PRODUCT

Meaning of Product: A product is something that is manufactured for sale in the market.
Customer needs are met by the usage of products. Product is one of the main components of
marketing—all marketing activities revolve around the product. A product is a set of tangible and
intangible attributes, including packaging, colour, price, manufacturer’s and retailer’s services,
which the buyer may accept as offering satisfaction or wants or needs”. In a narrow sense, “A
product is a set of tangible physical attributes in an identifiable form”
According to W. Alderson “A product is a bundle of utilities consisting of various product
features and accompanying services”.
According to Philip Kotler, “A product is anything that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a want or need. It includes physical objects,
services, persons, places, organization and ideas”.
According to Hills and Woodruff “Product is anything that is potentially valued by a target
market for the benefits or satisfactions it provides, including objects, services, organizations, places
people and ideas”.
Features of a Product
1. Tangibility: Products are tangible in nature, customers can touch, seen or feel a products. For
example, car, book, computer etc.
2. Intangible Attributes: Service products are intangible in nature, services like, consultancy,
banking, insurance etc. The product may be combination of both tangible & intangible attributes
like restaurants, transportation; in case of a computer it is a tangible product.
3. Associated Attributes: The attributes associated with product may be, brand, packaging,
warranty, guarantee, after sales services etc.
4. Exchange Value: Irrespective of the fact that whether the product is tangible or intangible, it
should be capable of being exchanged between buyer and seller for a mutually agreed price.
5. Customer Satisfaction: A product satisfies the customer needs and wants of customers, value
of products is also determined by the level of satisfaction given by a product after purchase.
Different Levels of a Product:
1. Core Product: It includes the key feature of a product. It forms the basis for other product
offering levels. For example, the key feature of a car is to travel from one place to another.
Therefore, a simple and small car with no additional features is a core product.
2. Basic Product: It includes some added benefits along with the basic feature of a product. For
example, a clean and spacious car is the basic product.
3. Expected Product: It refers to a product that is desired by customers. It varies from individual
to individual depending on other factors, such as social class. For example, a customer buying a
car may expect an air conditioner and music system in it.
4. Augmented Product: It includes additional attributes of a product as compared to products
offered by competitors. The additional benefits satisfy rational customers more in terms of
value. For example, a car may have special in-built features, such as LCD TV or refrigerator.
5. Potential Product: It compares the benefit derived from the product in future with the current
product. It creates a value for customers beyond their expectations. For example, a high
technology gadget car with good ambience and comfort is a potential product.

Product Hierarchy:
1. Need family: The core need that underlines the existence of a product family. Let us consider
computation as one of needs.
2. Product family: All the product classes that can satisfy a core need with reasonable
effectiveness. Example: all of the products like computer, calculator can do computation.
3. Product class: A group of products within the product family recognized as having a certain
functional coherence. For instance, personal computer (PC) is one product class.
4. Product line: A group of products within a product class that are closely related because they
perform a similar function, are sold to the same customer groups, are marketed through the same
channels or fall within given price range. For instance, portable wire-less PC is one product line.
5. Product type: A group of items within a product line that share one of several possible forms of
the product. For instance, palm top is one product type.
6. Brand: The name associated with one or more items in the product line that is used to identity
the source or character of the items. For example, Palm Pilot is one brand of palmtop.
7. Product variant: A distinct unit within a brand or product line distinguishable by size, price,
appearance or some other attributes. For instance, LCD, CD- ROM drive and joystick are
various items under palm top product type.
Product Hierarchy:
1. Need family: The core need that underlines the existence of a product family. Let us consider
computation as one of needs.
2. Product family: All the product classes that can satisfy a core need with reasonable
effectiveness. For example, all of the products like computer, calculator or abacus can do
computation.
3. Product class: A group of products within the product family recognised as having a certain
functional coherence. For instance, personal computer (PC) is one product class.
4. Product line: A group of products within a product class that are closely related because they
perform a similar function, are sold to the same customer groups, are marketed through the same
channels or fall within given price range. For instance, portable wire-less PC is one product line.
5. Product type: A group of items within a product line that share one of several possible forms of
the product. For instance, palm top is one product type.
6. Brand: The name associated with one or more items in the product line that is used to identity
the source or character of the items. For example, Palm Pilot is one brand of palmtop.
7. Item/stock-keeping unit/product variant: A distinct unit within a brand or product line
distinguishable by size, price, appearance or some other attributes. For instance, LCD, CD-
ROM drive and joystick are various items under palm top product type.
Classification of Products:
A. Based on the Nature:
1. Goods: Any product manufactured in mass quantity, requires proper marketing to make it
available to its consumers located in different places of the country or world. Example; Mobile
phones manufactured in China and sold all over the world
2. Services: An economic activity performed to meet the consumer’s demand, needs, promotion
and marketing. Example; Ola cabs providing for local taxi services
3. Events: Various trade fairs, live shows, local events & other promotional events Example; IPL
4. Experiences: It organizes & customizes the impression made by certain goods and services to
fulfill the customer’s wish. Example; A Europe trip package provided by makemytrip.com.
5. Places: Marketing of tourist places, cities, states & countries helps to attract visitors from all
over the world. Example; India’s Ministry of Tourism promoting through ‘Incredible India’.
6. Properties: It provides for selling of tangible & intangible properties like real estate, securities,
debentures, etc. Example; Real estate agents publicize the residential plots to investors
7. Organizations: Several corporations and non-profit organizations like schools, colleges,
universities, art institute’s, etc. create and maintain a public impression through marketing.
Example; Circulars and advertisements made by colleges as ‘admission open.’
8. Information: Certain information related to healthcare, technology, media, market, finance, etc.
have to demand among the corporate decision-makers marketed by leading information
agencies. Example; Bloomberg provides all current financial, business and market data
9. Ideas: Brands market their products or services through advertisements spreading a social
message to connect with the consumers.
B. Based on Consumer Intentions:
1. Convenience Products: Convenience Products are usually low priced, easily available products
that customer buys frequently, without any planning or search effort and with minimum
comparison and buying effort. This category includes fast moving consumer goods (FMCG) like
soap, toothpaste, detergents, food items like rice, wheat flour, salt, sugar, milk and so on.
2. Shopping Products: Shopping products are high priced, less frequently purchased consumer
products and services. While buying such products or services, consumer spends much time and
effort in gathering information about the product and purchases the product after a careful
consideration of price, quality, features, style and suitability.
3. Speciality Products: Speciality Products are high priced branded product and services with
unique features and the customers are convinced that this product is superior to all other
competing brands with regard to its features, quality and hence are willing to pay a high price
for the product. The buyers do not compare specialty products.
4. Unsought Products: Unsought product is consumer products that the consumer either does not
know about or knows about but does not normally think of buying. In such a situation the
marketer undertakes aggressive advertising, personal selling and other marketing effort. The
price of such product varies. Examples of unsought product are cemetery plots, blood donation
to Red Cross, umbilical cord stem cell banking services.
C.Based on Industrial Intentions:
1. Raw Materials: Raw materials used in the production of other goods are called industrial
goods. Such goods may be sold in their natural state or may be processed.
(a) Natural products such as iron ore, crude petroleum, lumber.
(b) Farm products such as livestock and agricultural products, fruits, cotton, vegetables, etc.
2. Fabricating Materials and Parts: Many manufacturers purchase rather than construct some of
the component parts of their product. These parts become part of the product. The automobile
industry is a example for fabricating materials. The producers put together such parts as tyres,
batteries that have been purchased from affiliated companies rather than internally produced.
3. Installations: Machinery and equipment of an industrial producer are depreciated by long use
and new ones are to be installed. Examples: locomotives, factory buildings, etc. Middlemen are
rarely used for the purchase of installations and the channel of distribution is short, running from
the producer directly to the industrial user.
4. Accessory Equipment: Accessory equipment facilitates perform the basic operations of a
manufacturing plant. Small motors, computers, office furniture are examples of accessory
equipment. Advertising & sales promotion strategies are used in marketing accessory goods.
5. Supplies: Supplies are materials used in the operation of a business that do not become a part of
the finished product. Lubricating oil, coal, stationery are examples of supplies. Supplies are the
convenience products of the industrial market. The channel of distribution for these goods is
short and the goods are frequently negotiated in large contract lots by top executives.
6. Services: Nearly half of all consumer expenditures are for services. There is a big market for
industrial services. Many large organizations are moving into the service sector. For example, in
the baby Food Company, owns nursery schools & Coca-Cola has entered the education market.
Product Mix: Product mix, also known as product assortment, refers to the total number of
product lines that a company offers to its customers. The product lines may range from one to
many and the company may have many products under the same product line as well. The product
mix is a subset of the marketing mix and is an important part of the business model of a company.
The product mix has the following dimensions
1. Width: The width of the mix refers to the number of product lines the company has to offer. For
example – if a company produces only soft drinks and juices, this means its mix is two products
wide. Coca-Cola deals in juices, soft drinks, and mineral water, and hence the product mix of
Coca-Cola is three products wide.
2. Length: The length of the product mix refers to the total number of products in the mix. That is
if a company has 5 product lines and 10 products each under those product lines, the length of
the mix will be 50 [5 x 10].
3. Depth: The depth of the product mix refers to the total number of products within a product
line. There can be variations in the products of the same product line. For example – Colgate has
different variants under the same product line like Colgate advanced, Colgate active salt, etc.
4. Consistency: Product mix consistency refers to how closely products are linked to each other.
Less the variation among products more is the consistency. For example, a company dealing in
just dairy products has more consistency than a company dealing in all types of electronics.

NEW PRODUCT DEVELOPMENT

Concept: A new product is a product that is new to the company introducing it even though it may
have been made in same form by others. New products are whose degree of change for customers
is sufficient to require the design or re-design of marketing strategies. Development is the process
of finding out the risk of producing a product.
W.J. Stanton: “A new product is one which is really innovative which is significantly different
from existing and imitative products that are new to the company.”
Need of New Product Development: The need for new product development is:
1. Putting All Eggs in One Basket: If an organization depends on only one product to get all the
business & profits it faces the danger of losing everything in one stroke. Example: Automobile
Products selling Lambretta scooters lost its business to Bajaj & it had no option to close down.
2. Creating New Avenues: The market is always growing itself & newer consumer needs &
demands. Organizations must come out with new products that will create new avenues for the
growth of organizations. E.g. Godrej refrigerators did not come out with smaller refrigerators to
take care of the middle class willing to buy them & lost business first to Whirlpool/LG etc.
3. Choice for Selection: The consumer needs & demands keep changing & organizations should
create products in both upward & downward changes. E.g. Maruti launched its 800 & introduce
Zen, Swift, Swift Dezire and WagonR etc. to give the consumers various choices & keep them
tied to its own products.
4. Competition: When competition is the market leader, organizations introduce multiple products
to corner small portions of the competitor’s market share and win a larger market share. E.g.
Vadilal introduced 24 flavours to beat Quality Ice-cream and become the market leader
New Product Development Stages:
1. Idea Generation: The new product development starts with the search and generation of ideas
which may arise from various sources like company’s R&D department, market and consumers
trends, competitors, focus groups, employees, sales people and such other.
2. Idea Screening: At this stage, the generated ideas are screened down on the basis of their
feasibility and viability, only practical and workable ideas are developed. The purpose of
screening is to have a critical evaluation of product ideas and drop the poor ideas.
3. Concept Development & Testing: The Company may have considered the idea to be feasible,
but has to be tested with the target audience. Here the product idea is converted into consumer
item & presented to appropriate target consumers to know their reactions. If the reaction is
positive, the company moves to next stage.
4. Market Strategy Development: After successful concept testing, the marketing manager will
develop a preliminary marketing strategy for introducing the product in the market. The
marketing strategy will highlight the segmentation, targeting & positioning strategy.
5. Business Analysis: It is the study of economic feasibility of the new product i.e. whether the
product will be financially worthwhile in long run or not. This stage estimates the expected
future profitability, i.e. what cash flow can generate, what will be the cost of production, what
will be the expected life of the product, share of market product etc.
6. Product Development: The product is declared economically feasible; the company gives the
product its physical shape. This stage involves huge investments. The physical product as it
would appear is prepared so that it can be tested.
7. Test Marketing: It is a stage where the new product is tested with a particular target market, to
find out whether it is acceptable or not. The expectation of the consumers from the product is
tested here. It helps in pretesting the product & marketing plan before launched in the market.
8. Commercialization: Marketing gives actual introduction of the product. Here the company
considers certain factors like when to launch the product, where & how the product will be
launched, which market & which consumers to target etc. Market entry timing is very important.
Reasons for New Product Failure:
1. Improper Planning: Improper planning of market leads to failure of the product. Companies
often while caring for the customers fail to appreciate the changes taking place in their needs
and wants. Similarly, the needs of the buyers are affected by the changing environment, business
opportunities, & technological changes and so on.
2. Improper Timing: Launching a product at wrong time also leads to the failure of the product.
Marketers many times launch the product too early which results in high cost or too late by
which time the demand of the product may decrease.
3. Poor Quality: New product may not be of that quality that the consumer expects and may
therefore fail. The quality of the product is not only reflected in its superior features but also its
difference from the existing product. New product many time do not satisfy unique needs of the
consumers, or does not satisfy a new function..
4. Deficiencies in the Product: Technical deficiencies in the product are common cause for new
product failure. Though the engineers try to get the best laboratory products, technical
deficiencies may be there and the product may fail.
5. Bad Ideas: Many products fail because the basic idea was not good. This type of failure is
because a wrong idea was allowed to grow. The defect here lies in the screening process which
could not filter out the unfit ideas. The company and corrective measure should be incorporated,
if company wants to avoid this type of failure.
6. Tough Competition: The competitive environment may be such that new product fails to gain
ground and grow. If the competitors are strong or more in numbers, it becomes difficult for the
company to make the product a success. Firm should therefore carefully analyse the competitive
environment and only then go for new product development.
7. Improper Promotion: Many times product fails because company do not give due attention to
the promotion. Without sound communication about the product to the consumers, markets
remained uninformed and they do not buy the products..
Product Life Cycle
Product life cycle [PLC] can be understood as “the period of time over which an item is developed,
brought to market and eventually removed from the market. Every product passes through almost
similar type of phases, which are known as the product life cycle. Though all products have a
different life cycle and several products do not pass through all phases. The PLC theory believes
that the industry follows an ‘S shaped curve’ because innovation and diffusion of a new product.
Philip Kotler, “The product life-cycle is an attempt to recognize distinct stages in the sales history
of the product.”
William J. Stanton, “From its birth to death, a product exists in different stages and in different
competitive environment. Its adjustment to these environments determines to a great degree just
successful its life will be.”

1. Introduction Stage: At this stage the product is launched into the market, hence awareness and
acceptances are minimal. So here the emphasis should be on promotional activities so as to
acquaint customers with the product and gain acceptance. Advertising and sales promotions are
extensively used in order to build awareness, encourage evaluation and trial and initial adoption.
2. Growth Stage: During this stage mass market acceptance will take place through early
adopters. Growth will be rapid, profits & all initial costs covered during this period. This stage is
marketed by increase in the number of competitors, major product improvements, etc. An
expansion facilitates market penetration in view of increasing pressure from competitors.
3. Maturity Stage: During this stage sales growth continues but declining number of potential
customers. This stage represents the most competitive stage in the life of a product but profits
are flowing in steadily. Promotional efforts are needed to attract new users to the product.
During this stage emphasis is given in opening new distribution channels and retail outlets.
4. Saturation Stage: There are now many competitors in the market, profits per unit have further
declined and there is no growth in sales. It is time to consider new markets, changes in prices,
promotion and introduction of new product versions or new products.
5. Decline Stage: In this stage declining sales as it faces competition from better products or better
substitutes developed by the competitors. At this stage the product has to be redesigned or the
cost of production reduces so that they can continue to make some contribution to the company.
Strategies followed During Various Stages of Product Life Cycle are:
1. Strategies during Product Development Stage:
a) Focus is on product
b) Emphasis is on cost reduction
c) Exploring of the market starts
d) Publicity of the product (about its coming)
e) Production capacity must be looked after
f) Quality must be checked
g) Focus on work is to be given
2. Strategies during Introduction Stage:
a) Persuade people to try the products.
b) Stress should be on advertising to inform the customer about the product
c) Give introductory offers by providing some attractive gifts to entice the customers.
d) Give a valid reason to the customers to buy the product
e) Dealers should be given good discounts
f) There should be selective distribution to focus on target customers
g) Skimming pricing should be followed to earn higher profits in the initial stages
3. Strategies during Growth Stage:
a) Aggressive advertising is required to stimulate the sales of the product
b) Availability of the product should be ensured to a large number of customers
c) Modifications or new versions of the product are required to be introduced to fulfill the
requirement of different customer classes.
 d) Focus should be on developing the brand image through promotional activities
e) Competitive prices must be maintained to grab the market.
f) Activities should be customer oriented; an emphasis should be given on customer services
to satisfy them to a maximum level.
4. Strategies during Maturity Stage:
a) More and more emphasis is required on the brand image in order to differentiate the product
from products of the competitors.
b) More benefits may be provided e.g. extending the warranty period, guarantee period etc.
c) Packaging may attractive.
d) Requirement to explore the new markets for the product.
e) New uses and new users of the product may be developed.
f) New Technology can be adopted to enhance the quality of the product.
g) New features can be added to enhance the value of the product.
5. Strategies during Decline Stage:
a) More emphasis on the promotional schemes
b) More value addition to the product can be done.
c) Cost of production should also be reduced.
d) Economy packs of the products should be introduced.
e) Emphasis is on sales volume with minimum profit margins.
Factors Affecting PLC:
1. Rate of Technical Changes: Life-cycle of a product depends upon the rate of technical changes
taking place in the country. If technical changes take place in the country at a very high rate, the
life-cycle of the products in that country will be very limited because new and improved
products take place of the old products.
2. Rate of Market Acceptance: The length of life-cycle of products in a country depends upon the
rate of market acceptance in the country also. If the customer of a country accepts a new product
very fast, the life-cycle of products in such country will be very limited because the customers,
who have accepted a product so fast and the product may stand out of the market.
3. Ease of Competitive Entry: The success or failure of a product in the market depends to a large
extent upon the situation of competition in the market. If the competitors can enter into a market
very easily, the life-cycle of the product will be very short. On the contrary, if the competitors
cannot enter into a market so easily, the life-cycle of products in such market can be fairly long.
4. Risk Bearing Capacity: The enterprises having more risk bearing capacity can keep their
products standing in the market for a long period because they can face all the challenges of
market effectively. On the other hand, the enterprises having less risk bearing capacity are
unable in facing the challenges of the market; life-cycle of their products is curtailed to short.
5. Economic & Managerial Forces: Economic & managerial forces also determine the success of
the enterprise in the market to a great extent. If an enterprise enjoys sound economic and
managerial forces, the life-cycle of the product of such enterprise can be longer than that of the
products of an enterprise suffering from weak economic and managerial forces.
6. Protection by Patent: If the patent of a product is registered, the life-cycle of the product can
be long, and if the patent of a product is not registered, the life-cycle of the product is short.