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Marketing Notes 14 - Product

Marketing Notes 14 - Product

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Published by: Information should be FREE on Oct 07, 2010
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Products and Services by Geoff Lancaster ©
For a marketing plan to be successful it is essential that all elements of the marketing mix should support each
other. Marketing mixes will change between products, services and market situations and indeed this is what
makes marketing dynamic; it is the skill of the individual marketing person in manipulating the individual mixes
that can make a product or service a success or a failure. Different emphases to individual elements in the
marketing mix are often called for. However, the product or service is particularly important in this calculation
for this is the tangible element that will appeal to customers and it is upon this that customers’ purchases and
repeat purchases are based. This is what must provide the end satisfaction for this, after all, is the practical
application of the marketing concept.
A study of products and services is concerned with, amongst other things, design, appearance, length of time it
will last and how is perceived by customers and non-customers alike.
Defining the product
People purchase what marketing practitioners term a ‘bundle of satisfactions’. This includes obvious things like
the physical product itself or a less tangible service offering. If asked to state what they have purchased most
customers will simply mention the product or service in its simplest terms. However, there is much more to a
purchase than simply this.
It is the task of marketing to take a more expansive view of what constitutes an augmented product or service,
and then combine the marketing mix in such a way as to present consumers with the ‘bundle of satisfactions’ that
marketing research has identified as being most pertinent to their requirements. This augmented product concept
is sometimes called the extended product, and this definition includes the total marketing effort. Thus a view of
the product or service is rather broader than the mere object or service offering; it is the utility or a ‘bundle of
satisfactions’ that provides satisfaction.
Categories of products
Given the background that has been presented, we are now in a position to present a formal classification system
for products and services. This is needed in order that marketing planners can more easily formulate and design
their strategies and tactics.
Industrial goods are separated from consumer goods as the first part of this categorisation.
Industrial goods
The mention of industrial goods conjures images of components and raw materials, but not all industrial goods
are as tangible as this. A number of additional items and services are important to ensure the smooth running of a
factory. A classification exists to describe categories of industrial goods and services:
Installations include the plant and machinery required for a company’s manufacturing processes. These are
very critical purchases and usually involve complex purchasing decision making processes with price not
necessarily being the deciding factor when making such purchases.
Accessories are also capital items but are less critical and depreciated over a shorter period of time. They
include items like office equipment and materials handling equipment.
Raw materials are the most obvious of industrial goods and this is the major task in a modern purchasing
department. Here, buyers are specifically looking for a keen price coupled with quality and reliability of
Component parts and materials are items that are required in the production process, but are not part of the
finished product. It includes such items as packaging, greases and oils.
Supplies include items like cleaning and maintenance materials and stationery. Buying here tends to be more
routine and it is often a matter of simply reordering with price being the major criterion consistent with a
standard specification of quality.
This classification is linked to organisational buying behaviour where the fact that buyers are dealing with larger
sums of money and larger quantities tends to make it a more professional and organised process than in consumer
goods purchasing.
Consumer goods
These are the types of products and services with which we, as individuals, are familiar. Unlike industrial
products, more irrational and emotional motives tend to be connected with their purchase and it is upon this
factor that many manufacturers base much of their marketing effort. As with industrial goods, they also lend
themselves to a number of sub-categories.
Convenience goods are everyday items whose purchase takes little effort on the buyer’s part. They can be
classed as everyday necessities, purchased on a regular basis. Advertising plays an important role in terms
of attempting to persuade the consumer to take a particular brand. Staple convenience goods are purchased
routinely for consumption and it is more difficult to differentiate one product from another and no pre-
planning goes into their purchase. Many such products are delivered to the door like milk and newspapers.
Shopping goods is the term used to describe durable products and their purchase tends to be at infrequent
intervals. More planning goes into their purchase on the part of buyers and buyer behaviour is more
complex. The purchasing cycle is much longer and more complex models of buyer behaviour apply.
Further classifications relate to homogeneous shopping goods that are standard items like toasters and kettles
and heterogeneous shopping goods that are non-standard and where personal choice plays a more important
Speciality goods are major purchases made at infrequent intervals. Here, much probing in the market-place
is undertaken by customers. Many more purchasing motivations are involved in the final decision and quite
often the final purchase is a compromise decision between a number of purchasing criteria. Examples of
such purchases are motor cars and a major item of relatively expensive clothing.
Unsought goods are ones that the purchaser has not actively considered buying. Techniques used in their
marketing are often rather dubious and this has led to much criticism of marketing. Consumers usually have
to be persuaded that they need such products, as it would never occur to them to go out and actively
purchase. Insurance typifies such a service - particularly life assurance - where the potential customer does
not necessarily see an immediate need for this service. Methods of selling such goods and services tend to
use more directly targeted approaches like direct mail, telephone selling and door-to-door.
Product management
Organisational considerations
Larger organisations, especially those that produce consumer durables and fast moving consumer goods (fmcg)
often have what is termed a ‘product management’ system of managing single products or a line of similar
products. In fmcg companies, the term used tends to be ‘brand manager’ whose responsibility it is to manage the
image and the marketing (but not the selling) of a single product line. This person acts as a liaison between the
advertising agency and the company and is responsible for the ‘image’ of the product and will commission
marketing research when it is needed.
This kind of system has been criticised on the grounds that product managers have to rely upon others, especially
the sales force, to carry out their ideas. This has the potential for conflict, particularly on the part of the field sales
force who have to be sold the promotional idea with which they may, or may not, agree.
Where a system of product management is in operation, the typical organisation of the marketing function is that
the marketing manager is in overall control and is directly under the managing director. Under the marketing
manager is the overall products manager and under the products manager come individual brand managers.
Alongside the products manager comes the sales manager and under the sales manager comes the sales team
organised by various kinds of geographical or functional split.
Strategic considerations
Under this heading of product management it is appropriate to discuss the strategies that are open to product
managers when devising strategies for their product portfolios. Igor Ansoff first introduced his idea of a simple
matrix in 1957 and it is described in Figure 1:
Figure 1 Ansoffs matrix
Each of the decisions is looked at in turn under their respective headings:
1/1 decision takers are the true innovators, but the strategy is perhaps rather risky in terms of expenditure
costs and the high failure rate of new products. This strategy is referred to as ‘diversification’.
1/2 decisions (new products into existing markets) comprise producers who like to stay ahead of their
competitors or are able to provide some sustainable advantage that makes their product unique in the minds
of consumers. This is a strategy of ‘product development’.
2/1 decisions (existing products into new markets) relate to manufacturers who are seeking to expand their
total sales volume by moving into an entirely new (to them) marketplace. An example might be an industrial
adhesives manufacturer who decides to target the office stationery market by modifying the existing range of
industrial adhesives. This strategy is known as ‘market development’.
2/2 decisions are taken by manufacturers who play safe. Arguably, it lacks imagination and there is a
possibility of such manufacturers being left exposed if their particular market hits recessionary times. This is
a strategy of ‘market penetration’.
ew products
Different companies have different policies in relation to this subject. Many let others taking risks and follow
when new products are launched and proved. They are, however, very important for the thrusting innovative
company, but there are risks attached in terms of damage to the company’s reputation if the new product fails
plus the attendant costs of development and launch. The product or service is the main component of marketing
as it provides revenue. Before the formal development programme is discussed, a listing of the types of new
product categorisation used by marketing people is now described:
Innovative products are completely new to the marketplace.
Replacement products are ones that provide a different slant on a traditional theme and might include well-
known items, but with a new design and functions.
Imitative products are quite common once an innovative product has become successfully established.
Marketing slang refers to them as ‘me too’ products. There is, of course, less risk involved in their launch.
Relaunched products happen when an original product has gone into decline, but the company anticipates
that there is sufficient potential sale if the image of the product is altered through manipulation of the
marketing mix.

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