Summary of Product Characteristics and Classifications

1488 Words Sep 22nd, 2010 6 Pages
CHAPTER 12 ::: SETTING PRODUCT
STRATEGY

SUMMARY

::: Product Characteristics and Classifications

Product Levels: The Customer Value Hierarchy

The marketer needs to address five product levels. Each level adds more customer value, and five constitute a Customer value hierarchy.
Core benefit: It is the fundamental level. It is the benefit the customer is really buying.
Basic product: The marketer has to turn the core benefit in to the basic product.
Expected product: A set of attributes and conditions buyers normally expect when they purchase this product.
Augmented product: The product that exceeds customer expectations.
Potential product: It encompasses all the possible augmentations and transformations the product or offering might
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• The consistency of the product mix refers to how closely relate the various product lines are in end use, production requirements, distribution channels, or some other way.

Product-Line analysis:
Companies normally develop a basic platform and modules that can be added to meet different customer requirements. This modular approach enables the company to offer variety while lowering production costs. Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest, or divest. They also need to understand each product line’s market profile.

Sales and Profits: Every company’s product portfolio contains products with different margins. A company can classify its products into four types that yield different gross margins depending on sales volume and promotion. They are core product, staples, specialties, convenience items.

Market Profile: The product line manger must review how the line is positioned against competitor’s lines. The product map must be developed which reveals possible locations for new items. It also identifies market segments. Product line analysis provides information for two key decision areas—product-line length and product-mix pricing.

Product-Line Length:

Companies seeking high market share and market growth will generally carry longer product lines. Companies that emphasize high profitability will carry
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