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Classification of products

Whole Product Concept


. Products are complex; they have many dimensions It is the totality of what a customer buys A product is the physical object (hardware, food, medicine), software or service from which customer gets direct utility plus a number of other factors, services and perceptions that make the product: Useful Desirable Convenient

Restaurants product is: food + ambiance + service + cleanliness + other things Definition of all the above depends on the market segment Supermarkets canned soup is: soup + the cans label + stores display + stores cleanliness + the type of store (Safeway, gourmet food store, gas station convenient store,.)

A product, to the potential customer, is value satisfaction The generic thing or device is not itself the product. It is the minimum necessary to get into the game A product has meaning only from the viewpoint of the customer or the ultimate user. Only the buyer or the user can assign value

Generic Product Expected Product Augmented Product Potential Product

The Generic Product The generic product is the rudimentary thing without which there is no chance to participate in the market: for a bank: loanable funds for a realtor: for sale properties for a lawyer: the bar exam certificate for WebTV: the box for satellite TV: the antenna and receiver box

The Expected Product


.The expected product represents the customers minimal expectations Delivery conditions, installation services, post-sale services, spare parts, training, packaging conveniences the bank: the loan officer who is cooperative the realtor: who is on your side the lawyer: who protects you the WebTV: that only connects to a few home shopping channels the Satellite TV retailer: that does not offer installation support to an old man

The Expected Product, contd The expected attributes vary by customers and industries They could be sources of product differentiation depending on how well suppliers do them

The Augmented Product


Customer may be offered more than what she thinks she needs or expects Computer that comes with Office 2000 already installed Offer two year warranty for semiconductor process equipment where the norm is one year Optical store that replaces customers lost contact lenses nights & weekends and delivers them to customers home Augmentations are means of product differentiation They could also create customer dependency on the supplier

Product augmentations can educate the customer about what is reasonable for him to expect This raises the competitive bar; augmented benefits may turn into customer expectations (and move into the inner circle) Not all customers can be attracted to by an ever widening circle of augmented benefits They may prefer lower prices to more augmentation

The Potential Product


The Potential Product consists of everything potentially feasible to get and keep customers what may remain to be done what is possible in the future Suppliers, and customers, can compete more effectively with the Potential Product in the changed conditions of future

In high tech markets, customers desire extendibility for the product so that the platform and basic technology can last over several generations of technology progressions e.g. semiconductor technology cycles Product Roadmap is important

High Tech markets are different than consumer markets, requiring different definition of the whole product point of sale (sold directly to customers by sales persons) function (emphasized) pre-sale evaluation (customers spend a lot of time, sometimes more than one year) post-sale support (documentation, customer training, service) risk in purchasing decision (is high) intangible factors (trust, reputation,references) product/technology roadmap (extendibility)

. Product Definition

The cost of creating a complete product is often many times the cost of developing the generic product (hardware, or software, or drug)

If the product cannot be made to work by the customer, it is useless The reason may be It inherently does not work user is not adequately trained and does not know how to use it documentation telling the user how to install and operate the product is inaccurate product is not serviced & supported

Products are multidimensional A whole product is one that can be functional (technology and design meeting spec) manufactured (materials & tools available, be manufacturable) serviced & supported (trained people, fast response, be serviceable) applied (documentation, process recipe) sold (distribution channels, sales collateral)

Concept Customers needs and wants define products Depending on the targeted market segment, the definition of the product must change The product must be defined differently in different phases of the Technology Adoption Life Cycle

When you are positioning yourself against competition, it is important to compare complete products not just devices A product will achieve a commanding position within a segment only if it is complete

Marketing organization is responsible to ensure that products are complete for the targeted market segment guarantee that the product remains complete as the customer base evolves and competition sets new standards for completeness

Products are marketing inventions Product invention / definition is a continuous process Starts at the intersection of new technology capability and perceived market opportunity Continues during the market research and definition of Market Requirements Specification (MRS) device development and demonstration product launch

Product Definition

Continues past product introduction thru discovery of new applications (not envisioned by the original developers) Continues further as product marches down the Technology Adoption Life Cycle and product is redefined for new groups of customers as the company diversifies into new market segments to capture more market share

Product Costs
In High Tech, cost of marketing, selling (distribution) and supporting the product is often more than the cost of manufacturing the product Manufacturing cost (Software products cost almost nothing to make) Support cost R&D cost amortized over life of product Marketing, sales and distribution costs Successful companies get products to customers in the most cost-effective fashion(not necessarily lowest price!)

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