MKT 243

CHAPTER 5
PRODUCT DECISION

Prepared by:
Dr Syahrul Hezrin Mahmud
Puan Rusnah Ismail
Faculty Of Business And Management
UiTM (Terengganu)
Learning Objectives

Definition of Product and Types of

LO1 Consumer Products

Product Items, Lines & Mixes

LO 2

Branding and Benefits

LO 3
 Trademark

LO4 Packaging and Labeling

2
What Is a Product?

LO1

Definition of Product and

Types of Consumer Products

3
What Is a Product?

Everything, both favorable

and unfavorable, that a
person receives in an exchange.

Product
Product

Good
Good
Service
Service
Idea
Idea 4
What Is a Product?
Product is the starting point of
Marketing Mix

Product

Price Promotion

Place (Distribution)
5
CLASSIFICATION of Products

6
Types of Products

Business Product - A product

used to manufacture other
goods or services, to facilitate
an organizations operations, or
to resell to other consumers.

Consumer Product - A product

bought to satisfy an individual’s
personal needs or wants.
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LEVELS AND TYPES OF PRODUCT

LO3

Explain the level and

types of product

8
LEVELS OF PRODUCT

Augmented Product

Actual Product

Core Product

9
LEVELS OF PRODUCT
CORE PRODUCT
The problem solving services or core benefits that
consumers are really buying when they obtain a
product.
ACTUAL PRODUCT
A product’s parts, quality level, features, design,
brand name, packaging and other attributes that
combine to deliver core product benefits.
AUGMENTED PRODUCT
Additional consumer services and benefits built
around the core and actual product such as
installation, after-sales service, warranty and deliver
and credit. 10
Types of Consumer Products

Convenience A relatively inexpensive item that merits

Product little shopping effort

A product that requires comparison

Shopping
shopping, because it is usually more
Product
expensive and found in fewer stores

A particular item for which consumers

Specialty
search extensively and are reluctant to
Product
accept substitutes

A product unknown to the potential

Unsought
buyer or a known product that the buyer
Product
does not actively seek
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 TWO TYPES OF SHOPPING PRODUCTS

HOMOGENEOUS HETEROGENOUS
Consumers perceive Consumers perceive
homogenous shopping heterogeneous shopping
product as basically product as eseesntially
similar. different.
Consumers always look Consumers have trouble
for the lowest price brand in comparing them,
that has the desired because of the prices,
features. quality and features vary
Eg: washers, dryers, so much.
refrigerators and Eg: furniture, clothing,
television. housing and university.
Product Items, Lines, and Mixes

LO2

Define the terms product item,

product line, and product mix.

14
 Product Items, Lines,
and Mixes
AA specific
specific version
version of
of aa product
product
that
that can
can bebe designated
designated asas aa
Product
Product Item
Item distinct
distinct offering
offering among
among an an
organization’s
organization’s products.
products.

AA group
group of
of closely-related
closely-related
Product
Product Line
Line product
product items.
items.

All
All products
products that
that an
an
Product
Product Mix
Mix organization
organization sells.
sells.
15
Product Items, Lines and Mixes
Benefits of Product Lines
1. Advertising economies: economies of scale in
advertising (more impact for equivalent spending).
2. Package uniformity: packages may have a
common look but maintain individual identities.
3. Standardized components: reductions in
manufacturing and inventory costs.
4. Efficient sales and distribution: a product line
enables a full range of choices to customers, and
as a result, better distribution and retail coverage.
5. Equivalent quality: all products in a line are
perceived as having similar quality.
17
Product Mix Width

The number of product lines

an organization offers.

• Diversifies risk
•Capitalizes on established
reputations

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Product Line Depth

The number of product items in a product line.

•Attractsbuyers with different preferences

•Increases sales/profits by further market
segmentation
•Capitalizes on economies of scale
•Evens out on seasonal sales patterns

19
 Adjustments

Adjustments
Adjustmentsto to
Product
ProductItems,
Items,
Lines,
Lines,and
andMixes
Mixes

Product
Product Line
Line
Product
Product Product
Product Extension
Extension or
or
Modification
Modification Repositioning
Repositioning Contraction
Contraction

Over time, updates in technical or product developments or

environmental changes warrant changes to product items,
lines, and mixes. 20
Types of
Product Modifications

Quality
Quality Change in a product’s
Modification
Modification dependability or durability.

Change in a product’s
Functional
Functional
Modification versatility, effectiveness,
Modification
convenience, or safety.

An aesthetic product
Style
Style change (like color) rather
Modification
Modification than a quality or functional
change. 21
Planned Obsolescence

The practice of modifying

products so those that have
already been sold become
obsolete before they actually
need replacement.

22
Repositioning

Why
Whyreposition
reposition
established
established
brands?
brands?

Changes
Changes in
in
Changing
Changing Declining
Declining Social
Social
Demographics
Demographics Sales
Sales Environment
Environment

The second way of adjusting product items, lines, and mixes

is by repositioning. Repositioning changes consumers’
perceptions of a brand. 23
Product Line Extension

Adding additional products to an

existing product line in order
to compete more broadly
in the industry.

24
Product Line Contraction

Symptoms of Product Line Overextension

 Some products have low sales or

cannibalize sales of other items
 Resources are disproportionately allocated
to slow-moving products
 Items have become obsolete because of
new product entries

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Product Item, Product Line, and Product Mix

26
Branding

LO3

Describe marketing
uses of branding.

27
Brand

A name, term, symbol, design,

or combination thereof that
identifies a seller’s products
and differentiates them
from competitors’ products.

28
Branding

Brand That part of a brand that can be spoken,

Name including letters, words, and numbers

Brand The elements of a brand that

Mark cannot be spoken

Brand
Equity
The value of company and brand names

Global A brand where at least one-third of the

Brand product is sold outside its home country

29
Branding
 Brand Name:
 Spoken and letters – GM, DKNY
 Words – Chevrolet
 Numbers – WD-40, 7-Eleven

 Brand Mark:
 Cannot be spoken Mercedez Benz and Malaysia Airlines
System symbols.
Branding : TRADEMARKS

• A trademark is the exclusive right to use

a brand or part of a brand.
• Others are prohibited from using the brand
without permission.

• Examples:
 Shapes - the Coca-Cola bottle.
 Ornamental color or design – Levi’s small
tag on the left side of the raer pocket of its jean.
 Catchy phrases – Nike’s “Just Do It”
 Abbreviation – Coke
 Sounds – MGM lion’s roar.
Benefits Of Branding
1. Identification (Brand equity)
Allows marketers to distinguish their products from
all others. A brand name tells buyers something
about the product quality.
2. Repeat sales (Brand loyalty)
Satisfied customers who recognize which brands to
purchase again and which brands to avoid.
3. New-product sales (Brand recognition)
It helps to recall customer’s attention to new
products that might benefit them and generate new
product sales.
Branding Strategies

Brand No Brand

Manufacturer’s
Private Brand
Brand

Individual Family Combi- Individual Family Combi-

Brand Brand nation Brand Brand nation

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Manufacturers’ Brands

Manufacturer’s Brand
The brand name of manufacturer.
Sometimes referred to as ‘national brand’.
The product or service whose brand is
owned by manufacturer.
Example: Kodak, Fruit of Loom, Stussy.

34
 Private Brands

Private Brand
 A brand name owned by a wholesaler
or a retailer.
 Also known as private label or store
brand.
 Example: Mydin, Jusco, Giant, Tesco.

35
 Advantages of
Private Brands
 Earn higher profits on own brand
 Less pressure to mark down price
 Manufacturer can become a direct competitor
or drop a brand/reseller
 Ties customer to wholesaler or retailer
 Wholesalers and retailers have no control
over the intensity of distribution of
manufacturers’ brands
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HOW TO FINE-TUNE THE
STRATEGIES …….

Firms must consider:

 individual branding (different
brands for different products),
 family branding (common
names for different products), or
 combination of individual and
family branding.
Individual Brands

- Using different
brand names for
different products.

-Used when products

differ in used, quality
or targeted segment.

38
Family Brands

-Marketing several
different products
under the same
brand name.

-Easy to introduce
new products under
the same brand
name.

39
Co-branding

Co-branding is placing two or

more brand names on a
product or its package.

The benefits of cobranding:

Enhancement of prestige or
value of a product and
increased market presence in
markets with little or no
market share.
40
Types of Cobranding

Ingredient
Ingredient
Branding
Branding

Types of Cooperative
Cooperative
Cobranding Branding
Branding

Complementary
Complementary
Branding
Branding

41
 TYPES OF Cobranding
1. Ingredient branding identifies the brand of a
part that makes up the product. Examples:
Intel in Dell computers, Coach interiors in
Lincoln automobiles.

2. Cooperative branding occurs when two

brands receive equal treatment. Examples:
Promotional contest sponsored by Ramada
Inns, American Express, and Continental
Airlines.

3. Complementary branding refers to products

advertised or marketed together to suggest
usage. Eg. Spirits brand (Seagram’s) and
compatible mixer (7 Up)
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Packaging

LO4

Describe marketing uses of

packaging and labeling.

43
Packaging and labelling

44
Packaging

PACKAGING
Packages served a practical function such as
to hold contents and protect goods during
Transportation as well as a container for promoting
products and making it easier and safer.

45
Functions of Packaging

Contain and Protect

Promote

Facilitate Storage, Use,

and Convenience

Facilitate Recycling

46
Functions of Packaging

CONTAIN AND PROTECT

PROMOTE

 To contain product that are

liquid, granular or otherwise  Identify the brand, list the
divisible. ingredients, specify
features and give
 Enables manufacturers,
wholesalers and retailers to  Able to differentiates
market product in specific product from competing
quantities.  The designs, colors, shapes
 Packages provide physical and materials try to
protection of products from influence consumers
breakage, evaporation, perceptions and buying
spillage, spoilage, light, heat,

cold etc. 47
Functions of Packaging

FACILITATE STORAGE, FACILITATE

USE, AND RECYCLING
CONVENIENCE
 Wholesalers and retailers  The most important issues
prefer packages that are easy today is compatibility with
to ship, store and stock on. the environment.
 Packages must be able to  Examples:
protect products, prevent
Shampoo and hair
spoilage or breakage and
conditioner in bottles that
extend the product’s shelf
are bioegradable in
 Consumers require items that landfills.
are easy to handle, open and
Coca-Cola use recycle
reuse and to re-close,
material for its can
reusable and disposable
container.
packages. 48
Labeling

Persuasive Informational
 Focuses on  Helps make proper
promotional selections
theme
 Lowers cognitive
 Consumer dissonance
information is
secondary  Includes use/care

49
Universal Product Codes

Universal Product Codes (UPCs)-

A series of thick and thin vertical
lines (bar codes),
readable by computerized optical
scanners, that represent numbers

used to track products.

50
Global Issues in Branding

One
One Brand
Brand Name
Name
Everywhere
Everywhere

Global Options
for Branding Adaptations
Adaptations&&
Modifications
Modifications

Different
DifferentBrand
BrandNames
Names
in
inDifferent
DifferentMarkets
Markets

51
Global Issues in Packaging

Labeling
Labeling

Global
Considerations
for Packaging Aesthetics
Aesthetics

Climate
Climate
Considerations
Considerations
52
Product Warranties

Warranty A confirmation of the quality or

performance of a good or service.

Express A written guarantee.

Warranty

An unwritten guarantee that the

Implied
good or service is fit for the purpose
Warranty for which it was sold. (UCC)

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TUTORIAL 5
1. What is product?
2. Discuss four types of consumer products. Provide example to support
your answer.
3. What is the difference between a homogeneous shopping product and
a heterogeneous shopping product? Give specific examples of
products that fit into each category to help illustrate your answer.
4. Name and describe the three categories of modification of existing
products in the product line.
5. Packaging is an important component of the product strategy. List and
briefly describe the four major functions of packaging.
6. Define the terms ‘product item’, ‘product line’ and ‘product mix’. Give
an example for each.
7. Define brand and describe three main purposes of branding.
8. An integral part of any package is its label. There are two basic
labeling strategies. Name and describe each of the two strategies.
9. Distinguish between an implied warranty and an express warranty.
Give one example of each.
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