Module 06: Strategizing Products and Services

Course: MK11x Marketing Fundamentals, IIM Bangalore. Instructor: Prof. Ashis Mishra.

This module covers the P of Product: what a product actually is, how a company decides how many products to carry, how a product becomes a brand, how products age through a life cycle, and how all of this changes when what you are selling is intangible.

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6.1 The Product Concept

6.1.1 Product, a conceptual framework

Product: anything that can be offered to the market that satisfies a need or a want.

The five levels of a product

Product evolution. Levels are not fixed. What is augmented today becomes expected tomorrow as competitors copy it.

Memory hook: "Today's augmented becomes tomorrow's expected, and today's expected becomes tomorrow's basic."

Link to positioning. The augmented product is where your points of difference (POD) live. The expected product is your points of parity (POP). What counts as expected or augmented varies with the customer type, the competition and the market environment. Honeymooners and adventure tourists expect completely different things from the same hotel.

6.1.2 Classification of consumer goods

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6.2 Product Line Management

Product line management answers one question: how many products should the portfolio carry, and which ones should be dropped? Think of Levers, Procter and Gamble, Coca-Cola, Dabur, Himalaya or Patanjali, each holding dozens of products.

6.2.1 The four dimensions of a product mix

Product Line Management I | Product Line Management II

Worked example 1: length and breadth of a home furnishing company

Given: a home furnishing company carries three categories.

Answer: the breadth of the product mix is 3.

Answer: lamps have a length of 4, tables 7 and chairs 5. Each line has its own length; there is no single length for the mix.

Answer: 16 product items across a mix of breadth 3.

Worked example 2: depth, and why it explodes

Given: a soap product item is offered in

• 3 sizes: 50 g, 100 g, 200 g
• 3 aromas: sandal, lavender, rose

Step 1. Depth from size and aroma.

Answer: 9 variants.

Or equivalently:

Answer: 18 variants of a single product item.

Common trap: Depth multiplies, it does not add. Each new attribute dimension multiplies the SKU count, so proliferation grows in a factorial way. The professor's warning: a Lifebuoy brand manager who starts with two or three SKUs and keeps saying "why not two more varieties, two more gels, two more hand washes, two more aromas" can end up with thousands of SKUs on the same two underlying variants, spread too thin to manage or resource.

Consistency, and why it is a cost question

Consistency is about whether two product lines can share resources.

Fresh produce, dairy, meat and fish all need a temperature-controlled supply chain, so they are inconsistent with dry goods. Knowing consistency tells you how much material, money and supply-chain resource a strategy will actually consume.

Memory hook: Length is how many items in a line. Breadth is how many lines. Depth is how many variants of one item. Consistency is how much they share.

Reading depth strategically. If soap has far more depth than your other lines, you are micro-segmenting the soap market. If soap, detergent, toothpaste and bleach all have the same depth, you are simply serving the same target group through different products. That comparison is the point of product line analysis.

6.2.2 Product line strategies

Product Line Management III

What drives product line depth

Product line analysis

Product line analysis determines the optimal size of the product mix. There is no formula. It is an iterative, what-if judgement built on two inputs:

1. Performance. Sales, profit and loss across every product and brand.
2. Market profiling. Your offering versus the competitor's, your positioning versus theirs, then linking both back to sales and profit.

Formula: A product line is too short if profit can be increased by adding items. It is too long if profit can be increased by dropping items.

The six product line strategies

Common trap: The upside of line filling is profit, satisfied channels and competitors kept out. The risk is cannibalisation, one of your products eating another's market. That is a problem for the individual brand manager but not for the company overall, since the money still comes to the company.

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6.3 Branding

6.3.1 Introduction to branding

Branding is the most advanced form of marketing strategy available for any product or service, because once you have a brand you are no longer arguing about attributes and features.

The professor's test case is Apple. Someone who loves Apple products does not compare a Mac against a Samsung, an LG or an HP feature by feature, checking which has the faster processor. They buy the next Apple product and then find the reasons. The characteristics and features have been superseded by belief in the brand.

6.3.2 Branding: the conceptual framework

Memory hook: The professor's image for the brand is the five blind men and the elephant. Touch the leg and you say a pole; touch the tail and you say a snake. A brand is everything, and more.

Definition, part one, identification. A brand is a name, a term, a sign, a symbol or a design, or any combination of these, intended to identify the product or service of one seller or group of sellers and differentiate them from competitors.

Definition, part two, the promise. A brand is the seller's promise to deliver a specific set of features, benefits and services constantly and consistently to the buyer.

Both halves matter. A logo alone is identification. What makes it a brand is delivering the same value consistently and constantly for long enough that the value becomes attached to the name.

Why that produces sustainable competitive advantage. When Nike says "Just do it", you are not comparing Nike's air soles against Adidas or Puma. You buy Nike because Nike has always delivered the quality, the air sole, the lightness. Someone can build a laptop with better specifications than a Mac. Nobody can build another Mac.

The link back to consumer behaviour. Module 4 distinguished extensive, selective and routine problem solving. Branding converts an extensive problem-solving task into a routine one. For an unbranded technical or expensive purchase, the consumer compares attributes, brands, retailers, price and quality every time. Once a brand has delivered on its promise for long enough, the consumer stops comparing entirely, unless the brand messes up badly.

The six meanings a brand communicates

6.3.3 Roles of a brand

A brand performs six distinct roles, three administrative and three strategic.

How a brand creates a barrier to entry

This is the part the lecture spends most time on. Once consumers stop comparing features, a new entrant cannot win by being better on features, because nobody is checking.

The professor's example is Taj Mahal tea and the Zakir Hussain "Wah Taj" campaign. Even if a rival tea genuinely tastes better, people who love Taj Mahal tea simply buy Taj Mahal tea. They are not comparing, and they are not even trying the alternative. The association is so strong that Taj means legend, quality and character. That is a competitive advantage which is very difficult to overcome, and it is precisely what keeps new entrants out of the segment.

Memory hook: A brand is a barrier to entry because it removes the comparison on which a challenger's superiority would have to be noticed.

6.3.4 Building strong brands: equity, culture and value

Three concepts, and they answer three different questions.

6.3.5 Building a strong brand culture

Brand culture is created out of stories told about the brand, repeatedly, over time. Those stories come from four sources: brand ambassadors, influencers, the company itself, and consumers and users. The accumulated storytelling tells aspiring users what they get by joining the community.

6.3.6 Building effective brand equity

Brand equity is the set of assets linked to the brand's name that adds to (or subtracts from) the value of the product or service. A brand is more than the characteristics or features of a product: the whole is more than the sum of the parts.

David Aaker's five components of brand equity

Common trap: Brand awareness is the simplest component and brand loyalty is the strongest. Do not treat awareness as the goal.

The Customer Based Brand Equity (CBBE) model

Four steps, expressed as four questions. The first two are asked by the consumer to the brand; the last two are asked by the consumer to himself.

Memory hook: Two questions outward, then two questions inward. Identity, meaning, response, relationship.

6.3.7 Generating high brand value

Brand value is the quantitative measure of the financial value of the brand. Several consulting firms compute it using their own models, both qualitative and quantitative, so the same brand can be valued differently by different firms.

Why this is not academic. Established brands mortgage the brand to raise loans, and banks lend against the valuation. The professor's example is the SBI-led consortium extending loans to Vijay Mallya against the value of Kingfisher as a brand.

Memory hook: Every model reduces to two things: the financial value of the brand, and the brand's contribution to the organization through employees, customers and stakeholders.

6.3.8 Measuring the success of a brand

Brands are intangible assets, so creating, nurturing and then using their value is a challenge. Three measurement tools:

1. Perceptual mapping (from Module 3 positioning).
2. Brand Asset Valuator (BAV), the framework by Young and Rubicam.
3. Brand Report Card, by Kevin Lane Keller.

Keller's Brand Report Card: the ten attributes

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6.4 The Product Life Cycle

Every product has a finite commercial life, and the shape of that life is predictable enough to plan against. The four stages below each have their own characteristics and their own strategies.

6.4.1 Introduction to the PLC

Maturity can slide into decline and, with the right strategy, be pulled back into growth. Identifying which stage a product is in is what allows you to pick the right strategy for it.

6.4.2 PLC: the conceptual framework

The axes. X-axis is time. Y-axis is a performance metric. Sales is the most common, but profit or return on investment work equally well, giving sales-against-time, profit-against-time or investment-recovery-against-time curves.

The central point of this clip, and the one most often lost: the sales curve and the profit curve do not move together.

Memory hook: Maximum profit sits in maturity, not in growth. And most products die in introduction, because market acceptance never comes, competition cannot be beaten, distribution cannot be built, or quality slips.

The maturity trap. Because maturity is where you are reaping the benefit, you do not know where to stop. Six months more, one year more. The brand is your baby, so you do not notice that it has lost relevance and customers are looking for alternatives. Then you find yourself in decline with every metric going south.

When you have no history. A young company with no twenty-year sales record can still place its product on the curve by using industry and competitor data. The music industry is centuries old and has run through vinyl records, tapes, CDs, MP3 players and streaming, each a small life cycle inside the industry's. Plot the industry and the competitors, and you can locate yourself.

Common trap: You need a life cycle to analyse a life cycle. A product that is a day or a month old has no PLC curve at all.

6.4.3 The introduction phase

Characteristics

The four introduction strategies

The framework is a 2 by 2 on price (high or low) and promotion (high or low).

Memory hook: High price = skimming. Low price = penetration. High promotion = rapid. Low promotion = slow.

Try the exercise the professor sets: for each of the four cells, name products or services you have seen launched that way. The more examples you can place, the more usable the framework becomes.

6.4.4 The growth phase

Characteristics

• Rapid climb in sales.
• New product features are introduced.
• Distribution is expanded.
• Additional customers buy the product.
• Price remains the same or falls slightly.
• Promotion stays level or increases, because competition is now arriving.
• Profit increases, because the market has accepted the product.

The shift in message: in introduction you advertised that the product exists. In growth you advertise that you are superior to the competitor, because in introduction there was no competitor and now there is.

Why growth is the shortest phase

Growth is the golden phase, equivalent to a star in the BCG matrix: rapid growth, limited competition, customers arriving. It is also the shortest of the four stages, because competitors quickly notice that someone is making a lot of money in this space and copy it. Once competition arrives, your share falls and you slide into maturity.

Memory hook: The objective of the growth phase is simply to stay in it as long as possible, and to make entry difficult for anyone else.

The seven growth-phase strategies

Plus one pricing lever: lower the price to buy market share and make entry harder for competitors.

How this creates a barrier to entry. A virgin market is easy to enter. A market where you are already established is not, because the entrant must be at least equivalent to you. Your presence sets a performance standard and an industry benchmark the challenger has to clear before it can get a foothold. Every flanker product raises that bar.

6.4.5 The maturity phase

The three sub-stages of maturity

Maturity is not one state. It has three sub-stages, three characteristic types of market leader, and three modification strategies.

The three types of market leader in maturity

The volume identity

Every maturity-phase market modification is an attack on one of those two terms.

The three modification strategies

1. Market modification. Raise the number of brand users or the usage rate.

2. Product modification. Improve quality, style, aesthetics or design. Invest in R&D for improvements or new variations.

3. Marketing mix modification. Adjust price, distribution, promotion and services to stay competitive and relevant.

All three modifications are attempts to hold or grow volume in a market that has stopped growing on its own.

Key dynamics of the maturity phase

• Continuous flux. Market share fluctuates constantly as competitors adjust.
• Continuous fragmentation and reconsolidation. The market fragments as niche players enter, then reconsolidates as weaker players exit and the larger ones absorb the space. This is the defining strategy of the stage.
• The objective is to remain profitable and relevant in a saturated market, choosing between high volume with low margin and low volume with high margin.

6.4.6 The decline phase

Characteristics and causes

Sales fall, slowly or rapidly, and the only real question left is how long to stay and when to leave.

Market reactions: competitors and brands withdraw from unprofitable segments, product offerings are reduced, firms retreat to the core market, and price cuts and promotions spread.

The five decline-phase strategies

The strategic question is how long to stay and when to exit.

6.4.7 Concluding the PLC

The S-curve is not the only shape. The professor teaches with the classic S curve, but the pattern varies.

Brand management and the PLC. Effective brand management requires knowing the current stage and adapting strategy to it.

Industry life cycle. Individual product life cycles sit inside the broader industry life cycle. The music industry has run through vinyl, cassettes, CDs, MP3 players and streaming, and each of those is a life cycle within an industry that persists.

Cascading effects. Brand, product, technology and industry life cycles all influence one another. A product in the introduction phase inside a mature industry faces very different challenges from the same product inside a growth industry, so strategy must account for both.

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6.5 The Service Concept

6.5.1 Introduction to services

A product is tangible. A service is intangible. Everything difficult about service marketing follows from that one difference.

6.5.2 Evolution of services

The professor traces the evolution through the retail store, and it shows how service becomes the differentiator once the product is identical everywhere.

6.5.3 Defining services

Products and services are two ends of one continuum, not two categories. As the complexity of a product rises, the importance of service rises with it. A plain wooden chair needs almost no service. An electronic recliner chair needs a great deal.

American Marketing Association definition:

Products such as bank loans or home security that are intangible, or at least substantially so. If totally intangible, they are exchanged directly from the producer to the user. They cannot be transported or stored, and are almost instantly perishable.

Philip Kotler's definition:

Any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Four consequences worth memorising:

1. Services are hard to identify because they come into existence at the moment they are bought and consumed.
2. They are composed of intangible elements that are inseparable.
3. They usually involve customer participation in some important way.
4. They have no title and cannot be sold in the sense of an ownership transfer.

6.5.4 The product-service mix

Even a pure tangible good carries an essence of service: the display aisles in the supermarket are themselves a service.

6.5.5 Characteristics of a service

Four characteristics, each with a named set of remedies. This table is the most exam-shaped block in the services half of the module.

Notice that every remedy attacks the characteristic directly: intangibility is met with evidence, inseparability with demand management, variability with standardisation, and perishability with flexible capacity.

6.5.6 Service strategy

Classifying services by purchase behaviour

Before you can build a service strategy you need a second classification, this time based not on the product-service mix but on consumer purchase behaviour.

The credence example: a consulting firm delivers a report to raise your sales. You are happy with the report, but whether sales actually rise takes six months to a year to discover. The consumption has ended and you still cannot evaluate it.

The 7Ps of service marketing

Services extend the 4Ps with three more. The three additions are exactly the elements that exist because production and consumption are simultaneous.

Memory hook: The extra three are People, Process, Physical evidence. In a service, the staff, the SOP and the surroundings are the product.

The three key elements of service strategy

Service positioning

Strategically, service positioning is no different from product positioning. The difference lies entirely in technique of application.

The pricing decision that is really a positioning decision. Home delivery by a retailer is a service and a genuine non-price differentiator, because the merchandise price is the same everywhere. But the moment you charge for home delivery, price re-enters the comparison. Keep it free and you have a differentiator at constant price. Charge for it and you have a price competition.

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6.6 Case Study: Santoor

The Santoor case pulls together segmentation, targeting, positioning, value types, the product life cycle and product line extension in a single forty-year story.

6.6.1 The soap market in 1995

Introduction | Santoor's evolution

The soap market is one of the most competitive in FMCG. For every brand that succeeds, roughly 10 to 15 fail.

The price pyramid

The competitor benefit table

This table is the analytical heart of the case setup. Read it as three columns: which segment the brand plays in, what benefit it claims, and what support validates the claim.

Memory hook: Every established brand already owned a benefit plus a proof. That is the wall Santoor had to get over, and the reason "good for skin" could never work: Rexona and Palmolive already owned it.

The NCAER household pyramid

Consumer profile from NCAER, 1996, classifying Indian households by annual income.

The growth projection that made the market attractive. By 2005 the very rich were expected to reach 5 million households and the consuming class 75 million.

Answer: a fivefold expansion of the very rich and a roughly two and a half fold expansion of the consuming class in a decade, which is what justified entering a market with a 10 to 15 failure rate per success.

6.6.2 Santoor's entry and the 1987 shock

The name. Wipro wanted a soap built on sandalwood and turmeric for the popular segment. San from sandalwood, tur from turmeric, giving Santoor.

Why the price rise hurt Santoor more than Lifebuoy or Lux

This is the case's first analytical payoff and it links straight back to branding.

Santoor was a new brand with a good product, attractively priced, but with no USP and no loyalty. Consumers had bought it out of innovative behaviour or boredom with the same old soap, not out of commitment. Buying a soap is not the same as being loyal to it.

So there was nothing to justify the price hike. With a brand you trust, a price rise makes you assume there must be a reason, because a brand is a promise and a trust. With Santoor in 1987 there was no trust to draw on, so consumers simply switched, either to other new brands or back to their old ones.

Memory hook: Brand loyalty is what buys a price rise forgiveness. Santoor had product quality but no loyalty, so it had no pricing protection.

By 1988 the position was: volume stable at 2,400 tons, no growth, heavy competition, no newness, consumers switching and trial rates declining.

6.6.3 The two pre-repositioning ads and what was missing

Evaluating the ads

Two campaigns ran during the stagnation, one in Hindi and one in English.

• Ad 1. Target: traditional and religious people. Value: hygiene and purity.
• Ad 2. Target: young women who care about beauty but are traditional. Value: the effect of chandan and haldi on the skin.

Target segment: a conventional, traditional Indian woman, shown at home, often performing puja, dressed conventionally, young, who prefers tried and tested traditional ingredients for her health and hygiene.

Value communicated: sandalwood for aroma, turmeric for good looks and healthy skin. Both purely functional benefits.

What was missing: no strong benefit, nothing aspirational, and no growth.

FCB Ulka's brief

Wipro set itself a target and handed the problem to the Bangalore agency FCB Ulka.

Answer: roughly double the volume and more than five times the top-of-mind awareness, in two years.

Top-of-mind awareness is the first brand named when a consumer is asked to name a soap, measured by survey.

Consumer research findings

• Low correlation between the brand name and the ingredient story, despite hammering sandalwood and turmeric repeatedly. Consumers saw it and did not notice it.
• Middle-class image and a brand ambassador who was neither looked up to nor noticed. The brand was not aspirational.
• Santoor had become a niche product for people obsessed with sandalwood.
• The product itself was good: it scored well on fragrance, price, lather, long life, colour and shape. Consumers wanted something good for skin, and Santoor was saying exactly that, and it was still not connecting.

The psychographic insight

• Women want to be admired and loved, and beauty and good looks are the desirable attributes for that. There is a positive relationship between good looks and soap.
• Lifestyle was shifting from traditional to modern, with rising urbanisation and disposable income.
• People were taking more care over how they dressed and the image they projected. The emphasis was moving from family, spirituality and tradition towards the self.

The repositioning decision

The existing 2,400 tons of consumers had to be retained while new consumers were added, so the differentiation had to stay with the ingredients. The literature showed that sandalwood and turmeric keep the skin tight and supple, leading to younger looking skin.

Memory hook: The winning move was not a new ingredient. It was a new benefit from the same ingredient, moving the claim from a functional value everyone owned to an experiential and social value nobody owned.

6.6.4 The ad journey: the deliberate sequence

Santoor's repositioning story

Every ad uses the same device, mistaken identity: a married woman with a child is mistaken for a younger, unmarried woman. What changes is the context, and the context is the strategy.

The two structural tells

Both are things the professor asks you to notice on the screen rather than in the script.

1. The word "new" disappears from the pack. It is present on the pack in the early ads and gone by the aerobics ad. The relaunch has stopped being a relaunch.
2. The voice shifts. In the early ads the Santoor woman says it herself: "meri twacha se meri umar ka pata nahi chalta", from my skin nobody can tell my age. By the aerobics ad it is another woman saying "iski twacha se iski umar ka pata nahi chalta". Others are now saying it about her.

Memory hook: When the brand makes the claim, you are in introduction. When other people make the claim, the market has accepted it and you are in growth. That single change of speaker is the clearest PLC signal in the case.

The result

What the case demonstrates

6.6.5 Discussion forum response: three decades of Cadbury advertising

From my observation and research, over the past three decades Cadbury has repositioned itself from a premium foreign chocolate brand to a more accessible and everyday brand. This effectively helped them increase their customer base, increase sales and revenue, and gain consumer trust.

Associating Cadbury with traditions (2000s)

Positioning: Celebrating every moment.

"Kuch Meetha Ho Jaaye" campaign (2004). This iconic campaign, meaning "Let's Have Something Sweet", linked Dairy Milk to traditional Indian sweets, positioning it as the go-to for celebrations such as Diwali, weddings and family gatherings.

Outcome: by linking Dairy Milk with meetha, a culturally significant element of Indian celebration, Cadbury redefined its product as part of Indian tradition, bridging Western and Indian cultures.

Association with emotions (2010s)

Positioning: Sharing happiness and togetherness.

"Shubh Aarambh" campaign (2010). Meaning "Auspicious Beginning", this campaign encouraged people to start new ventures or make small moments special by sharing Dairy Milk, subtly embedding Cadbury in Indian cultural practice.

Impact: these campaigns deepened emotional connections, positioning Cadbury as a treat for good fortune and happiness, a symbolic and auspicious item for family moments rather than simply a sweet.

Inclusivity and purpose (2020 to present)

Positioning: A brand with purpose and community connection.

"Not Just a Cadbury Ad" (2020). During the COVID-19 pandemic, Cadbury created an ad to support small businesses, using AI to highlight and promote local shops, showing the brand's commitment to community support in a difficult time.

Impact: this positioned Cadbury not only as part of joyful everyday moments but as a brand that supports local communities and stands for social causes, aligning with modern consumer expectations of brand accountability and purpose.