[6] 6137 - Product Mix

Product Development Decision Process

• step-by-step guidelines or strategies that a company would follow in order for them to develop new products and make decisions whether they would produce the product or not

• a generic process for product development

• shows whether the company would modify the process, send back for improvement, or even drop a product

Product Development Decision Process

• Steps

1. idea generation

2. idea screening

3. concep development and testing

4. marketing strategy development

5. business analysis

6. product development

7. market testing

8. commercialization

STEP 1: Idea Generation

• is the idea worth considering?

• a company would generate idea & determine if it is worth pursuing

STEP 2: Idea Screening

• is the product compatible with the company’s objectives, strategies and resources?

• check if the product will be aligned with the company’s objectives, strategies, and resources

STEP 3: Concept Development and Testing

• can we find a good concept consumers say they would buy

• the idea being developed should have a clear product concept and should be tested with your potential costumers

• e.g., food product (taste trials with acquaintances)

STEP 4: Marketing Strategy Development

• can we find cost-effective, affordable marketing strategy?

• design a marketing plan to determine if the product can be sold effectively at a profitable and affordable price

STEP 5: Business Analysis

• will this product meet our profit goal?

• evaluate the costs, forecast sales, and assess profit potential 

• determine whether the product is financially feasible

STEP 6: Product Development

• have we got a technically and commercially sound product?

• if product is feasible, marketable, and profitable, then you can proceed to mass-produce it

• physically created and tested to ensure it can be produced and function properly

STEP 7: Market Testing

• have product sales meet market expectations?

• a small market first to see if it would meet customer’s expectations

STEP 8: Commercialization

• are product sales meeting expectations?

• done when the expectations of the small community is met

• if the product performs well = officially launched to a bigger market

PRODUCT

• heart of a great brand

• anything that can be offered to a market to satisfy a want and/or need

A company can achieve market leadership when the market is offered

a product with superior quality and excellent customer service.

PRODUCT CHARACTERISTICS & CLASSIFICATIONS

• As a marketer, it is your job to build the product offering to its highest possible level.

• Remember: each level adds more value to your customers (but comes with a cost).

Philip Kotler’s Five Product Levels Model

1. core benefit

2. generic product

3. expected product

4. augmented product

5. potential poduct

Level 1: Core Benefit

• basic benefit 

• fulfills basic benefit consumers want

• Refers to the basic product

• The focus is on the purpose for which the product is intended.

• 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.

In designing a product offering, it is crucial to identify the

benefit that a market is looking for to buy.

Level 2: Generic / Basic Product

• provides actual product with tangible qualities without added features or branding 

• represents all the qualities of the product

• “actual product”

• the core benefit identified must be transformed into a basic product

Level 2: Generic / Basic Product

• In pharmaceutical viewpoint this pertains to

• choosing the correct dosage form to deliver the core benefit.

Level 3: Expected Product

• generic product + other qualities/attributes consumers want/expect 

• all the benefits consumers expect to get when they purchase a product

• the basic product concept is translated into a set of attributes that the markets expects.

Level 3: Expected Product

• marketer avoids misalignment and focuses instead on market need. 

• e.g., When a market expects an herbal product, they would usually check if the offering contains a chemical/synthetic/non-herbal ingredient

Level 4: Augmented Product

 In this level,__ take place

brand positioning and competition

Level 4: Augmented Product

• all the additional factors which set the product apart form competition = brand & identity / brand identity & image 

• Product gives more physical product

• have a strong USP (unique selling proposition) – reason for buying despite numerous competitors. 

• The product is more established and will be bought despite competition’s performance.

• The feature that the company provided to compete with other products of competitor

Level 4: Augmented Product

• Remember:

• augmentation adds cost to the product but soon becomes expected benefits for customers to compare with others. 

Level 5: Potential Product

• encompasses all the possible augmentations/innovations 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.

Product System

a group of diverse but related items that function in a compatible manner

• Group of different but related products that work together or are used for similar purpose 

Product System

• example

A pharmaceutical company can have a full Cardiovascular portfolio offering CV drugs such as anti-hypertensives, anticholesterol drugs, anticoagulant drugs

Product Mix

• (also called a product assortment)

• the set of all products and items a particular seller offers for sale.

• consists of various product lines.

Product Mix

• example

A pharmaceutical company can offer a full range of dosage form and strengths of a particular product. Atorvastatin 10mg, 20mg, 40mg, 80mg

4 DIMENSIONS OF PRODUCT MIX

1. Width

2. Length

3. Depth

4. Consistency

Width

• refers to how many different product lines the company carries.

Width

• example

• e.g., A pharmaceutical company may have a product line of CV Drug, antibiotics, and even vitamins.

[witdh] Brand extension

– when a company decides to offer another line of products to its offerings 

[witdh] Brand extension

• example

• e.g., Colgate offering a mouthwash and toothbrush are product line extensions

Length

• refers to the total number of items in the mix

Length

• example

• i.e., individual products in the line

Depth

• refers to the number of variants (differences in strength, flavor, sizes) in each product line

Depth

• Line extension

• – when expanding an offering (adds new variation) of an existing product

Depth

• Line extension (example)

• e.g., Offering different flavors of an antibiotic syrup

Consistency

• describes how closely related the various product lines are in terms of function, production, and target market 

Consistency

• example

• (Ex. Is it consistent with the store: Healthy Options to offer sugary drinks and salty chips?) 

PRODUCT DIFFERENTIATION

• making a product distinct from the other competing products even if they provide similar benefits

• makes a product more attractive to the consumers  and easier to recognize in the market

APPROACHES TO PRODUCT DIFFERENTIATION

1. Form & Style 

2. Features 

3. Durability

4. Reliability

APPROACHES TO PRODUCT DIFFERENTIATION

• Once a product is built, marketers need to differentiate the product among the rest of competition. Without differentiation,

• it will be easier for customers to decide on not buying your product.

Differentiation

 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.

Form & Style

Many products can be differentiated in form:

• Size, shape, or physical structure of a product.

Form & Style

• Consider the many possible forms of Multivitamins with Iron.

• It can be differentiated by dosage size, shape, color, coating, or action time.

Form & Style

• While style describes the product’s

• look and feel to the buyer

Features

• Most products can be offered with varying features that supplement their basic function – through market research/survey.

• Marketers should consider how many people want each feature, how long it would take to introduce it, and whether competitors could easily copy it.

Durability

• a measure of the product’s expected operating life under natural or stressful conditions

• length of time the product remains usable or effective or stable; longer shelf life

Reliability

• a measure of the probability that a product will not malfunction or fail within a specified time period (within declared shelf-life). 

• consistency and dependability of the product performance

• Buyers normally will pay a premium for more reliable products.

PRODUCT DESIGN

• The pharmaceutical company as a multi-billion peso industry faces

• strong competition. Because of this, differentiation becomes mandatory. 

PRODUCT DESIGN

• Crucial part of a differentiation program

• offers a potent way to differentiate and position a company’s products.

• totality of features that affect how a product looks, feels, and functions to a consumer.

• offers (first) functional and (second) aesthetic benefits and appeals to both our rational and emotional sides.

Red

• A powerful color, symbolizing energy, passion, or even danger. 

• works best for action-oriented products or brands, products associated with speed or power, or dominant or iconic brands

Orange

• Often connotes adventure and fun. 

• Like red, it’s an attention-grabber and is thought to stimulate appetites, but it’s less aggressive than red can be. 

• has been used to convey value and discounts, and recently has earned young stylish associations thanks to the fashion industry

Yellow

• equated with sunny warmth and cheeriness. 

• Its more vibrant shades elicit feelings of well-being and are said to stimulate mental activity, so yellow is often associated with wisdom and intellect. 

• works well for products or brands tied to sports or social activities, or for products or content looking to garner attention

Green

• Connotes cleanliness, freshness and renewal and, of course environmental friendliness

• experts warn that green now is overused in the marketplace. 

• one of the most predominant naturally occurring colors, so it is often associated with wholesome attributes. 

• works well for organic or recycled products, or for brands associated with health and wellness.

Blue

• Another naturally predominant color

• regularly associated with security, efficiency, productivity, and a clearness of mind. 

• has become a popular color in the corporate world and particularly in the high-tech industry. 

• also symbolizes cleanliness, openness and relaxation, and works well for everything from cleaning and personal care products to spas and vacation destinations.

Purple

• For centuries, it has symbolized nobility and wealth, and those associations hold true today. 

• a powerful color for luxury brands and products, or for companies that want to lend an air of mystery or uniqueness to their wares 

• particularly popular with females of all ages

Pink

• a stereotypically girly color associated with frilliness and warmth, and is considered to have soft, peaceful, comforting qualities. 

• works well for personal care products and baby-related brands. 

• also associated with sweetness 

• works well for food marketers touting sugary treats.

Brown

• strong, earthy color that connotes honesty and dependability. 

• often cited as a favorite color among men. Iits darker shades are rich and solid, while often shades work well as a foundational color. 

• often works best in conjunction with other colors

Black

• classic and strong

• a regular fixture in marketers’ color schemes as either a primary component or an accent color for font or graphics. 

• convey power, luxury, sophistication and authority, and can be sued to market everything from cars and electronics to high-end hotel and financial services

White

• color of puffy clouds and fresh snow, logically connotes purity and cleanliness. 

• often used as background or accent color to brighten a color scheme

• can be used liberally to create clean associations for organic foods or personal care products. 

• also symbolize innovation and modernity

Packaging includes

all the activities of designing and producing the container for a product.

The package is the buyer’s first encounter with the product.

A good package draws the consumer in and encourages product choice. In effect, they can act as "five second commercials” for the product.g the container for a product.

5 OBJECTIVES OF PACKAGING

1. Identify the brand 

2. Convey descriptive and persuasive information 

3. Facilitate product transportation and protection  

4. Assist at-home storage 

5. Aid product consumption

FACTORS AFFECTING GROWTH IN USE OF PACKAGING

Self-service

Consumer affluence

Company & brand image

Innovation opportunity

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

Innovation opportunity

unique packaging attracts consumers who are looking to try new products

Billboard effect

• consumers attribute a specific color/branding to a specific product (Ex. GSK’s diamond pattern branding; Sandoz’ Giant “S” branding) 

LABELING

• The label can be

• a simple attached tag or an elaborately designed graphic that is part of the package. 

• In terms of marketing, a label performs several functions: 

1. It identifies the product or brand.

2. It grades the product – provide sense of being standard or premium. 

3. It describes the product – manufacturer, importer, net content, warnings, precautions.

4. It promotes the product through attractive graphics

PRODUCT DESIGN CREATIVITY TECHNIQUES

• When first designing a product, the following techniques can be used to aid in the design and development process.

• attribute listing

• forced relationships

• morphological analysis

• reverse assumption analysis

ATTRIBUTE LISTING

• List the attributes of product and modify each attribute

• what can be modified in the packaging and labeling for appeal

ATTRIBUTE LISTING

• example

•  break down a product into its attributes and change/improve each part

• An NSAID suspension has attributes such as color (appeal), flavor (palatability), packaging (ease of use)

FORCED RELATIONSHIPS

• List several ideas and consider each in relationship to each of the others

• combine two different ideas/products to create something new

• What can be combined or added to make improvements?

• help companies think creatively, leading to innovative & differentiated product that meets customer needs

FORCED RELATIONSHIPS

• example

An NSAID for headache and Caffeine for people suffering from Caffeine-dependence = an NSAID with Caffeine for people experiencing caffeine-dependence (withdrawal) induced headache

MORPHOLOGICAL ANALYSIS

• Start with a problem, think of dimensions (breaks down a product into dimensions), and create different possible combinations of solutions to that problem

MORPHOLOGICAL ANALYSIS

• example

• Problem: People forgetting to take antibiotics. Dimensions for this problem include: 

  • dosage form (tablet, capsule, suspension), 

  • mode of administration (oral, IV), 

  • manner of letting the customer remember (alarm, app-based notifications)

REVERSE ASSUMPTION 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

• example

• Other dosage forms will be part of a new concept

Concept Development

• A necessary but NOT sufficient step for new product success

• Marketers must also distinguish winning concepts from losing concepts

• Not all ideas succeed. Marketers must identify which concepts would work.

Concept Development

• A product idea can be turned or shaped into several concepts for a target market. The following questions are answered by the marketer:

• target user: Who will use this product? 

• main objective/value: What primary benefit should this product provide? 

• usage/situation/timing when it will be needed: When will people consume this product?

Perceptual Map

• In brand concept development, a perceptual map is usually prepared to

• show the position of a product or brand among the competition

• Helps the company to decide on how to design & position the product based on how consumers see competing brands

• Locate a gap or less crowded segment on the perceptual map where your product will be distinctive

If 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 (i.e., wouldn’t compete), unless that brand is weak or inferior or market demand was high enough to be shared by multiple competitors.

Product Positioning Map

shows the place of the product among other competing products

Brand Positioning Map

shows the place of the brand among other competing brands

HOW TO DO A PERCEPTUAL MAP?

1. Identify 2 attributes that your product may have. 

2. Identify the opposites/variations of those attributes.

3. Place the first attribute opposites on the x-axis and the second on the y-axis. 

4. Plot the competitors on the map accordingly.

5. Plot the product on the map.

6. Analyze how the product fares among the competition.

PRODUCT COMMERCIALIZATION

• Suppose a company has almost completed the development work on its new product, it is faced with several questions on how to market/effectively launch the product to the customer through a specific mix of programs

• ensures the product is launched at the time, right place, to the right people with the right strategy to maximize success

DIMENSIONS OF PRODUCT COMMERCIALIZATION

1. Timing

2. Geographic Strategy

3. Target-Market Prospects

4. Introductory Market Strategy

 Timing

• Answers the question: when?

• best time to launch the product (before competitors or during peak demand)

• finding the most suitable period at which a product can be sold having favorable market response

DIFFERENT PERIODS OF TIMING A PRODUCT OFFERING

1. First Entry

2. Parallel Entry

3. Late Entry

1. First Entry

• The first firm entering a market usually enjoys the “first mover advantages” of locking up key distributors and customers and gaining leadership 

• PRO: first to gain and secure brand recognition, distributors, and customers

CON: Rushing too early entry may backfire

2. Parallel Entry

• The firm might time its entry to coincide with the competitor’s entry

• PRO: The market may pay more attention when two companies are advertising the new product, shared effort in market education

• CON: immediate strong competition

3. Late Entry

• The firm might delay its launch until after the competitor has borne the cost of educating the market (i.e., after product launch), and its product may reveal flaws the late entrant can avoid (PRO)

• PRO: The late entrant can also learn the size of the market 

• CON: harder to compete with an establishe

Geographic Strategy

• Answers the question: where?

• Most companies will develop a planned market rollout over time

• Effective geographic strategy to support product launch depends on several factors

FACTORS AFFECTING GEOGRAPHIC STRATEGY

1. Market potential

2. Company’s local reputation

3. Cost of filling the pipeline

4. Cost of communication media

5. Competitive penetration

1. Market potential

• Can the market afford the product in the short and long run? 

• afford to sustain the demand

• e.g., Higher-priced products perform better at urban areas than rural areas