Lecture 04: Terminologies Associated with Product - 2

Welcome to

this session friends. We will be focusing upon

product hierarchy, elements of product  hierarchy as we discussed in the last

session, wherein I focused upon need as the  fundamental most element of product hierarchy,

and although it is very simple to  understand for us what need is basically,

but, it is the originating point of looking at  the satisfaction of a need in terms of products

and that is the originating point of a large  puzzle for marketers, I would not say unsolvable

puzzle, but that is a long path which marketers  have been taking in terms of categorizing,

re-categorizing and calibrating on how a customer  should be reached with what kind of a product.

We referred to few examples of computing  and dental care and those kinds of things

in due course of time and by now, you would have  started thinking about what need is?. For example,

hunger as a need and shelter as a need and so on.  But then you would realize that, it is a starting

point of a complex kind of a thinking, when we  look at it with the perspective of a marketer.

Let us look at some other terms and I will  be coming back to this conceptual perspective

in due course of time and we will be looking at  product management with a strategic perspective.

But, let us start making it more interesting  and start understanding few specific terms.

So, next in product hierarchy  comes in product family,

a family of Apple products, for example.  And when you say this is an Apple family,

now, it is very interesting and someone from the  marketing side of Apple would say that we have

a family of products, wherein they have desktops,  they have laptops, they have smart phones, musical

devices and so on. So, a huge Apple family. You go  to some showroom of Apple, and you would realize

that you are meeting Apple family there. So,  the person would greet you and he would say,

welcome to the Apple family of products. Now, that is very interesting basically, when

we talk of a family of products. Then here again,  I would say that there is a categorical reference

to a definitional perspective wherein we have  been continuously referring to Philip Kotler and

Kevin Lane Keller, marketing management fifteenth  edition published by Pearson, 2016, India Edition

published by Pearson India education services  Private Limited, 2016. But, again, you see,

there is an evolving perspective around  these terms. So, I will not take you to

that evolving perspective discussion, because  that will subsequently be followed, when we will

be understanding whole of the scenario. So, product family, wherein all the product

classes (and I will come to classes later  on), that can satisfy a core need (need we

have talked about with reasonable effectiveness).  So, there are several classes within a family.

Now, at this juncture, you see, and I have  always been suggestive of a fact to my

marketing students that in many core concepts  and terminologies, used in marketing, there is

a backdrop of what we would have understood  in economics. I will not take you there, but

just a reference then there is an understanding  related to language also, the perspective also.

So, those kinds of several things  constitute a good marketing understanding,

now, when we talk of a product family,  it may have a reference to alternatives,

alternative products, which may solve the  same kind of a core need though those products

might not be similar, but they would be solving a  particular need for example, a protein rich diet.

For example, a person needs protein. So, the  core need here is associated with protein, so,

protein rich diet, wherein home cooked  meal can also solve that purpose.

Now, a protein supplement can also solve  that purpose. If a marketer has these two

options with him, basically, he can put up  those things in a family, but it is slightly

a complex kind of thing. That is why I chose the  example of Apple to explain a family of products,

wherein they have processes at the  backdrop and similar kinds of process

based understanding and processes associated with  the production of the product are being used to

address the core needs, wherein, that family  can be projected in front of the customer.

There are multiple devices such as laptops  or smartphone s or computers and desktops,

which can help in satisfying the computational  need of the customers and so on, and

now onwards, I would request you to think in terms  of about which of the products can be understood

with reference to being a family. Remember, they  should solve a core need, and they should belong

to different product classes. This is how we  will go into understanding product hierarchy.

Then, comes in product class, as I said a  group of products within a product family

recognized as having a certain functional  coherence. A functionality perspective of

similarity has to be there and you see here,  there is a reference of substitution as such,

so, you have a replacement in terms of  substitution, when we talk of a product class

for example, when we come to look into computing  devices or computers, we come across various

product classes such as personal computers,  PCs, it is a subclass of computers, basically,

then you have servers, then you have several,  several classes here, the point is that there

has to be a functional coherence. So, one can substitute the other in

almost equal way and that is where the class  comes in, and these classes would constitute

family and family is related to coordinate and  that is how the hierarchy starts coming our way.

You see, it is slightly confusing when we talk  of a fundamental generic term and then we say

that there the organization has to be same but  do not get confused at this particular stage.

Just think in terms of examples, which can enhance  your understanding. As an example of toothpaste,

Colgate has several products such as Colgate  Total, Colgate Max fresh, Colgate 360 and so on.

You can go on but again the point here  is about core need family.

Now comes in a very interesting  term and this is used very commonly

and very emphasizingly actually and it  has several linkages and connotations

in whole of the marketing literature and  marketing understanding. Let me introduce

you to product line , so ladies and gentleman, it  is a group of products within the product class

and now, to reiterate that what we have talked  about up till now i.e. within the product class

wherein those products are closely related  because they perform a similar function,

(mark this similar function) are sold to the same  customer group or you may say that the target is

similar and are marketed through  the same outlets or channels

or fall within given price ranges. Now,  product line is something where in product,

price, place and promotion comes together  for similar customer, same customer group

whom you want to serve and that is  where line comes into being. So,

you see that is a very important thing for us  to understand and it is a part of product class.

So, when we talk about product class, we  refer to different kinds of toothpaste they

can become substitution for a customer, but then  you have marked those products separately towards

different kinds of target customers, Colgate for  kids is specifically marketed towards kids.

Now, if you bring a variation in that  toothpaste, that is where a line comes in.

Let us say a particular model of a car targeted  towards particular kinds of customers. Now,

if you have a slight variation in that car, but  still you are targeting similar customer group,

that is where product line is, you have surf  and surf excel or let us say excel matic. So,

you say that the same customer can use excel  matic in a washing machine and same customer

should buy a slightly different variant, if they  want to wash their clothes with their own hands.

Now, this kind of a categorization,  this kind of a variation actually

focused upon same customer group having  similar functionality is called product line.

We will just be talking about how it is associated  with production line perspective, but till then,

just remember these fundamental elements and why  am I emphasizing upon these terms. So, we have

just talked about detergents, automotives, now,  you can think in terms of scooters. For example,

you have a variation in Honda Activa and some  other model of Honda scooters so a young girl,

a woman and a male go to purchase Honda Activa and  they suddenly get introduced to a particular kind

of a scooter which is parked there and then the  salesman says that it is under similar kind of a

price bracket sir but it has different slightly  different features, some innovative colors,

some extra boot space, and under this again is as  a newer variant of what has been offered till now.

You do not mind because it is not away from  your price bracket. Same outlet is offering

you that particular scooter. It has the similar  functionality perspective and you are the target

customer. See that is what I am trying to  suggest here, when we talk of a product line.

Bar soaps, you can talk about world  of soaps for a long, long time, but,

if you have purchased different kinds of soaps  recently, especially, by similar or same marketer

and if those soaps are stacked somewhere  in your cabinet, just go and watch that.

You would have purchased different variants of  the same soap under the same price bracket.

So, if you are watching your cabinet  where you have stacked the soaps

and you just looked at different variants of  a soap you would have purchased for yourself,

might be with a slight variation in  the fragrance itself and that is all.

So, that can also be as far as the line thing goes  basically and this has to be why a marketer might

be doing that. We will be going into specific  details extensively throughout this course, and

then probably, you want that variation, probably,  if the market goes for same kind of product,

probably the customers would look for options, all  around competition would come in with a variation

of your kind of a soap with a different  kind of a name and it is not uncommon.

So, you see, you have to look at the competition,  you have to look at the customer, you have to look

at the customer attention, you have to look at the  customer multiplication and so on. So, that is a

strategic part which I will keep on retreating,  but I will be focusing on that strategic part in a

sequence in a structured manner later on as well.  Now, let us go to understand two associated terms

although specifically different,  as far as the meaning goes,

production, so, production is an associated  a term because product is produced,

but here because we are referring to line, family,  classes, production must be understood when it

refers to the addition of utilities to goods or  the rendering of services possessing utility.

In marketing, it specifically refers  to the creation of form utility

that is all activities used to change the  appearance or composition of a good or

service with the intent of making it more  attractive to potential and actual user.

It is an important thing because later on, we  would be focusing briefly upon a discussion on

how things are produced, because we will be  referring to design thinking element briefly,

innovation element briefly and so on. For example,  going back to one of my favorites Ikea furniture s

have a coffee table which is very lightweight.  As, the kind of technology, the material which

they have used is light though wood, it is sturdy  and very strong and it is heat resistant, because

you use it for drinking tea and so on and there  are chances that something may fall on that. So,

that kind of a thing definitely is associated  with as far as the product perspective goes.

For example, Barbie should not be made with any  material which is harmful to our young girls.

That is an important thing. Many times young kids  feel like chewing parts of their toys many times,

I remember when my daughter was very young  she used to chew few things, especially

when she was growing her teeth or her teeth  were emerging, Lego toys definitely looks at it

and they produce the toys with the material which  is not harmful to the health of children actually,

because any child may go on chewing the product.  So, see that is an important thing which has to

be considered here. And further details can be  found on the references which we are extending

to you continuously and those references  would be giving you further clues as well. So,

keep watching those websites and the references  which we have extended in due course of time and

thanks to my team which is supporting me here  in this effort Manvi Goel and Rakesh Nair. I

should take their names, because they have been  extensively supportive in due course of time.

So, now, comes in production line. It is again  a very important thing. We talked about product

line, when we talked about similar functions  and same customers and same customer group.

Production line is an important aspect.  It is an arrangement of machines in a

factory where the products pass from machine to  machine until they are finished. Now, imagine

automotives belonging to the same line being  produced on a production line. So, you see,

several different production lines cannot be  engaged in production of one product line.

Might not be if demand is too high. Then you have  similar production lines, but again the point is

that here the logic is associated with justifying  the production line with product line and that is

where the understanding has to be focused upon. I will be coming back to this concept wherein I

would be using product line and production line  association briefly to explain the strategic

perspective associated with marketing  wherein when many times you have a huge

capacity and market demand about a particular  kind of or for a particular kind of a product

in a product line is low, you create a  variant on the same production line. So,

that will justify the production capacity and on  the other side would increase a target group for

you and that is how production line and product  line have a systematic relationship. Many times it

is production line capacity directing marketing  exercise and many times marketing feedback

directs production line changes. So, there are several kinds of production

systems, flexible production systems and similar  kinds of courses are there which will tell you

about those kinds of systems and you would  better understand about how this production

line systems works but here, we are focusing  upon the marketing element of production line.

Now comes in product type, you see, you  would feel like that, starting from need

and family and classes and line and coming  to types now, but again, this is the existing

demarcation which is used by marketers, and why  this demarcation has come up? This has evolved,

because you have to understand what you  are doing. And remember one thing about

how a marketer is addressing his customers  or her customers? Through categorization,

through product, physical product or let us  say experience or let us say, whichever way

we have talked about but in totality a marketer  is reaching to the customer through a product.

So, we have to understand how to  categorize that hierarchy.

A group of items within the product line  that share one of several possible forms

of the product. Now, here one specific  form of that product is a product type.

This is again a very thin line kind of a  demarcation basically and many times it is

debated also, because apparently it makes kind of  a difference in the customer choices, but still,

there is a similarity of function. For example,  same engine is used to manufacture two entirely

different models of automotives. And that is  what I am referring to when I say product type.

So you see, how is it categorized? You are  using the same kind of a production line

and you are using the same engine type and  technology. For example, you are using a same

compressor, the same power of a refrigerator to  develop a specifically different model of an air

conditioner or a refrigerator. So, that can also  be and many times you only change a grill largely

kind of casing is similar or interior is similar,  the power is similar, intensity is similar,

the grill of the window is different and that  is you see, because apparently the grill is in

front of you always, you forget about what kind  of compressor power is there and what kind of a

compressor is being used in air conditioners. Then comes in product item wherein, and again

this is slightly technical, which is usually used  by marketers for their sake, but still it has to

be understood because what are we? Prospective  marketers, we are marketing students.

Product item is also called SKU, stock keeping  unit or a product variant where in there is one

particular product in a product line with  a distinct size, appearance price etc. You

may call model also when we talk of packs of same  food supplement like different packs of Bournvita

or you may think in terms of different sizes of  the same toothpaste. You may think in terms of two

different sizes of a soap bar as well. So, here  for example a smartphone product type comprises of

various brands out of which for example, iPhone  11 has three SKU s based on internal storage,

64, 128 and 256 GB. And we all know that they  have a different kind of price bracket also.

Customer is paying depending upon that how  customer wants to purchase that with what

kind of usage element and what kind of  a price bracket she has in mind for that

kind of a particular product. It s not that 128  GB customer would not be able to pay for 256 GB

and wherein for example iPhone 11, 64 GB white  is one, SKU iPhone 11, 64 GB Grey is the other

one and so on. So, again very specific  categorization when you talk of an item.

And you see in the product type Colgate  sensitive, prevent and repair is a specific

kind of a product. It has three SKU s based on the  weight, Colgate sensitive prevent and repair 30

grams and 70 grams and 120 grams. Am I sounding  like a salesman of Colgate and Apple iPhones?

So, now comes in some other aspects of  terminologies associated with product.

But I will start from product mix  discussion in our subsequent session.

Just remember that we have been talking  of hierarchy all through in due course

of time. And that hierarchy basically  directs our thought process of looking at

same customer type, similar customer type and  different customer type. And that is our focus.

We are an organization which is  an expert on producing something.

We have a technological background, we have  a capacity and capability in terms of human

resource and production capability. But we  want to serve different types of customers

and that is where this hierarchy is very  helpful for us to understand. Look around Apple,

look around Samsung, they have televisions, they  have Smartphone s, they have laptops and so on.

Try to think in terms of potentiality as well.

And I will be coming up with a discussion on  marketing mix in the subsequent discussions,

and on other related terminology associated  with product. Till next time, goodbye.