cause this.
Sales: Declining.
Profit: Declining, potentially leading to losses.
Marketing Strategy:
• Promotion: Cut back on advertising and promotion, focusing only on
loyal customers or niche markets.
• Pricing: Discounted prices to clear inventory.
• Distribution: May reduce distribution channels as demand decreases.
• Product: Option to discontinue the product or rejuvenate it through
modifications or repositioning.
 Extension (Optional)

• Sometimes, a product can enter an extension

stage before it enters decline, where businesses
use strategies to prolong its life, such as:
• Product Modification: Updating the product
features, design, or technology.
• Repositioning: Shifting the product's target market
or use.
• New Marketing Campaigns: Renewed advertising
efforts to attract new customers.
 Product Line Decisions
• A product line is a group of products that are
closely related because they function in a
similar manner, are sold to the same
customer groups, are marketed through the
same types of outlets, or fall within given
price ranges
 Key Aspects of a Product Line:

1. Product Line Length:

1. The length of a product line is determined by how many
different products or variations are included in it.
Companies may decide to expand (add more products) or
contract (remove underperforming products) the length of
their product line based on market demand, profitability,
or competitive pressures.
Examples:
1. A soft drink company may offer a line that includes soda, diet
soda, and flavored water.
2. A tech company may have a product line of smartphones with
different models (entry-level, mid-range, premium).
2. Product Line Depth:
The depth of a product line refers to the number of
variations within each product offering. These variations
can be in terms of size, color, design, or features.
Examples:
• A cosmetics company might offer multiple shades of
lipstick, each a different variation within the lipstick
product line.
• A footwear company may offer different sizes and styles
(sneakers, boots, sandals) in the same product category.
3. Product Line Filling:
• Product line filling is the process of adding new products
to an existing line to fill gaps or offer more options
within the same price range or feature set. This can
prevent competitors from filling those gaps and help
meet customer demand for variety.
• Example: A car manufacturer may add a new mid-range
model between two existing models to cater to
customers who want more features than the entry-level
model but don't need the luxury features of the high-
end model.
 Brand
• Brand represents the consumer’s perceptions
and feelings about a product and its
performance. It is the company’s promise to
deliver a specific set of features, benefits,
services, and experiences consistently to the
buyers
 Branding
• Branding refers to the process of creating and
managing a unique identity for a company,
product, or service. It involves crafting a
distinct name, logo, design, and messaging
that differentiate a company or product from
its competitors and establish a lasting
emotional connection with customers.
Effective branding helps build recognition,
loyalty, and trust in the marketplace.
 Key components of branding include:

1. Brand Name: The verbal identity of the brand, often a memorable

and meaningful name that resonates with the target audience.
2. Logo: A graphical symbol or design that represents the brand,
often used for recognition and association.
3. Brand Values and Personality: The core principles, values, and
personality traits that the brand embodies (e.g., innovation,
reliability, luxury).
4. Tagline or Slogan: A short, memorable phrase that communicates
the brand’s essence or promise.
5. Brand Voice: The tone and style of communication the brand uses
across all customer touchpoints (e.g., friendly, professional,
authoritative).
 Challenges in Branding

1. Brand Differentiation: In crowded markets, it can be difficult for a brand to stand

out from competitors. Companies must develop a clear and unique value
proposition to differentiate themselves.
2. Brand Consistency: Maintaining consistency across all brand touchpoints (e.g.,
advertising, social media, packaging) is challenging, especially for global brands.
Inconsistent messaging can confuse consumers and damage brand perception.
3. Evolving Consumer Preferences: Consumer tastes, values, and expectations
change over time. Brands must be adaptable and relevant to avoid losing
customer interest.
4. Brand Equity Maintenance: Over time, brands can lose their value if they do not
invest in staying fresh, relevant, and aligned with customer needs.
5. Global Branding: When brands operate in multiple countries, adapting the brand
to local cultures while maintaining a global identity can be complex. What works
in one market may not be suitable for another.
 Packaging Concept

Packaging refers to the design and materials

used to contain, protect, and promote a
product. It is a critical part of a brand’s identity,
as it communicates product information, attracts
attention, and contributes to the overall
customer experience. Good packaging also
serves a functional role in preserving the
product’s quality and ensuring ease of use.
 Key Functions of Packaging

1. Protection: Packaging safeguards products from damage, contamination, and

environmental factors like moisture or light.
2. Convenience: Packaging is designed for easy storage, handling, and transportation.
Some packaging designs offer convenience features like resealable closures or easy-
pour spouts.
3. Marketing and Branding: Packaging communicates key brand elements (logo,
colors, fonts) and often conveys the product's value proposition and benefits. Eye-
catching packaging can influence buying decisions and attract attention on store
shelves.
4. Information: Packaging provides essential product details such as ingredients,
usage instructions, safety warnings, expiration dates, and nutritional facts. Labeling
is often a critical part of packaging for this function.
5. Sustainability: With growing environmental concerns, packaging is increasingly
being designed to be more eco-friendly, using recyclable or biodegradable
materials.
 Labeling Concept

• Labeling refers to the information presented on a

product’s packaging that communicates important
details about the product. Labels can include
product names, ingredients, usage instructions,
safety warnings, and promotional messages.
Labels also provide essential information for legal
compliance, particularly in regulated industries
like food and pharmaceuticals.
 Functions of Labeling

1. Identification: Labels help consumers easily identify the product and distinguish
it from other offerings in the market.
2. Consumer Education: Labels inform consumers about the product’s features,
ingredients, benefits, and usage. This is especially important for products like
food, cosmetics, and medications.
3. Legal Compliance: Many products, especially in the food, health, and
pharmaceutical industries, require specific labeling to meet regulatory
requirements, including product safety and ingredient disclosure.
4. Branding: The label plays a critical role in reinforcing the brand’s image and
values. The design, colors, and typography can all communicate the brand’s
personality and appeal to the target audience.
5. Sustainability Information: Increasingly, consumers are looking for labels that
communicate a product’s environmental impact, including certifications for
organic, fair trade, or recyclable packaging.
Thank You