The AUGMENTED product is the non-physical part of the product.
It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service
6.2.1 The total product concept
An important product concept is, of course, that of the product itself. We already know from our early definition of marketing that we are not in the business of selling products, but in the business of satisfying customers' needs and wants. We also know from our study of buying behaviour and positioning that customers are interested in acquiring perceived benefits with their purchases, rather than just the physical object itself. Thus, as defined by Boone and Kurtz (2005, p. 318) a product is: ...a bundle of physical, service,and symbolic attributes designed to satisfy a customer's wants and needs. This means that the same physical object may be several different products. The variance arises because of the different needs and wants of different customers, and because of their different perceptions of the physical object. For example, WD-40 is a spray lubricant in a pressure pack. One person might see it as a product for degreasing their car engine; another might use it to lubricate fishing gear; another might buy it to stop doors and windows from squeaking. Thus a product can be more precisely referred to as the total product concept , and one that contains three levels:
y y y
the core product, that is the benefits which are being purchased the actual product, that is the tangible item(s) the augmented product, that is the service components and intangibles.
Figure 6.1 provides a diagrammatic representation of the total product concept and its three levels using Close-Up toothpaste as the example. The diagram is particularly useful in its display of the augmented product but ¾ be careful ¾ it might confuse you with its treatment of the core and actual products. We are using the three levels of product described as core, actual and augmented. The diagram presents these as the essential benefit, core and augmented respectively. So Figure 6.1 is using 'essential benefit' to refer to what we are calling 'core'; and they are using 'core' to refer to what we are calling 'actual. Consider this
the augmented product is many additional things.Do you think different authors' use of different terminology for the same thing might imply that it is the concept that is more important than the terminology?
Figure 6. The brand name is intended to suggest social confidence.
Think of a tangible product. which includes a few pages used in Chapter One. provides your text's definition of a product and an excellent example of the total product concept using Qantas. p. the benefits being purchased with the toothpaste are clean teeth and prevention of tooth decay.
Activity 6. the core product. turn to it now. 396-400 'Service classifications'. that is. The toothpaste comes in a flip-cap package so it provides the benefits of ease of use and convenient storage. 384-391. The next reading. and so on. (2004) Chapter 11. However.1 The total product concept and its three levels Source: Zikmund and d'Amico (1995. It is the augmented product that offers so many opportunities in positioning a product. romance and white teeth. The actual product is the toothpaste itself. In your text Kotler et al. 235) As you can see. pp. services and experiences'. The flavour offers a pleasant taste and freshsmelling breath. 'Products: Goods. 'What is a product?' and pp.
6. manufactured materials and parts capital items . This generates four main categories for consumer products.raw materials.
Business (or industrial) products are based on how buyers think about products and how these will be used.supplies. Therefore. Various tangible and intangible elements comprise a service product . business services. but we shall use it to refer to the 'bundle of activities that includes the core service. p.2 Product classifications
One widely used way of classifying products is one based on the way consumers think about and search for products. 'Extending the classification of products and services'. 'Product classifications'.2. In your text Kotler et al.3 The service offering
There is some variation in the use of the term service offering . they are not classified the same way as consumer products.1. Write down the benefits that represent the core product. pp. 2000. and a group of supplementary service that support or enhance the core service' (Lamb et al. Briefly describe the actual product.2. 2. as the tangible elements are much easier to identify than the intangible. They are commonly classified as:
y y y
material and parts . accessory equipment supplies and service . and pp. 378). The kinds of issues addressed within the service concept are what services to provide. which is the most basic benefit the customer is buying. The difficulty is in breaking down the service. For instance. (2004) Chapter 11. 391-396. each of which will be addressed in the next reading:
y y y y
convenience products shopping products speciality products unsought products. 3. when and how and where and by whom. Write down the attributes that make up the intangible components of the product. does a passenger flight include the departure lounge experience?
Turn now to the next reading to review some of the above material and cover the detail of the consumer and business product classifications as well as other examples that do not fit neatly into the preceding classification.
issues we will treat in greater detail in later chapters. There are various ways the elements of the service may be packaged. (2004) for a service perspective. accuracy and safety are just some of the aspects of quality expected by buyers of port services. among other things. vehicles. warehouses. Unlike a physical product. In the case of terminal services.That leads to the issue of controllable versus uncontrollable service elements. the process. The professionalism and personal skills of service personnel are vital ingredients in assessments of the quality of service. physical evidence and participants are all vital to the success of the service offering. the cranes to load/unload rapidly or the warehouse to provide protection from weather and pilferage. The service can be offered to the consumer in different forms. the manufacturing and marketing of a service are usually inseparable. For instance. Consider this What are the seven Ps of services? Can you write a short definition on each? As you will begin to realise. a shipper may offer a door-to-door service or an alongside-wharf service. your next reading will direct you to a model by Grönroos (1990). on which the successful marketing of services hinges. The physical evidence of a service encompasses such things as buildings. physical evidence would include the cranes. and documents. This is especially true in liner shipping where homogeneity of the product is the norm. because some elements are simply beyond the control of the service provider. Closely linked to the idea of offering any number of a variety of services. Other tangible aspects of a service delivery system would be the ability of the computer system to produce accurate bills of loading. is the idea of offering quality of service. For example. A service delivery system (process) both creates the service product and delivers it to the consumer. the service provider/marketer cannot know whether an inspection by customs will delay and possibly damage the goods shipped half way across the world. he/she may offer service with or without insurance or send cargo by express or ordinary speed. computer systems. There are a few conceptual approaches to assist in understanding the service product and your text offers the total product concept on pages 389-390 that we use to explain physical products. It is at this stage that the additional Ps for services become necessary as a means of showing the factors related to delivering the service product. Items such as these form the technology that facilitates the performance of the service. The service delivery system is comprised of the physical evidence of the service and the participants . Reliability. equipment. speed. Although it is useful for you to study the model in Kotler et al. and containers. due to the interactive real time experience of a service. The model is called the augmented service offering and is part of four steps Grönroos (1990) suggests to managing the service offering:
420-424.1 Grönroos. 1. Using the augmented service offering as a guide write down three facilitating services and three supporting services which exist at your organisation.3 The product mix
Most organisations offer more than one product to their customers.
Turn now to the next reading to learn more about the service offering in terms of the augmented service offering. C. pp. 'Product line decisions' and 'Product mix decisions'. Managing the Moments of Truth in Service Competition. Service Management and Marketing. (2004) Chapter 11. please turn to the reading now. That complete range of products which a company sells is called its product mix . the product line . After working through Grönroos (1990) try to recognise his concepts in the second reading on Carnival Corporation's cruise ships. 20-21. Do you still agree with what you have written in point 2?
Activity 6. 1990. pp. 2. pp.2
Go back to the beginning of this chapter and re-examine the total product concept. As your Kotler et al. Do you think the augmented service offering is required for services? Why? 3. Reading 6. 4. Write down any similarities and differences between the total product concept and the augmented service offering. (2004) text covers these concepts sufficiently.y y y y
develop the service concept develop a basic service package develop an augmented service offering manage image and communication. Massachusetts . There is an associated concept that is important for you also to understand. Lexington Books. 71-91. In your text Kotler et al.2 'Carnival Corporation receives its last in a series of eight cruise ships' 1999.3
. namely. Reading 6.
Activity 6. Ships and Ports .
and explore how it could expand. Reading 6. Does it have a brand name? If not.4
Consider the product/service you chose in Activity 6. branding in services is more likely to relate to the organisation's image. Analyse that brand name according to the criteria for creating a good brand name in Figure 6. pp. 'Individual product decisions'. Management Today . alter or re-position its product mix. As you will find in your readings. Thus. One way organisations try to do this is by branding because brands are a means of readily identifying products. Consider this Think about a maritime or logistics organisation you are familiar with and consider the image it promotes. contract. Why does the organisation promote that particular image? Your next reading will discuss the decisions involved in marketing products. It introduces the terminology associated with branding. A. 2. the types of brand strategies that can be used and the legal difficulties faced by brands.Choose the product mix of a firm you are familiar with and suggest possible product-mix strategies they could adopt.4 Branding
One of marketing's objectives is to create a unique position for a given product in the minds of customers. (2004) Chapter 11.2.1. is there a supplier in the market who is currently using a brand name for a similar product? Now: 1.
6. 'Brand mania: I'm confused'. How did the brand name rate. you might pick a trucking firm. September. p. consider the range of products represented by the brands on page 410 of your textbook. We will cover this further in later chapters. 35. 2001. and could you suggest a better one?
Short and simple Easy to spell and read
Suggestive of product benefits Adaptable to
Activity 6. For example. For instance. 404-417. The article by Fletcher (2001) is of interest because it questions what is meant by the term 'brand'.3 Fletcher. In your text Kotler et al. shopping becomes easier and quicker for the customer. How much longer would your shopping take if you had to make conscious choices between each manufacturer's product in each product type rather than choosing your preferred brand.
pp. 424-425. can they be packaged
6. the overall image and the appeal of the product. 2 March. p.y y y y
Easy to recognise and remember Easy to pronounce Can be pronounced in only one way Can be pronounced in all languages (for international markets)
y y y y
packaging/labelling needs Not offensive. Consider this Due to the intangible nature of services. Somewhat like every person experiences a lifecycle between birth and death.5 Packaging
Both branding and packaging are part of the augmented product.6 Product life-cycle
As we now understand what a product is. so do products experience a life-cycle from introduction into the
. B&T Weekly . which in turn provides positioning opportunities for the product. it is more than just protection for the product. 'International product decisions'. (2004) Chapter 11. 417-419.2 Characteristics of a good brand name Source: Quester et al. As you probably already realise there is also a linkage between promotion and packaging as the package can convey messages of quality. that is. p. 'Labelling'. The reading also includes an interesting item on the role of packaging in attracting customers to purchase pet products. 'Product support services' and pp. M. in this situation.4 Ligerakis. 8. Reading 6. 2001. obscene. 'Packaging to tempt every man (and his dog)'. Turn now to the next reading to cover what your text has to say about packaging and labelling. 279)
6. (2004. milk and yoghurt for dogs! In your text Kotler et al. we are able to move on to the realisation that products do in fact have life-cycles with distinct stages. or negative Always timely (does not get out of date) Adaptable to any advertising medium Legally available for use (not in use by another firm)
Figure 6. 'Packaging'.
the length of each stage varies from product to product. and from market to market. Consider this Consider for example. at the industry level and at the level of individual products. but. Besides the initial product development. your text indicates four stages in the product life-cycle:
y y y y
market introduction market growth market maturity sales decline. The product life-cycle can be considered at two levels.
Table 6. objectives and strategies Introduction Growth Maturity Decline Characteristic Low sales Rapidly rising Peak sales Declining sales Sales High cost per sales Low cost per Low cost per Costs customer Average cost customer customer Profits Negative per customer High profits Declining Customers Innovators Rising profits Middle profits Competitors Few Early adopters majority Laggards Growing Stable number Declining number beginning to number decline Marketing Create product Maximize Maximize Reduce Objectives awareness and market share profit while expenditure trial defending and milk the market share brand Strategies Offer a basic Offer product. brand and items service. Therefore there is a life-cycle for a product in general in an industry and life-cycles of the same products as marketed by different companies.1 Summary of product life-cycle characteristics.1 identifies typical characteristics of these different stages for you. Which of them are still in the growth stage and which are in maturity or decline? Table 6.market to decline and withdrawal. the various types of cargo vessels that have been developed this century. Diversify Phase out weak Product product extensions. models warranty
Use cost-plus Price to Price to match Cut price penetrate or best market competitors Build selective Build intensive Build more Go selective:
. You need to be aware of the characteristics of each stage. remember.
. 468) The product life-cycle can also be presented graphically to help understand the four stages and the impact of sales over time.3 Different product life-cycle patterns Source: based on Quester et al.5
Consider Figure 6.3 does this. 302)
Activity 6. Figure 6.
Figure 6. p. p. (2004. starting with the traditional shape of the lifecycle in the graph in the top left-hand corner. The remaining graphs remind us that the product life-cycle varies a lot in terms of how long the life-cycle lasts and the shape it takes.(2004.distribution
phase out unprofitable outlets Build product Build Stress brand Reduce to level awareness awareness and differences and needed to among early interest in the benefits retain hardadopters and mass market core loyals dealers Use heavy Reduce to take Increase to Reduce to sales advantage of encourage minimal level promotion to heavy brand entice trial consumer switching demand
Source: Kotler et al.
Write down brief descriptions of each of the product life-cycles as represented by each of the graphs. but of entertaining them. The diffusion of innovations or the adoption of new products is an interesting process in the lifecycle of a product. 2. that previous services or products become obsolete. Yet. In Figure 12. Most people would agree that technological obsolescence is inevitable and beneficial.4 in Kotler et al. Product development does not just mean creating new products. that for many years. pp. This has happened with passenger ships. Consider this Why do you think Australians resisted this change in earlier decades and what price have they paid since doing so? Of the five categories of people ¾ what do you see yourself as in regard to personal consumer goods?
6. ports in Australia resisted technological and management innovation. even though it is high-risk and high-cost over the long haul. Consider this
. No firm can depend on its current products indefinitely for growth and profitability. but planned obsolescence is a controversial area. we tend to conform. 'Product life-cycle strategies'. Provide an example of a product which you think represents each of these forms of the product life-cycle.1. However. if organisations are developing new products they must keep in mind that many do not succeed and there are many reasons for that. So. (2004. In your text Kotler et al. however. It seems. Table 6. (2004) Chapter 12. which no longer serve as a major means of transporting people. The ports. firms have to be involved in new product development. their management and unions have been. Turn now to the next reading to review what your texts have to say about the stages and length of product life-cycles.7 Product development
Every firm needs to periodically examine the number and diversity of products in its stable. Innovations and new products mean. 447) you are given a graphic illustration of the steps in the development process. and the country has paid a heavy price for that attitude. even though we deplore style obsolescence. laggards when it came to initiating or accepting change. of course. 460-469. p.2 summarises some of these reasons for you. It can also mean revitalising and repositioning present products. on the whole.
unstructured project teams within the firm the freedom to innovate and to act in an entrepreneurial role.Do you feel that such a process is in existence in your organisation or an organisation you are familiar with? Table 6. Misestimating: Forecast sales may be overstated or costs may be underestimated. Insufficient market size: The market may not be big enough to generate volume necessary to produce a profit. however. Mispositioning: A product designed to do one thing may be positioned as something different or marketing communications explaining the product may be unclear. p. Now is also a good time to read how Branch (1998) applies the 7P marketing mix to ports and shipping. Market changes: The market environment may change between testing and launch. that having a systematic new product development process does not eliminate the risk of a marketing disaster. computers. Yet. since they are also rather bureaucratic. 10. they tend to stifle creativity. many failures here are 'me-too' products. 8. 3. One of the exciting aspects of marketing is that a new product can pleasantly surprise you by being a runaway success! However. Mistargeting : A good product may be offered to a group that doesn't want or need it. Misjudging the competition : A company may fail to read the exact nature of the competitive situation and lack adequate planning for competitive counter-strikes. 4. (1995. Wearing blinders: A company may become so committed to making a concept come alive that it subconsciously overlooks or downplays all 'bad news' as it goes through the developmental steps. 9. 11. 12. Poor execution : The product never actually duplicates the original. proven concept. Hence there is a trend towards giving small. research facilities and plant capacity to produce innovations.
.3 Why new products fail 1. 6. and an example in the first article of how the process could be applied to developing a new butter product. 409) Bear in mind. Bad concept : The product does not meet a consumer need or does not offer a good value. in reality. 7. Bad timing: The product may be tested or introduced at the wrong time of year or in the wrong cultural or economic environment. Inadequate budget : Underestimating the investment needs to launch a new product and move it into profitability can adversely limit development at every step. 2. Insignificant difference: A difference exists but isn't significant enough to warrant changing from a current brand.
Source: Keegan et al. Often it is only the larger firms that have the financial resources. there are seldom true innovations like the aeroplane. 5. By working through this reading you will not only gain a broad perspective of each of the extended marketing mix elements but also understand how they relate to the maritime sector. it only lessens it. You can read all about the new product development process in your textbook. from initial R&D through promotion. DVDs or ball-point pens that revolutionise our lives and are outstanding marketing successes.
5 Hudson. Although some sectors of the maritime industry. 'New products'. United Kingdom . pp. We have seen in this chapter that while services share some characteristics with physical products. 'The new product dilemma' and 'The new product development process'. 3 rd edn. 'New product development strategy'. (2004) Chapter 12. 'Developing new products? Develop new thinking'. Marketing & eBusiness . such as ports. pp. other sectors. April. are involved in the production of physical products.8 Summary
You should by now have a good idea of what is mean by product in marketing terms. Stanley Thornes. 2002.6 Branch. 341-357. Note however that Branch (1998) mistakenly refers to the 7P marketing mix as the international marketing mix. 42-43. Reading 6. Maritime Economics: Management and Marketing . A. In your text Kotler et al. pp.
6.This is a useful reading to keep referring back to as you progress through the chapters. 1998. Cheltenham . E. Reading 6. such as shipbuilding. 436-460. in other ways they are quite different. Please now turn to the next readings. and it is probably quite different to your use of the term previously. are involved with the provision of service products