PRODUCT POLICY AND PLANNING

 PRODUCT POLICY AND PLANNING

Product policy is concerned with defining the type, volume and timing of products a company offers for sale. The product policies are general rules set up by the management itself in Making product decisions. Good product policies are the basis on which the right products are produced and marketed successfully.

A product policy generally covers the following:

1. Product Planning and Development

2. Product Line

3. Product Mix

4. Product Branding

5. Product Positioning

6. Product Packaging

1. Product Planning and Development:

Product planning means an attempt to establish the product in line with market needs. It is 

defined as the act of making out and supervising the search, screening, development and 

commercialisation of new products, the modification of existing lines and the discontinuance 

of marginal or unprofitable items. The planning and development of new products, though a 

vital necessity for all progressive enterprises, constitute a costly process. They involve risks 

and hazards also.

In order to reduce the risk, a few logical steps are followed in a new product planning

and development. These are as follows:

Exploration:

The first step is the generation of ideas. Ideas about new products or improvement of old 

products or processes may come from:

(a) Internal sources like salesmen, non-marketing employees, middle managers and top 

management,

(b) External sources like customers, distributors, advertising agencies, laboratories, private 

research organisations, trade associations, government agencies and the like.

Some techniques have also been developed over the years which are useful in generating 

ideas. Among them are gap analysis, attribute listing and brain storming, forced relationships, 

morphological analysis, problem identification and synectics.

Gap Analysis:Gap analysis attempts to find out gaps in the market where there exist unsatisfied consumer 

demand and opportunities for a new product.

Attribute Listing:

Attribute listing involves the preparation of a list of the attributes of a product and 

formulation of methods to modify them in order to see if a new combination of attributes can 

be evolved for the improvement of the product.

Brain Storming:

Brain storming in an organised group exercise like a stormy meeting of about six to eight 

creative personnel specially convened to stimulate new ideas. The chairman of a brain-

storming session which generally lasts about an hour and a half leads saying, “Remember 

now, I want each one of you to come out with an idea of new product or an improvement of 

an old product. The wilder the idea, the better.” Freewheeling is welcomed, combining and 

improving ideas is encouraged, quantity is encouraged and criticism is ruled out.

Forced Relationships:

Here several objects are listed and each product is considered in relation to every other 

object.

Morphological Analysis:

Morphology means structure and this method calls for identifying the structured dimensions 

of a problem and examining the relationship among them.

Need/Problem Identification:

Need or problem identification starts with the consumer. Consumers are asked about needs, 

problems and ideas. The various problems would be rated for their seriousness, incidence and 

cost of remedying to determine which product improvements to make.

1. Synectics:For the development of sufficient number of perspectives, Gordon has developed this 

method. Gordon decided to define the problem so broadly that the group would have no 

inkling of the specific problem.

Gordon described five principles underlying the synectics method:

Deferment, autonomy of object, use of the commonplace, involvement or detachment and use 

of metaphor.

2. Screening:

The purpose of idea generation is to create a large number of ideas. The purpose of 

succeeding stages is to reduce the number of ideas to an attractive, practicable few. The first 

idea- pruning stage is screening.

In screening the ideas, the company must avoid two types of errors:

A DROP error occurs when the company dismisses an otherwise good idea. If a company 

makes too many DROP-errors, its standards are too conservative. AGO-error occurs when the 

company permits a poor idea to move into development and commercialisation. The purpose 

of screening is to spot and drop poor ideas as early as possible.

3. Conceptualisation:

It would be the height of folly to develop all the ideas generated in the first step into concrete 

business proposals. Many of these can be eliminated just on the basis of theoretical 

evaluation. So only those ideas that survive screening are taken up for expansion into 

concrete business propositions in terms of costs, idea, manpower requirement and the like, It 

is quite possible that at this stage of conceptualisation some ideas may just fall through 

because they cannot be turned into concrete proposals which are viable enough.

4. Comparative Evaluation:

The limited numbers of product concepts that have come out of the third stage are now 

subjected to close scrutiny. This takes place with an eye to profitability and other cost-benefit 

analysis. All the available talents in the concern are brought together. In some cases, the different product concepts may even be sent to a cross section of possible customers and their 

opinion sought about the acceptability of the particular production.

5. Product Development:

During this stage the ‘idea on the paper’ is turned into a product on hand’. In other words, the 

idea is converted into a product that is producible and demonstrable. This stage is also known 

as ‘Technical Development’. During this stage all the developments of the product, from idea 

to final physical form take place.

Once the management decides to go ahead with the product idea, the proposal is now turned 

over to the engineering or production departments for the making of a product. But to start 

with, it is made only in small quantities.

6. Test Marketing:

Under test marketing, the product is introduced in selected areas often at different prices in 

different areas. These tests would provide the management an idea of the amount and 

elasticity of the demand for the product.

The objectives of tests marketing are:

(a) To evaluate a complete marketing plan including advertising, distribution, sales, pricing 

and others;

(b) to determine the promotional media mix, channels, etc.; and (c) to forecast the likely sales 

volume.

7. Commercialisation:

In this stage, the product is submitted to the market. Commercialisation is also the phase 

where marketing is most active in connection with the new product. This stage is considered 

to be a critical one for any new product and should, therefore, be handled carefully.

The following activities are usually undertaken during this stage:

(a) Completing final plans for production and marketing,

(b) initiating coordinated production and selling programmes, and

(c) checking results at regular intervals.

8. Market Entry:

Generally, a company does not put a new product into full national distribution from the 

beginning. In commercialising a new product, market entry timing can be critical.

The company faces three choices:

(a) First Entry:

The first firm entering a market usually enjoys first mover advantages consisting of locking 

up some key distributors and customers and gaining reputational leadership.

(b) Parallel Entry:

The firm must time its entry with the competitor. If the competitor rushes to launch the 

product, the company does the same. On the contrary, if the competitor takes its time, the 

company also takes time, using the extra time to refine its product.

(c) Late Entry:

The firm might delay its launch until after the competitor has entered.

2. Product Line:

The product line is a group of products that are closely related either because they satisfy a 

class of need or are used together or sold to the same customer groups or marketed through 

the same type of outlets or fall within given price ranges.

According to Stanton, A broad group of products intended for essentially similar uses and 

possessing similar physical characteristics constitutes a product line. For example, Bajaj 

Electricals turns out fans, electric lamps, cables, electric irons, heaters, transformers and so 

on.

The important advantages are:

(a) It provides for fuller utilisation of productive capacity.

(b) It facilitates entry into new items without extra marketing expenses.

(c) It enables the marketer to consolidate his advertising and promotional strategy.

(d) It promotes consumer satisfaction.

(e) It acts as a deterrent to competitors who try to step in.

(f) It increases the profitability of the company.

(g) It also satisfies the dealers.

(h) It reduces the risk.

(i) It avoids seasonal fluctuations in sales.

Product Line Decisions:

In fact, decision about adding a new product is not different from other managerial

decisions. Taking decision of the product line depends upon a number of factors:

(a) Company’s objectives

(b) Product specialisation

(c) Product influences

(d) Elimination of unsought goods

(e) Marketing influences

(f) Buying habits

(g) Changes in market demand

(h) The distribution net-work

(i) The company’s cost structure

(j) The availability of raw material

3. Product Mix:

It is a broad term which refers to the total assortment of different commodities marketed by a 

firm. It is, however, treated as a composite. According to Stanton, “The product mix is the 

full list of products offered for sale by a company”. It may range from one or two product 

lines to a combination of several product lines or groups.

Characteristics:

There are four principal characteristics:

(a) Length:

Length of the product mix refers to the total number of items in its product mix.

(b) Depth:

Depth refers to average number of items sold by a company within a single product line.

(c) Width:

Width is judged by the number of different product lines dealt with by a company.

(d) Consistency:

Consistency means how many product lines are closely related in production requirements, 

distribution process, end use, etc.

These four characteristics of the product mix provide the handles for defining the company’s 

product strategy.

Advantages:

1 More products mean choice for customers and thereby more consumer satisfaction.

2. Costs of maintaining the sales force are reduced if more products are distributed through 

the same outlets.

3. Advertising of a wide range of products is likely to yield better results.

4. It may be possible to overcome inefficient middlemen and set up direct distribution to con-

sumers and end users.

5. Production of items with a few minor changes in the model results in lowering cost per unit 

of production.

Factors Influencing Change in Product Mix:

Product mix is affected by several factors and particularly changes in the product may

be due to the following factors:

(a) Goodwill of the company

(b) Competitors’ attitude

(c) Financial position of the company

(d) Change in company’s plan

(e) The purchasing power of consumers

(f) The change in demand of a product

(g) The introduction of by-products

(h) Possibility of adding new product with least cost

(i) The existing marketing capacity

(j) Advertising and distribution factors

Strategies of Product Mix:

The following strategies are generally employed by the producer of the product:

(a) Expansion of Product Mix:

Under expansion of product mix, a company may expand its present product mix by 

increasing the number of product lines or increasing the number of product items. It is also 

known as product diversification. The diversification may be concentric diversification, 

horizontal diversification or conglomerate diversification.

(b) Contraction of Product Mix:

Under certain circumstances, the management has to drop the production of non-profitable 

products. The company’s product line managers periodically review items for product line 

contraction. Sometimes the company may either eliminate an entire line or simply the 

assortment within a line. After that, the manager should concentrate on producing the higher 

margin items.

(c) Alteration of Existing Products:

Instead of developing a new product, the management should take a fresh look at the 

company’s existing products. Very often improving an established product can be more 

profitable than introducing a new one. The alterations may be introduced in the colour, 

design, packaging, etc.

(d) Positioning the Product:

Positioning is an attempt to distinguish the particular product from its competitors along real 

dimensions in order to be the preferred product for certain market segments. Positioning aims 

to help customers to know the real differences between competing products so that they can 

match themselves and thereby satisfy their needs best.

(e) Trading Up and Trading Down:

Trading up refers to the adding of higher priced and more prestigious products to their 

existing line in the hope of increasing the sales of existing low priced products. Trading down refers to the adding of lower priced item to its lines of prestigious products in the hope that 

people who cannot afford the original products will want to buy the new one, because it 

carries some of the status of the higher priced product.

(f) Product Differentiation:

Products are assumed to be homogeneous under perfect competition. Today the markets are 

no more perfect. We live in a world of monopolistic competition where there are competing 

monopolies. Here products are similar but not identical. Products are close substitutes for one 

another. For instance, in the case of toothpaste there are several brands such as Colgate, 

Signal, Binaca, Forhans, Close-up, etc.

The purpose of product differentiation is to make their goods look superior. It is this product 

heterogeneity which provides monopoly power to the firm.

E.H. Chamberlin has mentioned two types of differentiation:

(i) Differentiation based upon the characteristics of the product itself. This includes real and 

imaginary differences.

(a) Real differences—Materials used, design and workmanship.

(b) Imaginary differences—Advertising, packaging and brand names.

(ii) Differentiation based upon the conditions surrounding the sale of the product. They are 

convenience of location of the shop, courtesy, reputation for fair dealing, etc.

Porter identifies ‘differentiation’ as one of the three generic strategies a firm can adopt to 

secure its competitive advantage in an industry. The other two are ‘cost leadership’ and 

‘focus’. According to Porter, “Differentiation provides insulation against competitive rivalry 

because of brand loyalty by customers and resulting lower sensitivity to price”.

Models of product differentiation tend to be of two types:

(a) Address Type Models:Here goods are characterised by their attributes. Address type models seek to characterize the 

degree of product differentiation in equilibrium.

(b) Non-Address Type Models:

Here, there is a set of goods that can be produced, and consumers have tastes over the range. 

Consumers like variety.

(g) Market Segmentation:

The concept of market segmentation is an outgrowth of the marketing concept. Its main thrust 

is to give separate attention to the distinctive characterisation of each segment. Market 

segmentation has been defined by Stanton as, “The process of taking the total, heterogeneous 

markets for a product and dividing it into several sub-markets or segments, each of which 

tends to be homogeneous in all significant aspects.”

Conditions for Effective Segmentation:

The four important conditions are:

(i) Measurability:

The characteristics of the market segment or the buyers comprising it must be such as to be 

physically determinable. They must be measurable or quantifiable.

(ii) Accessibility:

The market segment must be accessible through the existing channels of distribution, 

advertising media, sales force and so on, but all at reasonable cost.

(iii) Substantiality:

The segment must be large enough to be profitable. Conceptually, a firm treats each customer 

like a separate segment.

(iv) Responsiveness:

It is also necessary that the segment must be willing to react favourably to an appropriate 

marketing programme. The degree of willingness may vary, but some amount of willingness 

must be a basic condition.

Basic Approaches:

When a marketer decides to adopt a segmentation strategy, he can adopt either of the two 

basic approaches or he can combine both into a kind of grid.

These are:

(i) Consumer Characteristics Approach:

This is the oldest form of approach. It consists in identifying established groups of 

consumers, about whom many things are already known, analysing their characteristics and 

finding out how these groups differ from others according to their common characteristics.

(ii) Product Approach:

This is a recent origin. It takes up a product and studies its buyers to determine what 

differences exist between them and its non-buyers. Thus a study may be made on how buyers 

of brand X differ from those of brand Y.

(iii) Product-Consumer Grid Approach:

This approach is more refined and analytical. It consists in developing a grid on the basis of 

two important factors, namely, possible products and possible consumer groups and then 

finding out which particular combination in the grid fits the company’s position.

Advantages:

The advantages of market segmentation may be summed up as follows:

(a) To determine what promotional approach will be most effective for the company.

(b) To design products that really matches market demands.

(c) To direct money and effort to the potentially most profitable markets.

(d) To choose advertising media more intelligently and determining how to allocate better the 

budget among the various media.

(e) I о set the timing of the promotional efforts so that they are heaviest during those times 

when response is likely to be at its peak.

(f) To provide various types of information which are useful in marketing research, product 

development and evaluation.

Disadvantages:

The disadvantages of market segmentation are as follows:

(i) Production costs rise because runs are shorter and variations are introduced into the assem-

bly process.

(ii) Media discounts may be lost, as varied advertising campaigns are employed.

(iii) Research expenditures rise because more and more market segments are investigated.

(iv) Sales in one market segment may be sacrificed as another segment is served.

4. Product Branding:

Branding is a major issue in product strategy. On the one hand, developing a branded product 

requires a great deal of long term investment spending, especially for advertising, promotion 

and packaging. On the other hand, those manufacturers eventually learn that the power lies 

with the brand name companies. Branding is the process of identifying the name of the 

producer with the product. The essence of branding is identification of particular product 

from among rival products.

Branding is a general name describing the establishment of a brand name, a brand mark or 

trade mark for a product.

According to American Marketing Associations:

i. Brand is a name, term, symbol or design or a combination of them which is intended to 

identify the goods or services of one seller or a group of sellers and to differentiate them from 

those of competitors.

ii. Brand name may be in the form of words, letters or numbers which may be localised.

iii. A brand mark is that of a brand which appears in the form of a symbol or design or 

distinctive colouring or lettering.

In short, brand name refers to the product, trade name refers to the company, trade mark 

refers to the brand name with legal protection. In certain cases, brand name and trade name 

are combined. Trade mark should be registered with the authorities specified under the 

relevant law.

Branding Process:

Branding is done normally in the following way. A brand name is selected. It then becomes a 

part of the product. Whenever it is put in the market, it carries the said name. In course of 

time, the impression spreads. The branded product is generally marketed independently. If a 

new name has been adopted, it has to be followed by intense advertising and promotional efforts to 

develop consumer awareness and acceptance. Thus branding has almost the same effect as monopoly 

in marketing.

Branding Objectives:

The main aim of branding is to build an image about the product which is associated with the brand. 

A powerful brand name is said to have consumer franchise. This is evidenced when a sufficient 

number of customers demand that brand and refuse a substitute even if the price is somewhat lower. 

Distributors want brand names as a means of making the product easier to handle, identifying 

supplies and increasing buyer preference. Customers want brand names to help them identify 

quality differences and shop more efficiently.

Types of brand name:

(a) Company name Glaxo

(b) Coined name Krackjack

(c) Dictionary word True biscuits

(d) Descriptive name Ponds face powder

(e) Geographical Bombay Dyeing

(f) Historical names – Tajmahal Tea

(g) Personal name – Tata

(h) Suggestive name Quick fix

Types of Brands:

(i) According to their origin or nature, brand names may be classified as follows:

(a) Symbols— H.M.V’s dog

(b) Letters — I.T.C for India Tobacco Company

(c) Name of the founder or family — Tata Steel

(d) Company name — IBM Computers

(e) Words having some relation to the product — Quick fix (Resin)

(f) Words or figures which have no relation to the product — 501 Bar Soap

(g) Words which have originated as brand names — Aspirin

(ii) Brand may be classified as:

(a) National or manufacturers —DaldaVanaspati

(b) Private or middlemen — Roebuck and Company

(iii) Brand may also be classified as:

(a) Family brand — A firm adopts for a variety of products, i. e. Johnson and Johnson

(b) Individual brand — A firm adopts for each of its products

(c) Combination device — Products have individual name and company brand e.g. Tata’s 

Taj.

Different Degrees of Branding:

(a) Brand Insistence:

The customers may insist on a particular brand and refuse to accept the substitute. It is called 

brand insistence.

(b) Brand Preference:

The customers may prefer a particular brand to a number of other brands available. It is 

called brand preference.

(c) Brand Recognition:

It is the least loyalty which makes the consumer buy that brand when the preferred brand is 

not available.

Basic Requirements of Branding:

(a) There must be enough and more demand for the product.

(b) There must be widespread supply of the product.

(c) The quality of the products should be ensured.

(d) There should be effective distribution of the product.

(e) The product should be distinctive.

Characteristics of a Good Brand:

A good brand should possess the following characteristics:

(a) A brand should suggest a few benefits about the product such as its use, quality, content 

and mode of action.

(b) The brand should be neither descriptive nor deceptive.

(c) The name should be easy to pronounce, spell and remember.

(d) A brand name should be short and simple.

(e) A brand name should be distinctive.

(f) A brand name should be versatile so that it can be applied to new products.

(e) A brand name should be adaptable to any advertising medium.

(f) A brand name should be capable of being registered and protected legally.

(g) A brand name should be selective so that it can be suited to the specific market.

(h) It should not be obscene or offensive.

(k) A brand should not resemble other brand name.

Advantages:

A brand is advantageous both for consumers and manufacturers.

(i) To the Consumers:

(a) Consumers find it easy to identify the product.

(b) Producers maintain quality throughout so that consumers get quality goods.

(c) Consumers are protected as the brand identifies the firm.

(d) Branding ensures reliability, standardisation and quality.

(e) Many people get satisfaction in certain brands.

(f) It saves time in his shopping.

age of the product and the company.

(c) It helps in introducing the new product.

(a) It works like a cumulative force, promotes repeat sales and stabilises the sales volume.

(b) It establishes an in ducts.

(d) It enables a manufacturer to eliminate middlemen.

(e) It assists him in withstanding price competition.

(f) It helps in reducing selling cost.

(g) It distinguishes products from rival firms.

Disadvantages:

The disadvantages of branding are:

(a) The product price tends to go up.

(b) It involves heavy expenditure and sustained effort to establish a brand.

(c) It imparts a sort of rigidity to the product.

(d) Manufacturers taking advantages of the popularity may reduce the quality gradually.

(e) The selection of a proper brand name also creates problems.

5. Product Positioning:

Product positioning refers to a brand’s objective attributes in relation to other brands. It is a 

characteristic of the physical product and its functional features. Position is the art of 

selecting, out of a number of unique selling propositions, the one which will get you 

maximum sales. Product positioning is so central and critical that it should be considered at 

the level of mission statement. It comes to represent the essence of a business.

Components of Product Positioning:

There are four important components of product positioning and they are:

(i) Perpetual Mapping:

Perpetual mapping technique identifies the two dimensions that differentiate consumer 

perceptions of products and the positions of existing products on these dimensions. Perpetual 

mapping is usually represented on two dimensional scales so that the marketing manager can 

readily see where his own brand is positioned in the mind of his prospective buyers and in 

relation to other brands. In short, measuring the perception in mathematical psychologists 

way is known as perpetual mapping.

(ii) Product Benefits:

Product benefits facilitate consumers in their decision making. It also reduces uncertainty in 

their minds. Product benefits can be offered through branding because the brand owner is 

able to earn an easy recognition and image compared to owners of unbranded products. 

Product benefits can be converted into brand benefits to achieve prestige, legal right, basis for 

successful demand, creational activity, sales stability, widening the market area, and 

innovations. It constitutes the heart of product management.

(iii) Market Segmentation:n market segmentation, consumers are grouped in terms of market dimensions and the firm 

attempts to match the need of different consumer groups through compatible marketing 

inputs. The different types of segments are geographic segmentation, demographic 

segmentation, socio-psycho- logical segmentation, product segmentation, benefit 

segmentation, volume segmentation, marketing factor segmentation and life style 

segmentation.

(iv) Product Categories:

Products are generally categorised into consumer and industrial goods. The category of con-

sumer goods is still too broad to formulate specific market strategy.

So consumer goods may be further subdivided into:

(a) Convenience goods,

(b) Shopping goods,

(c) Speciality goods, and

(d) Impulse goods.

(a) Convenience Goods:

Convenience goods are those goods which are brought with the maximum of convenience 

such as ready availability and satisfaction of immediate and frequent requirements, low unit 

price and more or less standard quality and uniform price.

(b) Shopping Goods:

Shopping goods are those goods which are bought by consumers after some shopping, i.e., 

making comparisons about their price, style and suitability in general in a number of shops.

(c) Speciality Goods:

Speciality goods are those goods to get which significant number of consumers is habitually 

willing to make special purchasing efforts. Examples of speciality goods are home 

appliances, wrist watches, automobiles, etc.

(d) Impulse Goods:

Impulse goods are those goods that are purchased by the consumers on the basis of sudden 

emotions or impulses.

On the basis of benefits provided to the users, consumer goods may also be divided into:

(a) Durable goods, and

(b) non-durable goods.

Durable goods are all those goods that last long or they can be used again and again. In the 

process of consumption, they suffer some depreciation. Examples are: motor car, furniture, 

clothing, etc. Non-durable goods are those goods which cannot be used for long. They get 

exhausted after one or few uses. Examples are food items, medicines, toiletries, etc.

Industrial Goods:

Goods which are used for production or used in producing other products are industrial

goods. The industrial goods are further classified into:

(a) Raw Materials:

Raw materials are the basic materials entering physically into the final products. Examples 

are raw cotton, raw jute, oil seeds, etc.

(b) Fabricated Materials:

Materials of this category will enter physically into the final products, but some type of 

processing is already undergone. Examples are leather, yarn, bricks, etc.

(c) Component Parts:Such type of parts are already undergone some processing and more or less the parts can be 

called as final products, that is, assembly of several component parts makes the final 

products. The components are visible in the final product such as tyres, speedometer, spark 

plugs and spare parts.

(d) Installation:

Machines, buildings, equipment’s, etc. do not enter into final products and are durable for a 

long period. They are essential for production. Examples are gas, power installation, etc.

(e) Accessories:

They are light machines or tools which are used for the operation of a business. They are not 

used for manufacturing a product. Examples are hand tools, type-writers, calculators, etc.

6. Product Packaging:

Packaging is an important tool for face lifting of a product. Packaging is intended to protect, 

identify, differentiate, improve handling, convenience, and promote the sale of the product. 

Package, therefore, has become virtually a part of the product. The package has been rightly 

described as the ‘silent salesman.’

According to Louis C. Baril, “Packaging may be defined as the protection of materials for all 

kinds of means of containers so designed as to prevent damage to contents by outside 

influences”. Stanton defines packaging “as the general group of activities in product planning 

which involve designing and producing the container or wrapper for a product”. According to 

the Indian Institute of Packaging, “It is the embracing function of package selection, 

manufacture, filling and handling.”

Kinds of Materials Used for Packaging:

The following materials are generally used for packaging:

(i) Paper — Soap

(ii) Tin — Biscuits

(iii) Plastic — Oil

(iv) Glass — Medicine

(v) Card Board — Fragile articles

(vi) Straw Baskets — Vegetables

(vii) Gunny Bags — Grains

(viii) Wooden Boxes 

—

Apple

(ix) China Jars — Products need protection 

against light

(x) Earthenware — Liquor

Functions of Packaging:

The following are the important functions of packaging:

1. Protection:

The packaging is intended to give protection to the product against the following:

(a) Damage by machine handling

(b) Product loss from spilling and evaporation

(c) Pilferage

(d) Contamination

(e) Moisture

(f) Heat

(g) Light exposure

(h) Insect or fungus attack

(i) Rain

(j) Chemical transformation

(k) Loss of freshness

2. Convenience:

(a) Convenience of storage in warehouses, shops and house-shelves

(b) Convenience in use

(c) Convenience in handling

(d) Convenience in opening

3. Identity of the Product, Firm and Brand:

Package helps to identify the products, through colour, lettering, size, shape, material and 

text.

4. Package acts as the Carrier of Message:

It provides product information. Wherever possible some message or information is printed 

or embossed on the package.

5. Re-use or Scrap:

Packages are prepared in such a way that can be used for storing other articles. Some 

packages are so designed that refills can be bought at an economic price and the same product.

can be used in the original container. Even if the package cannot be re-used very well, it can 

be used as a scrap.

6. Reduces Transport Cost:

The most important factor in packaging is the cost. Bulky cotton or fabrics are compressed 

into bales. By the use of light weight and at the same time strong materials for packing, 

transport cost can be reduced. So package must be strong enough to undertake the strain of 

the journey.

7. Product Differentiation:

Products with narrow differences can be differentiated easily with the help of packing. 

Washing soaps like 555, Rin, Wheel, Henko, etc. can be identified only with the help of the 

wrapper. Changing the package is the easiest and inexpensive way to practice product 

differentiation.

8. Sales Promotion:

The use of package provides the product a prestige. Attractive package induces sales. 

Package provides an extra attraction to affluent buyers who may buy the product just to get 

its special package.

Characteristics of a Good Package:

The package to be effective should have the following characteristics:

1. Attract attention

2. Clean and sanitary

3. Establish identity

4. Develop and sustain interest

5. Convenient to handle

6. Enhance the image of the product

7. Instil itself in the memory of the consumer.

Factors involved in the Development of a Package:

The development of packaging is the sum total of the talents of the designer, the researcher, 

the technician, the advertising man, the marketing expert, the sales department and top 

management. The important factors or considerations involved in the development of a 

package are size, shape, colour, material, text and cost.

The size of a package should be handy and convenient. Identification of the product is 

accomplished through the shape. Shape is also more a factor of convenience. The colour of a 

package should be such as to attract the eye of the purchaser. Packaging is intended to protect 

the product.

A protective package has to be made of metal which is widely used in packing medicines. 

Package should also act as a carrier of message. To suit this purpose, some special type of 

material may be used by a packager. The packager should also keep down the cost of 

packaging to the minimum.

Kinds of Packaging:

The following are the types of packaging:

1. Consumer Package:

It refers to the package which holds the required volume of product for household 

consumption. For example toothpaste.

2. Family Package:

T he different products of a particular company are packed in a uniform way. Application of 

the same material and method of packaging for all products is called family packaging. For 

example, Tata oil and Shampoo.

3. Dual Use Package:It is also known as reuse package. It refers to package that could be reused after its contents 

are fully consumed. For example, glass jars, plastic containers and cotton bags.

4. Multiple Packages:

The method of placing several units in one container is known as multiple packaging. For 

example, Baby’s care set, cosmetics and perfumes set.

5. Bulk Package:

Bulk package is useful for supplying the product to the industrial consumers in large 

quantities. Similarly, bulk package is used for loose dispensing by the dealers.