Concept of a Product
customers looking for an
Product
is the item offered for sale
It can be goods (tangible) or
services (intangible)
A product needs to be relevant:
the users must have an
immediate use for it.
A product needs to be
communicated: Users and
potential users must know why
they need to use it
A product needs a name: a
name that people remember
and relate to.
A product should be adaptable:
with trends, time and change in
segments, the product should
lend itself to adaptation
Product Concept
is based upon the idea that
customers prefer products that
have the most quality,
performance, and features
The product concept is a
company's driving force to
create cutting-edge products
that are superior to other
similar products
Quality
the ability of a product or
service to consistently meet or
exceed customer requirements
or expectations.
make
an important contribution to
long-term revenue and
profitability
Variety
is used to draw in
array of goods
A merchandising strategy
in which a retailer stocks
a large number of
different products.
Warranty
a guarantee or promise
which provides assurance
to a buyer that a product
or service is or shall be
presented
The distinction between goods
and services
There is a major difference
between goods and services
based on both tangible as well
as intangible factors.
Goods are basically objects or
products which have to be
manufactured, stored, transported,
marketed and sold.
Services on the other hand are
output of individuals and they can be
a collective or individualistic action or
performance by an individual.
Thus the difference between
goods and services is based on
tangibility. Where goods are
tangible in nature, services are
mostly intangible.
The classic rules which defined
services were:
Intangibility
Heterogeneity
perishability
variability
 However, although the old rules
are applicable even today,
several new rules have been
added to define the difference
between goods and services.
7 points help you in noticing how
goods and services differ.
1. Ownership is not transferred
When buying a service, the service
ownership is not transferred to the end
customer. If you buy a car then the car
is yours. But if you buy a ticket for an
airline, then the airline is definitely not
yours.
2. Intangibility How do you
measure service? In a restaurant, the
dish can be measured, but the efforts
gone in making the same dish by two
different chefs cannot be measured
from the customer end. Same goes for
large service corporates like Accenture
and Infosys. The time and effort gone
for giving service to the customer is
intangible. Both ownership and
intangibility are old school differences
between goods and services.
3. Involvement of customer When
comparing the difference between
goods and services we have to look at
the involvement of customer as well.
In services involvement of customers
is much more than in products.
For example ATMs are services
wherein customer has to use the
machine. The same goes for vending
machines as well as for self service
restaurants. Today ice cream chains
like Hokey pokey and food chain like
Subway have more than 50%
involvement of customer where the
customer gets to decide the
ingredients they want in their ice
cream / Sub.
4. Quality In case of products,
mass manufacturing is common. And
mass manufacturing means uniformity.
However, services involve a lot of
manual labor due to which the quality
may vary each time. Uniformity in
services is a factor which each service
owner tries for.
For example The major challenge of
food chains like Subway, Pizza hut and
dominos is to give the same quality
over and over again, whereas in local
restaurants the quality of food may
vary time to time from the same
restaurant.
5. Evaluation of services is
tougher As quality varies from time
to time and the involvement of
customer is maximum, evaluation of
different services becomes tougher.
For example HDFC has more number
of ATM than SBI. Thus we can evaluate
that HDFC service is better because
they have more reach to the end
customer. But how do we evaluate
how a barber cuts your hair.
6. Inventories are absent
Production and consumption of
services happens at the same time.
This does not mean that the raw
material is not present to provide the
service.
For example in a restaurant, a dish is
made only after you order it. The raw
material and the chef might be
present. But the production does not
begin unless and until there is a
customer to consume the service.
7. Time is very important in
services Because inventories are
absent in services, and because
production and consumption is at the
same time, time is a very important
difference between goods and
services.
The keyword here is delay. There
should be no delay in providing the
service. Thus the cab should arrive on
time, the food should be prepared by
time and the trains should run on
time. Because time is important.
Thus the difference between goods
and services is based on many
different factors. These factors are
become more and more acute as the
services sector rises in demand.
NEW MARKET OR PRODUCT
DEVELOPMENT PROCESSES
FIVE STEPS:
An important element in this
new- product development
process is continued evaluation
of new ideas likely profitability
and return on investment.
Applying this process requires
much analysis of the idea - both
within and outside the firm
before research and
development (R&D) or
engineering spend any money
to develop physical item.
Step 1: Idea Generation
The first step in the process of
creating new products and one
requiring most searching and
creative thinking.
New ideas can come from a
companys own sale or
production staff, middlemen,
competitors, consumer survey,
or other sources- such as trade
associations, advertising
agencies, or government
agencies.
Analyzing new and different
views of companys markets
help spot opportunities that
have not yet occurred to
competitors or even to
potential customers.
Research shows that many
ideas in industrial markets come
from customers who identify a
need they have, also through
unsolicited suggestion and
complaints, or through formal
mechanism.
SCREENING
Screening involves evaluating the
new ideas with the product-market
screening criteria. These criteria
include the combined output of a
resources (Strengths and Weaknesses)
analysis, a long-run trends, analysis
and the objectives of the company.
Some companies screen based on
consumer welfare
-The firms final choice in product
design should fit with the companys
overall objectives and make good use
of the firms resources. But it is also
desirable to create a need-satisfying
product which will appeal to consumed
in the long run as well as the short
run.
Desirab Salutar
le y
Product Product
Pleasin Deficie
g nt
Product Product
 to design and develop the physical
part of the product.

But it is still desirable to test

Safety should be considered in models and early versions of the
screening ideas product in the market. This process
The CONSUMER PRODUCT SAFETY may have several cycles-building a
ACT OF 1972 set up the consumer model, testing it, revising product
product safety commission to specifications based on the tests, and
encourage more awareness of safety so on-before pilot plant production.
in product design and better quality With actual models, potential
control. customers can see how the idea has
Product liability must be taken been converted into a tangible
seriously product. This can lead to revision of
product specifications for different
PRODUCT LIABILITY means the legal markets. Sometimes months or even
obligation of sellers to pay damages to years of research are necessary to
individuals who are injured by focus on precisely what different
deflection products or unsafely market segments will find acceptable.
designed product.
After testing the tangible
ROI is a critical screening criterion product, pilot production begins-to be
sure that the product can be produced
Getting by the initial screening economically. Test market can be risky.
criteria does not guarantee success for It not only tests ideas for the
the new idea but it does show that at company- but also gives information
least the new ideas is in the right ball to the competition. If the new product
park for this firm development process is used carefully,
the market test will provide a lot more
IDEA EVALUATION
information to the firm than to its
Firms use concept testing--- competitors.
getting reactions from
customers about how well a
new product idea fits their
needs.

Concept testing uses market-

research- ranging from informal
focus groups to formal surveys
of potential customers.

Idea evaluation is often more

precise in business markets.

Development Step

Product ideas that survive the

screening and idea evaluation steps
must now be analyzed further. Usually,
this involves some research and COMMERCIALIZATION
development (R&D) and engineering-
A product idea that survives this far products city by city or region
can finally be placed on the market. by region-in a gradual roll out-
until they have complete
First, the new-product people market coverage.
decide exactly which product
form or line to sell. Roll outs also permit more
market testing-although that is
Then, they complete the not their purpose. All
marketing mix-really a whole implementation efforts should
strategic plan. be controlled-to be sure the
strategic plan on target.
And top management has to
approve an ROI estimate for the
plan before it is implemented.

Finally, the product idea

emerges from the new-product
development process-but
success requires the
cooperation of the whole
company.

Putting a product on the market

is expensive. Manufacturing
facilities have to be set up and
enough product has to be
produced to fill the channels of
distribution.

Further, introductory promotion

is costly-especially if the
company has to develop new
channels of distribution.

Because of the size of the job,

some firms introduce their