Lesson 6: Product

Module Overview:

Product is a key element in the overall market offering. Marketing-mix planning begins with
formulating an offering that brings value to target customers. This offering becomes the basis
upon which the company builds profitable relationships with customers. In this lesson, the
importance of product. service, and experience will be discussed.

Objectives:

At the end of the lesson, the learners should be able to:

1. Define the product and;

2. Differentiate the product, services, and experiences.

6.2 Jumpstart

In marketing, a product is anything in the form of good, service, or idea consisting of a bundle
of tangible and intangible attributes that can be offered to a market that might satisfy a want or
need and is received in exchange for money or something else of value. There are three
components of a product, namely:

1. Core product - this is the end benefit for the buyer. The core product is what the buyer
really buying.
2. Formal product - this is the actual physical or perceived characteristics of the product
including its level of quality, special features, styling, branding, and packaging.
3. Augmented product - these are the support items that complete the total product
offering such as after-sales service, warranty, delivery and installation.

6.3 The Classification of Products and Services

Marketers may classify products and services into two types.

Consumer products refer to products that are purchased by customers for their consumption.
These products are primarily for personal, family, and/or household purposes.

Industrial products on the other hand refer to any products that purchased by individuals or
institutions for the purpose of implementing a business. These products are are goods that are
sold to other businesses and used to produce other goods.

Types of consumer products:

1. Convenience products - These are products that consumer purchase regularly for
consumption. The price of these products are usually low and/or affordable.

2. Shopping products - These are products consumer purchase infrequently compared to

convenience products. Customers exert effort on getting information on the brands before
deciding to buy.

3. Specialty products - These are products that have unique attributes and brand recognition for
which consumers are ready to exert special effort.

4. Unsought products - these are products or services that consumer are either not aware of the
brand existence or have awareness of the brand however not usually consider buying it.

Industrial Product Clusters:

1. Materials and parts - These are materials or manufactured materials and parts.

2. Capital Items - These are products that help the companies in operation and production,
installation, and accessory equipment.

3. Supplies and services - These include operating supplies, repair, maintenance.

6.4 Developing Products and Services

The marketers must consider the benefits of the products and services to be prioritized. These
product attributes are the one being communicated and delivered to the customers. Attributes
are seen through product design and style, quality, and features.
Design and Style. To add value to the product, companies enhance design and style of the
product. In this way, brands will be more distinct and look special in the eyes of the buyers.

Quality. This is one of the major considerations of marketers in positioning a product. Quality
has a direct relationship with product performance. it is considered determinants of customer
value and satisfaction.

Features. To establish product distinction, companies may consider developing product

features. It will help the company to attain competitive advancement. Companies often
introduce valued new features to create market superiority.

6.5 Establishing Products and Services

In establishing products and services, marketers must think of the following product strategies:

A. Branding - it refers to the name, term, signs, symbols, design, or combinations of

these, which serve as identification of the products, services, or institutions that
separate them from their competitors.
B. Packaging - it pertains to the process of designing and producing container or wrapper
for products. The fundamental role of the package is to secure the product's condition.
C. Labeling - from simple tags to intricate graphics, label plays a vital role in creating an
identity to the brands. it serves as the identification or ID card of the brand because it
tells many things about the product's name, origin, symbol, content, dimension, and
usage.
D. Product support service - as part of the customer's overall brand experience, support
service is essential in building healthy relationship with customers.

6.6 Discovering New Product Development Strategy

With the fast changing trends in the market today, companies should establish a stable stream of
new products. Companies may acquire new products through procurement of companies that
produce commodities. On the other hand, companies may also develop new products through
enhancement of its original product.
Every marketer should have a strong grip on the concept of new product development to
successfully give birth and nourishes the growth of new products. Certain stages have to be
considered in doing this.

Stages in new product development includes:

1. Idea Generation Stage - Great products come from simple ideas that are carefully polished by
skillful hands of the marketing team. Marketers should be resourceful in generating and
gathering ideas for new products. Potential ideas for new products may come from sources like
market research, customers, employees, consultants, distributors, and suppliers.

2. Idea Screening Stage - All ideas may seem promising. However, marketers should dive into
the idea and explore it to find out if the idea has the potential to bring triumph to the company.
The process may be rigorous, but it pays to be meticulous as early as this stage.

3. Concept development and Testing Stage - After selecting potential ideas, it will go through
the process of conceptualization and testing. Concepts may undergo different forms. From
product idea, the marketers will transform it into product concept, a more detailed description of
a product idea. Then, the product concept should be visualized as actual and potential product
using the consumer's lenses.

The product concepts will be tested by a group of target customers as participants to see the
feasibility. Marketers may present the concepts to the target customers using symbols or
concrete concept. The insights that marketers will get from the participants will be an essential
in developing new products.

4. Marketing Strategy and Development Stage - In this stage, marketers will develop a
marketing strategy based on the tested and treated new product concept. The marketers should
identify critical strategic marketing elements like target audience, marketing objectives, product
positioning, pricing, distribution plan, and promotional tools.

5. Business Analysis Stage - In this stage, the marketers should focus on the review of product
sales, cost, and profit. It is not enough to think of the feasibility of the product. marketers should
also consider the financial worth of the new product to the company.
6. Product Development Stage - in this stage, the prototype of the new product is being
designed and produced. The produced prototype will face series of testing. it will be presented
to selected people representing the target segment of the market to make sure that the product is
ready, and there is no need for further modification.

7. Test Market Stage - The companies will select a specific geographical area to check the
product's marketability. Thus, the product will be launched to the particular area. In this stage,
the performance marketing mix strategy will be monitored and evaluated. The result of the
observation will be the basis if the product needs adjustments or completely passes the tests and
ready for grand launching in the national market.

8. Commercialization - In this stage, the new product is assumed to be ready for the national
launching. Marketers must be conscious on the timing of the launch, the distribution and
availability of the product, and the promotional tools to be used.

6.7 Product Life Cycle

As consumers, people purchase millions of products every year. Just like humans these products
have a life cycle. Older, long-established products eventually become less popular, while in
contrast, the demand for new, more modern goods usually increases quite rapidly after they are
launched.

Since most companies know the different product life cycle stages, and that the products they
trade all have a limited life span, the majority of them will invest a lot in new product
development in order to make certain that their businesses continue to grow.

The product life cycle has four very clearly defined stages, each with its own characteristics that
mean different things for business that are trying to manage the life cycle of their particular
products.

1. Introduction Stage - this stage of the cycle could be the priciest for a company launching a
new product. The size of the market for the products is small, which means sales are low,
although they will be increasing. On the other hand, the cost of things like research and
development, consumer testing, and the marketing required to launch the product can be very
high, especially if it's a competitive sector.

2. Growth Stage - the growth stage is normally characterized by a strong growth in sales and
profits. Since the company begin to benefit from economies of scale in production, the profit
margins, as well as the overall amount of profit will increase. This makes it feasible for
businesses to put in more money in the promotional activity to take full advantage of the
potential of this growth stage.

3. Maturity Stage - During the maturity stage, the product is established and the aim for the
manufacturer is now to keep the market share they have built up. This is most likely the best
competitive time for most products and businesses to invest sensibly in any marketing they
undertake. They also need to consider any product modifications or improvements to the
production process which might give them a competitive advantage.

4. Decline Stage - Eventually, the market for a product will start to get smaller, and this is
what's known as the decline stage. This reduction could be due to the market becoming
saturated, or because the consumers are switching to a different type of product. While this
decline may be unavoidable, it may still be possible for companies to make some profit by
switching to less expensive production methods and cheaper markets.

6.7.1 Product Extension

As that life cycle nears an end, the company must decide what to do to extend the product life
span. Here are some strategies that can help in product life extension.

1. Re-Packaging - Re-packaging provides a new way for the company to give a mature product
a new image, particularly if the product's earlier image has limited its target audience. Fresh
packaging can draw in a new part of the market by tapping into that market's visual preferences.

2. Discounting - Designing a new pricing strategy does not have to be a short-term alternative
for mature product. In some cases, re-pricing the product by discounting it can reach out to a
target market that has normally seen the product as being just out of reach.

3. Re-branding - Re-branding a mature product can be a somewhat extreme approach to

extending its life cycle, but it can also be a valuable method. Re-branding results in changing
not only the packaging. The name and total appearance of the product could be changed also.

4. Expanding Abroad - In some cases, a product life cycle can only go so far in one place.
Expanding the product in a foreign country to reach out to a totally unserved market can make
longer the product life cycle on a different level.