UNIT-I

Product: Concepts,
Product Levels,
Product Hierarchy, and
Product Classification –
Product Life Cycle –
Portfolio Management –
Market Potential –
Product Demand Pattern and Trend Analysis–
New Product: Planning, Development Strategies, and Launching Strategies.

In order to be effective at selling or marketing, it is necessary to have a proper perspective of

the meaning of a product, or how it should be viewed from a marketing perspective.
The key element in any marketing program is an organisation’s product. Before making decisions
about pricing, promotion and place-the other elements of marketing mix a firm has to determine
what product it will present to the public.
Any firm that markets products or services has two aims to achieve : Consumer satisfaction and
profit maximization. Profit maximization objective can only be achieved through consumer
satisfaction. To the marketer products are the building blocks of a marketing plan. Good products
are key to market success. Product decisions are taken first by the marketers and these decisions are
central to all other marketing decisions such as price, promotion and distribution. Product is the
vehicle by which a company provides consumer satisfaction. It is the engine that pulls the rest of the
marketing program. Products fill in the needs of society. They represent a bundle of expectations to
consumers and society.
Definitions :
"A product is a complex of tangible and intangible attributes including, packaging, colour, price,
manufacturer’s prestige and retailer’s prestige and manufacturer’s and retailer’s services which the
buyer may accept as offering satisfaction of wants or needs" - William J.Stanton
"A product is a bundle of physical service and symbolic particulars expected to yield
sati sfacti on or benefi ts to the buyer". Philip Kotler

So it can be said that Product is a combination of several characteristics physical and psychological.
How people personally feel about or perceive the product is just as important as the actual physical
characteristics of it. For example; a refrigerator is not just merely steel, plastics, feron gas, brand
name, number of doors etc. but also involves factors like after sale service, delivery and installation,
assisting in purchase of the product, dealer network and service etc. One more example-a motor car
in terms of marketing is something more than merely assembled pieces of metal, rubber etc. It
certainly provides "transportation" and that is one of the important benefits provided by a car.
However this is not the only reason why motor cars are bought. Why some people move about in
expensive foreign cars ? The expensive cars obviously provide a sort of ’image’ or a ’status symbol’
for the purchaser.
Product Concept :
What then constitute a product ? To understand and appreciate, we need to perceive it as a four
layers items. The following figure explains the total product concept
At the heart of it is the "Core" or "generic" part. Core product addresses the question "what is the
buyer really buying"? It consists of the problem-solving service or the basic benefit which the
customer seeks while buying the product. e.g. when we buy a refrigerator, we buy the benefit of
preserving food stuff, availing the benefit of ice and cold water etc.
To differentiate its product from all others, the firm names it (branding), packs it, puts additional
features like laminated top, a stand or a water tap on the door of the refrigerator, use colours to
give distinctive appeal. All this transforms a "core product" into a "formal product" or the expectant
product. It is here that the marketer searchs for possible differentiation. When technology ceaes to
give one and it becomes a price and promotional war the marketer looks for the intangibles.
Intangibles are services like after sale services, delivery and installation, schedules helping buyers
purchase the product through low-cost financing options and the like. There are no fixed
range of services that a marketer may offer. It is based on customer needs and marketer’s creative
strategy to feel it. This intangible component of the product along with the formal and core
components is called augmented product. The marketer keeps expanding the service component,
thus enhancing the product value. Not all customers for all products and under all circumstances can
be attracted by this on going process of value enhancement. They may prefer to buy a low priced
product to an augmented product. Some customers may not be able to use extra services offered by
the marketer. The firm should also undertake cost reduction programme so that it can compete on
the price front too.
The potential product consists of every thing that might be done to enhance utility of the product to
hold customers to attract newer ones. These offerings differ from one market to another because of
varying economic and competitive conditions. The driving force in developing these offering is the
prime goal of any firm retain competitive advantage.
Thus product is the total concept that a customer buys. As competition intensifies, markets open up,
and as we improve our telecommunication and information network and there are more televisions
in Indian families, firms will have to reexamine their product concepts. For, an important fact to be
kept in mind is that these concepts keep changing as customers become more aware and
sophisticated.
Classification of Products :
Let us now analyse the different types of products we come across. Broadly products can be
classified into following categories. Figure given below :

Consumer Products or Goods :

Consumer goods are those which are used by ultimate consumers or households and in such form
that they can be used without further commercial processing. Consumer products were first
classified almost seventy years ago by Melvin T.Cope land. His three category systems of
convenience, shopping and speciality products is widely employed today.
(i) Convenience Goods : These goods are purchased with minimum of effort because the buyer has
knowledge of the product characteristics prior to purchase. The consumer does not want to search
for additional information. Many food products, candy, soft drink, Cambs, small hardware items,
newspapers, small packed confectionery etc. fall into the convenience goods. For marketing of these
products the marketer relies on intensive distribution, intensive advertising and in store displays.
Convenience goods can be susdivided into three categories : Staple goods, impulse goods and
emergency goods.
(ii) Staple goods : These account for bulk of the convenience purchasing. Such are purchesed
routinely with little planning. Many are perishable such as bread, milk, meat, and are brought
frequently. The consumer does not exert much effort to acquire staple products. These items must
be close to where the consumer lives, works or passes by.
(iii) Impulse Goods : These are the goods the consumer does not plan to buy on a specific trip to a
store. The consumer enters the store and see a product which attracts his eyes, he buys it on
impulse. Such goods are not purchased on regular basis. Here the exposure to product triggers the
need. The desire to buy staple products may cause to got to shopping but the desire to buy the
impulse goods is a result of shopping
Emergency goods : Purchase of emergency products result from urgent and compelling needs such
as repair of umbrella when raining.
Shopping goods : These are goods which are purchased after going around shops and comparing the
different alternatives offered by different manufacturers and retailers. In this case, quality, price,
fashion, style, etc. are of great importance. A common example in the Indian context, would be the
purchase of sarees by ladies. Generally ladies go on looking around from shop to shop before they
make their final selection. These also include durables such as furniture and refrigerators. That is
why a large variety of goods offered at a retail outlet increases sales of this type of goods. A
manufacturer should also attempt to have his product properly displayed and offered at most retail
outlets.
Shopping goods can be further divided into two categories :
1.Homogeneous Products
2.Heterogeneous Products
1. Homogeneous Products : These products have essentially the same features. For example,
refrigerators, washing machines, etc. Brand names are very important since consumers view them as
assurance of quality. These products are usually price based shopping products.
2. Heterogeneous Products : These are non standardized and stylish in nature. Consumers get
information about and then evaluate product information w.r.t. features, warranty, performance,
options and other factors. The product with best combination of attributes is purchased. For
example, furniture, jewellery etc.