Page 359 - Marketing Management

336 PART 5 SHAPING THE MARKET OFFERINGS

The Product Hierarchy

The product hierarchy stretches from basic needs to particular items that satisfy those needs. We
can identify six levels of the product hierarchy, using life insurance as an example:
1. Need family—The core need that underlies the existence of a product family. Example: security.
2. Product family—All the product classes that can satisfy a core need with reasonable effec-
tiveness. Example: savings and income.
3. Product class—A group of products within the product family recognized as having a certain
functional coherence, also known as a product category. Example: financial instruments.
4. Product line—A group of products within a product class that are closely related because they
perform a similar function, are sold to the same customer groups, are marketed through
the same outlets or channels, or fall within given price ranges. A product line may consist of
different brands, or a single family brand, or individual brand that has been line extended.
Example: life insurance.
5. Product type—A group of items within a product line that share one of several possible forms
of the product. Example: term life insurance.
6. Item (also called stock-keeping unit or product variant)—A distinct unit within a brand or
product line distinguishable by size, price, appearance, or some other attribute. Example:
Prudential renewable term life insurance.

Product Systems and Mixes

A product system is a group of diverse but related items that function in a compatible manner. For
example, the extensive iPod product system includes headphones and headsets, cables and docks,
armbands, cases, power and car accessories, and speakers. A product mix (also called a product
assortment) is the set of all products and items a particular seller offers for sale.
A product mix consists of various product lines. NEC’s (Japan) product mix consists of com-
munication products and computer products. Michelin has three product lines: tires, maps, and
restaurant-rating services. At Northwestern University, separate academic deans oversee the schools
of medicine, law, business, engineering, music, speech, journalism, and liberal arts among others.
A company’s product mix has a certain width, length, depth, and consistency. These concepts
are illustrated in Table 12.2 for selected Procter & Gamble consumer products.
• The width of a product mix refers to how many different product lines the company
carries. Table 12.2 shows a product mix width of five lines. (In fact, P&G produces many
additional lines.)

Michelin has three distinct, but
somewhat related, product lines.