What is a Product ?

Products, Services, and Experiences

Market offerings, pure tangible goods, pure
services, experiences
 Product Definitions
Whatever is offered for “sale” in a
marketing exchange
Product
 Anything tangible offered to a market for

attention, acquisition, use, or consumption

that might satisfy a need or want.
Service
 Any activity or benefit that one party can offer

to another that is essentially intangible and

does not result in ownership of anything.
 Goods Services

Tangible Intangible

Sold Then Produced and/

Produced Then Sold or Consumed Same Time

Can Store and Transport Perishable

Often Produced Separate Often Produced In

From Consumer Consumer's Presence
 Levels of Augmented
Augmented
Products Product
Product

Installation

Packaging
Brand Features
Name Core
Core After-
Delivery Benefit
Benefit or
or Sale
& Credit Service
Quality Service Service
Design
Level

Warranty

Actual
Actual Core
Core
Product
Product Product
Product
 Classification of Products
How Long the Products Will Last
 High
Involvement
Decisions Durable
Durable Goods
Goods
Provide
Provide Long-Term
Long-Term Benefits
Benefits
(cars,
(cars, furniture,
furniture, home
home appliances)
appliances)

Nondurable
Nondurable Goods
Goods
Low
Involvement Provide
Provide Short-Term
Short-Term Benefits
Benefits
Decisions (newspapers,
(newspapers, food)
food)
Product Classifications
 Consumer products
 Industrial products
 Types of  Frequent purchases
Consumer bought with minimal
buying effort and little
Products comparison shopping
 Low price
 Convenience  Widespread
distribution
Shopping
Specialty  Mass promotion by
producer
Unsought
 Examples: toothpaste,
tea, laundry
detergents etc.
 Types of  Less frequent purchases
requiring more shopping
Consumer effort and price, quality,
and style comparisons.
Products
 Higher pricing
 Selective distribution in
Convenience fewer outlets
 Shopping  Advertising and
personal
Specialty selling/representation
by producer and reseller
Unsought
 Examples: television,
geyser, cooking stove,
furniture etc.
 Types of  Strong brand
Consumer preference and loyalty,
requires special
Products purchase effort, little
brand comparisons,
and low price
Convenience sensitivity

Shopping  High price

 Specialty  Exclusive distribution
Unsought  Carefully targeted
promotion by
producers and resellers
 Examples: Rolex
watches, ARY gold Etc.
 Types of  Little product awareness and
Consumer knowledge (or if aware,
sometimes negative interest)
Products  Pricing varies
 Distribution varies
 Aggressive advertising
Convenience and personal selling by
producers and resellers
Shopping  Examples: life insurance, blood
Specialty donations etc.

 Unsought
Industrial products
 Materials and parts
 Capital items
 Supplies and services
Individual Product/Service
Decisions

Product Attributes

Branding

Packaging

Labeling

Product Support Services

Product Attributes
Developing a Product or Service Involves Defining
the Benefits that it Will Offer

Quality Features
Features
Quality

Style
Style &
& Design
Design
 Ability
Ability of
of aa Product
Product to
to Perform
Perform Its
Its
Product
Product Quality
Quality Functions;
Functions; Includes
Includes Level
Level &&
Consistency
Consistency

Help
Help to
to Differentiate
Differentiate the
the Product
Product from
from
Product
Product Features
Features Those
Those inin the
the Competition
Competition

Product
Product Style
Style Process
Process of
of Designing
Designing aa Product’s
Product’s Style
Style
&& Design
Design && Function
Function
Branding
Individual Product/Service
Decisions

Product Attributes

Branding
Packaging

Labeling

Product Support Services

 Brand

A name, term, sign, symbol, or design, or a

combination of these, intended to identify
the goods or services of one seller or group
of sellers and to differentiate them from
those competitors
 What is a Brand?

It’s who you are...and what you stand for.

 Children’s
Anthropology
P&E Arena Cable Net
Noggin
BET on J azz
Classical Knowledge
Music TV

Animal
Ovation New Scienc
Planet KIDS Network
CIVILIZATION

Classic Arts
Showcase
C-SPAN
Booknet Theater
DIYArts & Antiques Channel
Museum
Channel BLOOMBERG
NEWS INFORMATION
SCIENCE Travel
Channel
EOP
 Why?

Because...A Strong Brand is the Heart and “Soul”

of an Organization!
 What Branding Is?
 A clear identity in the consumer's mind
 Who you are: Product/service quality
 What you stand for: Values/promise - Can be
registered and legally protected
 A set of associations and feelings - market
segmentation
To Brand or Not to Brand?
 Branding strategies:
i) Brand Positioning
 Product attributes (lowest level)
 Benefits
 Beliefs and values
Branding strategies:
ii) Brand Name Selection
 • Short and simple
• Suggestive of product benefits
• Legally available
A
A Good
Good • No negative imagery
Brand
Brand Name
Name • Easy to spell, read, and
Is...
Is... pronounce
• Adaptable for international
markets
• Adaptable to packaging/labeling
needs
• Adaptable to any advertising
medium
Generic name: A brand name that has
become a generally descriptive term
“for a class of products”.

 If this occurs, the original owner loses

exclusive right to the brand name
(which is very bad for marketers).
 Examples: nylon, aspirin, escalator,
kerosene, etc.
 Branding strategies:
iii) Brand Sponsorship
 Manufacturer brands
 Private (store) brands
 Licensed brands
 Co-branding
 Branding strategies:
iv) Brand Development
Product Category

Existing New

Existing

Line Extension Brand Extension

Brand Name

New
Multibrands New Brands
 Branding
Focus:
Rejection Change Position

Focus:
Non-recognition Increase Awareness

Focus:
Recognition Continue Education

Focus :
Preference Maintain Availability

Focus : Develop High

Insistence Brand Equity
Individual Product/Service
Decisions

Product Attributes

Branding

Packaging
Labeling

Product Support Services

 Packaging

 Activity of designing and producing the container

or wrapper for a product.
 Packaging used to contain and protect the
product.
 Goals of Packaging

Protection against damage, spoilage,

tampering etc.

Assistance in marketing the

product

Cost effectiveness (and good for the

environment)
Labeling
Individual Product/Service
Decisions

Product Attributes

Branding

Packaging

Labeling
Product Support Services
Labeling
 Labeling

Printed information appearing on or with the

package.

Performs several functions:

 Identifies product or brand
 Describes several things about the product
 Promotes the product through attractive
graphics.
 Universal Product Code
(UPC)
 A bar code on a product’s package that provides
information read by optical scanners.
 UPC codes provide several advantages: labor
saving, improve inventory control, and help with
marketing research.

79400 80740
Functions of packaging &
labeling

Sales Competitive Product

Tasks Advantages Safety
Packaging
Packaging

Labeling
Labeling

Identifies Describes Promotes

Individual Product Decisions

Product Attributes

Branding

Packaging

Labeling

Product Support Services

 Product - Support Services

Companies should design its support services to

profitably meet the needs of target customers
and gain competitive advantage.
 How?
Step 1. Survey customers to assess the value of
current services and to obtain ideas for new
services.
Step 2. Assess costs of providing desired services.
Step 3. Develop a package of services to delight
customers and yield profits to the company.
How?
Service marketing
Product Line Strategies
 Product
Product Line
Line Extensions
Extensions

Stretching Filling Contracting

Contractingaa
Product
ProductLine
Line
Adding new Adding sizes or
items to line styles Dropping
Droppingitems
items

Downward

Upward

Two-way
New Product Development

The development of original products, product

improvements, product modifications, and new
brands through the firm’s own R&D efforts.
Major Stages in New-Product
Development
Marketing Business
Strategy Analysis

Concept
Product
Development
Development
and Testing

Idea Test
Screening Marketing

Idea Commercializatio
Generation n
Sources of New-Product Ideas
 Employees  Marketing research firms
 Customers  Other manufacturers
 Resellers  International
 Suppliers/ vendors
 Competitors
 Advertising agencies
Stage 2: Idea Screening
 Ideas are evaluated against criteria; most are
eliminated.

It is done to avoid:
 Product development costs increase substantially
in later stages.
Stage 3: Concept Development and Testing

 Concept tests ask target consumers to evaluate

product concepts.

Because:
 Product concepts provide detailed versions of new
product ideas.
Stage 4:

Marketing Strategy Development

 Strategy statements describe:

– The target market, product positioning, and sales,

share, and profit goals for the first few years.

– Product price, distribution, and marketing budget

for the first year.

– Long-run sales and profit goals and the marketing

mix strategy.
Stage 7: Test Marketing

Standard test markets

Controlled test markets

Simulated test markets

 Standard
Standard
Test Controlled
Controlled
Test Market
Market Test
Test Market
Market
Full
Full marketing
marketingcampaign
campaign
in AAfew
few stores
storesthat
thathave
have
in aasmall
small number
number of
of agreed
representative
representativecities.
cities. agreed to
tocarry
carrynew
new
products
products for
for aafee.
fee.

Simulated
Simulated
Test
Test Market
Market
Test
Testininaa simulated
simulated
shopping
shopping environment
environment
to
toaa sample
sampleofof
consumers.
consumers.
 Stage 8
Commercialization
New-Product Development
Management

Top Level
Support

Authority
Key
Issues
Market-Guided
R&D

Integration &
Coordination
 New Product Development

Marketing Business
Strategy Analysis

Concept Product
Development Development
and Testing

Idea Test
Screening Marketing

Idea Commercializa
Generation tion
Types of New Products Include

New-To-The
New-To-The World
World

Repositionings
Repositionings

New
New Category
Category
Entries
Entries

Product
Product
Improvements
Improvements

Product
Product Line
Line
Additions
Additions
Consumer Adoption Process
Strategy
Awareness
Awareness
Communicate
CommunicateAvailability
Availability

Strategy
Interest
Interest
Communicate
CommunicateBenefits
Benefits

Strategy
Evaluation
Evaluation
Emphasize
EmphasizeAdvantages
Advantages

Strategy
Trial
Trial
Motivate
MotivateConsumers
Consumers

Adoption Strategy
Adoption
Ensure
EnsureSatisfaction
Satisfaction
 Product Life-Cycle
(PLC)
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Development
Stage

Sales and Profits Over

the Product’s Life
From
Inception to Demise
The Typical Product Life Cycle (PLC)
Has Five Stages
 Product Development, Introduction,
Growth, Maturity, Decline
 Not all products follow this cycle
 Some products move rapidly through the
product life cycle, while others pass
through those stages over long time
periods.
Product Life-Cycle Strategies
Product Development Stage
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Development
Stage

Sales and Profits

Over
the Product’s Life
From
Inception to Demise
 PLC Stages
 Begins when the
company develops a
new-product idea
 Product
development  Sales are zero
Introduction  Investment costs are
Growth high
Maturity  Profits are negative
Decline
Introduction Stage
PLC Stages
 Low sales
 High cost per
Product development customer acquired
 Introduction  Negative profits
Growth
Maturity
 Innovators are
targeted
Decline
 Little competition
 Sales
Sales Low
Low sales
sales

Costs
Costs High
High cost
cost per
per customer
customer

Profits
Profits Negative
Negative

Create
Create product
product awareness
awareness
Marketing
Marketing Objectives
Objectives and trial
and trial

Product
Product Offer
Offer aa basic
basic product
product

Price
Price Use
Use cost-plus
cost-plus

Distribution
Distribution Build
Build selective
selective distribution
distribution

Advertising Build
Build product
product awareness
awareness among
among early
early
Advertising adopters
adopters and
and dealers
dealers
Growth Stage
Sales and
Profits ($)

Sales

Profits

Time

Product Introduction Growth Maturity Decline

Development
Stage

Sales and Profits

Over
the Product’s Life
From
Inception to Demise
PLC Stages
 Rapidly rising sales
Product development  Average cost per
Introduction customer
 Growth  Rising profits
Maturity  Early adopters are
Decline targeted
 Growing competition
 Sales
Sales Rapidly
Rapidly rising
rising sales
sales

Costs
Costs Average
Average cost
cost per
per customer
customer

Profits
Profits Rising
Rising profits
profits

Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share

Product Offer
Offer product
product extensions,
extensions, service,
service,
Product warranty
warranty

Price
Price Price
Price to
to penetrate
penetrate market
market

Distribution
Distribution Build
Build intensive
intensive distribution
distribution

Build
Build awareness
awareness and
and interest
interest in
in the
the
Advertising
Advertising mass
mass market
market
 Maturity Stage
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Development
Stage

Sales and Profits

Over
the Product’s Life
From
Inception to Demise
PLC Stages
 Sales peak
Product development  Low cost per
Introduction customer
Growth  High profits
 Maturity  Middle majority are
Decline
targeted
 Competition begins to
decline
 Sales
Sales Peak
Peak sales
sales

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits High
High profits
profits
Profits

Maximize
Maximize profit
profit while
while defending
defending
Marketing
Marketing Objectives
Objectives market
market share
share

Product
Product Diversify
Diversify brand
brand and
and models
models

Price
Price Price
Price to
to match
match or
or best
best competitors
competitors

Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution

Advertising
Advertising Stress
Stress brand
brand differences
differences and
and benefits
benefits
Decline Stage
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Development
Stage

Sales and Profits Over

the Product’s Life From
Inception to Demise
PLC Stages
 Declining sales
 Low cost per
Product development customer
Introduction
 Declining profits
Growth
Maturity  Laggards are
 Decline targeted
 Declining
competition
 Sales
Sales Declining
Declining sales
sales

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits Declining
Declining profits
profits

Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditure
expenditure and
and milk
milk the
the brand
brand

Product
Product Phase
Phase out
out weak
weak items
items

Price
Price Cut
Cut price
price

Distribution
Distribution Go
Go selective:
selective: phase
phase out
out unprofitable
unprofitable outlets
outlets

Advertising
Advertising Reduce
Reduce to
to level
level needed
needed to
to retain
retain
hard-core
hard-core loyal
loyal customers
customers
Overlap of Life Cycle for Products
A and B
 WINDOWS 3.1

WINDOWS 95
1991 1995 1996 1997
Extending the Product Life Cycle
 Market Modification

1. Increase frequency of use

by present customers
2. Add new users
3. Find new uses
4. Change product quality or
packaging

Product Modification
To prevent the product going into
decline you modify the product
 Adding new features, variations, model
varieties will change the consumer reaction
- create more demand therefore you attract
more users