UNIT 2

1. Highlight the ve product levels that constitute a customer-level hierarchy

The customer level hierarchy, also known as the ve product levels, outlines the
di erent layers of value that customers perceive when purchasing a product or
service. Here are the ve levels:

• Core Bene t: This is the basic need or requirement that the customer is
seeking to ful ll by purchasing the product. It represents the primary
problem or desire the customer aims to address. For example, when buying
a car, the core bene t might be transportation.

• Basic Product: At this level, the core bene t is translated into a tangible
product or service. It's the simplest form of the product that meets the
customer's needs. Using the example of a car, the basic product would be
the vehicle itself, with its essential features such as engine, wheels, and
seats.

• Expected Product: This level involves adding features and attributes that
customers expect as standard in a product category. It encompasses the
qualities that customers take for granted when purchasing a product. For a
car, expected features might include safety features like airbags, reliability,
and basic comforts like air conditioning.

• Augmented Product: Beyond the expected features, this level involves

additional enhancements or attributes that di erentiate the product from
competitors and provide added value to customers. It includes
supplementary services or features that exceed customer expectations. For
a car, augmented features could include advanced technology like
navigation systems, entertainment options, or extended warranty coverage.

• Potential Product: This level represents the future possibilities and

potential improvements or innovations that could enhance the product's
value for customers. It encompasses potential advancements, upgrades, or
expansions that could be introduced in response to changing customer
needs or technological advancements. In the context of a car, potential
products might include advancements in fuel e ciency, autonomous
driving capabilities, or integration with smart infrastructure.
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 2. What is product mix? Distinguish any ve product mix pricing strategies
adopted by companies

Product mix refers to the assortment or range of products and services o ered by
a company to meet the diverse needs and preferences of its target market. It
encompasses all the products and services a company produces or sells within its
portfolio. A well-planned product mix allows a company to cater to di erent
customer segments, increase market share, and maximize revenue.

Here are ve product mix pricing strategies adopted by companies:

• Product Line Pricing: In this strategy, prices are set based on the di erent
products or product lines within the company's portfolio. Prices may vary
based on factors such as features, quality, and target market. For example,
a company o ering multiple models of smartphones may price each model
di erently based on its speci cations and target audience.

• Optional Product Pricing: Optional product pricing involves o ering

optional features, add-ons, or services alongside the core product, each at
an additional price. Customers can choose to purchase these optional
extras based on their preferences and needs. For instance, car
manufacturers often o er optional features such as upgraded sound
systems or leather seats at an additional cost.

• Captive Product Pricing: Captive product pricing involves setting a low

price for the core product and charging higher prices for complementary
products or services that are essential for its use. The initial product is often
sold at a lower cost to attract customers, while pro ts are generated from
the sale of related accessories, consumables, or services. An example of
this is printers, which are often sold at a low price, while the manufacturer
earns pro ts from the sale of ink cartridges.

• Product Bundle Pricing: This strategy involves selling multiple products or

services as a bundle at a discounted price compared to purchasing each
item individually. Bundling encourages customers to buy more items by
o ering cost savings and convenience. For example, fast-food restaurants
often o er meal deals that include a sandwich, fries, and a drink at a lower
price than purchasing each item separately.

• Psychological Pricing: Psychological pricing involves setting prices at

particular levels to in uence consumers' perceptions and behavior. This
can include strategies such as setting prices just below round numbers
(e.g., $9.99 instead of $10.00) to create the perception of a lower price, or
using prestige pricing to convey quality and exclusivity by setting higher
prices. This strategy capitalizes on psychological biases and tendencies to
in uence purchasing decisions.
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3. What are ve common product line pricing strategies.

1. Premium Pricing: Charging higher prices for products to convey high quality
or exclusivity. Example: Apple's iPhone XS priced higher than other
smartphones due to its advanced features and brand prestige.

2. Economy Pricing: O ering products at low prices to attract price-sensitive

customers. Example: Walmart's Great Value line of products o ers a ordable
alternatives to brand-name products.

3. Penetration Pricing: Setting low initial prices to gain market share quickly.
Example: Video streaming services like Net ix o ering low introductory
subscription rates to attract new customers.

4. Price Bundling: O ering multiple products together at a discounted price.

Example: Fast food combo meals that include a sandwich, fries, and a drink at
a lower price than purchasing each item separately.

5. Optional Product Pricing: Charging extra for additional features or services

beyond the base product. Example: Car manufacturers o ering optional
features like navigation systems or leather seats for an additional cost.

4. Substantiate any company's product mix based on its certain width, length,
depth and consistency with a suitable example

Let's substantiate Apple Inc.'s product mix based on its width, length, depth, and
consistency.
• Width: Apple's product width refers to the variety of product lines it o ers.
Apple has a relatively narrow product width compared to some other
technology companies. Its main product lines include:
• iPhone (smartphones)
• iPad (tablets)
• Mac (computers)
• Apple Watch (wearables)
• Apple TV (media devices)
• AirPods (audio accessories)
• HomePod (smart speakers)
• Services (such as iCloud, Apple Music, and Apple TV+)

• Length: The length of Apple's product mix refers to the total number of
products within each product line. Apple has a considerable length within
each of its product lines. For example:
• iPhone: Various models with di erent storage capacities and sizes
(e.g., iPhone 12, iPhone 11, iPhone SE).
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 • iPad: Di erent models including iPad Pro, iPad Air, iPad, and iPad
mini.
• Mac: MacBook Air, MacBook Pro, iMac, Mac Mini, and Mac Pro.
• Apple Watch: Series 7, SE, and older models.
• Apple TV: Di erent generations and storage capacities.
• AirPods: Di erent generations and variations like AirPods Pro and
AirPods Max.
• Depth: Depth refers to the variations within each product category. Apple
o ers various con gurations, features, and accessories within each product
line. For example:
• iPhone: Di erent storage capacities, colors, and screen sizes.
• MacBook Pro: Various con gurations with di erent processors,
memory, and storage options.
• Apple Watch: Di erent case materials, sizes, and bands.
• iPad: Di erent storage capacities, colors, and connectivity options
(Wi-Fi or cellular).
• AirPods: Di erent generations, with or without wireless charging
case, and di erent ear tips.
• Consistency: Apple maintains consistency in its product mix by
emphasizing design aesthetics, user experience, and integration among its
products and services. This consistency is re ected in the design language
across its product lines, the seamless integration between hardware and
software, and the ecosystem it creates with services like iCloud, iMessage,
and Apple Music.

5. Compare the type of consumer products on the basis on 4Ps and brand
loyalty

Consumer products can be classi ed into di erent types based on consumer

purchasing behavior, marketing strategies, and brand loyalty. The 4Ps of
marketing (Product, Price, Place, Promotion) play a crucial role in
determining the type of consumer products and in uencing brand loyalty.
Let's compare di erent types of consumer products based on these factors:
• Convenience Products:
• Product: Convenience products are those items that consumers
purchase frequently and with minimal e ort. They are usually
inexpensive and widely available. Examples include snacks,
toiletries, and household items.
• Price: Pricing for convenience products tends to be low or
moderate, as these products aim to attract a large number of
customers through a ordability.
• Place: Convenience products are typically sold in numerous
locations to maximize accessibility, such as supermarkets,
convenience stores, and online platforms.
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 • Promotion: Promotion for convenience products focuses on
maintaining visibility and availability. Strategies include point-of-
sale displays, in-store promotions, and online advertising. Brand
loyalty is generally low for convenience products, as consumers
are often in uenced by factors such as price and convenience
rather than brand preference.
• Shopping Products:
• Product: Shopping products are items that consumers
purchase less frequently and are willing to invest more time and
e ort in comparing alternatives before making a purchase.
Examples include clothing, electronics, and furniture.
• Price: Pricing for shopping products varies, and consumers are
often willing to pay a higher price for quality or speci c features.
• Place: Shopping products are typically available in specialty
stores, department stores, and online marketplaces, where
consumers can explore di erent options and make informed
choices.
• Promotion: Promotion for shopping products emphasizes
product features, bene ts, and di erentiation. Strategies include
advertising, product demonstrations, and comparison tools.
Brand loyalty for shopping products can vary depending on
factors such as product quality, reputation, and customer
experience.

• Specialty Products:
• Product: Specialty products are unique or exclusive items for
which consumers are willing to make a special e ort to obtain.
Examples include luxury cars, designer clothing, and high-end
electronics.
• Price: Pricing for specialty products is often high, re ecting their
exclusivity, quality, and prestige.
• Place: Specialty products are sold through select retailers,
boutiques, or authorized dealerships, where the brand image
and customer experience are carefully curated.
• Promotion: Promotion for specialty products focuses on
building brand image, prestige, and exclusivity. Strategies
include targeted advertising, sponsorships, and partnerships
with in uencers or celebrities. Brand loyalty for specialty
products is typically high, as consumers develop strong
emotional connections and attachment to the brand identity and
values.
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 6. De ne 4P's of marketing mix and their importance

The 4Ps of marketing mix is a foundational framework used by marketers to de ne

and implement their marketing strategies. It consists of four essential elements
that represent di erent aspects of a company's o ering in the marketplace. The
4Ps stand for Product, Price, Place, and Promotion. Here's a brief overview of
each:
• Product: This refers to the tangible or intangible goods and services
o ered by a company to satisfy the needs or wants of its target market. It
includes the features, quality, design, branding, packaging, and any
additional attributes that di erentiate the product from competitors.
Understanding the product involves identifying customer needs,
developing suitable products, and ensuring they meet market demands.

• Price: Price refers to the amount of money customers are willing to pay in
exchange for a product or service. Pricing decisions are in uenced by
various factors, including production costs, competitor pricing, perceived
value, and customer demand. Setting the right price is crucial for
pro tability, market positioning, and attracting the target audience. Pricing
strategies can vary, such as penetration pricing, skimming pricing, or
value-based pricing.

• Place: Place, also known as distribution, refers to the channels and

methods used to make products available to customers. It involves
decisions related to distribution channels, logistics, inventory
management, and retail locations. The goal is to ensure that products are
conveniently accessible to target customers when and where they need
them. E ective place strategies optimize the distribution process to reach
the target market e ciently.

• Promotion: Promotion encompasses all the activities aimed at

communicating and promoting the product to the target audience. It
includes advertising, sales promotion, public relations, direct marketing,
and personal selling. The objective of promotion is to raise awareness,
generate interest, persuade customers to buy, and ultimately drive sales.
E ective promotional strategies align with the overall marketing
objectives and target audience preferences.
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 The importance of the 4Ps of marketing mix lies in their ability to provide a
structured framework for marketers to develop and implement cohesive marketing
strategies. Here are some key reasons why the 4Ps are essential:
• Strategic Planning: The 4Ps help marketers systematically analyze and
plan their marketing e orts by focusing on key elements of the marketing
mix.

• Customer Focus: By considering product, price, place, and promotion

from the perspective of the target market, companies can better
understand and address customer needs and preferences.

• Competitive Advantage: E ective utilization of the 4Ps allows

companies to di erentiate themselves from competitors, create value for
customers, and gain a competitive edge in the marketplace.

• Resource Allocation: The 4Ps help companies allocate resources

e ectively by prioritizing marketing activities and investments based on
their potential impact on sales and pro tability.

• Market Adaptation: The 4Ps framework provides exibility for

companies to adapt their marketing strategies to changing market
conditions, consumer behavior, and competitive dynamics.

7. Highlight the steps in new product development process.

The new product development (NPD) process involves several key steps to bring a
new product from concept to market. Here are the typical steps involved in the
NPD process:
1. Idea Generation: The process starts with generating ideas for new products or
improvements to existing ones. Ideas can come from various sources such as
market research, customer feedback, brainstorming sessions, or internal R&D
e orts.

2. Idea Screening: Once ideas are generated, they undergo preliminary

evaluation to assess their feasibility, alignment with company goals, market
potential, and compatibility with resources and capabilities. Ideas that are not
viable are eliminated at this stage.

3. Concept Development and Testing: Promising ideas are developed into

product concepts that outline the key features, bene ts, and value proposition
of the proposed product. Concepts are then tested with target customers
through surveys, focus groups, or prototype testing to gather feedback and
re ne the concept.
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 4. Business Analysis: A comprehensive business analysis is conducted to
evaluate the nancial viability and potential pro tability of the new product.
This involves assessing costs, sales projections, pricing strategies, competitive
analysis, and potential risks.

5. Product Development: Once the concept is approved, the product

development process begins. This stage involves designing, engineering, and
prototyping the product to create a working model that meets customer needs
and technical requirements.

6. Market Testing: Before full-scale production and launch, the product may
undergo market testing in select regions or target segments. This involves
releasing the product to a limited audience to gauge customer response,
identify potential issues, and gather feedback for further re nement.

7. Commercialization: After successful market testing and nal adjustments, the

product is ready for full-scale production and commercial launch. This involves
nalizing production processes, distribution channels, marketing campaigns,
and sales strategies to introduce the product to the market.

8. Launch and Post-Launch Evaluation: The product is o cially launched to the

market, accompanied by marketing and promotional activities to generate
awareness and drive sales. After launch, ongoing monitoring and evaluation are
essential to track performance, gather customer feedback, and make
necessary adjustments to ensure the product's success.

9. Continuous Improvement: The NPD process is iterative, and companies

should continuously gather feedback, monitor market trends, and seek
opportunities for product enhancements or new iterations to stay competitive
and meet evolving customer needs over time.

8. Mention the varied types of industry good classi cation with suitable
examples

Industry goods, also known as industrial goods, are products that are used by
businesses or organizations to produce other goods or provide services. They can
be classi ed into various types based on their characteristics and usage. Here are
some common classi cations of industry goods along with suitable examples:
• Raw Materials: Raw materials are unprocessed goods that are used in the
production of other products. Examples include:
• Iron ore used in steel manufacturing.
• Cotton used in textile production.
• Crude oil used in the production of petroleum products.
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 • Components and Parts: Components and parts are nished or semi-
nished goods that are used in the assembly or manufacturing of other
products. Examples include:
• Computer chips used in electronic devices.
• Engines and transmissions used in automotive manufacturing.
• Bearings and gears used in machinery production.
• Capital Goods: Capital goods are long-lasting goods that are used by
businesses to produce other goods or provide services. Examples include:
• Manufacturing equipment such as CNC machines and 3D printers.
• Commercial vehicles like trucks and buses used for transportation.
• Construction machinery such as cranes and excavators.
• Supplies and Consumables: Supplies and consumables are goods that
are used in day-to-day operations but are not directly incorporated into the
nal product. Examples include:
• O ce supplies such as paper, pens, and printer ink.
• Cleaning supplies like detergents and disinfectants used in janitorial
services.
• Maintenance and repair items such as lubricants and replacement
parts.
• Industrial Services: Industrial services are non-tangible o erings that
support business operations or enhance productivity. Examples include:
• Maintenance and repair services for machinery and equipment.
• Logistics and transportation services for the movement of goods.
• Consulting and advisory services for process optimization and
e ciency improvement.
• Fuel and Energy: Fuel and energy are essential inputs used in various
industries for powering machinery and operations. Examples include:
• Electricity used in manufacturing facilities and o ce buildings.
• Natural gas used for heating, cooking, and industrial processes.
• Diesel fuel used in transportation and heavy machinery.

9. What are four main stages of product lifecycle? Expalin any two alternate
patterns witnessed in product lifestyl

The four main stages of the product lifecycle are Introduction, Growth, Maturity,
and Decline. Here's an overview of each stage:
• Introduction: The introduction stage is characterized by the launch of a
new product into the market. Sales are typically low as consumers become
aware of the product and its features. Companies invest heavily in
marketing and promotion to create awareness and stimulate initial demand.
Pro tability may be low or negative due to high initial costs.
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 • Growth: In the growth stage, sales begin to increase rapidly as consumer
acceptance and demand grow. This stage is marked by a rapid increase in
market share, as more customers adopt the product and competitors enter
the market. Companies may invest in expanding production capacity,
improving product features, and entering new market segments.
Pro tability improves as sales volumes increase and economies of scale
are realized.

• Maturity: The maturity stage is characterized by stable sales levels and

intense competition. The market becomes saturated, and growth rates slow
down as most potential customers have already adopted the product.
Companies focus on maintaining market share, defending against
competitors, and extending the product's lifecycle through product
di erentiation, pricing strategies, and marketing campaigns. Pro t margins
may start to decline as price competition intensi es.

• Decline: In the decline stage, sales and pro ts begin to decline as

consumer demand decreases, market saturation reaches its peak, or new
technologies or products emerge. Companies may face declining revenues,
shrinking market share, and increasing costs due to obsolete technology or
outdated production facilities. Some companies may choose to divest or
discontinue the product, while others may attempt to prolong its lifecycle
through cost-cutting measures, niche marketing, or product innovation.

Alternate patterns witnessed in the product lifecycle include:

• Cyclical Lifecycle: In some cases, products may experience cyclical
lifecycles characterized by multiple periods of growth, maturity, and
decline. These cycles are often in uenced by factors such as changes in
consumer preferences, technological advancements, or economic
conditions. For example, fashion trends or seasonal products may
experience cyclical lifecycles with periods of peak demand followed by
decline and resurgence.

• Shortened Lifecycle: Rapid technological advancements and changing

consumer preferences can lead to shortened product lifecycles, where
products move through the stages more quickly than traditional lifecycles.
Companies must adapt by accelerating innovation, streamlining production
processes, and continuously refreshing their product o erings to remain
competitive in dynamic markets. For example, smartphones and
electronics often experience shortened lifecycles due to rapid
advancements in technology and frequent product launches.
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