Chapter 1

Defining Marketing
for the 21st Century
What is Marketing?

Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships in ways that
benefit the organization and its
stakeholders.
CREATIVE
CREATIVE
 Successful Relationships

Value, Satisfaction, and Retention

 Defined as the ratio between the
 Customer Value
customer’s perceived benefits
(economic, functional and
psychological) and the resources
used (monetary, time, effort and
psychological) to obtain those
benefits

5
What is Marketing Management?

Marketing management is the

art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.
 What is Marketed?
• Goods (products)
• Services
• Events (Disney)
• Experiences (Bunzi)
• Persons
• Places (Lankawei)
• Properties
• Organizations
• Information (XRAY, MRI)
• Ideas (Drugs Abuse Campaign)
 Whom to Market?
A MARKETER is someone who seeks a response from
another party, called PROSPECT
Marketer possesses the skill to stimulate demand:
 Negative Demand: Pay a price to avoid it (Avoid heart attacks,
pay full body check up where the result can be negative)
 Nonexistent Demand: Consumer may be unaware or
uninterested in the product.
 Latent Demand: Share a strong need that can not be
satisfied with current product.
 Irregular Demand: Seasonal, Monthly or Weekly
 Full Demand: Consumers are adequately buying all products
put into the marketplace.
 Overfull Demand: Would like to buy more than can be
satisfied.
 Unwholesome Demand: Should not desire the product, but
want it badly and have undesirable social consequences.
Tobacco, Drugs, Guns….
 Key Markets?
 Consumer Markets: Selling consumer goods and services.
Such as; drinks, cosmetics, air tickets
 Business Markets: Companies selling business goods and
services. Such as; Caterpillar, Elevator etc.
 Global Markets: Companies selling goods and services in
the global marketplace. Such as; Pamper-Japan and cultural impact
 Non-Profit and Governmental market: Companies selling
their goods to nonprofit organization. Like; universities,
mosque, charitable organization (Medicine to Lion Eye Hospital)
Marketplaces, Marketspaces and
Metamarkets
 Marketplace: It is physical…..When we shop in the
store.
 Marketspace: It is digital……When we shop on the
internet.
 Metamarket: A cluster of complementary products
and services that are close related in the minds of
consumers but are spread across a diverse set of
industries.
Example: Yatra.com for travelers; Shaadi.com for marriage service
Like; automobile manufacturers, new car and used car dealers, financing
companies, insurance companies, mechanics, spare parts dealers, service shops,
auto magazines etc.
Core Concepts

 Needs, wants, and demands

 Offerings and brands
 Target markets, positioning, segmentation
2. Understanding the Marketplace
and Customer Needs
Customer Needs, Wants, and Demands

• States of deprivation

Needs • Physical—food, clothing, warmth, safety

• Social—belonging and affection
• Individual—knowledge and self-expression

Wants • Form that human needs take as they are shaped by

culture and individual personality

Demands • Human wants backed by buying power

 2. Understanding the Marketplace
and Customer Needs
 Market offerings are some combination of
products, services, information, or experiences
offered to a market to satisfy a need or want

 Brand is offering from a known source. A

brand name such as Pizza Hut carries many
associations in people minds that make up
image of…..Pizza, Cleanliness, Convenience,
Speed, Courteous Service….
3. Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve

Market segmentation refers to dividing the

markets into segments of customers
Target marketing refers to which segments to
go after
3. Designing a Customer-Driven
Marketing Strategy
Selecting Customers to Serve

Demarketing is marketing to reduce demand

temporarily or permanently; the aim is not to
destroy demand but to reduce or shift it
 3. Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations

Production Product Selling Marketing Societal

concept concept concept concept concept
Production concept is the idea that consumers will
favor products that are available or highly
affordable

Product concept is the idea that consumers will

favor products that offer the most quality,
performance, and features. Organizations should
therefore devote its energy to making continuous
product improvements.

Marketing myopia is focusing only on existing wants and losing sight of

underlying consumer needs
Selling concept is the idea that consumers will
not buy enough of the firm’s products unless
it undertakes a large scale selling and
promotion effort

Marketing concept is the idea that achieving

organizational goals depends on knowing the
needs and wants of the target markets and
delivering the desired satisfactions better
than competitors do
Societal marketing concept is the idea that a
company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’
long-term interests, and society’s long-run
interests
Holistic Marketing
Holistic Marketing
Holistic Marketing:
Holistic marketing recognizes that “everything matters” with
marketing. There are four components:
 Relationship Marketing: Aim of building mutually satisfying
long-term relationships with key parties-customers, suppliers,
distributors etc. Create marketing network….among the
stakeholders.
 Integrated Marketing: Fully integrated marketing programs to
create, communicate and deliver value for consumers.
 Internal Marketing: Internal marketing is the task of hiring,
training, and motivating able employees who want to serve
customers well. The sales force thinks product managers set
prices or sales quotas “too high”.
 Performance Marketing: Ethical, environmental, legal and
social context of marketing activities and programs. Renault:
Nissan. Electric car for conserving environment.
 CHAPTER 5:
Analyzing
Consumer Markets
Contents

1. What Influences Consumer

Behavior?
2. Key Psychological Processes
3. The Buying Decision Process: The
Five Stage Model
1) What Influences Consumer
Behavior?
Consumer Behavior

The field of Consumer Behavior:

“studies how individuals, groups,

and organizations select, buy,
use, and dispose of goods,
services, ideas, or experiences
to satisfy their needs and
desires.”
What Influences Consumer Behavior?

Cultural Factors

Social Factors

Personal Factors

6-5
What Influences Consumer Behavior?
• Cultural Factors
• Social Factors
• Personal Factors
• Psychological Factors
Culture

The fundamental determinant of

a person’s wants and behaviors
acquired through socialization
processes with family
and other key institutions.
Growing Child acquires values,
perceptions, preferences….

6-7
Culture
• Culture is learned and shared
• Culture is adaptive (natural selection)
• Culture is Dynamic
10/28
11/28
Subcultures: Provides more specific identification
and socialization for their members

Nationalities

Religions

Racial groups

Geographic regions

Special interests

6-12
Social Classes: Relatively homogeneous and
enduring divisions in a society, which hierarchically
ordered and whose members share similar values,
interests and behaviors…

Upper uppers
Upper middles
Middle class
Working class
Lower lowers

6-13
Characteristics of Social Classes

• Within a class, people tend to behave alike

• Social class conveys perceptions of inferior
or superior position
• Class may be indicated by a cluster of
variables (occupation, income, wealth)
rather than single variable
• Individual can move up or down the social-
class ladder during their lifetimes.
6-14
Social Factors

Family:
Family Orientation
Reference (Parents and siblings)
groups Family Procreation
(Influence of spouse and Children)

Social
Roles: Status:
Activities a person is Roles carries a status
expected to perform

6-15
What Is a Group?

• Two or more people who interact to accomplish

either individual or mutual goals (health club)

• A membership group is one to which a person

either belongs or would qualify for membership
(University’s club membership group)

• A symbolic group is one in which an individual is

not likely to receive membership despite acting
like a member (Using same tennis racket or sneakers)
6-16
 Reference groups
consists of all the
Reference groups that have a
Group direct or indirect
influence on his/her
attitudes or behavior.
 Factors that affect reference group influence

• Information and experience (first hand information and less

likely to be influenced by others and no experience needs comments of
others)

• Credibility and power of reference group (persuaded by

knowledgeable person)

• Conspicuousness (easily visible) of the product (How visually

or verbally conspicuous the product to others…..mobile phone, visually
conspicuous…..Highly interesting things to describe….new automobile,
fashion clothing….sleek laptop)

6-18
Reference Groups

Membership groups

Primary groups

Secondary groups

Aspirational groups
Hopes to join

Dissociative groups
Behavior an individual rejects
6-19
Reference Groups

• Primary groups: This can

be informal (Family, friends,
neighbors and co-workers)
• Secondary groups: This
can be formal (religious,
professional, trade-union group)

Opinion Leader: Offer

advice or information about
specific product or category.
6-20
Personal Factors

Age
Self- Life cycle
concept stage

Lifestyle Occupation

Values Wealth
Personality

6-21
Behavior changes
according to life
cycle stage

•Family
•Psychological
•Critical life events

6-22
The Family Life Cycle

• Traditional Family Life Cycle

– Stage I: Bachelorhood
(single apart from family)
– Stage II: Honeymooners
(young married couple)
– Stage III: Parenthood
(married couple with at least one children)
– Stage IV: Post parenthood
(older married couple with no children)
– Stage V: Dissolution
(one surviving)
6-23
 Blue-collar worker
will buy work
clothes, work shoes,
Occupation and
lunch
Economic
boxes…..company
Circumstances
president will buy
dress suits, air travel,
membership of clubs

6-24
 A set of distinguishing
human psychological
traits that lead to
relatively consistent and
Personality enduring responses to
environmental stimuli.
self-confidence, dominance,
autonomy, sociability,
adaptability
Personality traits

– Sincerity (Down to earth, honest……) Panasonic

– Excitement (Darling, spirited, imaginative, up-to-date MTV
– Competence (Reliable, intelligent, Successful) CNN
– Sophistication (Upper class and charming) BMW
– Ruggedness (Outdoorsy and tough) Levi’s

6-26
 Consumer often
choose and use
Personality and brands that have a
self concept brand personality
consistent with their
actual self-concept
What is a Self-concept?

• Self-Concept: the totality of the individual’s

thoughts and feelings having reference to him-or
herself as an object. Composed of the attitudes you
hold towards yourself.

• Self-concept can be divided into four basic

parts…

6-28
Dimensions of a Consumer’s Self-Concept

Actual self concept: Who I am now

Ideal self concept: Who I would like to be
Private self concept: How I am or would like to be to myself
Social self-concept: How I am seen by others 6-29
 Lifestyle is a person’s
pattern of living in
Lifestyle and the world as
Value expressed in
activities, interests
and opinions.
Lifestyle and Values-
• Money constrained or time constrained
consumers: Searching for low cost product and
services……every day low price….Wal-Mart,
Konan (Cheap Store).
Ready-made products for time-constrained
consumers…..

• Multi-tasking:
Do two or more thing
at a time.
Smart Phone
6-31
Key Psychological Processes

Motivation Perception

Learning Memory

6-32
Motivation: Maslow’s Hierarchy of Needs
Perception: The process by which an individual selects,
organizes and interprets information inputs to creates
meaningful picture of world

Selective Attention:
Heightened awareness when stimuli
meet their current needs (Travel Adv…in Vacation)

Selective Distortion or Interpretation: Tendency to

Interpret information that fit with preconceptions.
Positive attributes to those who resemble them.
(Model selection for Lipstick)

Selective Retention:
Remember good points about a product we like.

6-34
 TYPES OF BUYING DECISION
BEHAVIOUR
 Four Types of Buying Behaviour
 TYPES OF BUYING DECISION
BEHAVIOUR (CONT’D)
 Four Types of Buying Behaviour (Cont’d)
Model of Consumer Decision Making
 Consumer Buying Decision Process

Problem Recognition

Information Search

Evaluation

Purchase Decision

Post-purchase
Behavior
6-38
 Buying Decision Process

• Problem Recognition The buying process starts when

the buyer recognizes a problem or need. The need can be
triggered by internal or external stimuli. A person may want
to buy a LCD television considering the social acceptance in
the society.

6-39
The process of problem recognition
• Nature of problem recognition: the result of a
discrepancy between a desired state and an actual state
that is sufficient to arouse and activate the decision
process.
• Actual state: The way an individual perceives his or her
feelings and situation to be at the present time.
• Desired state: They way an individual wants to feel or be
at the present time.
Friday night in western country….if bored then go to
club…..or if you feel like reading novel……then stay home

• Desire to resolve recognized problem depends on:

• The magnitude of the discrepancy between desired and
actual states (Call per minute of GP postpaid 0.75 paisa/sec and
0.12 paisa/10sec. (The discrepancy may not exists to drive)
• Relative importance of the problem (Consumer own Nokia 1200
and may want Nokia 2)
 Buying Decision Process
• Information Search: Active search of information to
fulfill certain needs. These can be:
Personal: Family, friends
Commercial: Advertising
Public: Mass Media….Press Release
Experiential: Previous handling, examining and using the
product.

• Evaluation of alternatives:
First: Whether the product may satisfy the need
Second: Looking for certain benefit from the product solution
Third: Each product as a bundle of attribute to compare
Laptop: Price, Weight, Processor, Battery life, After sales support and
Display quality
6-41
 Post-Purchase Behavior
Rent it
Temporary
get rid of
Lend it
To be (re)
Give it away sold

To be used
Permanently Trade it
Product
get rid of
Sell it Direct to
Use it to serve consumer
original purpose Throw it away
Through
Convert it to middleman
serve a new
Keep it purpose
To
Intermediary
Store it
 CHAPTER 7

MARKET SEGMENTATION,
TARGETING, AND
POSITIONING
 STEPS IN MARKET SEGMENTATION,
TARGETING, AND POSITIONING
Market Segmentation
1. Identify bases for
segmenting the market
2. Develop segment profiles

Market Targeting
3. Develop measure of
segment attractiveness
4. Select target segments

Market Positioning
5. Develop positioning for
target segments
6. Develop a marketing mix
for each segment

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 LEVELS AND PATTERNS OF MARKET
SEGMENTATION
 Patterns for Market Segmentation
Preference segments
 Homogeneous preferences
 Similar brands
 Diffused preferences
 Different brands
 Clustered preferences
 Natural market segments
 Concentrated marketing
 Largest group

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
FOUR LEVELS OF MICROMARKETING

Segments Niches

Local areas Individuals

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Niche Marketing: A niche is a more narrowly defined group
seeking a distinctive mix of benefits. Marketers usually
identifies niches by dividing a segment into sub-segments.
Eg. Producer of environmentally friendly products, Printers for printing
maps, Insurance for risky drivers, Market for Ferrari sports Car, Used
book markets (BOOKWORM).

Local Marketing: Target Marketing is leading to marketing

programs tailored to the needs and wants of local customer
groups. Local marketing reflects a growing trend called
grassroots marketing. Eg. Local Newspaper, Cable Channel
and advertisement.
Customized Marketing: ‘One to one’ Marketing. Eg. Tailored
made clothes.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Bases for Segmentation
Psychographic:
Culture, sports or
Psychographic Demographic: age, family size, life
Demographic
outdoor oriented cycle, gender, income, occupation

Customer
Characteristics

Socioeconomic:
SocioeconomicSocial Geographic
Class, socio-economic

Behavior: Behavior
Regular occasion Outlets

Usage: non~regular user; Buying

light~heavy user Situation

Awareness: Benefits
Benefits: Quality,
Awareness
Unaware-Loyal speed, economy
Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
DEMOGRAPHIC SEGMENTATION

Age and Life Cycle (Chips)

Life Stage (Video Camera for parents)
Gender (Gillette for Men/ Women)

Income (Luxury to Budget Apartment)

Generation

Social Class
(Magic Tooth Powder)

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
  GENERATION EFFECT AND COHORT
Sociologists attribute different consumer needs
and wants among various age groups to the
cohort effect
Cohort effect is a tendency among members of
a generation to be influenced and drawn together
by significant events occurring during the certain
years.
 Age between 4-14 has influence in urban buying
decision. The influence of buying chips, bicycle,
play station, Xbox etc.
 13-18 and 19-24 age group consider young
adults are major decision maker of cell phone,
case of cell phone.

8-8 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
  GENERATION EFFECT

8-9 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 SOCIAL CLASS EFFECT
  SEGMENTING BY HOUSEHOLD TYPE
 The “traditional family” to “other types of Family”
 Single-parent families, single-person households, and
non-family group households
 Non-traditional households make likely buyers of
single-serving and convenience foods

8-11 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Bases for Segmentation

Psychographic:
Culture, sports or
Psychographic Demographic: age, family size, life
Demographic
outdoor oriented cycle, gender, income, occupation

Customer
Characteristics

8-12 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 PSYCHOGRAPHIC SEGMENTATION
Divides a population into groups that have
similar psychological characteristics, values,
and lifestyles

The most common method for developing

psychographic profiles of a population is to
conduct a large-scale survey:
VALS.
“Values and Lifestyles”

8-13 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
VALS
 VALS Segments
 Actualizers: Successful, sophisticated, active, take-
charge people with high self esteem and abundant
resources.
 Fulfilleds and believers:
 Fulfilleds: mature, satisfied, comfortable people who
value order, knowledge and responsibility. They
look for functionality, value and durable products
 Believers: Conventional people….family, church,
community based jobs
 Achievers and strivers:
 Achievers: are successful career and work oriented
people. Do work which give sense of duty, prestige
 Strivers: Seek motivation, approval from the world
around them. Money defines success for
strivers……

8-15 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 VALS Segments
 Experience and Makers:
 Experiencers: young, enthusiastic, impulsive.
They look for excitement and risky way of life.
They are quick and became enthusiastic about
new possibilities and quick to cool.
 Makers: Practical people who have constructive
skill and value self sufficiency. They live within
practical work, family….building a house, raising
children…..gardening……
 Strugglers: Chronically poor with limited educations
and skills, without strong social bonds. They must
struggle to meet the urgent needs of the present
moment

8-16 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Bases for Segmentation

Behavior: Behavior
Regular occasion

Usage: non~regular user; Buying

light~heavy user Situation

Awareness: Benefits
Benefits: Quality,
Awareness
Unaware-Loyal speed, economy
8-17 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 PRODUCT-RELATED OR BEHAVIORAL
SEGMENTATION
 Dividing a consumer population into homogeneous
groups based on the characteristics of their relationships
to the product
 Can take the form of segmenting based on:
 Benefits that people seek when they buy (Weight
Reducing Tea)
 Usage rates for a product
 Consumers’ brand loyalty toward a product

8-18 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
  Eclipse
 Segmenting by
Benefits (Fresh
Breath) Sought

8-19 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
  USAGE RATES
 Segmenting by grouping people according to the
amounts of a product that they buy and use
 Markets often divided into heavy-user, moderate-user,
and light-user segments

8-20 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 SELECTING A TARGET MARKET
 Before a marketing mix strategy can be
implemented, the marketer must
identify, evaluate, and select a target
market.
Market: people or institutions with
sufficient purchasing power,
authority, and willingness to buy
Target market: specific segment of
consumers most likely to purchase a
particular product

8-21 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 CRITERIA FOR EFFECTIVE SEGMENTATION
 Market segmentation cannot be used in all cases.
To be effective, segmentation must meet the
following basic requirements.
The market segments must be measurable in
terms of both purchasing power and size.
Marketers must be able to effectively promote
to and serve a market segment.

Market segments must be sufficiently large to

be potentially profitable.
The number of segments must match the firm’s
capabilities.
8-22 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 CRITERIA FOR EFFECTIVE SEGMENTATION

Differentiable • Each segment should be different

than the other segments

• Size, purchasing power, profiles

Measurable of segments can be measured.

• Segments can be effectively

Accessible reached and served.

• Segments are large or profitable

Substantial enough to serve.

• Effective programs can be

designed to attract and serve
Actionable
the segments.

8-23 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Market Positioning
Positioning has been defined as “the art and science of fitting
the product or service to one or more segments of the broad
market in such a way as to set it meaningfully apart from
competition.”
Approaches to Positioning
Positioning strategies generally focus on either the consumer
or the competition.
While both approaches involve the association of product
benefits with consumer needs, the former does so by linking
the product with the benefits the consumer will derive or
creating a favorable brand image
 Target Marketing Process
Developing a Positioning Strategy
 Positioning by Products Attributes and Benefit: Linux (Virus
free and ease of use)
Positioning by Price/Quality: Quality need not be affordable
(Clark Shoe)
 Positioning by Use of Application: Stink sucker at Refrigerator
Positioning by Product Class: Airline industry (Low cost and
Comfort based, CD competes with MP3 player)
 Positioning by product user: Couch based Truck
 Positioning by Competitor: Grameen Phone, widest network
Positioning by Cultural Symbols: Mina Cartoon….A symbol of
Struggle for the children
 Figure 8.6 Patterns of Target Market Selection

Coca-Cola

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 Patterns of Target Market Selection

Porsche Tooth Paste

on Sports car

8-27 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
 Patterns of Target Market Selection

Calculator for different consumer groups AU for students

8-28 Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
MARKETING MANAGEMENT
12th edition

Chapter 9
Crafting the Brand
Positioning
Marketing Strategy

Segmentation

Targeting

Positioning

10-2
 Positioning

Act of designing the company’s

offering and image to occupy
a distinctive place in the mind of
the target market.

Positioning starts with product….

But positioning is not what your do to a product.
Positioning is what you
do to the mind of the PROSPECT
10-3
Value Propositions

• Domino’s Pizza
– A good hot pizza, delivered to your door
within 30 minutes of ordering, at a
moderate price
• Target Consumer: Convenience-minded pizza lovers
• Benefit: Delivery speed and good quality
• Price: 15% premium
• Value Proposition: A good hot Pizza, delivered to your door
within 30 minutes of ordering, at a moderate price
10-4
 Competitive Frame of Reference

• Competitive Frame of Reference is to determine

the category membership- The product or sets of
products with which a brand competes and which
function as close substitutes.
Domino’s Pizza and Frozen Pizza Market

10-5
Competitive Frame of Reference

Frozen Pizza

Normal Pizza
Points of Parity (POP) and
Points of differences (POD)
Point of Difference  A particular attribute or
dimension of a brand which a group of consumers
likes and perceives as the uniqueness of the brand.

Point of Parity  a particular dimension or attribute

or a brand which a group of consumers believe
that is ‘good enough’ or meet their basic
expectations.

10-7
 Point of Difference Vs. Points of Parity
• Point of Difference: The attributes consumers strongly
associates with a brand, positively evaluate, and believe
that they could not find to the same extent with a
competitive brand.
• FedEx (Guaranteed Overnight Delivery)
• Nike (Performance)

10-8
 Consumer Desirability Criteria for PODs

Desirable to consumer: Target consumers must find the

POD personally relevant and important. eg: Westin Stamford Hotel
in Singapore advertised that it was the world’s tallest hotel.

Desirable by company: Must have internal resource

and commitment and profitability to create and maintain
brand association. VISA

Differentiating from competitor: Distinct and superior to

relevant competitors. Eg. GP 3G in Bangladesh

10-9
 Deliverability Criteria for PODs

Feasibility: The product or service design and

marketing offering must be support the desired
association. REAL CHANGE

Communicability: What factual or verifiable evidence

or proof points can be given as support of believability.
Eg. Wrinkle Control Cream……Fair and Lovely…….Veet

Sustainability: Is the positioning preemptive,

defensible and difficult to attack? Sustainable positioning of
Prada, Hermes

10-10
 Point of Difference Vs. Points of Parity
• Point of Parity: That are not necessarily unique to the brand
but may in fact be shared with other brands.
– Category POP: They represent necessary condition for
brand choice. For example; Consumer may not choose a travel
agent unless it is able to make air ticket, hotel reservation and can
give advise about leisure package….etc. This POP may change over
time due to technological advances, consumer trend or legal
development.

– Competitive POP: designed to overcome perceived

weaknesses of the brand. In the eyes of consumer. If a
brand can ‘break-even’ in those areas where the
competitors are trying to find an advantage and can
achieve advantages in other areas, the brand should in a
strong- and perhaps unbeatable-competitive position.

10-11
 Product Differentiation

• Product form (Size) • Style

• Features (functions) • Design (laptop mouse)
• Performance • Ordering ease
• Conformance (Panasonic • Delivery (30 minutes delivery)
energy saving)
• Installation (CAT Installation)
• Durability
• Customer training
• Reliability
• Customer consulting
(Nazma Metal 10 years)
• Reparability • Maintenance
(Spare parts availability)

Air Asia Airlines with low prices 10-12

Personnel Differentiation

• Singapore Airlines enjoys excellent reputation in

large part because of its flight attendants.
• IBM people are professional
• McDonald’s people are courteous

Channel Differentiation
• CAT dealers found more locations than
competitors dealers.
• DELL and AVON is direct marketing channel

10-13
Image Differentiation

• Image is the way the public perceives the

company and its products. Effective identity does:
– Product’s character and value proposition
– Character in distinctive way
– Emotional power beyond a mental image

IBM MEANS SERVICE

TOYOTA MEANS LOW COST EFFICIENT CAR

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Image Differentiation

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Image Differentiation

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Chapter 11
Setting the Product Strategy
by

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Copyright © 2003 Prentice-Hall, Inc.
 Product

Anything that can be offered to a market to

satisfy a want or need.

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 The Product and the Product Mix

 Product Components
of the Market Offering
 Physical goods
 Services
 Experiences
 Events
 Persons
 Places
 Properties
 Organizations
 Information
 Ideas
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 The Product Characteristics and Classification
 Product levels
Customer Value Hierarchy
Five Product Levels
 Core benefit (Hotel; Rest &
Sleep)
 Basic product (Hotel Room with
bed, bathroom, towels, desk, dresser
and closet)
 Expected product (Hotel guests
expect clean bed, fresh towels,
working and quietness)
 Augmented product (May be
overwhelmed if a guest found fresh
flower in his room after returning
from shopping comparing to
competitor)
 Potential Product
All augmentation and transformation
a product must undergo in future.
Card based security system at hotel 14-4
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 The Product Characteristics and Classification
 Product classifications
 Durability and Tangibility Classification:
 Nondurable goods (Soap; Consumed quickly and purchased
frequently….mark up should be low and advertise to induce trial)
 Durable goods (Refrigerators, clothing that needs more personal
selling and higher margin and guarantee)
 Services (Intangible; require more quality control, credibility and
adaptability)

 Consumer-Goods Classification:
 Convenience goods
 Staples: Regular basis; rice, toothpaste….etc.
 Impulse goods: Without planning; Candy, Magazine
 Emergency goods: Need is urgent; Umbrella

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Copyright © 2003 Prentice-Hall, Inc.
The Product Characteristics and Classification
 Consumer-Goods Classification:
 Shopping goods (In the process of selection and purchase,
characteristically compares on quality, price and style)…furniture,
clothing, used car….and major appliance
 Homogeneous
shopping goods: Similar in quality and different enough in
price
 Heterogeneous
shopping goods: Product features and services are more
important that price
 Specialty goods: (Special characteristics or brand for which
buyers are willing to make a special purchasing effort)…. Mercedes
Car, Photographic equipment
 Unsought goods: Does not know or does not normally think
of buying….Life Insurance, grave, KAFON’s stuff….advertising
and personal selling is required to sell them.
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 The Product Differentiation
 Product Differentiation
 Form: The size or shape of the product
 Feature: Feature bundles or packages…
 Performance Quality: Low quality low cost and high
performance high price
 Conformance Quality: Porsche is designed to
accelerate to 60 miles per hour within seconds
 Durability: Long lasting or not
 Reliability: Japanese or Chinese
 Reparability: Japanese Laptop….reinstallation facility
 Style: Montblanc Pens….Apple Computer
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 Product and Brand Relationships
 Product hierarchy
 Need family (Hunger)
 Product family (Food)
 Product class (Cereal Food)
 Product line (Rice, Flakes)
 Product type (Flavored rice)
 Item (Pran Chinigura Rice )

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 Product System and Mixes
 Product mix (Product assortment):
Set of all products and items a particular seller offers for sale.
Northwestern University, there are separate academic deans for medical
school, law school, business school and so on
 Product mix has a certain:
 Width (Different product lines the company carries)
 Length (Length of line)
 Depth (Variants are offered of each product in the line, Tide
comes with mountain spring and regular)
 Consistency: How closely related the various product lines are
in the end user, production requirement and distribution channels
(P&G product lines are consistent and consumer goods are going
through same distribution channel)
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 Table 12.1. Product-Mix Width and Product-Line Length for
Proctor& Gamble Products
Product-Mix Width
Disposable Paper
Detergents Toothpaste Bar Soap Diapers Tissue
Ivory Snow Gleem (1952) Ivory Pampers Charmin
(1930) (1879) (1961) (1928)
Crest (1955)
PRODUCT- Dreft Kirk’s Luvs Puffs
LINE (1933) (1885) (1976) (1960)
LENGTH
Tide Lava Banner
(1946) (1893) (1982)

Cheer Camay Summit

(1950) (1926) (1992)

See text for complete table 14-10

Copyright © 2003 Prentice-Hall, Inc.
 Product and Brand Relationship
 Product-line length
 Line Stretching
 Downmarket Stretch
 The company may notice strong growth opportunities as
mass retailers (Wal-Mart) attract a growing number of
shoppers with value-price goods
SONY
CORPORATION
 The company may wish to tie up lower-end competitors, if
attacked by lower end competitors.
 The company may find that the middle market is
stagnating or declining
 Upmarket Stretch: High end market for more growth,
higher margin or to position full line mfg. TOYOTA LEXUS
 Two-Way Stretch: Middle market company may try to
stretch their line in both directions

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 Product and Brand Relationship
 Line Filling
 Just-noticeable difference (The company has high ended
car….low ended car…introduced SPORTS CAR)

 Line Modernization, featuring, and pruning

(Microsoft introducing new advanced software)

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 Product and Brand Relationship
 Product-Mix Pricing
 Product-line pricing: Price for low quality, average and
high quality items in the product line…for dress…items etc.

 Optional feature pricing: Optional products and

associated price. Fog light for car, extended warranty

 Two Part Pricing: Fixed plus variable. Telephone bill

 By-Product Pricing: Legs of mutton…and pricing

 Product Bundle Pricing: Bundle price should be cheaper

than loose one….Shampoo and conditioner bundle

 Captive Product Pricing: Diabetic machine…razor.

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 Product and Brand Relationship
 Co-Branding and Ingredient Branding
Co-Branding: Product are often combined with products from
other companies in various ways.

 Same company co-branding: Amul Milk and Butter

 Joint venture co-branding: CitiBank Visa Card…or Bic

Camera Visa Card

 Multiple Sponsor Co-branding: Intel, Lenovo, Microsoft

 Ingredient Branding: Special case of co-branding for parts

availability. Carl Zesis for Sony Camera.

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Packaging, Labeling, Warranties and Guarantees
 Labeling
 Functions
 Identification (identify the product or brand)
 Grading (grade of the product)
 Description (describe)
 Promote (through attractive graphics)
 Warranties and Guarantees
 Products under warranty can be returned to the
manufactured or designated repair center for repair,
replacement or refund.
 Guarantee reduces buyers perceived risk.
 Unconditional Guarantee (Money back guarantee if not satisfied
which is suitable for new products)
 Attribute Guarantee (FedEx International delivery within 3
days)
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