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Group Members

NC Ali Tanveer NC Muhammad Ajmal NC Umar Ehsan NC Imran Azeem Capt Zahid Jadune

PRODUCT CONCEPTS
Product Classifications
(Part 2 of 3)

Business Products used to create other products Characteristics of Business Products:


1. 2. 3. 4.

Derived demand carsteelglass Price elasticity industry vs. company Volatility of demand inventory fluctuation Buyer expertise rational - - emotional

Business Products used to create other products Production Operations Based Based

Raw Materials

Accessory Equipment

Component Parts

MRO Supplies
Process Materials

maintenance & repair

Installations (Capital Projects)

Business Services

Consumer Products end users.


Durable & Non Durable Consumer Products
Durable goods Services

Non durable goods


Short Time of consumption

Conceptual Model

The Product Classification Sequence


CONSUMPTION BEHAVIOR (Leads to)

PRODUCT CLASSIFICATION Level of effort Level of reward Convenience Shopping Specialty


(Which leads to)

MARKETING MIX STRATEGY

Consumer Product Goods

Classification

(M. Copeland)
Specialty Products

Convenience Products

Shopping Products

Is based on Level of Effort expended

. . To satisfy information needs & buying motives

CONVENIENCE GOODS
Convenience goods consumers use minimal effort for frequently purchased low cost items

regular basis (ex. milk, eggs) Emergency goods - purchased when the need is urgent (ex. umbrella, boots) Impulse purchases no conscious pre * 70 % of cheese purchases planning
(Donut)

Staples - goods purchased on a

MILK

* Ordering a mixed drink in a bar

CONVENIENCE. . . CONVENIENCE. . . CONVENIENCE. . .


Segment Profile: Average supermarket consumer (a woman) spends 21 min. to shop buys 18 items (average) out of 30-40,000 browse time decreased 25% over 5yrs. doesnt bother to check prices
(Proctor + Gamble,WSJ/99)

Convenience Products
Marketing Strategy Principles
- Intensive distribution Provide convenient locations and hours of operation - Self-Service/Pre sold Brand Name TOMS - Low Markup MARKET - Substantial substitution
Open 24 hrs.

Case Example: Ice Cream Rivals


UNILEVER 17% Mk Sh Nestle (Dreyers)- 16% Ben & jerrys Haagen Daz Good Humor, Breyers Drum Stick Brands

Nestl's task

Improve (intensive) distribution techniques Introduce new branded vending machines & freezers in big gas stations & convenience stores. (aim for 100,000 non grocer outlets) Create new novelty products & specialty items: ex. Coffee Almond Crunch Bar at Starbucks
WSJ, June,03

Valued freezer space

Costs are up to 6x higher to keep food in the freezers of non grocer venders because of electricity and maintenance costs Ice cream covers 35% of convenience freezer space but items offer 25% higher profit margins than super market tubs Out of home consumption is growing 10% per year compared to 8% in home (* 80% of ice cream consumption is in home) (8%x80% volume)

Shopping Products
Shopping

considerable effort to evaluate

goods - consumers make a

Consumers make product comparison(s), They seek information before purchase, they are not impulsive Moderate substitutions are made Products last a considerable time Monetary & social costs may be high

TVs As a Shopping Product (2007 ---- 1950s)


Attribute-based Plasma LCD screen Price-based
LOW PRICE

WARRANTY REMOTE CONTROL PICTURE SIZE

Brand Name

Homogeneous products select on price Heterogeneous products select on benefits

Shopping Good Principles

Homogeneous shopping goods have numerous substitutes which are similar in quality and features but they are different in price. Principle: you need to find a way to make your good stand out and make people want it (product differentiaion)

Marketing Strategy Principles


Product Differentiation (Quality,design,etc.) - Selective Distribution - Brand Name Focus - Moderate Markup - Somewhat Knowledgeable sales force
-

Specialty Products

Specialty goods - consumers make a


significant effort to acquire the desired brand.


infrequently (seldom) purchased relatively expensive little or no substitution High involvement, well informed consumers High visibility to others

Specialty Products
Marketing Strategy Principles
- Have a knowledgeable sales force (pros)
Exclusive Distribution High Markup/exceptional service Be Innovative/cutting edge Maintain a differential advantage

Tony M. drove a Ford explorer to a Mercedes showroom. Where are the sales people? (2003)

Consumer Behavior Product Classification Market Strategy


Market Coverage

Product Category (convenience)

Intensive Distribution

Selective Distribution
Exclusive Distribution

(shopping)
(specialty)

WIDENING GULF THEORY


-

Consumer behavior is so complex that marketers do not understand what consumers want Conclusion: Product classifications overlap & have limited influence on strategy
CAUSES:

- Rapid technological changes - Fierce Competition - Changing consumer values

What Do You Think?

Do you think the consumer product classification sequence has an impact on marketing strategy?

Product mix

Product line

Product Mix - the total group of products offered consistency: relatedness Product Line - a group of of items closely related products

LAMPS Table Ceiling Track Desk

CONCEPTUALIZATION OF PRODUCT MIX


Home Depot, Lowes
WIDTH

# of lines = 4 # of items = 12

D E P T H

A wide product mix facilitates one stop shopping

PRODUCT MIX EXAMPLE


Width (# of product lines)
HAIR CARE Shampoo SALTY SNACKS Chips DENTAL CARE
Tooth Brush Tooth Paste Dental Floss

SOFT DRINKS Cola Ginger Ale

Conditioner Nuts Hair Spray Crackers Brush

Root Beer

Complimentary products peanut butter & jelly

THE GILLETTE PRODUCT MIX


Selected Product Items Product Lines Product Mix (% of Total 1985 Sales by line)

*Atra Razor & Cartridges *Trac II Razor & Blades *Disposable Razors
*Foamy Shaving Cream *Adorn Hair Spray *Silkience Shampoo *Right Guard Deodorant *Toni Hair Preparation

BLADES & RAZORS

33

TOILETRIES & COSMETICS

31

Product Portfolio Concept

. . The sales revenue (cash flow) for the complete mix of products is emphasized rather than (isolated) problems of individual products . . Focus on the interrelatedness among products Issue: Cannibalism

A small percentage of the organizations products contribute to a large % of profits.(80/20 rule) Principles: Protect best sellers Delete marginal products Reallocate marketing support

PRODUCT MANAGEMENT BY TELENOR COMMUNICATIONS, PAKISTAN

Muhammad Shoaib Khattak


MBA (Booth School of Business, University of Chicago) Company Regional Manager, Telenor Communications, Rawalpindi, Pakistan.

Other professionals just contacted over cellphone


ADIL FARHAD
Product Development - Data Services Executive at Telenor Pakistan Products Development Executive (VAS) - Internet and Messaging at Telenor Pakistan

Graduate from NUST, Islamabad


ARFAN AFZAL
Manager Marketing - Postpaid Services, Telenor

Graduate from COMSATS, Lahore

This is how Telenor manages product


To achieve operational excellence one must understand the challenges involved in designing, implementing and streamlining a best in class process. Initial Problem faced by Telenor was to adjust themselves in Pakistani market with different trends comparing one in Norway

The main goals were also the design criteria for the process:

Opportunity and customer driven product development

The Importance of a Supporting Environment to create an ecology of innovation

Importance of a Supporting Environment to create an ecology of innovation

Pause processing of old methods when new fix it all emerges means appreciation of innovation
Professional product development and portfolio management need to take a long term view, as well as keeping ahead in finding and commercialising new business opportunities.

Products by Telenor

TALK~SHAWK

Telenor Business

Any questions?

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