Part-5: Creating Value

Lesson-5: Discussion Questions (Based on chapter 12 and chapter 14):

1.      Studying how consumers shop, how they use a particular product or service, and how they dispose of the product when consumed is important for marketers. This information forms the basis of product strategy. Define the consumption system and identify the two upcoming product strategies that are affected by this knowledge.

DQ No.1) Answer:

The product consumption style has been considered as one of the important factors that provide a clue for marketers to design the product strategies.  Studying how consumers use the product will definitely help to form the basis of strategy. Most of successful marketers are always looking into the market in order to get some useful insights regarding changing consumers’ preferences and habits.

Consumption System refers to the pattern or manner about how consumers consume the products or services. It includes the combination of product consumption, the frequency of their consumption and the quantities consumed. For instance, Milk may be taken as directly or in tea and either cold or warm. It is important to understand the consumers’ consumption system while offering the goods and services to its end users. It needs to be understood by all marketers so that they can identify the appropriate product strategies for attracting its new customers and retaining the existing customers. The two upcoming product strategies that are affected by this knowledge are the product augmentation strategy and product potential strategy. They are briefly described as follows:

1.      Product Augmentation strategy: In this strategy, marketers prepare the augmented products that can exceed the customers’ expectations. In the developed countries like US, UK, Brand positioning and competitions are commonly prevailing. However, in developing countries like India, Brazil, it takes place at expected product level.

2.      Product potential strategy: in this strategy, potential products encompass all the possible augmentations and transformations the product or offering might undergo in the future.

In short, product consumption system differs in different places of the world because different people have different styles and cultures to do the same things in different ways. Likewise, consumption systems are measured differently in different areas so that two upcoming product strategies that are affected by this knowledge are augmentation and potential strategies.

References:

- Kotler, Philip & Keller, Kavin. (2012). Marketing Management. Addison-wesley: Prentice Hall.

- (n.d.) Retrieved from http://www.fao.org/wairdocs/ilri/x5466e/x5466e03.htm

2. Explain the concept of line stretching and the three uses for it.

DQ No.2) Answer:

All companies have a certain part of the total possible product range within product lines. Line stretching refers to the extension of the product range in order to strengthen its product line. In other words, an increase in the number of current product range within the same product line is called line stretching. For example, Toyota company had no product range at first but now it has been offering low product range to high product range; cars. Literally, there are three ways in which it can be done, and they are as follows:

1.      Down-Market stretch: Some companies produce low-priced goods for increasing its products in the markets. The condition when a company starts to produce goods in the lower priced range is called down market stretch. The company may notice strong growth opportunities as mass retailers such as Wal-Mart, Best Buy and others to attract a growing number on shoppers who prefer to buy low-priced goods. The company may wish to tie up lower end competitors who strive to move up market. If the company has been attacked by low end competitors, it usually decides to counter attract by entering the low end of the market.

2.      Up-Market Stretch: The condition when a company wishes to enter high end markets, or reach for higher range than their current line is called up market stretch. It can be done in the same line.

3.      Two-Way Stretch: The companies which are currently serving middle class, decide to stretch both down and up ways is called two way stretch. It can be very useful approach while entering into the competitive markets. Texas Instruments (TI) introduced its first calculators in the medium-price-medium-quality end of the market. Continuously, it added calculators at the lower end taking the share from Bowmar, and at the higher end to compete with Hewlett-Packard. This two-way stretch won Texas Instruments (TI) an early market leadership in the hand-calculator market. Examples are Zen LXI, and Zen VXI etc.

Three uses of it are as follows:

1.      Expansion on the product range: Line stretching is very important approach that helps to expand its product lines.

2.      Wide coverage of market and customers: It can be good way to cover wide market and customer’s coverage. It can be used to produce goods and services for covering wide area.

3.      Competitive advantage: It can be used to achieve a competitive advantage through using appropriate line stretching ways. It helps to accomplish the predetermined goals by serving all types of customers.

References:

-          Kotler, P., & Keller, K. L. (2005). Marketing Management. New Delhi: Prentice Hall of India.

-          www.citeman.com. (n.d.). Retrieved 11 28, 2014, from http://www.citeman.com/1290-line-stretching-in-marketing.html