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Principles of Marketing
Quarter 4 - Module 1
Defining a Product and
Differentiating Product,
Services, and Experiences
 I
In a business to
generate profits, there must be an offering of products and services to
both individual customers and organizations. Other than these,
marketing organizations also offer experiences, ideas, advocacies,
and even personalities.
As students, understanding products, services, and experiences will
help you value the product or services and make purchases based on
their perception of its ability to satisfy needs and wants. Here, you
will discover Product levels, classifications of products/Goods,
services, and experiences in helping you decide as consumers and to
formulate strategies as marketers. You will also learn that product
experience is important for the growth and sustainability of business
and as consumers you can build trust. It covers many different
learning situations where you can relate your personal experiences on
different practical scenarios about Principles of Marketing.

Learning Competency

Define a product and differentiate the product, services, and

experiences (ABM_PM11_11ae-16)

OBJECTIVES:
K: Define the characteristics of a product and highlight the
differences amongst products, services, and experiences; &
Discuss the usefulness of product, service, and experience
in analyzing situation as part of the decision making on the
part of the consumers and marketers;
S: Design and create product, service, and experience in the
formulation of strategies in marketing;
A: Apply the importance in valuing products, services, and
product experiences.
 I

Task 1: Let’s check your prior knowledge…

Identify the following words/group of words and write this symbol (✓) in the space
before each word if you think this is what an organization usually market. Write your
answers in your activity notebook.

_________ Goods
_________ Services
_________ Experiences
_________ Ideas
_________ Advocacies
_________ Personalities
_________ Product
_________ Plumbing
_________ Tangible Items
_________ Events
_________ Person
_________ Rewiring
_________ Motor vehicles
_________ Places
_________ Appliances

’s In

TASK 2: Relate me…

Direction: Relate the following situation and description. Then, Identify as Product,
Service, or Experience. Write only the number in its proper column.

Product Service Experience

 1. Tangible item that is put on the market for acquisition, attention, or consumption
2. Any activity or benefit that one party can offer to another which is essentially
intangible item, which arises from the output of one or more individuals
3. Are countable, touchable, and visible, a consumer can assess its durability by
examining it.
4. Involves experiential aspects of consumption
5. An activity, benefit or satisfaction that is offered for sale
6. Represent what buying the product or service will do for the customer
7. Customer’s overall perception of your company, based on their interactions with it.
8. One of the customers have said that company X is known for its warm and friendly
staff.
9. Anything that can be offered in a market for attention, acquisition, use, or
consumption that might satisfy a need or want.
10. A lawyer speaks for their clients in court.

11.

’s New

I think you’re doing great of the activities given above. Congratulations!

TASK 3: Let’s choose to buy…

As consumers, we have different levels of need for a product. Now, I want you to
identify the different products found inside the box and answer the given questions below.

Picture this scene:

You walk into a store and carefully looking around to buy a mask to protect yourself
from the virus…
 A B C D

https://www.google.com/search?q=different+masks+designs&tbm=isch&ved=2ahUKEwiO7Lr4ia
HvAhUQCaYKHVEOCzQQ2cCegQIABAA&oq=different+masks+designs&gs

Let’s examine the product level as you perceive by your senses prior to purchase of the
product.

Your Questions Your Explanation/statement

From letters A to D, Choose one (1)
product you want to buy. Start your
statement by saying
I want to buy…
Or
I’m looking for…
Or
I need…

Describe the benefit you can get that

can satisfy you when buying the
product that you chose?
Describe only those features
necessary for it to function?
What are set of features that you as
customer expect when you buy the
product you are choosing?
What product variations, extra
features, or services that help
differentiate the product that you
chose?

is It
 What do organizations market? As consumers, we are most familiar with the marketing of
goods and services. Other than these, marketing organizations also market experiences,
ideas, advocacies, and even personalities.

What is a Product?

Product is anything that can be offered in a market for attention, acquisition, use, or
consumption that might satisfy a need or want.

Includes:
 Physical object
 Services
 Events
 Person
 Places
 Organization
 Ideas

For Kotler, the definition of a product goes way beyond being a physical object or a
service. He defines a product as anything that can meet a need or a want. This means that
even a retail store or a customer service representative is considered a product.

Products or goods are physically tangible items. As such, they are generally
perceivable by the human senses and can therefore, be inspected prior to purchase.

Customers will choose a product based on their perceived value of it. The customer
is satisfied if the product’s actual value meets or exceeds their expectations. If the product’s
actual value falls below their expectations they will be dissatisfied.
 Figure 1. Product levels.
Source: www.expertprogrammanagement.com

Let’s consider each of the levels in turn.

1. Core Benefit
➢ The core benefit is the fundamental need or want that the customer satisfies when they
buy the product.
For example, the core benefit of a hotel is to provide somewhere to rest or sleep when away
from home.

2. Generic Product

➢ The generic product is a basic version of the product made up of only those features
necessary for it to function.

In a hotel example, this could mean a bed, towels, a bathroom, a mirror, and a wardrobe.

3. Expected Product

➢ The expected product is the set of features that the customers expect when they buy the
product.

In a hotel example, this would include clean sheets, some clean towels, Wi-fi, and a clean
bathroom.
4. Augmented Product

➢ The augmented product refers to any product variations, extra features, or services that
help differentiate the product from its competitors.

In a hotel example, this could be the inclusion of a concierge service or a free map of
the town in every room.

5. Potential Product

➢ The potential product includes all augmentations and transformations the product might
undergo in the future. In simple language, this means that to continue to surprise and
delight customers the product must be augmented.

In a hotel, this could mean a different gift placed in the room each time a customer
stays. For example, it could be some chocolates on one occasion, and some luxury water on
another. By continuing to augment its product in this way the hotel will continue to delight
and surprise the customer.

Product Classification

A product is anything offered for sale for the purpose of satisfying a want or need on
both side of the exchange process. Products are classified on two types on the basis of
customer characteristics.

Products that are marketed can be generally classified according to use,

differentiation, type, and durability.

Products/
Goods

According to According to
According to Use According to Type
Differentiation Durability

-Consumables -Convenience goods

- Consumer goods -Undifferentiated -Shopping goods
-Semi-Durables -Specialty goods
-Industrial goods -Differentiated
-Durables -Unsought goods

Figure 2: Classification of Products.

1. According to use : Consumer and Industrial Goods

Consumer goods are goods that are purchased for personal consumption and/or
household use.
Examples: Instant noodles, biscuits, milk, detergent soap, shampoo, and other similar
items

Industrial goods are purchased in order to make other goods, to serve as a raw
material or input in the production of other goods.
Examples: Aluminum (used to manufacture kitchen equipment and cans); electronic
cables and wires (serve as electrical conduits for home appliances)

It would not be possible to say, however, that a product is always a consumer good
or an industrial good. A good that is ordinarily a consumer good can also be used as an
industrial good, and vice-versa. For example, when a consumer buys sugar from the
supermarket and uses this sugar to sweeten his/her coffee, the sugar in this particular case is
a consumer good. However, if the sugar is added to flour, chocolate syrup, eggs, and
walnuts to make brownies and eventually sold, the sugar in this case is an industrial good.
In other words, physical characteristics alone cannot determine whether a product is
a consumer good or an industrial good. One should also consider how the product is
ultimately used.

2. According to Differentiation: Undifferentiated and Differentiated Goods

Undifferentiated goods are products whose physical characteristics are so identical, that it
would be difficult, if not impossible, to distinguish one purchased from one vendor or
another. Most undifferentiated goods are products that are sourced from nature.
Example: salt bought from the two different vendors’ looks, feels, and tastes identical.

Differentiated goods are varied in their characteristics and features that make them
distinguishable from one another.
Example: Car, the appearance and the features vary because of the ability of the
manufacturers to successfully distinguish their products from competitors which is called
branding.

3. According to durability: Consumable, Semi-Durable, and Durable Goods

Durability refers to the length of time a consumer can derive benefit from the
product or good purchased.
Consumable is a product whose benefit can only be used by a consumer for a short period
of time, sometimes only a few minutes. Consumables a such as food, drinks
 Semi-durables provide benefits to the consumer for a longer period of time, usually
spanning several months. Semi-durables are manufactured for long-term use by consumer.
Examples of semi-durables are clothes, shoes, belts, jackets, etc.

Durables are products that are manufactured to last a long time. They are capable of
providing consumers with years of beneficial use. Durables are usually expensive, and
many, therefore, require an augmented product to market them effectively. Examples of
durable goods are automobiles, houses, home appliances, customer electronics, furniture,
sports equipment, and toys.

4. According to Type: Convenience, Shopping, Specialty, and Unsought Goods

Convenience goods are products that are purchased frequently, usually inexpensive, and do
not require much purchase effort and evaluation. Examples are newspapers, gum, and
candy.
They key to the successful marketing of convenience goods is its availability in as
many retail outlets as possible, catering to consumer need where and when it arises.

Shopping goods are purchased less frequently than convenience goods, are relatively more
expensive, and require some amount of information search and evaluation prior to purchase.
Consumers of shopping goods consider features, evaluate attributes, and compare prices.
Examples of shopping goods are shoes, clothes, and handbags.
The successful marketing of shopping goods depends on intensive advertising,
welltrained salespersons, and positioning company products as superior alternatives to
competitors’ products.

Specialty goods are goods that require an unusually large effort on the part of consumers to
acquire. Consumers are usually willing to travel great distances to where these goods can be
purchased. Examples are branded luxury merchandise, works of art, automobiles, and
homes.
The successful marketing of specialty goods requires the promotion of strong brand
image and identities.

Unsought goods are goods that consumers seldom actively look for, and are usually
purchased for extraordinary reasons, such as fear or adversity, rather than desire. Examples
are investments, memorial plans, and life insurance. These goods require advertising and
aggressive selling efforts and are usually marketed using highly-trained and persuasive
salespersons.

What is Service?

Services are form of product that consist of activities, benefits, or satisfaction offered
for sale that are essentially intangible and do not result in the ownership of anything

Services are generally considered more difficult to market due to its four major attributes:
1. Intangibility
Physical products are tangible. As such, they can be inspected by consumers prior to
purchase. On the other hand, services are intangible. It would, therefore, not be possible to
“sample” a lawyer’s legal skills, or a doctor’s ability to handle a surgical operation before
one decides to retain a lawyer or a doctor. This is the first reason that makes the marketing
of services difficult.
How do marketers address the intangible attribute of services? Service marketers commonly
resort to the practice of making their services tangible. Although lawyers and doctors cannot
give their potential clients a preview of their service skills, they retail large luxurious offices
manned by smartly dressed staff. They maintain extensive and updated legal and medical
libraries that are readily visible to visitors. They also display diplomas, certifications, and
other documentary evidence of their training and expertise, and readily give out
professionally prepared business cards with Latin titles after their names. Moreover, they are
always professional in attire and conduct. These give their potential clients an impression of
their competence and capability to render the service required.

2. Variability
Because services are performed by human beings, no service provider can render the
same service in exactly the same way every single time. A college professor, when giving
the same lecture in two separate sessions, cannot use the exact words and gestures for both
sessions.

How do marketing organizations address the problem of service variability? The problem
can best be addressed by developing and implementing standard operating procedures on
how the service should be rendered. A fast-food counter clerk, for example, follows a script
in greeting customers, asking orders, reading and confirming the order, receiving payment,
etc. by following a procedure, incidences of variability are reduced.

3. Inseparability
Because services are rendered by people, the service provider must be present each
and every time the service is provided. Services are rendered and consumed simultaneously.
As a lawyer gives legal advice to a client, legal services are being “produced” and
simultaneously “consumed” by the client. This limits the ability to render the service to a
large number of people, as the service provider’s presence is always a necessary component
in the rendering of the service.
To maximize revenues, service companies institute a combination of standardized systems
and procedures, and service franchising.

4. Perishability
Unconsumed services cannot be stored or warehoused. When a 40-room boutique
hotel with a restaurant on its ground floor operates on a particular day, unconsumed or
unused ingredients for food production, unsold bottles of soda, or unused coffee beans can
be stored, available for use or sale the following day. However, if on the same day, only 32
of its 40 rooms are occupied by guests, the eight unsold, unoccupied rooms cannot be stored
and added to its 40-room availability the next day. The eight unsold, unoccupied rooms have
“perished.” they represent lost revenues for the day that can never be recovered. Similarly,
the unsold seats of a 250-seat commercial jet airliner flying from Manila to Los Angeles
“perishes” as soon as the plane takes off from the Ninoy Aquino International Airport.

How can marketers maximize revenues and avoid lost service Perishability? The key
is the implementation of a marketing strategy called capacity management, or achieving a
proper balance between service demand (customer needs) and service supply (service
availability). If service demand exceeds service supply, the excess demand cannot be
accommodated by supply; potential revenues are lost. On the other hand, if service supply
exceeds service demand, the excess supply “perishes” and represents unrecoverable
revenues.
Capacity management can be implemented in various ways. The airline industry, for
example, uses algorithms that monitor and change ticket prices for various destinations
depending on the time and date of ticket booking, and availability of seats. This results in
frequent price movements. Depending on supply and demand, ticket prices for some
destinations change in a matter of seconds. In traditional capacity management, international
long-distance carriers have been known to offer substantial discounts when are made at odd
hours (usually late nights to early morning). this is to relieve demand during peak hours.
Concert ticket prices vary by location in order to maximize the venue’s seating capacity,
thereby reducing the entertainment service’s “Perishability”. Some restaurants also offer
discounted rates for patrons dining during low-capacity hours of the day.

What is Experience?

A product which involves experiential aspects of consumption rather than utilitarian

ones. This type of product allows consumers to engage in fantasies, feelings and fun and
often carries subjective meanings and characteristics (Hirschman and Holbrook, 1982).

Represent what buying the product or service will do for the customer

Product Experience

Product experience is the overall value of a product or service to customers. This is

defined in terms of customer perceptions as they use the product or service in a variety of
contexts. Product experience is a component of customer experience, a broader concept that
includes all interactions between your firm and the customer. Product experience is mainly
achieved through design and quality control.
Customer experience

Customer experience is the impression your customers have of your brand as a whole
throughout all aspects of the buyer's journey. It results in their view of your brand and
impacts factors related to your bottom-line including revenue.

The two primary touch points that create the customer experience are people and
product.

Are you blown away by the performance of the product? Are you delighted by the
attention a customer support rep gives you to help solve your problem? These are some
general examples of what factors are at play when creating a great customer experience.

Importance of Customer Experience

A remarkable customer experience is critical to the sustained growth of any business.

A positive customer experience promotes loyalty, helps you retain customers, and
encourages brand advocacy.

Today, customers have the power, not the sellers.

Who gave them this power? Us — with help from the worldwide web.

Customers have a plethora of options to choose from at their fingertips plus the
resources necessary to educate themselves and make purchases on their own.

This is why it's so important to provide a remarkable experience and make them
want to continue doing business with you — customers are your best resource for growing
your brand awareness.

Glossary
Product - is anything that can be offered to a market that might satisfy a want or need.

Service - form of product that consist of activities, benefits, or satisfaction offered for sale
that are essentially intangible and do not result in the ownership of anything.

Experience - is a strategy that uses in-person events to promote products.

Organization - any system, body or group of people working together to achieve common
goals and objectives of the business.

Consumer- people or organizations that purchase products or services

Marketer -responsible for developing and executing strategies to promote brands, products
and services, maximizing profits for the company.