71  Product decisions: Concept; Product line; Product mix decisions; Product life cycle; New product development

71.1 Concept of a Product

A product is “anything that can be offered to a market to satisfy a want or need — including physical goods, services, experiences, events, persons, places, properties, organisations, information, and ideas” (Kotler). The classic mnemonic — GSEEPP-PROI — captures 10 entities that can be marketed as products. The most useful frame is Kotler’s five-level model of a product: Core benefit → Basic product → Expected product → Augmented product → Potential product.

71.2 Five Levels of a Product (Kotler)

TipFive Levels of a Product
Level Hotel example
Core benefit Rest / sleep
Basic product Bed, washroom, towels
Expected product Clean linen, hot water, Wi-Fi
Augmented product Breakfast, room service, loyalty points
Potential product Future possible transformations (concierge AI, smart room)

71.3 Product Classification

71.3.1 By Durability and Tangibility

TipDurability/Tangibility
  • Durable goods — fridge, car.
  • Non-durable goods — soap, bread.
  • Services — banking, education.

71.3.2 Consumer Products

TipConsumer Product Types
  • Convenience — frequent, low effort (soap, milk).
  • Shopping — comparison shopping (clothes, furniture).
  • Specialty — unique/brand-loyal (luxury watches, sports car).
  • Unsought — buyer unaware or doesn’t normally think of (life insurance, donations).

71.3.3 Industrial Products

TipIndustrial Product Categories
  • Materials and parts — raw materials, components.
  • Capital items — installations (plants), equipment.
  • Supplies and services — operating supplies (lubricants), MRO services.

71.4 Product Mix and Product Line

TipMix Dimensions
  • Width / Breadth — number of product lines a company carries.
  • Length — total number of items across all lines.
  • Depth — number of variants (size, flavour, model) of each item.
  • Consistency — closeness of various product lines in usage, production, channels.

Example: HUL — Width = lines (soap, detergent, food, beverage, personal care…); Length = total SKUs; Depth = variants of each (Lux 75 g, 150 g, herbal, almond…); Consistency = all consumer-goods, distributed similarly.

71.4.1 Line Stretching and Filling

TipLine Strategies
  • Downward stretch — add lower-end items.
  • Upward stretch — add premium items.
  • Two-way stretch — both ends.
  • Line filling — add items within existing range.
  • Line pruning — remove poor performers.
  • Line modernisation.

71.5 Branding, Packaging, Labelling

71.5.1 Brand

A brand is a name, term, sign, symbol, design or combination thereof intended to identify the goods/services of one seller and differentiate them from competitors (AMA).

TipBranding Decisions
  • Brand name decisions — individual vs family vs corporate.
  • Brand strategy — Line extension, Brand extension, Multi-brand, New brand, Co-brand.
  • Brand sponsor — manufacturer, private label (store brand), licensed.
  • Brand equity (Aaker; Keller’s CBBE — Customer-Based Brand Equity pyramid: Salience → Performance/Imagery → Judgements/Feelings → Resonance).

71.5.2 Packaging

Three levels: Primary (immediate container), Secondary (carton), Shipping (transport). Functions: protect, promote, inform, ease handling, sustainability.

71.5.3 Labelling

Functions: identifies, describes, grades, promotes, complies (Legal Metrology Rules 2011 in India, BIS, FSSAI for food).

71.6 Product Life Cycle (PLC)

The Product Life Cycle (Levitt 1965) traces sales and profit of a product over time:

TipPLC Stages
Stage Sales Profit Cash Customers Competitors
Introduction Low Negative Negative Innovators Few
Growth Rising fast Rising Improving Early adopters Growing
Maturity Peak / slowing High then sliding Strong Mass market Many
Decline Falling Eroding Reducing Laggards Falling

71.6.1 Marketing Strategies Across PLC

TipPLC Strategy
  • Introduction: Rapid skimming, slow skimming, rapid penetration, slow penetration (varies by price × promotion).
  • Growth: Improve quality; expand distribution; build brand preference.
  • Maturity: Market modification, product modification, marketing-mix modification.
  • Decline: Harvest, divest, or revive.

71.7 New Product Development (NPD)

Booz, Allen & Hamilton’s classic 8-stage model:

TipNPD — 8 Stages
  1. Idea generation — internal R&D, customers, competitors, distributors.
  2. Idea screening — drop unsuitable; DROP error vs GO error.
  3. Concept development and testing.
  4. Marketing strategy development.
  5. Business analysis — sales, cost, profit, ROI, NPV.
  6. Product development — prototype, alpha test.
  7. Market testing — beta test, test marketing.
  8. Commercialisation — full launch — When? Where? To whom? How?

71.7.1 Diffusion of Innovation (Rogers 1962)

TipFive Adopter Categories
Category Approx %
Innovators 2.5
Early adopters 13.5
Early majority 34
Late majority 34
Laggards 16

Rogers’ five product characteristics affecting adoption: Relative advantage, Compatibility, Complexity, Divisibility (trialability), Communicability.

71.8 Reasons for New Product Failure

Inadequate market analysis, product defects, lack of differentiation, poor positioning, wrong timing, weak distribution, inadequate promotion, overestimated demand, regulatory or technical surprises.

flowchart LR
  I[Introduction] --> G[Growth]
  G --> M[Maturity]
  M --> D[Decline]
    classDef default fill:#003366,color:#ffffff,stroke:#ffcc00,stroke-width:3px,rx:10px,ry:10px;

NoteDistractor warning

PYQ trap: PLC — Levitt 1965; NPD 8 stages — Booz, Allen & Hamilton; Diffusion — Rogers 1962 with 5 adopter categories.

71.9 Practice Questions

Q 01LevelsEasy

How many levels does Kotler's product model have?

  • A3
  • B4
  • C5
  • D6
View solution
Correct Option: C
**5 levels** — Core, Basic, Expected, Augmented, Potential.
Q 02PLCEasy

Product Life Cycle concept was popularised by:

  • AKotler
  • BTheodore Levitt (1965)
  • CPorter
  • DDrucker
View solution
Correct Option: B
**Levitt 1965** — HBR article.
Q 03PLC stageMedium

At which PLC stage is profit usually negative?

  • AIntroduction
  • BGrowth
  • CMaturity
  • DDecline
View solution
Correct Option: A
**Introduction** — high cost recovery period.
Q 04MixMedium

"Number of product lines a company carries" is product mix:

  • AWidth
  • BLength
  • CDepth
  • DConsistency
View solution
Correct Option: A
**Width / Breadth** — # of lines.
Q 05NPDMedium

8-stage NPD process is associated with:

  • AKotler
  • BBooz, Allen & Hamilton
  • CPorter
  • DDrucker
View solution
Correct Option: B
**Booz, Allen & Hamilton (1982)** classic model.
Q 06DiffusionMedium

Diffusion of Innovation theory was given by:

  • AEverett Rogers (1962)
  • BMaslow
  • CLevitt
  • DKotler
View solution
Correct Option: A
**Rogers 1962** — Diffusion of Innovations.
Q 07Innov %Hard

Innovators in Rogers' diffusion model are approximately:

  • A2.5 %
  • B13.5 %
  • C34 %
  • D16 %
View solution
Correct Option: A
**2.5 %** innovators; 13.5 % early adopters.
Q 08SpecialityMedium

"A consumer is brand-loyal and will make special effort to buy" — these are:

  • AConvenience products
  • BShopping products
  • CSpeciality products
  • DUnsought products
View solution
Correct Option: C
**Specialty** — Rolex, Harley-Davidson.
Q 09UnsoughtMedium

Life insurance is typically a:

  • AConvenience
  • BShopping
  • CSpecialty
  • DUnsought
View solution
Correct Option: D
**Unsought** — consumer doesn't actively shop for it.
Q 10CBBEHard

CBBE pyramid is by:

  • ADavid Aaker
  • BKevin Lane Keller
  • CTheodore Levitt
  • DTrout & Ries
View solution
Correct Option: B
**Keller's CBBE** — Salience, Performance/Imagery, Judgements/Feelings, Resonance.
Q 11PackagingEasy

Carton holding 24 tubes of toothpaste is:

  • APrimary packaging
  • BSecondary packaging
  • CShipping packaging
  • DLabelling
View solution
Correct Option: B
**Secondary** — between primary and shipping.
Q 12StretchingMedium

"Add a premium-priced item to an existing line" is:

  • ADownward stretch
  • BUpward stretch
  • CLine filling
  • DLine pruning
View solution
Correct Option: B
**Upward stretch**.
Q 13MaturityHard

At maturity stage, the marketer typically focuses on:

  • AAwareness
  • BProduct, market & mix modification
  • CHarvest only
  • DBuilding distribution
View solution
Correct Option: B
Maturity: market / product / mix modifications.
Q 14Brand extMedium

Using an existing brand on a *new category* is:

  • ALine extension
  • BBrand extension
  • CMulti-brand
  • DPrivate label
View solution
Correct Option: B
**Brand extension** — same brand, new category (e.g., Dettol soap → Dettol hand-wash → Dettol kitchen cleaner).
Q 15Idea screeningHard

Rejecting a good idea is:

  • ADROP error
  • BGO error
  • CType I error
  • DBeta error
View solution
Correct Option: A
**DROP error** — rejecting a good idea; GO error = accepting a bad one.
Q 16Diffusion attrHard

Which is NOT among Rogers' 5 product characteristics affecting adoption?

  • ARelative advantage
  • BCompatibility
  • CComplexity
  • DBranding
View solution
Correct Option: D
5 attributes: rel. advantage, compatibility, complexity, divisibility, communicability. Branding is not among them.
Q 17IndustrialMedium

Plant and machinery is which industrial product?

  • AMaterial and parts
  • BCapital items — Installation
  • COperating supplies
  • DMRO services
View solution
Correct Option: B
**Capital items — installations**.
Q 18AakerHard

David Aaker's brand equity has how many dimensions?

  • A3
  • B4
  • C5
  • D6
View solution
Correct Option: C
**5** — Loyalty, Awareness, Perceived quality, Associations, Other assets (patents, trademarks).
Q 19SkimmingMedium

"High price + Heavy promotion" launch strategy is:

  • ARapid skimming
  • BSlow skimming
  • CRapid penetration
  • DSlow penetration
View solution
Correct Option: A
**Rapid skimming** — high price + high promotion.
Q 20MatchMedium

Match PLC stages with characteristics:

Stage Feature
(i) Introduction (a) Many competitors, slowing sales
(ii) Growth (b) Negative profits, few customers
(iii) Maturity (c) Falling sales, exit time
(iv) Decline (d) Rising sales, rising profits
  • A(i)-(b), (ii)-(d), (iii)-(a), (iv)-(c)
  • B(i)-(a), (ii)-(b), (iii)-(c), (iv)-(d)
  • C(i)-(c), (ii)-(a), (iii)-(b), (iv)-(d)
  • D(i)-(d), (ii)-(b), (iii)-(c), (iv)-(a)
View solution
Correct Option: A
Intro-negative; Growth-rising; Maturity-many compete; Decline-exit.

71.10 Quick Recall

ImportantQuick recall
  • Five levels (Kotler): Core → Basic → Expected → Augmented → Potential.
  • Consumer products: Convenience, Shopping, Speciality, Unsought.
  • Mix: Width, Length, Depth, Consistency.
  • Brand strategies: Line ext., Brand ext., Multi-brand, New brand, Co-brand. Keller’s CBBE pyramid; Aaker — 5 brand-equity dimensions.
  • PLC: Intro → Growth → Maturity → Decline. Levitt 1965.
  • NPD 8 stages (Booz, Allen & Hamilton): Idea-gen, screening, concept test, marketing strategy, business analysis, product dev, market test, commercialisation.
  • Diffusion (Rogers 1962): Innovators 2.5, Early adopters 13.5, Early majority 34, Late majority 34, Laggards 16; 5 attributes — rel. advantage, compatibility, complexity, divisibility, communicability.
  • Launch strategies: Rapid/Slow Skimming, Rapid/Slow Penetration.