Topic 5

PRODUCT
 Table of Contents

5.1 5.2 5.3

Consumer and
5.4
Define Levels of Business Product Life
Product Product Product Cycle
Classification
5.1
Define
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 are more than just tangible goods.

They include :
a) physical objects e) places
b) services f) organizations
c) events g) ideas
d) persons h) mixes of these
entities
Eg : iphone 13, Big Mac at McDonald’s, Cuti-cuti
Malaysia vacation, advice from your family doctor,
Maybank2U online banking services
 SERVICES?

● SERVICES are :
 a form of product that consist of
activities, benefits, or satisfactions
offered for sale that are essentially
intangible and do not result in the
ownership of anything.

 Eg : home repair services, hotel

and banking.
5.2
Levels of
Product
3 LEVELS OF PRODUCT
 a. Core Product

 Eg : Sony Digital
 The most basic level is Camera  taking
the core product.
pictures
 It addresses the
question :
‘ what is the buyer really
buying?’
 It consists of the core,
problem-solving benefits
that consumers seek when
they buy a product or
service.
 b. Actual Product
 The product planner then builds an
actual product around the core product.

 The actual product has 5 characteristics:

i) quality level iv) features
ii) design v) brand name
iii) packaging

 For example, Sony Digital Camera

 combined name, parts, styling,
features, packaging, and other attributes
to deliver the core benefit that is a
convenient, high quality way to capture
important moments.
 c. Augmented Product
 Offering additional consumer services &
benefits such as :
a) Delivery and credit
b) Warranty
c) Installation
d) After sales service
 Sony digital camera must provide :
i) the consumers with a complete solution to
their picture- taking problems
ii) a warranty on parts
iii) workmanship, instructions on how to use the
digital camera
iv) quick repair services when needed
v) a toll-free telephone number to call if they
have problems or questions
 Example : Toyota Camry

(1)
Core product

(2)
Actual product

(3)
Augmented
product
5.3
Consumer and Business
Product Classification
 Product Classifications
Consumer Product Industrial Product
Products that purchased Products that purchased
by final consumers/end by individuals and
users for personal organizations for use in
consumption production, resell / rent to
get profit
 Consumer Product Classification
(1) Convenience Product
Customer buying Frequent purchase, little planning, little comparison or
behavior shopping effort, low customer involvement
Price Usually low price
Widespread distribution, convenient locations to make them
Distribution
readily available when customers need them.
Promotion Mass promotion by the producer

Examples Toothpaste, magazines, laundry detergent

 Consumer Product Classification
(2) Shopping Product

Customer buying Less frequent purchase, much planning and shopping effort,
behavior comparison of brands on price, quality, style
Price Higher price
Distribution Selective distribution in fewer outlets
Promotion Advertising and personal selling by both producer and resellers

Examples Major appliances, televisions, furniture, clothing

 Consumer Product Classification
(3) Specialty Product
Customer buying Strong brand preference and loyalty, special purchase effort,
behavior little comparison of brands, low price sensitivity
Price High price
Exclusive distribution in only one or a few outlets per market
Distribution
area
More carefully targeted promotion by both producer and
Promotion
resellers

Examples Luxury goods, such as Rolex watches, fine crystal, pearl

 Consumer Product Classification
(4) Unsought Product

Customer buying Little product awareness, knowledge (or, if aware, little or

behavior even negative interest)
Price Varies
Distribution Varies
Aggressive advertising and personal selling by producer and
Promotion
resellers

Examples Life insurance, red cross blood donations

Industrial Product Classification
(1) Materials and Parts

Goods that enter the product directly consist of

raw materials, manufactured materials, and
component parts.

a. Raw Materials
● These are the basic products that enter in
the production process with little or no
alternations.
● Raw materials consist of farm product and
natural products.
Industrial Product Classification
(1) Materials and Parts
b. Manufactured Materials
● Manufactured materials include those raw
materials that are subjected to some amount
of processing before entering the
manufacturing process.
● E.g -iron, yarn, cement, wires
c. Component Parts
● Component parts such as electric motors,
batteries and instruments can be installed
directly into products with little or no
additional changes.
● E.g - small motors, tires
 Industrial Product Classification
(1) Materials and Parts

 Sold directly to industrial users

 Price and services are the major marketing
factors
 Branding and advertising tend to be less
important
 Industrial Product Classification
(2) Capital Items

Industrial products that aid in the buyer’s

production or operations.
Including :
a) Installation
- major purchases such a buildings
(factories, offices)

- fixed equipment (generators, large

computer systems, elevator)
 Industrial Product Classification
(2) Capital Items

b) Accessory equipment
(i) Portable factory equipment and tools
(hand tools, lift trucks)
(ii) Office equipment (fax machines, desks)

 Light equipment and tools which have lower

purchase prices and are not considered as part
of fixed plant.
Industrial Product Classification
(3) Supplies and Services
Supplies and services sustain the operation of the
purchasing organisation. They do not become a part of
the finished product.

Supplies include :
(a) Operating supplies
(lubricants, coal, paper, pencils)

(b) Maintenance items

(paint, nails, brooms)
Industrial Product Classification
(3) Supplies and Services
Companies need a broad range of services like building
maintenance services, auditing services, legal services,
courier services, marketing research services and others

Services include :

(a) maintenance and repair services

(window cleaning, computer repair)

(b) business advisory services

(legal, management consulting, advertising)
5.4
Product Life Cycle
Product Life Cycle
(PLC)
Product Life Cycle (PLC)

 Like human beings, products also have a life-

cycle. From birth to death, human beings pass
through various stages eg; birth, growth,
maturity, decline and death.

 A similar life-cycle is seen in the case of products.

 Product life cycle involves FOUR stages :

Product Life Cycle
Product Life Cycle
(PLC)
 Product Life Cycle (PLC)
(I) Introduction (II) Growth

 It is a period of slow sales growth  It is a period of rapid market

as the product is introduced in the acceptance  increasing sales and
market profits

 Profits are non existent in this  The early adopters will continue to
stage because of the heavy expenses buy, and later buyers will start
of product introduction following their lead, especially if they
hear favorable ‘word of mouth’
 Product Life Cycle (PLC)
(III) Maturity
 It is a period of slow down in sales  It is a period when the sales fall off
growth because the product has
achieved acceptance by most potential
buyers.
 Profits level off or decline
because of increased
marketing outlays to
defend the product
against competition.
(IV) Decline
and the profits drop.
 Reason :
a) Tech advances
b) Shifts in consumer taste
c) Increased competition
 Company may : reduce costs and
price, promotions or drop the product