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Customer Value Hierarchy: Core Benefit The fundamental service or benefit that motivates a customer purchase
Customer Value Hierarchy: Basic Product The form that delivers core benefits
Customer Value Hierarchy: Expected Product A set of attributes and conditions buyers normally expect when they purchase this product
Customer Value Hierarchy: Augmented Product Attributes that exceed customer expectations Customer Value Hierarchy: Potential Product All the possible augmentations and transformations the product might undergo in the future
Differentiation: Product Differentiation Product form; features; customization; performance; conformance; durability; reliability
Differentiation
Design Differentiation
Differentiation: Service Differentiation Ordering ease; delivery; installation; customer training; customer consulting; maintenance and repair; returns Product System and Mixes: Product Mix The set of all products and items a particular seller offers for sale
Product Line Management Each company's product portfolio contains products with different margins Product-line managers need to know the sales and profits of each items in their line in order to determine which item to build, maintain, harvest and divest
Product-Line Length Strategies: Company objectives influence product line strategy Up-selling objective Cross-selling objective Diversification to reduce risk Market share objective High profitability objective
Line Stretching: Occurs when a company lengthens its product line beyond its current range Up-market stretch Down-market stretch Two-way stretch Up-Market Line Stretch Companies wish to enter the higher end of the market to achieve more growth, to realize higher margins or simply to position themselves as full-line manufacturers Often uses a new and different brand name disassociating from the middle market brand names
Down-Market Line Stretch A company positioned in the middle market introduce a lower-end (lower-priced) line: 1. The middle market is stagnating or declining 2. Possible growth opportunity with retailers that attract value-driven customers 3. Build competitive buffer (ex. fighting line)
Line Filling: A firm can lengthen its product line by adding more items within the present range to Utilize excess capability Reach for incremental profits B. a full-line business Or plug holes to keep out competitors Caution: of self cannibalization and customer confusion
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