Business Administration

Department
National College of Business and Arts

01
LECTURE

Course Code:
MM7
Lecture Unit(s):
3

PRODUCT MANAGEMENT

Product:
What is a product?
A product is anything that can offered to market for attention, acquisition ,use,
consumption that might satisfy a want or need.
Types of Product
Tangible products- A physical item that can be perceived by the sense of touch.
Examples of a tangible product include cars, food items, computers, telephones, etc. Many
businesses also need to provide packaging for a tangible product to provide protection
during its transportation to a retail location.
Intangible Products-That cannot be assessed, felt, measured, or moved because it has no
physical substance.
Examples of intangible product include travel, freight forwarding, insurance, repair,
consulting, computer software, investment banking, brokerage, education, health care,
accountingcan seldom be tried out, inspected, or tested in advance. Prospective buyers
are generally forced to depend on surrogates to assess what theyre likely to get.
Features of Product

Tangibility
Intangible attributes
Associated attributes
Exchange value
Customer satisfaction

Levels of product
Level One: Core Product
Level one is the most basic level and simply looks at what people set out to buy and what
benefits the producer would like their product to offer buyers. For example a camera is
expected to take pictures but there may be other benefits that the producer wants the buyer
to enjoy such as a wide lens, face recognition and high definition videos. So prior to
designing any product designers should list the core benefits the product needs to provide.
Level 2: Actual Product
Level two is about translating the list of core product benefits into a product that people will
buy. There may be competitor products offering the same benefits so the aim at this stage is
to design a product that will persuade people to purchase your product. Kotler states that
this can involve deciding on the quality level, product and service features, styling, branding
and packaging. For example Apple's iPhone design has enabled it to become a smart phone
market leader so that by September 2012 it was able to launch the iPhone 5, the 5th version
of this product. There are other smart phones on the market but Apple has managed to
design a product which people pre-order and camp overnight outside Apple's retail stores so
that they can be the first ones to buy the product.

Level 3: Augmented product

Level three involves deciding the additional non tangible benefits that a product can offer.
Competition at this level is based around after sales service, help lines, warranties,
free/cheap delivery and so on. In other words it is things that the product does not do but
customers may find them useful. Non tangible benefits such as product warranties offer
customers peace of mind and demonstrate the manufacturer has faith in the quality of its
product. In fact the ubiqtous use of some augmented benefits have turn some level three
benefits into a customer expectation for example customers expect cars to have
manufacturer warranties
Classification of product
Consumer Goods- are products that are purchased for consumption by the average
consumer. Alternatively called final goods, consumer goods are the end result of production
and manufacturing and are what a consumer will see on the store shelf. Clothing, food,
automobiles and jewelry are all examples of consumer goods. Basic materials such as
copper are not considered consumer goods because they must be transformed into usable
products.
They may be classified according to: (1) the rate of consumption and tangibility (2) the
consumers shopping habits.
1.

Rate of Consumption and Tangibility. Is classified according to

Durable goods- are tangible goods which normally survives many uses. Ex.
Motorbikes, refrigerators, television. Etc
Nondurable goods- are tangible products which are consumed in one or few uses. Ex.
Ice cream, blank CD, toothpick, and petrol.
Services- are intangible goods like activities, benefits, or satisfactions which are
offered for sale. Ex. Entertainment in a movie houses and concerts, transport
services, tailoring services, and haircuts salons.

2.

Consumers Shopping Habits. Is classified according to

2.a Convenience goods- are those which are purchased with minimum of effort. Ex.
Soap, braed, soft drinks, milk and dairy products.
Shopping goods- are those that are brought only after an effort to compare with other
goods is made. Ex. Radio sets, ready to wear suits, cellphones, and shoes.
Specialty goods- are those that the customer seek to buy and they are not willing or
they are not able to accept substitute. Ex. Special medicines, jewelry, and exotic
foods.
Unsought goods- are those that are not yet wanted by or are still unknown to the
consumer. Because of the said persons, consumers used no effort to seek them.
There are two types of unsought goods: (1) the new unsought goods, (2) the regular
unsought goods
The new unsought goods- are really new ideas or products that the consumer
still have to know to be motivated to buy. Ex. Black burger.

Prepared by: ALINE APRILLE C. MENDEZ, MBA

Texts and cases are subject to copyright. The preparer respects the right of the authors and writers cited in this lecture materials.

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Regular unsought goods- are those that stay unsought but not unbought
forever. Ex. Encyclopedias, educational plans, memorial plans, life insurances.
2.b. Industrial Goods- are goods that used in the production of other goods. They are
categorized as follows:
Installations- this term refers to industrial products with long life, are generally
expensive, and they form part of the major capital equipment of an industrial firm.
Ex. Buildings, generators, computers, elevators etc.
Accessory Equipment- these are industrial goods that are used as aids in the
production process. They have shorter usable life than installations. Ex. Hand tools
and lift trucks in factories, fax machines, and desk in offices.
Raw materials- these are unprocessed goods that will become part of another
product. Raw materials are of two types: farm products and natural products.
Component parts and materials- these are processed industrial goods that will still be
used and become an actual part of a finished products.
Supplies- these are items that are used as aids in the operating process but do not
become part of a finished products.
Services- these are expense items that assist in the operations. Ex, housekeeping,
security services, and consultancy services.
REFERENCES:

Crawford C. Merie, New Product Management 9th Edition, Boston, Irwin/McGraw Hill, 2010
Ulrich, Kari T Product Design and Development 4th Edition, Boston, McGraw Hill, 2008
http://www.businessdictionary.com/definition/tangible-product.html#ixzz463iiIMtq

Prepared by: ALINE APRILLE C. MENDEZ, MBA

Texts and cases are subject to copyright. The preparer respects the right of the authors and writers cited in this lecture materials.

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