Product

A product is anything that can be offered to a market for attention, acquisition, use, or consumption
that might satisfy a want or need. Products include; objects/goods (TVs, phones, cars, etc.), services
(medical, educational, banking etc.), places (New York, source of the Nile, etc), people (politicians,
musicians), activities (entering a contest), and ideas (get off the sexual network). A service is a form
of product that consists of activities, benefits or satisfactions offered for sale that are essentially
intangible and do not result in the ownership of anything.

Marketing mix planning begins with building an offering that brings value to target customers. This
offering becomes the basis on which the company builds profitable customer relationships.

Product levels
Consumers see products as
complex bundles of benefits
that satisfy their needs. When
developing products, marketers
first must identify the core
customer value that consumers
seek from the product. They
must then design the actual
product and find ways to
augment it to create this
customer value and the most
satisfying brand experience.

Core Product
This is the problem solving
benefit that consumers seek
when they buy a product; it is
the core customer value, which
addresses the question: What is
the buyer really buying? For
example with a car, the core
benefit could be convenience i.e. the ease at which you can go where you like, when you want to.
Another core benefit may be speed, since you can travel around relatively quickly.
Actual Product
At the second level, product planners must turn the core benefit into an actual product; the tangible,
physical product. These are the product attributes combined carefully together to deliver the core
benefit like the packaging, brand name, features, quality level, and design. I.e. the buyer can get
some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then
collect.
Augmented Product
These are the additional services and benefits to a product, i.e. installation, delivery and credit,
warranty, after sales services etc. 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.

Product Classifications
Products and services fall into two broad classes based on the types of consumers that use them
namely:
1. Consumer Products.
 2. Industrial Products.

Consumer Products
Consumer products are those bought by final consumers for personal consumption. Marketers
usually classify these products and services further based on how consumers go about buying them:
a) Convenience Products
These are consumer products that the customer usually buys frequently, immediately, and with a
minimum of comparison and buying effort e.g. soap, sweets, newspapers and fast foods etc. They
are usually low priced and widely distributed to make them available when customers need them.
b) Shopping Products
These are consumer products that the customer, in the process of selecting and purchasing, usually
compares on attributes such as suitability, quality, price and style e.g. furniture, clothing, TVs etc.
Marketers usually distribute such products through fewer outlets but provide deeper sales support
to help customers in their comparison efforts.
c) Speciality Products
These are consumer products with unique characteristics or brand identifications for which a
significant group of buyers is willing to make special purchase effort e.g. designer clothes, wedding
cake, specific brands of cars (hummer). Marketers usually distribute these products exclusively and
usually charge a premium price.
d) Unsought Products
These are consumer products/ services that the consumer either does not know about or knows
about but does not normally think of buying e.g. major new innovations, life insurance, blood
donation etc. These products need a lot of advertising, personal selling and other marketing efforts.

Industrial Products
These are products purchased for further processing or for use in conducting business.
These may be:
a) Materials and parts
Materials and parts include raw materials as well as manufactured materials and parts e.g. Raw
materials may include farm product (cotton, coffee) and natural products (copper, crude oil).
Manufactured materials and parts consist of component materials e.g. wires, cement etc.
b) Capital items – industrial products that aid in the buyer’s production or operations including
installations and accessory equipment. Installations may include buildings (factories, offices) and
fixed equipment (generators, machinery, computer systems). Accessory equipment may include
(computers, hand tools, desks)
c) Supplies and services; supplies include operating supplies e.g. lubricants, coal, paper, pencils
and repair and maintenance items e.g. paint nails etc. business services include maintenance
and repair services (window cleaning, computer repair)

Individual Product Decisions

1. Product attributes
Developing a product or service involves defining the benefits that it will offer. These benefits are
communicated and delivered by product attributes such as quality, features, and style and design.
Product quality – the characteristics of a product or service that bear on its ability to satisfy stated
or implied customer needs. Product quality has two dimensions:
 Performance quality – the products ability to perform its functions. E.g. for a car this translates
into such traits as acceleration, miles per litre, ease in handling and comfort.
 Conformance quality – freedom from defects and consistency in delivering a targeted level of
performance.
Product features – these are secondary product characteristics that are designed to enhance the
product’s basic functioning. In cars, examples include power steering, cruise control, ABS and DVD
 player. Features are competitive tool for differentiating the company’s product from competitors’
products.
Product style – style describes the appearance of the product i.e. how it looks feels, sounds, tastes
and smells.
Product design – involves crafting customer insights of products usage into the development of
products. It begins with observing customers, deeply understanding their needs and then shaping
their product-use experience.
2. Product Line
A product line is a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same types of outlets, or
fall within given price ranges. For example Adidas produces several lines of athletics shoes; Nokia
produces several lines of telecommunication products etc. The major decision is product line length
– which is the number of items in the product line.
3. Product Mix (Product Assortment)
This is a set of all product lines and items that a particular seller offers for sale.
Product mix has four important dimensions;
 Product mix width – this refers to the number of different product lines the company carries.
E.g. a company carrying line of house hold items, cosmetics, medicinal, house hold cleaning
items.
 Product mix length – refers to the total number of items the company carries within its
product lines. E.g. PepsiCo has Pepsi cola, Miranda, Mountain dew, 7-up in its product line.
 Product line depth – refers to the number of versions offered of each product in the line. E.g.
PepsiCo offers 2litre, 500ml, 350ml and 300ml bottles or Miranda has fruity, orange,
pineapple and apple flavours.
 Product mix consistency – refers to how closely related the various product lines are in end
use, production requirements, distribution channels or some other way.
4. Branding
A brand is a name, term, sign, design or symbol or a combination of these intended to identify the
goods or services of one seller or group of sellers and to differentiate them from those of
competitors.
Branding helps to:
 Consumers identify products that might benefit them.
 It portrays an image about the product quality and consistency of products.
 It helps a seller brand name and trademark provide legal protection for unique product features
that might otherwise be copied by competitors.
 It helps the seller segment markets. E.g. different Toyota brands
 A brand becomes a basis on which a whole story can be built about a product’s special qualities.
A good brand name should:
 Suggest something about the products’ or services’ benefits e.g. doom, cough off, etc.
 Be easy to pronounce, recognise, and remember. In this case short names help e.g. Bic, Nice etc.
 Be distinctive e.g. Kodak.
 Translate easily into foreign languages.
 Be capable of registration and legal protection. A brand name cannot be registered if it infringes
on existing brands.
4. Packaging
This involves designing and producing the container or wrapper for a product. The package may be
for any of the following: to carry the product, offer protection, attract buyers, communicating brand
positioning etc.

Levels of packaging
There are basically 3 – levels of packaging;
 Primary level
This is the first level package surrounding the product. E.g. for a soda the primary package is a
bottle, for tooth paste is the tube holding the paste.
 Secondary level
This is the package that surrounds the primary package. E.g. the secondary package for soda is a
crate, for tooth paste is the card box containing the tube of toot paste.
 Tertiary level/ Shipping package
This is a very big package containing small packages. It’s necessary to store, identify, and ship the
product. For soda the shipping package could be the big container were crates are packed, for
tooth paste could be a corrugated box carrying 12 boxes of tooth paste.
Read about the reasons and advantages of packaging

The Product Life Cycle

This is the course a product’s sales and profits take over its lifetime. A new product progresses
through a sequence of five distinctive stages from product development, to introduction, to growth,
to maturity, and finally decline. This sequence is known as the product life cycle. Marketers can use
the PLC concept to understand how the products and markets work and then develop good
marketing strategies for the different stages.

Product Life Cycle Diagram

Introduction Stage
The introduction stage starts when a new product is first launched. In this stage the firm seeks to
build product awareness and develop a market for the product. The sales are low, profits are
negative/ low because of the low sales and high distribution and promotion expenses, and
competitors are few.
The impact on the marketing mix may be as follows:
 Product branding and quality level is established and intellectual property protection such as
patents and trademarks are obtained. The marketing strategy here is to offer a basic product.
 Pricing may be low e.g. penetration pricing to build market share rapidly, or high e.g. skim
pricing to recover development costs.
 Distribution may be selective until consumers show acceptance of the product.
 Promotion is aimed at innovators and early adopters. Marketing communications seeks to build
product awareness and to educate potential consumers about the product. Advertising and use
heavy sales promotion to entice trial.
Growth Stage
If the new product satisfies the market, it will enter the growth stage, in which sales and profits will
start climbing quickly and the cost of distribution is spread around. Due to opportunities,
competitors will enter the market. At this stage the firm seeks to build brand preference and
increase market share.
 Product quality is maintained and additional features and support services may be added. Offer
product extensions, service, and warranty.
 Pricing is maintained or may reduce only slightly as the firm enjoys increasing demand with little
competition.
 Distribution channels are added as demand increases and customers accept the product.
 Promotion is spending is maintained and the goal remains educating the market and
differentiation from competitors.
Maturity Stage
At maturity, the strong growth in sales diminishes. Competition may begin to reduce prices and
increase their promotion. The primary objective at this point is to defend market share while
maximizing profit.
 Product the product may be modified through changing characteristics such as quality, features,
style, packaging, or technology platforms to retain current users or attract new ones.
 Pricing may be lower because of the new competition.
 Distribution becomes more intensive and incentives may be offered to encourage preference
over competing products.
 Promotion emphasizes product differentiation.
Decline Stage
In this stage, product sales begin to fade away. As sales decline, the firm has several options:
 Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
 Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment.
 Discontinue the product, liquidating remaining inventory or selling it to another firm that is
willing to continue the product.
The marketing mix decisions in the decline phase will depend on the selected strategy. For example,
the product may be changed if it is being rejuvenated, or left unchanged if it is being harvested or
liquidated. The price may be maintained if the product is harvested, or reduced drastically if
liquidated. Use selective distribution so as to phase out unprofitable out lets and reduce sales
promotion to minimal level.

NEW PRODUCT DEVELOPMENT

A company can obtain new products in two ways i.e. through acquisition – by buying the whole
company, patent, or license to produce someone’s product. The other is through new product
development – in company’s own research and development department. New products mean
original products, product improvements, product modifications, and new brands that the
company develops through its own R&D efforts.
Companies face a problem of failure of products on the market despite these products being new.
This may be due to so many reasons;
 Over estimated market size.
 Prices being too high.
 Poor promotion elements.
 Poor design of the actual product.
 Poor marketing research findings.
 Competitors fight back.
Due to the fact that so many products fail, companies are anxious to learn how to improve the
new products success. One way is to identify successful new products and find out what they have
in common. Some of the success factors of these new products include;
 Unique superior product – higher quality, new features and higher value in use.
 Well defined product concept – defining and assessing the target market, product
requirements, and benefits.
In order to reduce the product failures the solution lies in strong new product planning and in
setting up a systematic new product development process for finding and growing new products.
The New Product Development Process (NPD)
The NPD goes through the following stages; Idea generation – Idea screening – Concept
development and testing – Marketing strategy – Business analysis – Product development – Test
marketing – Commercialization.

1. Idea Generation
This is the systematic search of new product ideas. A company has to generate many ideas in order
to find a few good ones. The search for these new product ideas should be systematic. Otherwise,
although the company may find ideas most will not be good ones for its type of business. The
company should carefully define its new product development strategy. Some of the major sources
of new product ideas include; internal sources, customers, competitors, distributors, and suppliers.
2. Idea Screening
This helps to spot good ideas and drop poor ones as soon as possible. The company at this level can
set up a committee to review the various ideas.
This stage enables the company to choose ideas which are most likely to turn into profitable
products and to minimize the costs associated with those ideas that may not.
3. Concept Development and Testing
A product concept is a detailed version of the idea stated in meaningful consumer terms. The
product concept should be developed with the needs of the consumer or user in mind. The company
therefore has to develop the new product into alternative product concepts, find out how attractive
each concept is to consumers, and choose the best one. The concepts are then tested.
Concept Testing involves testing of the new product concepts with groups of target consumers to
find out if the concepts have strong consumer appeal. The concept may be presented to consumers
symbolically or physically.
For some concept tests a word or picture description might be sufficient. However, a more concrete
and physical presentation of the concept will increase the reliability of the concept test. Today, some
marketers are finding innovative ways to make product concepts more real to consumer subjects.
After being exposed to the concept, consumers then may be asked to react to it by answering some
questions. The answers will help the company decide which concept has the strongest appeal.
4. Marketing Strategy Development
After testing and choosing the best product concept, a marketing strategy has developed. The
marketing strategy development involves designing an initial marketing strategy for a new product
based on the product concept.
The Marketing Strategy consists of three parts;
First part describes the target market i.e. younger, well educated, moderate to high income
individuals, couples etc.
The second part outlines the product’s planned price, distribution, and marketing budget for the first
year.
The third part describes the planned long run sales, profits goals, and marketing mix strategy.
5. Business Analysis
After a decision on the product concept and marketing strategy, a Business Analysis is made. This
involves a review of the sales, costs, and profits projections for a new product to find out whether
they satisfy the company’s objective. If they do, the product can move to the product development.
6. Product Development
This stage involves the developing the product concept into a physical product. This step will show
whether the product idea can be turned into a workable product. The Engineering or R&D
department will develop and test one or more physical versions of the product concept. The R&D
looks forward to design a prototype that will satisfy and excite consumers and that can be produced
quickly and at budgeted costs.
7. Test Marketing
The stage of new product development in which the product and marketing program are tested in
more realistic market settings. It lets the company test the product and its entire marketing program
– positioning strategy, advertising, distribution, pricing, branding and packaging, and budget levels.
The costs of test marketing can be high, but they are often small when compared with the costs of
making the major mistake.
A company has three options to choose from while test marketing;
Standard test markets – the company finds a small number of representative test cities, conducts a
full marketing campaign in these cities, and uses store audits, consumer and distributor surveys, and
other measures to gauge product performance.
Controlled Test Markets – this is where a few stores agree to carry the new product for a fee.
Simulated Test Markets – the company tests the product in simulated shopping environment to a
sample of consumers.
8. Commercialization
This is the introduction of the new product into the market place. Test marketing gives management
the information needed to make a final decision to launch the new product.
The company launching a new product must first decide on introduction timing.
The company must also decide where to launch the new product i.e. in a single location, a region,
the national market, or the international market.

SERVICES
A service is any activity or benefit that one party can offer to another that is essentially intangible
and does not result in the ownership of anything.

Characteristics of services
Services have characteristics that greatly affect the design of marketing programmes and
differentiate them from tangible goods.
1. Intangibility
Unlike physical products, services cannot be seen, tasted, felt, heard, smelled, before they are
bought. To reduce uncertainty buyers look for signals or evidence of service quality. They will draw
inferences about the service quality from place, people, equipment, communication material,
symbols, and price that they see. Therefore it’s the service marketers’ job to tangiblize the service in
one or more ways.

2. Inseparability
Services are produced and consumed simultaneously. This is untrue of physical goods which are
manufactured, put into inventory, distributed through multiple resellers, and consumed still later.
Therefore inseparability of services means that services cannot be separated from their providers,
whether machines or people are the providers.
If a person renders a service, then the provider becomes part of the service. Since the client is also
present as the service is produced, provider – client interaction is a special feature of services
marketing. This means that both people affect the service outcome.

3. Variability
Services are highly variable. This means that their quality depends on who provides them as well as
when, where and how they are provided. The service varies from person to person depending on
energy levels and mental state. The company can take three steps to encounter this problem; (1)
investment in good personnel selection and training; (2) standardising the service – performance
process throughout the organisation; and (3) monitoring customer satisfaction through suggestion
and complaint systems, customer surveys and comparison shopping, so that the service difference
can be detected and corrected.
4. Perishability
This means that services cannot be stored for later sale or use unlike tangible products which can be
stored for a longer period of time. For example a person who goes to Bat Valley theatre to watch a
play which begins at 7:30pm but enters the Hall at 8:30pm. This means that the person will have
missed the 30minutes of the play. Therefore we say that the 30minutes perished.

5. Lack ownership
Services lack ownership. One cannot own and store a service like they do for a product. For example
when you buy an aero plane ticket to fly to the USA, you are buying a service and you cannot take
the aero plane flight home with you.

6. Customer Involvement
Many services require a fair degree of customer involvement. A channel designed to provide services
requiring customer input should attempt to facilitate customer involvement. Examples include
mirrors in beauty shops, individual work-ups for fitness clubs, Vita-Stat machines that weigh and
take people’s blood pressure in supermarkets and drugstores, etc. all involve customers in the
services being provided.

How to Market Services

Because of their nature services usually require additional marketing approaches. In offering services
it is the frontline service employee that interacts with the customer, therefore service providers
must interact effectively with customer if they are to create superior value during service
encounters.

Successful companies focus their attention on both the employees and customers in addition to
their 4ps; this is done through internal marketing (to the employees), External marketing (4ps) and
interactive marketing (to the customers).

External marketing
It’s a type of marketing between the company and customers. In this marketing the company
prepares/ sets price, distributes and promotes the service to customers.

Internal marketing
It’s marketing by a service firm to effectively motivate its customer – contact employees and all
supporting service people to work as a team to provide customer satisfaction.

Interactive marketing
This is a type of marketing by a service firm that recognizes that perceived service quality depends
heavily on the quality of buyer – seller interaction. In services marketing, service quality depends on
both the service deliverer and the quality of the delivery.