I. Lecture
“Product Characteristics and Classifications”
This section of the chapter focuses on the dynamics of consumer product perception and
product categorization. An organization’s product strategy should incorporate consumer
behavior relative to product innovation.
Teaching Objectives
Stimulate students to recognize how consumers perceive products in terms of hierarchy.
Gain an understanding of how organizations define products in terms of general categories.
Awareness of the need for a positioning policy and strategy.
Discussion
PRODUCT LEVELS
By thinking of their products in terms of levels, organizations may enhance their efforts in
product innovation. The automobile industry is a good example of demonstrating the
relationships between product levels and product innovation.
Core benefit of an auto is transportation.
The basic product should contain lights, heat, brakes, seat belts, manual transmission,
donut spare tire, etc.
The expected product also contains a radio, air conditioning, automatic transmission,
power windows and locks, ABS, power driver seat, etc.
The augmented product in addition may contain a navigation system, five CD changer,
six speakers, full spare tire, deluxe sound system, halogen lights, remote start-up,
heated seats, etc.
A potential product may include automatic speed governor tied to sensors that indicate
predetermined safe proximity to other automobiles, wireless access to support
automatic payment in parking garages, fast-food drive-ups, etc.
Discuss how auto manufactures know exactly which level should contain which features in
the consumer’s mind, how manufacturers place certain features as options in different
levels. The natural progression of feature movement through levels is also an interesting
discussion point. For example, features that are augmented tend to migrate to the expected,
and then to the basic offering.
Note to the Instructor:
Have students define a similar level breakdown for another product type and challenge
them to identify natural level migration. Also have them explain why the migration takes
place. Homes, appliances, cell phones/landlines are potential products.
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PRODUCT CLASSIFICATIONS
promotional material, in-depth information on the organization’s web site, good keywords to
optimize consumer web searches using search engines, presence on popular product
comparison sites such as buy.com.
Note to the Instructor:
“A NEW LOOK AT PACKAGING”
INTRODUCTION – PACKAGING: THE FIVE-SECOND COMMERCIAL
A point increasingly driven home to marketers of food, health, and beauty product lines, and
over-the-counter drugs, is that the package is the brand. Once the brand has done everything
possible to make the product taste good, work effectively, or cost less, it is still possible to
dramatically.
THE VALUE OF PACKAGING
Many marketers are paying more attention to package design because the products increasingly
are more alike in the marketplace. This is the argument of some marketing professionals who
point out that when differentiation through taste, color, and other product elements has reached
parity, packaging makes the critical difference.
is a way for them to build excitement without changing the formula or adding products that
will cannibalize the rest of their product line. That is the challenge.
The result is that Pepsi is building a whole new round of designs based on themes such as:
“Fast Break,” a 20-oz. re-sellable, curved bottle; “Big Slam,” a one-liter bottle geared to
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30-oz. can version of Coke’s “The Cube.” Pepsi’s has turned the 24-can multi-pack into a
promotional tool, carrying coupons from Breyer’s (a Nabisco label), Thermos, and Spalding.
Other examples include:
Perrier – The firm made its distinctive package the centerpiece of promotion,
Packaged goods marketers are paying special attention these days to delivery systems. That is
prompted in part by the success of club stores (Sam’s Club, B. J. Wholesale Club, etc.) whose
giant packs sell better when they are re-sellable. A unique delivery system, like Mentadent
toothpaste’s double pump, can cement a brand’s image. And designs that take into account how
about them.
Other companies also have capitalized on this as they fight off private labels:
Procter & Gamble has an easy-to-open yet childproof cap on its Aleve
analgesic.
Tylenol touts its Fast Cap, designed for older adults. This is a convenience move
required expensive retooling to produce.
Proprietary packaging, especially patented designs, prevents knockoffs. As a result, it has
become common practice for marketers to patent a specific design, and then build a moat
Consumer concerns for the environment now pressure marketers to avoid wasteful packaging.
hosiery in l991 and moved to a gabled box, there was no question they lost something. The egg
structure had been tied to a function; without the function, it is not clear whether the shape was
relevant to the future equity of the brand. And the question is, how do you capture the shape
graphically?
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developed new packaging for Sun-Maid dried fruits that uses the Sun Maid woman and bright
red used by the No. l raisin brand. Frito-Lay (Pepsi Co.) took the same approach by using the
Taco Bell name and graphics with its supermarket line of Taco Bell–branded food.
In sum, package design has to be very carefully integrated with product, distribution, and
Background Articles
IV. Case
Oscar Mayer: Strategic Marketing Planning
HBS Case: 597-051 TN 594-052A primary purpose of this case is to
cause students to consider carefully the need to combine realistic costing and marketing
new product development.
Teaching Perspectives
The marketing director of Oscar Mayer faces a series of strategic marketing options regarding
established and new products, including budget and capacity allocation decisions.
This case presents a strategic planning budget and risk management issue: given the recent
promotions budget be allocated?
Students assume the role of the division’s president, Marcus McGraw, and decide upon an
investment direction for the company. Decisions should try to meet McGraw’s ambitious
growth objectives: +4 percent per year on sales volume and +15 percent on operating income.
External and internal complexities create difficult decision-making circumstances.
division’s largest brand, relatively inexperienced new product development, and four division
leaders encouraging different investment directions.
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predicated on resource constraints.
Developing New Products
Suppose one innovation is successful in the marketplace, can it be expected to single-handedly
boost the division’s sales volume?
Successful new product development is a function of experience. What does the division’s
recent experience suggest about this alternative?
Questions
1. In the beginning of the case McGraw thinks he has “never encountered such a complex
strategic decision-making process does McGraw pursue?
pursue?
6. Which of Jim Longstreet’s new product ideas is less likely to succeed? Why?
2012 Pearson Education, Inc. publishing as Prentice Hall
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