PRODUCT DECISIONS AND STRATEGIES

PRODUCT :

Product related decisions form one of the 4Ps of marketing mix. These decisions include introduction of new products, Improvement of existing products, planned elimination of obsolete products and, packaging and branding.

Most product decisions are taken in the context of the overall strategy of an organisation. This strategy may also include important areas of diversification.

Product is the bundle of benefits or satisfactions offered to a customer. Product or Goods is a composite of the characteristics and features-physical and psychological-which are offered for purchase by a customer, whether it is a consumer or an industrial purchaser. How people personally feel about, or perceive the product is just as important as the actual physical characteristics of it. 

Product Differentiation: You must have understood now that a product is really a bundle of potential benefits offered to a purchaser. However, there are certain products which basically look alike. Take toothpastes, for example. These are offered by different manufacturers and were it not for the tube and the branding; the customer would not even be able to distinguish between the products of most different manufacturers. To make their product distinct from others the manufacturers identify them to the customer, that is, `differentiate', by using different packaging, colouring etc. and by emphasising different benefits or advantages in their promotion.  

Product Positioning: You know that all products do not appeal to all income groups or age groups, unless they are meant to satisfy basic necessities. A manufacturer can thus use the need-oriented segmentation. For example, a toothpaste manufacturer may appeal to prevention of `tooth decay', while another might offer `sociability' in the sense of preventing bad breath. Still another may provide the need to be `attractive' by emphasising the whiteness of the teeth which his product, toothpaste, gives. This lathe concept of product positioning. In the case of soft drinks, positioning can be done in terms of pricing, calorie contents and in many other ways. Thus positioning is used for bringing about differentiation in a manufacturer's product.

 

TYPES OF PRODUCTS

Let us now analyse the different types of products we come across. Generally products are classified into two types, namely

1. Consumer Products and

2. Industrial Products.  

Consumer Products or Goods

Consumer goods are those which are used by ultimate consumers or households and in such form that they can be used without further commercial processing. Consumer goods can be divided into : 

1. Convenience Goods;

2. Shopping Goods,

3. Durables or Durable Goods, and

4. Non-durables or Non-durable Goods.  

Convenience Goods

These are goods which consumers generally purchase frequently without making an effort or as a habit. The purchase is almost spontaneous and the person has already a predetermined brand in mind. These convenience goods include soaps, newspapers, toothpastes, toiletries, cigarettes, etc. Often convenience goods are bought impulsively or spontaneously. For example, when a person goes shopping around and sees a product which attracts his eyes, he buys it on impulse. Such goods are not purchased on regular basis.

Shopping Goods

These are goods which are purchased after going around shops and comparing the different alternatives offered by different manufacturers and retailers. In this case, emphasis on quality, price, fashion, style, etc. are of great importance. A common example, in the Indian context, would be the purchase of sarees by ladies. Generally, ladies go looking around from shop to shop before they make their final selection. Hence, the expression `shopping' goods. These also include durables such as furniture and refrigerators. That is why a large variety of goods offered at a retail outlet increases sales of this type of goods. A manufacturer should also attempt to have his product properly displayed and offered at most retail outlets.

Durable Goods

These are goods which are `durable' or which last for some time. Examples of such goods would be electric irons, refrigerators, television sets, etc. This type of product requires more selling effort from the salesman. The question of after sales service and repairs is also of importance as ‘selling points' or ‘benefits' which the customer would like to have. Therefore, in case of refrigerators, the number of years of guarantee, particularly for the compressor, is an important consideration when a consumer makes his final selection.

In case of certain types of durables, after sales service is very essential. If a customer purchases a cyclostyling machine or duplicating machine, it is necessary for the salesman to `follow through' and visit the customer to see how it is installed and used. Very often this product is operated by ‘peons' who may not know how to do so. This results in poor duplication and copies look unattractive and the consumer gets the impression that the fault lies with the machine. So, while marketing such a product, it is important to guide the actual user of machine.

Non-durable Goods

These are goods which get depleted on consumption. For example a bottle of soft drink is consumed at once on one occasion within a matter of minutes. Soap obviously takes a little longer. However, in both these cases, the goods are consumed very fast. The advantage of these goods is that they are purchased very often and therefore there are many repeat purchases once the customer is satisfied with one product. Therefore, one must ensure quality and appropriateness of price. These are the products that have to be advertised heavily, with a view to inducing people to try them out, and thus, build up brand preference and brand loyalty.

Services

Services are specially mentioned here (although they do not constitute products) because it is generally thought that marketing is related to products alone. It should be remembered that marketing ideas and practices are equally applicable to services with slight adaptations in certain decisional areas. Services in content are different from products. For example, courts offer a service. So are hospitals, the fire department, the police and the post office. These are not products in the normal sense and yet it is very important for each of these institutions to have an appropriate image. The police are often criticised; the fire departments generally praised; the post office criticised for delays; the hospitals perhaps criticised for negligence and exorbitant rates and so on. It is obvious that controlling the quality of service is important for building its image.

Apart from government or public sector undertakings, there are `non-profit' organisations such as museums and charities. Although non-profit, they also have to provide the best form of service for their popularity. The business and commercial sectors which includes airlines, banks, hotels and insurance companies, and the professionals such as chartered accountants, management consulting firms, medical practitioners etc. need marketing.

Industrial Products

These are products which are sold primarily for use in manufacturing other goods or for rendering some service. These include items like machinery, components and raw materials which form the bulk of industrial goods. Raw materials are sold in a different way from normal consumer products like chocolates, which require no personal selling. Raw materials on the other hand require a certain amount of technical knowhow on the part of the seller. The same would apply to component parts also.

Machinery is also sold generally through the salesforce, particularly if it is of the heavy type. It is obvious that the latter cannot be stocked in retail outlets. The type of product determines the type of marketing mix which has to be adopted.

Industrial goods also include supplies and services. Supplies may be like lubricant and oil or typing paper in connection with the office. Supplies are similar to convenience goods. They are purchased with very little effort and repurchased once the consumer is satisfied. They are also marketed through retail outlets. Industrial services include maintenance and repairs. For example, persons having typewriters naturally want them to be looked after on a regular basis generally by the same (regular) maintenance person who is normally an outsider. Similarly, after purchasing a computer, service is necessary. These services are often provided by small producers or by the manufacturer of the original equipment itself.

PRODUCT LINE DECISIONS

Let us now understand terms like product item, product line and product mix frequently used in managing products.

A Product or Product Item

The 'Product Item' refers to a specific product or brand like Pears or Liril soap. There are companies with only one product and there are others having several products for various reasons, may be higher market share or higher profits or both or any other reasons.

Product Line

It is a part of the product strategy to determine whether an organisation will have a single product or more than one product. A 'Product Line is an expression used to describe a group of closely related products. Examples of these would include the Usha line of fans or the Lakme line of cosmetics.

In case of product line, very often a product manager or a product line manager is appointed to look after a particular product line. Generally, he tries to enlarge his product line because he wants a higher market share, or growth in volume of sales resulting in more profit. The latter aspect must always be remembered_,, and the product line manager should be willing to eliminate any product which is found to be unprofitable, or nor required to complete the line of products offered.

Product line decisions have to be taken about how long or short the line should be. The basic considerations being the capacity of the organisation in terms of availability of. production facilities, finance, etc. and the profitability of the items in the product line.

A line of product is often meant to meet various segments of customers.

Consider the soap line of Hindustan Lever, as an example. 'Lifebuoy' is described as the soap that washes away dirt and is aimed at the lower income level.

For the middle priced market, this company offers Lux soap advertised as the beauty soap of film stars. Recently, as you must have noted, it was relaunched with a new perfume and a smart new look. For the `premium market', Hindustan Lever offers `Pears'. Primarily positioned for upper class the soap is supposed to take care of tender skin. An interesting point in this illustration is that each product item is marketed under different brand names, because a brand preferred by lower social classes will not be bought by higher classes.

Brand/Organisation	Product Line
MRF	Tyres
GODREJ	Soaps
Taj Mahal	Tea Bags
BPL	Colour TVs
TELCO	Light Commercial Vehicles

Product Mix Strategy

The expression `product mix' is used to refer to a set of all the products offered for sale by a particular company. The `Product Mix Strategy’, includes all product lines and product items offered by a company. An organisation has various options to improve its product mix. It can add new products in a particular product line, or add new product lines, thus widening its product mix. This brings us to the more important question of Product Diversification.