Chapter 4: Product

16 July 2022
Lesson Learning Outcome

• Gain more insight about ‘product’ and ‘services’.

• Understand strategies related to product and services

marketing.
Discussion

What is ‘product’?
What is ‘service’?
‘Product’ – a definition

• A product is anything that can be offered to a market for attention,

acquisition, use, or consumption and that might satisfy a want or
need.

• It includes: physical objects, services, events, persons, places,

organizations, ideas, or a combination of both tangible and pure
product/services.

• E.g. car, house, grocery, coffee at a cafe, a holiday trip, Facebook,

investments.
 What is ‘service’?

• 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.

• Consists of activities, benefits, or satisfactions offered for sale that are

essentially intangible.

• E.g. Banking services, airlines, going to see your doctor.

Products, Services & Experience

• As products and services become more consumer-oriented, price

sensitive & market-driven (commoditized), many companies are
moving towards a new level in creating value for their customers.

• To differentiate their offers, beyond simply making products and

delivering services, they are creating and managing customer
experiences with their brands or companies.

• E.g., Petrosains (KLCC), NIKE (“It’s not so much the shoe but where
they take you”.)
 Levels of Products & Services

• Three (3) levels in product planning (whether it is a product or

service):

i) Core customer value

ii) Actual product
iii) Augmented product

• Understanding the three levels and where co-creation can add value
or will transform the process will increase adaptiveness,
competitiveness and differentiation.
Core Customer Value (Core Product)
• What is the buyer really buying?
• When designing products, marketers must first
define the core, problem-solving benefits or services
that consumers seek.
Actual Product

• Where product planners turn the core benefits to actual product:

~ Product/services feature
~ Design
~ Quality level
~ Brand name
~ Packaging
Augmented Product

• product planners must build an augmented product

around the core benefit and actual product by
offering additional consumer services and benefits.

• E.g. a discount coupon for future purchase, a free

recipe book when you buy a kitchen appliances, free
wireless keyboard & mouse or a carry-bag when you
purchase a laptop.
The Three Levels of Product
Product & Services Classification
Consumer Products

• product & services bought by the final customer for their own
personal use.

• Classified based on how customers go about buying them:

➢ Convenience products
➢ Shopping products
➢ Specialty products
➢ Unsought products
Consumer Product – Convenience Products

• Products/services that consumers:

✓buy frequently & immediately
✓minimal comparison
✓minimal buying efforts
✓mass advertising
✓numerous purchase locations

• E.g. magazines, newspapers, fast food, candy.

Consumer Product – Shopping Products

• Less frequently purchased

• Careful consideration based on suitability, design, price & quality.
• Spend time gathering information & making comparisons.
✓Bought less frequently
✓Higher price
✓Fewer purchase locations
✓Comparison shop
• E.g. appliances, furniture, clothing, booking hotels for holidays
Consumer Product – Specialty Products

• unique characteristics or brand identification

• significant group of buyers - willing to make special purchase effort
✓Special purchase efforts
✓High price
✓Unique characteristics
✓Brand identification
✓Few purchase locations
• E.g. designer handbags, Lamborghini, Rolex watch, medical
services
 Consumer Product – Unsought Products

• consumer either does not know or knows about the product but does
not normally consider buying.
✓New innovations
✓Products consumers do not want to think about
✓Require much advertising and personal selling

• E.g. life insurance, fire extinguishers, encyclopedia, blood donations,

cemetery plots.
Marketing Considerations for Consumer Products
Industrial Products

• Products that are bought for further processing or use in conducting a

business.
• Purchased as ingredients or components to be used in manufacturing.
• Classifications on its purpose/use:
i. Materials and Parts: Raw materials, manufactured materials and parts
ii. Capital Items: Products that aid in buyer’s production or operations
iii. Supplies and Services: Operating supplies, repair, and maintenance
items
• E.g. Coconut oil/foaming agent/preservatives (shampoo), liquid filling &
capping machinery.
 Other Market Offerings

• Organizations: Organizational marketing makes use of corporate image advertising

to market themselves to various publics. Profit (businesses) and nonprofit (schools
and churches).
• Persons: Person marketing applies to political candidates, entertainment/sports
figures, and professionals. E.g. politicians, entertainers, sports figures, doctors,
and lawyers.
• Places: Place marketing relates to create, maintain, or change attitudes or
behavior toward particular places. (e.g., tourism).
• Ideas (social marketing): Social marketing promotes ideas or causes for the
purpose of improving an individual’s well-being or the well-being of society. E.g.
public health campaigns, environmental campaigns, family planning, or human
rights
Product and Service Decision

• Marketers make product and services decisions at

three levels:

1. Individual product decisions

2. Product line decisions
3. Product mix decisions
Individual Product Decisions

Focus is on important decisions about product attributes

based on:

• branding
• packaging
• labelling
• product support services
 Product Line Decisions

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.

E.g. Apple – iPhones, iPads, Airpods, laptops.

 Product Mix Decisions

Product mix consists of all the products and items that a

particular seller offers for sale
• Width, Length, Depth, Consistency

Decisions are made regarding adding a new or eliminating any existing

product from the product mix, adding a new product line, lengthening
any existing line, or bringing new variants of a brand to expand the
business and to increase the profitability.

E.g. a company may sell cosmetics, toiletries & medicine.

Services Marketing – Nature & Characteristics
 Individual Product & Service decisions

Developing a product or service involves defining the benefits that it will

offer.
These benefits are communicated and delivered by product attributes:
quality, features, style and design which in turn helps in
creating customer core value.
 Branding

A brand is a name, term, sign, symbol, logo, taglines, jingles, mascot or

design, or a combination of these intended to – (i) identify the goods or
services of one seller or group of sellers and (ii) to differentiate them
from those of competitors.
Branding helps in creating, maintaining, protecting, and enhancing
products and services.
Advantages to buyers: • Product identification • Product quality
Advantages to sellers: • Basis for product’s quality story • Provides legal
protection • Helps to segment markets
Branding
 Packaging

Activities involved in designing & purchasing the wrapper or

container for a product.
Developing a good package includes:
• Packaging concept
• Package elements
• Product safety
• Environmental concerns
Packaging
 Labelling

Labeling is the printed information appearing on or with the package

– providing information about the product/service.
Functions:
• Identifies product or brand
• Describes several things about the product
• Promotes the product through attractive graphics

❖To encourage sales

Labelling
 Product Support Services

Refers to everything that can help maximize customer’s

after-sales satisfaction:
parts, service, warranty, operator training,
maintenance training, parts delivery, reliability
engineering, serviceability engineering, product
design.
 Product Support Services - Benefits

Benefits:
• Assess the value of current services and obtain ideas for new
services.
• Assess the cost of providing the services.
• Put together a package of services that delights the
customers and yields profits for the company.
 Product Support Services - Channels

• Phone
• Email
• Social media
• Chat or video chat
• Customer self-service
• Call center
 Product Life Cycle

After all research and development have be done, it is time to

launch the product and begin its lifecycle.

Definition :
The length of time from a product first being introduced to
consumers until it is removed from the market
Product Life Cycle
 Product Life Cycle – Introduction Stage

Marketing team focuses on promotion & the product’s initial

distribution.
Usually at this stage, the product will have little or
no competitors.
Sales - may remain low because it takes time for the new
product to be accepted by the market.
At this stage of the life cycle, the company would be losing
money on the product.
 Product Life Cycle – Introduction Stage

Characteristics:
• slow rise in sales and profit margins
• limited competition
• high income group buyers (innovators)
• frequent product modifications
• high production and marketing costs
• narrow product line
• high prices
• limited distribution and primary demand cultivation
 Product Life Cycle – Growth Stage

The market has accepted the product & sales begin to

increase.
Make improvements to the product to stay
competitive.
Relatively few competitors.
Product Life Cycle – Growth Stage

Characteristics:
• Increase in competition
• Increased volume of sales
• Improvement in the quality of the product
• Price reduction
• Reduction in the promotional expenditure to sales ratio
 Product Life Cycle – Maturity Stage

In the maturity stage of the product life cycle, sales

will reach their peak.
Other competitors enter the market with alternative
solutions, making competition in the market fierce.
The company that introduced the new product may
begin to find it difficult to compete in the market.
Product Life Cycle – Maturity Stage

Characteristics:
• Slower increase in sales
• Cut throat competition
• Exit of poor competitors
• New changes in the product
• Increase in promotional efforts
 Product Life Cycle – Decline Stage

Sales will begin to decline as the product reaches its saturation

point.
Most products are phased out of the market at this point due to the
decrease in sales & competitive pressure.
The market will see the product as old and no longer in demand.
There is no set schedule for the stages of a product life cycle.
Differences will occur depending on the type of product, how well it
is received by the market, the promotional mix of the company, and
the aggressiveness of the competition.
Product Life Cycle – Decline Stage

Characteristics:
• A drastic reduction in sales
• Decline in profits
• Exit of the product from the market
Importance of Product Life Cycle (PLC)

1. Predictive Tool
Since a product has a predictive life pattern and the problems likely
to be encountered in different stages of PLC are known, the
management is pre-warned of the likely changes in the product
position.
For e.g. behavior patterns of sales, profits, dealers, competitors, in
different stages are known.
Although it is difficult to forecast these changes with any degree of
exactness, it certainly provides a preview of the broad spectrum of
product events that are likely to occur.
Importance of Product Life Cycle (PLC)

2. Planning Tool
Once product life pattern and behavior of forces lying on it are
known, management is better placed to plan its strategy in advance
so that they are able to fully exploit the product potential.
Product modification, promotion & pricing strategies, and dealer
motivation program may be planned much earlier than the market
conditions warrant.
Importance of Product Life Cycle (PLC)

3. Control Tool
In case of a multi-product company where a number of products are
simultaneously offered in the market, not all of them fair
identically. Some fair better, some not.
When their position in the PLC is monitored, it may indicate the
types of changes required in the marketing strategy & to fully
exploit their potential and attain maximum market share.
PLC - serves as an important market tool.