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COURSE TITLE : PRINCIPLES OF MARKETING

CHAPTER 4: Product
 Explain what a product is and the importance of products in the marketing
mix
 Discuss the product life cycle and its implications for marketing

CHAPTER 4: THE PRODUCT

PRODUCT
 Anything that can be offered to a market for attention, acquisition, use or consumption
that might satisfy a want or need.
 Products include physical object, services, events, persons, places, organizations, ideas
or mixes of these entities.
 This can be a physical item, a service or a virtual offering.
 A product is anything offered for sale by a firm to buyers to satisfy their physical, social,
symbolic, and psychological wants and needs.

It includes: Examples
a. goods clothes, airplane, soap, computer
b. services taxi ride, banking, hotel, repair services
c. events major trade shows, artistic performance, company anniversaries
d. experiences Disney theme parks, Ocean Adventure, Zoobic Safari
e. persons Phil Younghusband, Sharon Cuneta, Sarah Geronimo
f. places Philippines, Canada, cities, towns
g. properties Woodgrove, Xevera, Avida, Camella
h. organizations non-profit organizations like churches, colleges
i. information books, schools, universities
j. ideas Say No to Drugs, Cigarette Smoking is Dangerous to Your Health

PRODUCT CLASSIFICATION
All products can be broadly classified into 3 main categories. These are:
1. Tangible products: These are items with an actual physical presence such as a car, an
electronic device, and an item of clothing or a consumer good.

2. Intangible products: These are items that has no physical presence but can be felt
indirectly. An insurance policy is an example of this. Online items such as software,
applications or even music and video files are also intangible products.

3. Services: Services are also intangible products but they are the result of an economic
activity that does not result in ownership. It is a process that creates benefits for
customers. Services depend highly on who is performing them and remain difficult to
reproduce exactly.

LEVELS OF PRODUCT
1. Core Benefit
The core benefit is the fundamental need or wants that the customer satisfies when they
buy the product. For example, the core benefit of a hotel is to provide somewhere to rest
or sleep when away from home.

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2. Generic Product
The generic product is a basic version of the product made up of only those features
necessary for it to function.
In our hotel example, this could mean a bed, towels, a bathroom, a mirror, and a
wardrobe.

3. Expected Product
The expected product is the set of features that the customers expect when they buy the
product.
In our hotel example, this would include clean sheets, some clean towels, Wi-fi, and a
clean bathroom.

4. Augmented Product
The augmented product refers to any product variations, extra features, or services that
help differentiate the product from its competitors.
In our hotel example, this could be the inclusion of a concierge service or a free map of
the town in every room.

5. Potential Product
The potential product includes all augmentations and transformations the product might
undergo in the future. In simple language, this means that to continue to surprise and
delight customers the product must be augmented.
In our hotel, this could mean a different gift placed in the room each time a customer
stays. For example, it could be some chocolates on one occasion, and some luxury
water on another. By continuing to augment its product in this way the hotel will continue
to delight and surprise the customer.

Example: Coca-Cola
It can be easy to see how the Five Product Levels apply to the hotel industry, but what about a
company like Coca-Cola?
Let’s examine what each level might be for this company:
1. Core Benefit
The core benefit of Coca-Cola is to quench a thirst.
2. Generic Product
The generic product is a burnt vanilla smelling, black, carbonated, and sweetened fizzy
drink.
3. Expected Product
The expected product is that the customer’s Coca-Cola is cold. If this isn’t the case then
expectations won’t be met and the drink will not taste its best in the mind of the
customer.
4. Augmented Product
Coca-Cola’s augmented product is that it offers Diet-Coke. How does Coca-Cola exceed
customers expectations with this product? By offering all the great taste of Coca-Cola,
but with zero calories.
5. Potential Product
One way in which Coca-Cola delights customers is by running competitions. The prizes
in these competitions are often things that, “money can’t buy”, such as celebrity
experiences. To continue to delight customers over time the competition prizes change
frequently.

WHAT ARE CONSUMER PRODUCTS?

Consumer products, also referred to as final goods, are products that are bought by individuals
or households for personal use. In other words, consumer products are goods that are bought

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for consumption by the average consumer. From a marketing perspective, there are four types
of consumer products, each with different marketing considerations.

TYPES OF CONSUMER PRODUCTS

1. Convenience Products
Convenience products are bought the most frequently by consumers. They are bought
immediately and without great comparison between other options. Convenience
products are typically low-priced, not-differentiated among other products, and placed in
locations where consumers can easily purchase them. The products are widely
distributed, require mass promotion, and are placed in convenient locations.
Sugar, laundry detergent, pencils, pens, and paper are all examples of convenience
products.
 Characteristics of Convenience Products
 Purchased frequently
 At a low price point
 Easily available
 Not commonly compared with other products
 
2. Shopping Products
Shopping products are bought less frequently by consumers. Consumers usually
compare attributes of shopping products such as quality, price, and style between other
products. Therefore, shopping products are more carefully compared against, and
consumers spend considerably more time, as opposed to convenience products,
comparing alternatives. Shopping products require personal selling and advertising and
are located in fewer outlets (compared to convenience products) and selectively
distributed.
Airline tickets, furniture, electronics, clothing, and phones are all examples of shopping
products.
 Characteristics of Shopping Products
 Purchased less frequently
 At a medium price point
 Commonly compared among other products
 
3. Specialty Products
Specialty products are products with unique characteristics or brand identification.
Consumers of such products are willing to exert special effort to purchase specialty
products. Specialty products are typically high priced, and buyers do not use much time
to compare against other products. Rather, buyers typically spend more effort in buying
specialty products compared to other types of products.
Take, for example, a Ferrari (a specialty product). Purchasers of a Ferrari would need to
spend considerable effort sourcing the car. Specialty products require targeted
promotions with exclusive distribution; they are found in select places.
Sports cars, designer clothing, exotic perfumes, luxury watches, and famous paintings
are all examples of specialty products.
 Characteristics of Shopping Products
 With unique characteristics or brand perception
 Purchased less frequently
 At a high price point
 Seldom compared between other products
 Only available at select/special places

 
4. Unsought Products

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Unsought products are products that consumers do not normally buy or would not
consider buying under normal circumstances. Consumers of unsought products typically
do not think about these products until they need them. The price of unsought products
varies. As unsought products are not conventionally thought of by consumers, they
require aggressive advertising and personal selling.
Diamond rings, pre-planned funeral services, and life insurance are all examples of
unsought products.
 Characteristics of Shopping Products
 Not top-of-mind of consumers
 Requires extensive advertising and marketing efforts

PRODUCT LIFE CYCLE

An important consideration for any product is the logical stages of its lifecycle. A typical
product goes through the following stages:
1. Introduction – Slow growth period following product launch. The firm seeks to build
product awareness and develop a market for the product. The impact on the marketing
mix:
a) Product – branding and quality level is established, and intellectual property
protection such as patents and trademarks are obtained.
b) Pricing – may be low penetration pricing to build market share rapidly, or high
skim pricing to recover development costs.
c) Distribution – is selective until consumers show acceptance of the product.
d) Promotion – is aimed at innovators and early adopter. Marketing communications
seeks to build product awareness and to educate potential consumers about the
product.

2. Growth – Fast growth phase once the product is established. It is also known as the
“market acceptance” stage. This is when sales and profits increase at an increasing rate.
Product “tryers” are now repeat buyers.
a) Product – quality is maintained and additional features and support services may
be added.
b) Pricing – is maintained as the firm enjoys increasing demand with little
competition.
c) Distribution – channels are added as demand increases and customers accept
the product.
d) Promotion – is aimed at a broader audience.

3. Maturity – A period of slowdown in sales as the product becomes ubiquitous in the

market. More competitors enter the market with more advanced product development.
a) Product – features may be enhanced to differentiate the product from that of
competitors.
b) Pricing – may be lower because of the new competition.

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c) Distribution – becomes more intensive and incentives may be offered to

encouraged preference over competing products.
d) Promotion – emphasizes product differentiation.

4. Decline – A downward sales as the product is no longer fulfilling a need or there are
better options. As sales decline, the firm has several options:
a) Maintain the product, possibly rejuvenating it by adding new features and finding
new uses.
b) Harvest the product – reduce costs and continue to offer it, possibly to a loyal
niche segment.
c) Discontinue the product, liquidating remaining inventory or selling it to another
firm that is willing to continue the product.

REASONS WHY NEW PRODUCTS FAIL

1. Inadequate market analysis – inability to determine market demand, buying motives
and overestimation of potential sales of the new product which can be the result of
insufficient marketing information.
2. Product deficiencies – this means poor quality of new products.
3. Lack of effective marketing effort – insufficient marketing strategies as follow up after
introductory marketing programs.
4. Higher costs than anticipated – possible presence of inflation rate where prices of raw
materials had increased from idea generation to commercialization periods.
5. Competitive strength and reaction – ease of competitive entry, where other
companies may simultaneously beat timing of introduction.
6. Poor timing of introduction – this can be premature or post mature product
introduction.
7. Technical or production problems – inability to supply the quantity demand.

POSSIBLE SOLUTION TO AVOID PRODUCT FAILURE

1. Organizational changes aimed at strengthening new product planning.
2. Better marketing research to evaluate market needs and prospects.
3. Improved screening and evaluation of ideas and products.

BRANDS
A Brand is a word, mark, symbol, or a combination of them used to identify the marketer’s
product or service.
A brandname is something which can be vocalized or spoken.
A brandmark is a non-registered design, symbol or product logo.
A tradename is a registered company name.
A trademark is a brand registered under the Intellectual Property Office (IPO), and
therefore given
legal protection.
Trademarks can be recognized with presence of any of the following words or symbols
on product
labels or package:
1. Reg. Phil. Pat. Off. -- meaning Registered under the Philippine Patent Office
2. R -- means registered
3. * -- asterisk mark
4. c -- copyright under
5. Trademark under . . .

CHARACTERISTICS OF GOOD BRAND NAMES

1. It must be easy to remember. It is advisable to create one to three-syllable
brandnames. It will be easier to remember, pronounce and spell for consumer retention
of the term.
 Examples: Coke, Milo, Marlboro

2. It must suggest something about product benefits or use.

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Examples: Pronto floor wax -- means quick, fast action

 Examples: Mr. Clean detergent soap -- means cleaner wash

3. It must de distinctive. Symbols, colors must be easily recognized and not too confusing
for consumers.

4. It must be legally protected. Therefore, it must not be an imitation of any patented

brands by competitors and must be registered under the patent office.

PACKAGING
Packaging is a group of activities in product planning which involves designing and producing
container or wrapper for a product. Containers like tin can, glasses are for liquid-based
products, while wrappers like tin foil, paper, carton are for solid-based products.

REASONS FOR PACKAGING

1. For product protection during its route from producer, manufacturer to the final user, and
protection during storing period before consumption.
2. It implements a company’s marketing program through product differentiation by
customers.
3. It increases profit possibilities, particularly when other customers buy the product
primarily because of the package.

PACKAGING STRATEGIES
1. Family packaging involves making the package identical for all products using common
feature on all packages.
 Example: Johnson’s baby cologne varieties and baby oil has the same
package design.

2. Reuse packaging is designing and promoting package which can serve other purposes
when contents are consumed.
 Examples: decorative tin can by powdered milk brands

3. Multiple packaging is placing several units of a product in a single container.

 Examples: Tennis balls comes in three-in-one package

LABEL
A Label is that part of a product which carries verbal information about the product or the seller.
Labelling requires careful planning and policy formulation. Eye-catching graphics are important,
particularly if the label covers large portion of the package. The label’s primary purpose should
be to inform buyers by fairly representing the contents of the package. Both the vignette
(illustration) and the copy should accurately describe the contents of the package and guide the
consumers how to use it.

TYPES OF LABELS
1. Brand Labels. Brand alone applied to the product or package.
Example: bananas for export brand-labelled Del Monte.
2. Grade labels. Identifies product quality by letter, number or word. A or 1 may mean
premium quality. Premium means first class quality.
 Examples: Lorins fish sauce – Premium
3. Descriptive labels. Written or illustrative information about the product use,
construction, care or performance.
Examples: list of ingredients, expiration date, directions for use.

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ACTIVITY

1. Give a product. Identify and explain the level of the product.

2. There are 4 types of consumer product. Give 3 examples each and explain.
3. Do you believe that all products undergo product life cycle? If yes, why? If no, pls give 3
examples of a product that does not have a life cycle.

Deadline: TBA

REFERENCES

Armstrong, G., & Kotler, P. (2018) Principles of Marketing 17th Edition

Medina, R., (2007) Principles of Marketing

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