Marketing CHAPTER 7

CHAPTER
7
MARKETING MIX:
PRODUCT
Subtopics:-
7.1 Definition Of Products, Services and Experiences
7.2 Product and Service Decisions
7.3 Branding Strategy
7.4 Services Marketing
7.5 Managing New-Product Development
7.6 Product Life Cycle
7.1 PRODUCTS, SERVICES, AND EXPERIENCES
Definition of Products, Services, and Experiences
What comes to mind when someone says “product”? Does an

image such as a camera or a burger come to mind?
What about architecture or courier services? Are they

considered as products?
Now, let us take a closer look at the definition of products,

services, or experiences.
A product is a key element in the market offering. It is the heart of an

organization’s marketing programme. Without a product, a price, promotion
strategy, or a distribution channel cannot be determined.
Definition
Products Anything that can be offered to a
market for attention, acquisition,
1.
use, or consumption that might
satisfy a need or want.
Service A form of product that consists of
activities, benefits, or satisfactions
2. offered for sale that are essentially
intangible and do not result in
ownership.
Experiences Represent what buying the
3. product or service will do for the
customer.
104 | P a g e C h a p t e r 7 : M a r k e t i n g M i x : P r o d u c t
Example of products, service, and experience are as follows.
Physical
goods
automobile camera
Services
haircut hotel
Experience
s
Genting Highland
Berjaya Times Square
Indoor Theme Park
Levels of Product and Services
Do you realize that a product and service can be divided into

three levels? Let us find out.
1. Core Benefit
The most basic level is the core benefit, which addresses the question
what is the buyer really buying?
What can car benefit you? A car gives you a convenience state. A
car would ease you at which you can go where you like, and
when you want to. Another core benefit is speed since you can
travel around relatively quickly. What is customer really buy is a
convenience and a speed.
2. Actual product
The ACTUAL product is the tangible, physical product. You can get some
use out of it.
Let’s us consider the example of car again.
From the benefits it turns into a car. Proton, Perodua or Honda’s car
is an actual product. Its name, parts, styling, features, and other
attributes have all been combined carefully to deliver the core
benefit such as a convenience, and speed.
3. Augmented product
The AUGMENTED product is the non-physical part of the product. It usually

consists of lots of added value, for which you may or may not pay a
premium.
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 and Service Classifications
Products and services can be classified as either consumer or business

(industrial) products, depending on the buyer’s intentions.
Consumer Products
Consumer products are products and services bought by final consumers for
personal consumption. They can be classified into four types.
1. Convenience products
Convenience products are items the consumer seeks to purchase
frequently, and immediately. They are inexpensive and are purchased
often and with little expenditure of time and effort.
Example of convenience products are milk, newspaper, detergent,

soap and bread which things can be found at a 7-Eleven, grocery
shop in your neighbourhood and even at petrol stations such as
Petronas, Shell and Mobil.
2. Shopping products
The product requires comparison shopping effort because the product is
usually more expensive than convenience products and found in fewer
stores. Consumers usually buy products after comparing several brands or
stores based on styles, practicality, price, and lifestyles compatibility.
A person intent on buying a

new sofa or dining room
table may visit many stores,
examine dozens of pieces of
furniture, and spend days
making the final decision.
3. Speciality products
Consumers will search extensively for a particular item and are very
reluctant to accept substitutes. Marketers usually use selective, status
conscious advertising to maintain product image. The distribution is also
limited to one or few outlets in a geographical area.
Examples of speciality
products are Rolex watches,
Lamborghini and Rolls Royce
automobiles.
4. Unsought Products
Consumers normally do not think of buying the product unless marketers
do heavy promotion to attract attention. Marketers will have to do
aggressive personal selling and highly persuasive advertising.
Examples of unsought
products are
encyclopaedias, life
insurance, cemetery plots,
and blood donations.
Industrial Products
Industrial products are those purchased for further processing of for use in
conducting a business.
Thus, the difference between a consumer product and an industrial product

is based on the purpose for which the product is bought.
If a consumer buys a lawn mower for use around home, the lawn mower is a
consumer product. If the same consumer buys the same lawn mower for use
in a landscaping business, the lawn mower is an industrial product.
The industrial product can be classified into three groups.
1. Materials and parts

 Goods that enter the manufacturer’s product completely. They
fall into two classes: raw materials and manufactured materials
and parts.
 Most manufactured materials and parts are sold directly to
industrial users.
 Price and service are the major marketing considerations, and
branding and advertising tend to be less important.
2. Capital items
 Industrial products that help in the buyer’s production or
operations, including installations and accessory equipment.
3. Supplies and services
 Short-lasting goods and services that facilitate developing
and/or managing the finished product.
 Such services are usually supplied under contract.
7.2 PRODUCT AND SERVICE DECISIONS
Product and services decisions are made at three levels. They are individual
product and service decisions, product line decisions, and product mix
decisions.
Individual Product and Service Decisions
Shown below are the important decisions in the development and marketing
of individual products and services.
1. Product and Service Attributes
Product attributes are the benefits of the product or service offered. These
benefits are communicated and delivered by products attributes such as
quality, features, and styles and design.
 Product quality:
o Quality in terms of the product or service is the lack of
defects.
o In terms of the customer, quality is the value and satisfaction
provided by the product or service.
o Product quality includes level and consistency. Quality level is
the level of quality that supports the product’s positioning.
Performance quality is the ability of a product to perform its
function. Quality consistency is the freedom from defects and
the delivering of a targeted level of performance.
 Product features
o Product features are a competitive tool for differentiating the
company’s product from competitors’ products. Product
features are assessed based on the value to the customer
versus the cost to the company.
 Product styles and design

o Style describes the appearance of a product. Design
contributes to a product’s usefulness as well as to its looks.
Good style and design can attract attention, improve
performance, cut production costs, and give the product a
strong competitive advantage in the target market.
Nokia E71 is the very first Nokia’s 3G phone with full QWERTY
keyboard. Nokia E71 offers a nice and quality design and features
for both personal and business use.
2. Branding
Consumers view a brand as an important part of a product. Branding can

add value to a product. Brand names help consumer identify products that
might benefit them. Brands also tell the buyer something about product
quality.
Buyers who always buy the same brand know that they will get the same
features, benefits, and quality each time they buy.
Most consumers would

perceive a bottle of White
Linen perfume by Estee Lauder
as a high-quality, expensive
product.
But the same perfume in an

unmarked bottle would likely
be viewed as lower in quality,
even if the fragrance were
identical.
3. Packaging
Packaging involves designing and producing the container or wrapper for a

product. The primary function of the package is to contain and protect the
product.
Many companies realize the power of good packaging to create instant

consumer recognition of the company or brand. Innovative packaging can
give a company an advantage over competitors. In contrast, poorly
designed packages can cause headaches for consumers and lost sales for
the company.
The package includes a

product’s primary container
(the tube holding Colgate Total
toothpaste).
It may also include a

secondary package that is
thrown away when the
product is about to be used
(the card-board box
containing the tube of
Colgate).
4. Labelling
A customer can tell a lot about a company by the labels it places on its
products. Labels may range from simple tags attached to products to
complex graphics that are part of the package.
Labels perform several functions. They are:

 The label identifies the product or brand, such as the name Sunkist
stamped on oranges.
 The label might also describe things about the product- who made it,
where it was made, when it was made, its contents, how it is to be
used, and how to use it safely.
 The label might promote the product through attractive graphics.
These are examples of labels.
5. Product support services

Customer service is another element of product strategy. A company’s offer
to the marketplace usually includes some support services, which can be a
minor or a major part of the total offering.
Many companies are now using a sophisticated mix of phone, e-mail, fax,
Internet, and interactive voice and data technologies to provide support
services that were not possible before
Hewlett-Packard offers a complete set of sales and after sale

services. It promises “HP Total Care-expert help for every stage of
your computer’s life. From choosing it, to turning it up – all the way
to recycling it.”
Customers can click on to the HP Total Care service portal that

offers online resources for HP products and 24/7 tech support,
which can be accessed via e-mail, instant online chat, and
telephone.
Product Line Decisions
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.
Product line decision involves product line length. Product line length is the
number of items in the product line.
The line is too short if the manager can increase profits by adding items. The
line is too long if the manager can increase profits by dropping items.
A company can lengthen its product line in two ways:

 Product line stretching: It occurs when a company lengthens its
product line beyond its current range; downward, upward, or
combination of both.
o Downward product line stretching is used by companies at the
upper end of the market to plug a market hole or respond to a
competitor’s attack.
o Upward product line stretching is used by companies at the
lower end of the market to add prestige to their current
products.
o Combination line stretching is used by companies in the middle
range of the market to achieve both goals of upward and
downward line stretching.
 Product line filling: It occurs when companies add more items within
the present range of the line.
o There are several reasons for product line filling: reaching for
more profits, satisfying dealers, using excess capacity, being the
leading full-line company, and plugging holes to keep out
competitors.
Nike produces several lines of athletic shoes and apparel, Nokia

produces several lines of telecommunications products, and Rapid
KL produces several lines of transportation services.
Product Mix Decisions
A product mix consists of all the product lines and items that a particular seller
offers for sale. A company’s product mix has four important dimensions:
width, length, depth, and consistency.
Product Mix Width

Definition
 The number of different product
lines the company carries.
Examples
 Procter and Gamble (P&G)
markets a wide product mix
consisting of 250 brands organized
into many product lines.
 These lines include
o fabric and home care,
o baby care,
o beauty care,
o feminine care,
o health care,
o food and beverage products
Product Mix Length
Definition
 The total number of items the
company carries within its product
lines
Examples
 P&G carries many brands within
each line. They are::
o Seven laundry detergents
 Bounce
 Cheer
 Downy
 Ivory
 Tide
 Dreft
 Era)
o Six body wash and soap
 Camay
 Ivory
 Olay
 Old spice
 Safeguard
 Zest
o Two cosmetics
 CoverGirl
 Max Factor
o Five shampoos
 Aussie
 Head & Shoulder
 Herbal Essences
 Infusium 23
 Pantene
Product Mix Depth

Definition
 The number of versions offered of
each product in the line.
Examples
 P&G’s Crest toothpaste comes in
13 varieties, ranging from
o Crest Multi-care
o Crest Cavity protection
o Crest Tartar protection
o Crest Sensitivity Protection
o Crest Dual Action Whitening
o Crest Whitening Plus Scope
o Kid’s Cavity protection
o Crest Baking Soda & Peroxide
Whitening formulations
Consistency of the Product Mix

Definition
 Refers to how closely related the
various product lines are in end
use, production requirements,
distribution channels, or some
other way.
Examples
 P&G’s product lines are consistent
insofar as they are consumer
products that go through the
same distribution channels. The
lines are consistent insofar as they
perform different functions for
buyers.
7.3 BRANDING STRATEGY
Definition of Brand
Listed below are some of the brands which you might familiar or
not familiar about. Match each brand with its respective product.
Refer to the score table below to find out how well you familiar
about the brands.
Automobiles
Fast food restaurant
Coffee
Chocolate
Shoe
Score table:
5 Excellent!! You can familiar all the brands with its
products.
1-4 Good!!
0 Oh no!!! It seems that you cannot familiar all the
brands with its products
Let us take a look at the definition of brand.
A brand is a name, term, symbol, design, or combination of them, intended

to identify the goods or services of one seller or group of sellers and to
differentiate them from those of competitors.
These are examples of brand names.
letters
(KLMU,
CIMB)
words
(Proton,
Perodua)
numbers
(7-
Eleven,
1901).
Brand Equity
Aini is a brand cautious person. One day, Aini asked her friend
Aida, to accompany her to a handbag shop. The shop sells a wide
range of handbags from branded to lesser known ones. They
started a conversation.
Aida, look at this handbag. This

handbag is so nice, and looks
stunning
Wow! And look at the brand--

it’s Gucci. No wonder it looks
that stunning
I have been using my old

Gucci’s handbag for 6 years.
That’s why I trust Gucci for the
next handbag I buy.
You are so right.
Based on the conversation, shown that brand represents

consumers’ perceptions and feelings about a product and its
performance. Brands vary in the amount of power and value they
have in the marketplace. A powerful brand has high brand equity.
What does it mean by brand equity?
Brand equity refers to the value of company and brand names. A brand that
has high awareness, perceived quality, and brand loyalty among customers
has high brand equity. Maybank, Public Bank, and Maxis are companies with
high brand equity.
Brand equity does not develop instantaneously. A brand needs to be

carefully nurtured and marketed so that consumers feel real value and trust
towards that brand. A brand with strong brand equity is a very valuable asset.
The Malaysia's 5 most valuable brands in 2009 are:
Public Bank is
RM6.593 billion
Maybank is RM5.374
billion
CIMB is RM5.245
billion
Celcom is RM3.993
billion
Parkson is RM3.740
billion
Building Strong Brands
1. Brand Positioning
To target customers’ minds, brand must be positioned clearly. The position
can be done at any three levels.
 Product attributes: Product attributes is consider the lowest level of

brand positioning. This is because competitors can easily copy
attributes. Customers are not interested in attributes as such; they are
interested in what the attributes will do for them.
Marketers of Dove soap can talk about the product’s attribute of

one-quarter cleansing cream.
 Benefit: A brand can be better positioned by associating its name with

a desirable benefit.
Dove marketers can go beyond the brand’s cleansing cream
attribute and talk about the resulting benefit of softer skin.
Other successful brands positioned on benefits are:
Volvo (safety),
Harley-Davidson (adventure)
FedEx (guaranteed overnight

delivery)
Nike (performance)
Lexus (quality).
 Beliefs and Values: Beliefs and values are the strongest brand
positioning compared to attribute or benefit brand positioning. These
brands pack an emotional wallop.
Dove marketers can talk not just about

cleansing cream attributes and softer
skin benefits, but about how these will
make you more attractive.
2. Brand Name Selection

Desirable qualities for a brand name include:
 It should suggest something about the product’s benefits and qualities.
Examples: Dettol, Sunkist, Double A, Colgate, and Downy.
 It should be easy to pronounce, recognize, and remember. Short
names help, but longer ones are sometimes effective.
Examples of short names brands are Fab, Top, Lux, Zest, and Dove.
Examples of longer name brands are “I Can’t Believe It’s Not

Butter” margarine, “Toys R Us” toys and “Thank God its Friday”
restaurant.
 The brand name should distinctive.
Oracle, Kodak, OshKosh

B’Gosh and Adidas are
examples of distinctive brand
name.
 It should be extendable
Amazon.com began as
an online bookseller but
chose a name that
would expansion into
other categories.
 The name should translate easily into foreign languages.
Before spending $100

million to change its
name to Exxon, Standard
Oil of New Jersey tested
several names in 54
languages in more than
150 foreign markets.
It found that the name

Enco, when pronounced
in Japanese, referred to a
stalled engine.
 It should be capable of registration and legal protection. A brand
name cannot be registered if it infringes on existing brand names.
Hello Kitty has been licensed to

many products including credit
cards, purses, confectionery,
and UNO cards games.
IKEA is a home furnishing and

furniture produce good, safe, well
built for the masses, and
innovative designs at the lowest
cost.
3. Brand Sponsorship
A manufacturer has four sponsorship options. The product may be launched
as:
Manufacturer’s Brand
Descriptions
 A brand created and owned by a
producer.
Example
 Kellogg’s and IBM sell their output
under their own manufacturer’s
brand name.
Private Brand
Descriptions
 Also known as store brand
 A brand created and owned by a
reseller of a product or service.
Example
Wal-Mart offers Sam’s Choice
beverages and food products, Spring
Valley nutritional products, White
Cloud brand toilet tissue, diapers,
detergent, and fabric softener to
compete against major national
brands.

Licensed brand name

Descriptions
 A brand that the company sells its
output or product under another
brand name.
Example
Hart Schaffner & Marx sells some of its
manufactured clothes under licensed
names such as Christian Dior, Pierre
Cardin, and Johnny Carson.
Co-brand name
Descriptions
 This is where two companies
agree to make and
manufacture one product.
Example
 Nike and Apple co-branded the
Nike+iPod Sport Kit, which let
runners link their Nike shoes with
their iPod Nanos to track and
enhancing running performance
in real time.
4. Brand Development
A company has four choices when it comes to developing brands. They are
line extension, brand extension, multi-brands, and new brands.
Line extension
Descriptions
 Line extension occur when a
company introduces additional
items in a given product category
under the same brand name,
such as new flavours, forms,
colours, ingredients, or package
size.
Example
 The Yakult Company is a
manufacturer of Yakult Ace, a
high quality probiotics in the form
of a cultured milk drink.
 Recently, it has introduced Yakult
Ace Light, with less 50% sugar as its
new line extension.
Brand extension
Descriptions
 A brand extension involves the use
of a successful brand name to
launch new or modified products
in a new category.
Example
 Malaysia Airlines extending its
brand from airlines, to holidays,
catering, training, and cargo.
Multi-brands
Descriptions
 The company decides to further
introduce more brands into an
already existing category.
Example
 Kellogg’s have a number of
brands in the cereal market and
the cereal bar market.
New brands
Descriptions
 New brands are used when
existing brands are inappropriate
for new products in new product
categories or markets
Example
 Toyota created the separate
Scion brand, targeted toward
younger customers or Gen. Y.
 The first Scion models, the xA
hatchback and xB wagon, went
on sale in California in 2003.
7.4 SERVICES MARKETING
What comes to mind when someone mentions about services? Do

images of car workshops, hospitals, and child care centres come
to mind?
What about nurses, physical therapists, and social workers? Are

they in the same category as services?
Let us take a look at the definition, and characteristic of services,
as well as marketing mix for services.
Definition of Services
A service is the result of applying human or mechanical efforts to people or

objects. Services involve a deed, a performance, or an effort that cannot be
physically possessed.
Below are some examples of services.
Characteristics of a Service
Services have four major characteristics that distinguish them from goods.
They are as below.
1. Intangibility
Services are intangible. Therefore, the services cannot be touched, seen,

tasted, heard, felt, or smelled before they are bought. Evaluating the quality
of services before or even after making a purchase is harder than evaluating
the quality of goods.
Three characteristics can be used to evaluate a quality of services are:

1. A search quality: A characteristic that can be easily assessed before
purchase. Example, the colour of an appliance or automobile.
2. An experience quality: A characteristic that can be assessed only after
use. Example, the quality of a meal in a restaurant or the actual
experience of a vacation.
3. A credence quality: A characteristic that consumers may have
difficulty assessing even after purchase because they do not have the
necessary knowledge or experience. Example, medical and consulting
services.
For example, people undergoing cosmetic surgery cannot see the
result before the purchase.
2. Inseparability
Services are often produced and consumed at the same time. In contrast,
goods are produced, sold, and then consumed.
Inseparability means the inability of the production and consumption of a

service to be separated. Consumers must be present during the production.
Examples of inseparability services are haircuts and surgery.
3. Variability
Service variability means that the quality of services depends on who

provides them as well as when, where, and how they are provided.
Example: Physicians in a group practice or barbers in a barber shop

differ within each group in their technical and interpersonal skills.
4. Perishability
Perishability means that the services cannot be stored, warehoused, or

inventoried for later sale.
Some doctors charge patients for missed appointments because

the service value existed only at that point and disappeared when
the patient did not show up.
Marketing Mixes for Services
As for goods, services are using the same four P’s in their marketing strategies.
However, they need to be adjusted to meet the special needs created by
the services’ characteristics-intangibility, inseparability, heterogeneity, and
perishability.
1. Product (Service) Strategy

In the case of a service organization, the product offering is intangible and
consist in large part of a process or a series of processes.
Product strategies for service offerings include decisions on the type of

process involved, core and supplementary services, standardization or
customization of the service product, and the service mix.
Private hospital is an example product (service) strategy.
2. Place (Distribution) Strategy

Distribution strategies for service organizations must focus on such issues as
convenience, number of outlets, direct versus indirect distribution, location,
and scheduling.
 Convenience:
o Service firms must offer convenience.
 Number of outlets:
o Having too many outlets may boost costs unnecessarily; having
too few outlets may inconvenience customers. Therefore, the
intensity of distribution should meet, but not exceed, the target
market’s needs and preferences.
 Direct versus indirect distribution:
o The question is either to distribute services to end users directly or
indirectly through other firms. Because of the intangible nature of
services, many service firms have to use direct distribution or
franchising. The newest form of direct distribution is the Internet.
 Location:
o Locations play an important role in the distribution strategy.
o For example, Conrad Hilton claimed that the three most
important factors in determining a hotel’s success are “location,
location, location.”
 Scheduling:
o Scheduling is important to service providers like airlines,
physicians, and dentists.
Ambank equipped self-service

Automated Teller Machines in
selected &-Eleven outlets to give
their customers the ultimate
convenience in banking.
Air Asia introduced online

booking flight tickets via website
to sell tickets directly to
consumers.
3. Promotion Strategy
Marketers face trouble promoting intangible services than tangible goods.
Here are four promotion strategies they can try:
 Stressing tangible cues:

o A tangible cue is a concrete symbol of the service offering.
 Using personal information sources:
o A personal information source is someone consumers are familiar
with (such as a celebrity) or someone they know or can relate to
personally.
 Creating a strong organizational image:
o One way to create an image is to manage the evidence,
including the physical environment of the service facility, the
appearance of the service employees, and the tangible items
associated with a service (like stationery, bills, and business
cards).
 Engaging in post-purchase communication:
o Post purchase communication refers to the follow-up activities
that a service firm might engage in after a customer transaction.
o Postcard surveys, telephone calls, brochures, and other types of
follow-up show customers that their feedback matters and their
support is appreciated.
Insurance companies use symbols like rocks, lions, umbrellas, and
hands to make intangible services appear tangible.
4. Price Strategy
Three categories of pricing objectives have been suggested:
 Revenue-oriented pricing focuses on maximizing the surplus of income

over costs. A limitation of this approach is that determining costs can
be difficult for many services.
 Operations-oriented pricing seeks to match supply and demand by
varying prices.
 Patronage-oriented pricing tries to maximize the number of customers
using the service. Thus, prices vary with different market segments’
ability to pay, and methods of payment (such as credit) are offered
that increase the likelihood of a purchase.
Matching hotel demand to the number of available rooms can be

achieved by raising prices at peak times and decreasing them
during slow times.
7.5 MANAGING NEW-PRODUCT DEVELOPMENT
Do you know the name of the devices shown above?
Yes, they are called an iPod. The iPod is a portable media player
designed and marketed by Apple. The first iPod model launched
on October 2001 is known as iPod classic.
The second is known as iPod Mini, the third is known as iPod Nano,
the fourth is known as iPod Shuffle, and the fifth is known as iPod
Touch.
Nowadays, the iPod Touch model is considered the latest and new
model in the iPod line that is with touch screen features.
Let us take a look on how to classify a new product as a new one.
Types of New Product
An item is called a new product when it is in the form of the following

categories:
New-to-the-world products
(discontinuous innovations):
Description
 New, innovative products that
create an entirely new market.
Example
 Nintendo Wii home video game
console
New product lines

Description
 New products that allow a
company to enter an
established market for the first
time.
Example
 Sony Ericsson’s brand of mobile
phone for Cyber shot
technology camera
Additions to existing product lines
Description
New products that supplement a
company’s established product lines.
Example
Nokia with the ‘N’ series
Improvements and revisions of

existing products
Description
New products that provide improved
performance or greater perceived
value and replace existing products
Example
Microsoft Office Professional 2007
Repositioning
Description
Existing products that are targeted to
new markets or market segments.
Example
Repositioning Johnson & Johnson’s
baby shampoo for adults as well as
youngster
Cost reductions
Description
 New products that provide
performance similar to competing
brands at a lower cost.
Example
 Intel’s Celeron chip
The new-product Development Process

New Product Development is a process which is designed to developed, test
and considers the viability of products which are new to the market in order
to ensure the growth or survival of the organization.
The process of developing new products consists of eight stages.
Step 1: Idea generation
Descriptions
New product development starts with
idea generation. It is the systematic
search for new product ideas. A
company typically has to generate
many ideas in order to find a few
good ones.
New products ideas have to come

from somewhere, the sources
include:
 Internal sources within the
company – employees
 Competitors
 Customers
 Distributors, suppliers, and
others.
Step 2: Idea screening

Descriptions
 This process involves reducing a
large number of ideas from the
idea generation stage.
 Therefore, idea screening refers to

screening new-product ideas in
order to spot good ideas and
drop poor ones as soon as
possible.
 As product development costs are

high, marketers will only go ahead
with the product ideas that will
turn into profitable products.
Step 3: Concept Development &
Testing
Descriptions
 The organization may have come
across what they believe to be
feasible idea; however, the idea
needs to be taken to the target
audience.
 What do they think about the
idea/ will it be practical and
feasible? Will it offer the benefit
that the organization hopes it will?
Or have they overlooked certain
issues?
 Attractive ideas must be
developed into a product
concept. However, it is important
to distinguish between a product
idea, a product concept, and a
product image.
o A product idea: A possible
product that the company
might offer to the market.
o A product concept: A detailed
version of the idea stated in
meaningful consumer terms.
o A product image: The way
consumers perceive an actual
or potential product.
 The company’s task is to develop
a new product into alternative
product concepts, find out how
attractive each concept to
customers, and choose the best
one.
 Concept testing calls for testing
new product concepts with
groups of target consumers. The
concepts may be presented to
consumers symbolically or
physically.
Step 4: Marketing strategy &
Development
Descriptions
 A proposed marketing strategy will
be written laying out the
marketing mix strategy of the
product.
 The marketing strategy statement
consists of three parts:
o The target market, the planning
product positioning, and the
sales, market share, and profit
goals for the first few years.
o The product’s planned price,
distribution, and marketing
budget for the first year.
o The planning of long-run sales,
profit goals, and marketing mix
strategy.
Step 5: Business Analysis

Descriptions
 The company has a great idea,
the marketing strategy seems
feasible, but will the product be
financially worthwhile in the long
run? If they do, the product can
move to the product
development stage.
 The business analysis stage looks
more deeply into the cash flow
the product could generate, what
the cost will be, how much market
share the product may achieve,
and the expected life of the
product.
Step 6: Product development
Descriptions
 If the product concept passes the
business test, it moves into product
development. In this, R&D or
engineering develops the product
concept into a physical product.
 The prototype will clearly run

through all the desired tests, and
be presented to the target
audience to see if changes need
to be made.
 The product development step

now calls for a large jump in
investment. It will show whether
the product idea can be turned
into a workable product.
Step 7: Test marketing

Descriptions
 If the product concept passes
functional and consumer tests, the
next step is test marketing, the
stages at which the product and
marketing programme are
introduced into more realistic
market settings.
 Test marketing means the product

within a specific area. The product
will be launched within a
particular region so the marketing
mix strategy can be monitored
and if needed, be modified
before national launch.
Step 8: Commercialization
Descriptions
 If the test marketing stage has
been successful then the product
will go for national launch. There
are certain factors that need to
be taken into consideration
before a product is launched
nationally.
 The company must first decide on

introducing timing, how the
product will be launched, then
where the product will be
launched, example in a single
location, a region, the national
market, or the international
market.
7.6 PRODUCT LIFE CYCLE STRATEGIES
Do you know what is this gadget called? Where can you see it?
Can you find this gadget around us? It is called a pager or a
beeper. Pager is a device operated by radio signals, used for
receiving messages.
This gadget is still in use and most of it is used by people of all

profession especially the emergency service personnel, medical
personnel and IT support staff.
What is the relationship between pager and this topic? Let us

find out
Every product whether new or mature in the market will have a life cycle. The
product life cycle (PLC) has five distinct stages. They are as follow.
1. Product development
 Product development stage begins when the company finds and
develops a new-product idea.
 During product development, sales are zero and the company’s
investment costs mount.
2. Introduction
 The introduction stage starts when the new product is launched in the
market.
 In this stage, the profits are not exists yet because of the low sales and
high distribution and promotion of the new product introduction.
 As a new product much time will be spent by the organization to
create awareness of its presence amongst its target market. Profits are
not yet exist because of this reason.
3. Growth
 Growth is a stage of rapid sales growth with sales start climbing quickly.
 Profits increase during the growth stage, as promotion costs are spread
over a large volume and as unit manufacturing costs fall.
 In the growth stage, the company faces a trade-off between high
market share and high current profit.
4. Maturity
 Maturity is a stage of slowdown in sales growth. This is because the
product sales reach peak as it has been accepted by most buyers.
 Profits level off or decline because of increased marketing outlays to
defend the product against competition.
 This maturity stage normally lasts longer than the previous stages, and it
poses strong challenges to marketing management.
 Product managers should do more than simply ride along with or
defend their mature products. They should consider modifying the
marketing, product, and marketing mix.
5. Decline
 Decline is the stage when sales fall off and profits drop.
 Sales may decline for many reasons, including technological
advances, shifts in consumer tastes, and increased competition.
 As sales and profits start to decline, the company may try to change
their pricing strategy to stimulate growth, or the company have to re-
modified, or replaced their aging product.
 In the case of the pager which was mentioned in the introductory
section, it can be said as being in the decline stage, where only a
certain group of people will consider buying the pager due to the
introduction of the mobile phones.
Below are some suggested examples of products that are currently
at different stages of the product life-cycle:
INTRODUCTION GROWTH MATURITY DECLINE

E-conferencing Email Faxes Snail mail
2G mobile
3G mobile 2.5G mobile
4G Mobile Phone phones
phones phones (GPRS)
(GSM)
Digital Versatile Video Compact Video tapes
Blu-ray Disc
Disc (DVD) Disc (VCD) (VHS)
REFERENCES
Abu, N., & Kamarulzaman, Y. (2009). Principles of Marketing. Kuala

Lumpur: Oxford University Press.
Kotler, P., & Armstrong, G. (2010). Principles of Marketing. New

Jersey: Pearson Prentice Hall.
McDaniel C, L. C., & JF, H. (2008). Introduction to Marketing. Ohio:

Thomson South-Western.

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CHAPTER

Definition of Products, Services, and Experiences

What comes to mind when someone says “product”? Does an

What about architecture or courier services? Are they

Now, let us take a closer look at the definition of products,

A product is a key element in the market offering. It is the heart of an

Do you realize that a product and service can be divided into

Let’s us consider the example of car again.

The AUGMENTED product is the non-physical part of the product. It usually

Product and Service Classifications

Products and services can be classified as either consumer or business

Example of convenience products are milk, newspaper, detergent,

A person intent on buying a

Thus, the difference between a consumer product and an industrial product

The industrial product can be classified into three groups.

1. Materials and parts

Individual Product and Service Decisions

1. Product and Service Attributes

 Product styles and design

Consumers view a brand as an important part of a product. Branding can

Most consumers would

But the same perfume in an

Packaging involves designing and producing the container or wrapper for a

Many companies realize the power of good packaging to create instant

The package includes a

It may also include a

Labels perform several functions. They are:

These are examples of labels.

5. Product support services

Hewlett-Packard offers a complete set of sales and after sale

Customers can click on to the HP Total Care service portal that

A company can lengthen its product line in two ways:

Nike produces several lines of athletic shoes and apparel, Nokia

Product Mix Decisions

Product Mix Width

Product Mix Depth

Consistency of the Product Mix

7.3 BRANDING STRATEGY

Let us take a look at the definition of brand.

A brand is a name, term, symbol, design, or combination of them, intended

These are examples of brand names.

Aida, look at this handbag. This

Wow! And look at the brand--

I have been using my old

You are so right.

Based on the conversation, shown that brand represents

What does it mean by brand equity?

Brand equity does not develop instantaneously. A brand needs to be

 Product attributes: Product attributes is consider the lowest level of

Marketers of Dove soap can talk about the product’s attribute of

 Benefit: A brand can be better positioned by associating its name with

Other successful brands positioned on benefits are:

FedEx (guaranteed overnight

Dove marketers can talk not just about

2. Brand Name Selection

 It should suggest something about the product’s benefits and qualities.

Examples: Dettol, Sunkist, Double A, Colgate, and Downy.

Examples of longer name brands are “I Can’t Believe It’s Not

Oracle, Kodak, OshKosh

 The name should translate easily into foreign languages.

Before spending $100

It found that the name

Hello Kitty has been licensed to