Download What Is A Product?

Marketing Mix
Product Decisions
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Chapter 11
Product Concepts
Objectives
• Understand the concept of a product
• Explain how to classify products
• Examine concepts of product: item, line,
and mix and how they are connected
• Understand product life cycle and impact
on marketing strategies
• Describe product adoption process
• Understand why products fail/succeed
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What Is A Product?
A product is a good, a service, or an idea
received in an exchange.
– Good- Tangible physical entity
– Service- Intangible result of the application of
human and mechanical efforts to people or
objects
– Idea- Concept, philosophy, image, or issue
The product may have any combination of
the above aspects
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The Total Product
The total product offering has a combination of three
interdependent elements (product characteristics):
1. Core product: consists of a product’s fundamental utility or
main benefit.
2. Supplemental features: provide added value or attributes
in addition to its core utility or benefit.
– Supplemental features provide installation, delivery,
training, and financing.
– These supplemental attributes are not required to make
the core product function effectively, but they help
differentiate one product brand from another.
3. Symbolic and experimental benefits: benefits based on
customers’ experiences with the product. Many products
have symbolic meaning for buyers.
When we buy a product, we really buy benefits that the
product will deliver.
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The Total Product
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Classifying consumer products
Consumer products are classified into four
categories according to how buyers generally
behave when buying these products:
1. Convenience Products
2. Shopping Products
3. Specialty Products
4. Unsought Products
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1. Convenience Products
Relatively inexpensive, frequently purchased
items for which buyers exert only minimal
purchasing effort
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Convenience Product:
Marketing Implications
• Buyers spend little planning and shopping
time to buy
• Marketed through many retail outlets
• High inventory turnover
• Low per-unit gross margins
• Little promotion effort.
• Packaging is important because they are
sold on self-service basis at the retail level
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
Many convenience
items are available
on a self-service
basis at retail, so
producers depend
on packaging and
promotion
Reprinted with permission of Procter & Gamble
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2. Shopping Products
Items for which buyers are willing to
expend considerable efforts in planning
and making purchases
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Shopping Product:
Marketing Implications
• Buyers compare between alternatives (prices,
quality, services, other features)
• Purchased less frequently
• No brand loyalty
• Fewer retail outlets than convenience
• Lower inventory turnover
• Higher gross margins
• Focus on personal selling
• Channel members expect cooperation (i.e.
repair, parts, promotion, … etc.)
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3. Specialty Products
Items with unique characteristics that
buyers are willing to expend considerable
effort to obtain.
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
When purchasing
specialty products
buyers know
exactly what they
need and go
directly to a source
providing the
desired product
Reprinted with permission of Pilatus Business Aircraft, Ltd.
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Specialty Product:
Marketing Implications
• High brand loyalty (no substitutes)
• Willingness to spend much time and efforts
• Limited retail outlets
• Lower inventory turnover
• High gross margins
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4. Unsought Products
They include:
- Products purchased to solve a sudden problem (such
as emergency medical services, car repairs,
umbrella on a day of heavy rains), or
- products of which customers are unaware (such as
new product which does multiple functions), or
- products that people do no necessarily think of
buying (i.e. life insurance).
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Unsought Products
Marketing Implications
Marketers must build trust with consumers through:
• Recognizable brand
• Superior product performance
• More effective informative promotion
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Classifying Business Products
1. Installations: facilities such as buildings, factories,
major equipments and large machines (non-portable
equipment).
2. Accessory equipment: not part of final product,
such as computers, telephone and fax equipments
(Compared with major equipments, accessory items are usually
standard, much cheaper, purchased routinely with less negotiation, and
treated as expense items rather than as capital items because they are
not expected to last as long).
3. Raw materials: natural materials that become part of
the finished product (i.e. wood, minerals, chemicals).
4. Component parts: finished (processed) items ready
for assembly or need little processing. They become
part of the finished product
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Classifying Business Products
(continued)
5. Process materials: used in production but not
identifiable, and become part of the finished product
(smoke detector, grease)
6. MRO: consumable supplies-maintenance, repair, and
operating items not part of final product. They are usually
standard items (i.e. office supplies)
7. Business services: intangible products used in
operations. They may be provided internally, or obtained
externally (outsourcing). (i.e. financial, legal, marketing
research, information technology, and catering services).
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Product Line And Product Mix
Main concepts:
• Product Item: specific version of product among organization's
products
• Product Line: closely related product items viewed as a unit
because of marketing, technical, or end-use considerations.
• Product Mix: total group of products that an organization makes
available to customers
• Width of product mix: number of product lines in an
organization.
• Depth of product mix: average number of different products
offered in each product line (product mix / width of product mix)
• Depth of product line: number of different products in the
product line
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Example: Product Width/Depth
Of Proctor & Gamble
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Product Life Cycle
The progression of a product through
four stages: introduction, growth,
maturity, and decline.
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
Stage Of The
Product Life Cycle
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Introduction Stage
The initial stage of a product’s life cycle; its first
appearance in the marketplace when sales start at zero
and profits are negative.
• During this stage, potential buyers must be made aware
of the new product’s features, uses, and advantages.
• Most new products start off slowly and seldom generate
enough sales to break even or make immediate profits.
• Risk of failure is high
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Growth Stage
During this stage, sales rise rapidly and
profits reach a peak, then start to decline.
Main characteristics:
– Sales rise rapidly
– Profits peak, then starts to decline as more
competitors enter the market, driving prices down
and creating a need for heavy promotion
– Competitors react to the product’s success
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Growth Stage
Marketing Strategy
At this stage, the marketer should:
–
–
–
–
–
–
–
Encourage brand loyalty- stress brand benefits
Strengthen market share
Emphasize product’s benefits
Use aggressive pricing (lower prices)
Analyze production position
Use efficient distribution system
Ensure that Promotion costs drop as % of sales
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Maturity Stage
During this stage, the sales curve peaks and starts to
decline, and profits continue to fall.
Main characteristics:
– Intense competition as many brands enter the market
as well as improved cost efficiency
– Competitors emphasize improvements and
differences in their products.
– Weaker competitors are squeezed out or lose
interest.
– Marketer usually adjusts marketing strategy in
response to tough competition.
– Persuasive promotion is particularly emphasized
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Maturity stage: Marketer’s objectives
Three objectives may be pursued at this stage:
1. Generate Cash Flow
2. Maintain Share of Market
3. Increase Share of Customer
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Example: product modifications
at the Maturity Stage
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Decline Stage
The stage of a product’s life cycle when sales
fall rapidly.
Main characteristics:
– Retail outlets with strong sales volumes are
maintained, while unprofitable outlets are
dropped out.
– Spending on promotion is usually reduced.
– Many firms lack the resources to revitalize the
product’s demand and thus leave the market.
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Decline Stage
Marketing Strategy
•
•
•
•
Eliminate/reposition items
Cut promotion
Eliminate marginal distributors
Plan for phase out, through either Harvesting or
Divesting:
– Harvesting: gradual reduction in marketing
expenditures and a less resource-intensive marketing
mix.
– Divesting: immediate withdrawal of the product from
the market; the firm may sell the product to another
firm.
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Product Adoption Process
The five-stage process of buyer acceptance of a
product: awareness, interest, evaluation, trial,
and adoption.
Note:
Entering the adoption process does not mean the
person will eventually adopt the product—rejection can
occur at any stage.
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The five stages Of
Product Adoption Process
1. Awareness is when a buyer becomes aware of the
product’s existence.
2. Interest is when the buyer seeks information and is
receptive to learning about the product.
3. Evaluation is when the buyer considers the
product’s benefits and decides whether to try it.
4. Trial is when the buyer examines, tests, or tries the
product to determine if it meets his or her needs.
5. Adoption is when the buyer purchases the product
and expects to use it again whenever the need for
this product arises.
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Adopter Categories
People do not begin the adoption process at the same time, nor do
they move through it at the same speed. They are viewed to have the
following pattern:
1. Innovators: are the first adopters of new products. They enjoy
trying new things and tend to be venturesome.
2. Early adopters: are careful choosers of new products. They
influence the behaviour of people in the remaining categories.
(They may act as opinion leaders)
3. Early majority: those who adopt new products just before the
average person. They are deliberate and cautious in trying new
products.
4. Late majority: includes skeptics who adopt new products when
they feel it is necessary.
5. Laggards: are the last adopters. They distrust new products,
and when they finally adopt the innovation, it may have been
replaced by a new product.
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Product Adopter Categories
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