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Study Guide in Mgt 101: Management and Marketing in the 21 st Century Module No. 6

STUDY GUIDE FOR MODULE NO. 7

PRODUCT
MODULE OVERVIEW

Yasss! So that’s the introduction to marketing. Module 6 is very important since it gives you the foundation for
the next parts. If you did not fully understand the concepts by heart and mind, you may not appreciate the next
since the previous module gives us the core lessons. Are you excited for the next ones?

After introducing marketing, we now take a deeper look at the marketing mix: the tactical tools that marketers
use to implement their strategies, engage customers, and deliver superior customer value. This module is all
about product, the first component of the marketing mix. You can easily memorize the components of
marketing mix since it is also known as 4Ps!  But, not all students know that! Marketing mix and 4Ps may be
used interchangeably.

All contents are heavily drawn from our main reference book, Principles of Marketing (17th ed.) by Kotler and
Armstrong (2018).

MODULE LEARNING OBJECTIVES

At the end of this module, you should be able to:

1. Define product and describe the major classifications of products and services.
2. Identify the four characteristics of services
3. Identify the forms of differentiation for products and services
4. Describe the stages of product life cycle and how marketing strategies change during a
product’s life cycle.

A. WHAT IS THE PRODUCT

We define a product as anything that can be offered to a market for attention, acquisition, use, or consumption
that might satisfy a want or need. Products include more than just tangible objects, such as cars, clothing, or
mobile phones. Broadly defined, products also include services, events, persons, places, organizations, and
ideas or a mixture of these.

Products, Services and Experiences

Products are a key element in the overall market offering. Marketing mix planning begins with building an
offering that brings value to target customers. This offering becomes the basis on which the company builds
profitable customer relationships. A company’s market offering often includes both tangible goods and
services. At one extreme, the market offer may consist of a pure tangible good, such as soap, toothpaste, or
salt; no services accompany the product. At the other extreme are pure services, for which the market offer
consists primarily of a service. Examples include a doctor’s exam and financial services. Between these two
extremes, however, many goods-and-services combinations are possible (hybrid).

Today, as products and services become more commoditized, many companies are moving to 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.

Levels of Products and Services

Product planners need to think about products and services on three levels. Each level adds more customer
value. The most basic level is the core customer value, which addresses the question: What is the buyer
really buying?
 When designing products, marketers must first define the core, problem-solving benefits or services
that consumers seek.
 Planners must turn the core benefit into an actual product. They need to develop product and service
features, a design, a quality level, a brand name, and packaging. Its name, parts, styling, operating

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Study Guide in Mgt 101: Management and Marketing in the 21 st Century Module No. 6

system, features, packaging, and other attributes have all been carefully combined to deliver the core
customer value of staying connected.
 Finally, product planners must build an augmented product around the core benefit and actual product
by offering additional consumer services and benefits.
 Consumers see products as complex bundles of benefits that satisfy their needs. When developing
products, marketers first must identify the core customer value that consumers seek from the product.
They must then design the actual product and find ways to augment it to create customer value and a
full and satisfying brand experience.
Product and Service Classifications

Products and services fall into two broad classes based on the types of consumers who use them: consumer
products and industrial products. Broadly defined, products also include other marketable entities such as
experiences, organizations, persons, places, and ideas.

Consumer Products

Consumer products are products and services bought by final consumers for personal consumption.
Marketers usually classify these products and services further based on how consumers go about buying
them. Consumer products include convenience products, shopping products, specialty products, and
unsought products.

 Convenience product: A consumer product that customers usually buy frequently, immediately, and
with minimal comparison and buying effort.
 Shopping product: A consumer product that the customer, in the process of selecting and purchasing,
usually compares on such attributes as suitability, quality, price, and style.
 Specialty product: A consumer product with unique characteristics or brand identification for which a
significant group of buyers is willing to make a special purchase effort.
 Unsought product: A consumer product that the consumer either does not know about or knows
about but does not normally consider buying.

Industrial Products

Industrial products are those products purchased for further processing or for use in conducting a business.
Thus, the distinction between a consumer product and an industrial product is based on the purpose for which
the product is purchased.

 Materials and parts include raw materials as well as manufactured materials and parts. Raw materials
consist of farm products (wheat, cotton, livestock, fruits, vegetables) and natural products (fish,
lumber, crude petroleum, iron ore).
 Capital items are industrial products that aid in the buyer’s production or operations, including
installations and accessory equipment. Installations consist of major purchases such as buildings
(factories, offices) and fixed equipment (generators, drill presses, large computer, elevators).
Accessory equipment includes portable factory equipment and tools (hand tools, lift trucks) and office
equipment (computers, fax machines, desks). These types of equipment have shorter lives than do
installations and simply aid in the production process.
 The final group of industrial products is supplies and services. Supplies include operating supplies
(lubricants, coal, paper, pencils) and repair and maintenance items (paint, nails, brooms). Supplies
are the convenience products of the industrial field because they are usually purchased with a
minimum of effort or comparison. Business services include maintenance and repair services (window
cleaning, computer repair) and business advisory services (legal, management consulting,
advertising). Such services are usually supplied under contract.
Product and Service Classifications

In addition to tangible products and services, marketers have broadened the concept of a product to include
other market offerings: organizations, persons, places, and ideas.

 Organizations often carry out activities to “sell” the organization itself. Organization marketing consists
of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers

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toward an organization. Both profit and not-for-profit organizations practice organization marketing.
Business firms sponsor public relations or corporate image marketing campaigns to market
themselves and polish their images
 People can also be thought of as products. Person marketing consists of activities undertaken to
create, maintain, or change attitudes or behavior toward particular people. People ranging from
presidents, entertainers, and sports figures to professionals such as doctors, lawyers, and architects
use person marketing to build their reputations. And businesses, charities, and other organizations
use well-known personalities to help sell their products or causes.
 Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior
toward particular places. Cities, states, regions, and even entire nations compete to attract tourists,
new residents, conventions, and company offices and factories.
 Ideas can also be marketed. In one sense, all marketing is the marketing of an idea, whether it is the
general idea of brushing your teeth or the specific idea that Crest toothpastes create “healthy,
beautiful smiles for life.” Here, however, we narrow our focus to the marketing of social ideas. This
area has been called social marketing and consists of using traditional business marketing concepts
and tools to encourage behaviors that will create individual and societal well-being.

LEARNING ACTIVITY 1

Continue reading the topic on the ebook, Principles of Marketing by Kotler, P. & Armstrong, G. (2018) on
pages 244-249 and watch this video 10 Industries Booming Due To The Coronavirus on
https://www.youtube.com/watch?v=GIr5bKGxZU0

Reflection (Guide) Questions (Code: T7_RQ1)

 What are the products (tangible) that thrived/prospered in the Philippines during the pandemic? How
about those who failed/affected negatively? List down at least five products. (Include picture if you
can!)
 Describe convenience, shopping, specialty and unsought products in terms of customer buying
behavior, price, distribution and promotion. Cite some examples that you can see at home (go beyond
the examples from the book!).

B. SERVICES MARKETING

Service industries vary greatly. Governments offer services through courts, employment services, hospitals,
military services, police and fire departments, the postal service, and schools. Private not-for-profit
organizations offer services through museums, charities, churches, colleges, foundations, and hospitals. In
addition, a large number of business organizations offer services—airlines, banks, hotels, insurance
companies, consulting firms, medical and legal practices, entertainment and telecommunications companies,
real estate firms, retailers, and others.

The Nature and Characteristics of a Service

A company must consider four special service characteristics when designing marketing programs:
intangibility, inseparability, variability, and perishability.

Types of Services Marketing

 Internal marketing means that the service firm must orient and motivate its customer-contact
employees and supporting service people to work as a team to provide customer satisfaction.
 Interactive marketing means that service quality depends heavily on the quality of the buyer–seller
interaction during the service encounter. In product marketing, product quality often depends little on
how the product is obtained. But in services marketing, service quality depends on both the service
deliverer and the quality of delivery.
 Pretorius (2016) defined external marketing as the action or business of promoting and selling
services or products, including market research and advertising to clients and potential clients.

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Study Guide in Mgt 101: Management and Marketing in the 21 st Century Module No. 6

LEARNING ACTIVITY 2

Continue reading the topic on the ebook, Principles of Marketing by Kotler, P. & Armstrong, G. (2018) on
pages 258-260 and also this article from LinkedIn https://www.linkedin.com/pulse/internal-vs-external-
marketing-francois-pretorius/. Also watch the following videos to learn more about the lesson. Do not forget to
take notes!

 Characteristics of services: https://www.youtube.com/watch?v=D2f507ExIco

 Services Marketing Triangle Explained with Examples: https://www.youtube.com/watch?
v=3jm4hJ5_n0U

Reflection Question/s: (Code: T7_RQ2)

 Describe each of the characteristics of services.

 What are the services that thrived / prospered during the pandemic? How about those who
failed/affected negatively? Why do you think they succeeded or failed? List down at two services
each.
 What are the differences of internal, external and interactive marketing? Which one is the most
important in services marketing and why?

C. PRODUCT AND SERVICE DIFFERENTIATION

 Means for differentiation for products include form, features, performance quality, conformance
quality, durability, reliability, repairability, and style. Design has become an increasingly important
differentiator.
 The main service differentiators are ordering ease, delivery, installation, customer training, customer
consulting, maintenance and repair, and returns.
 Packaging, labelling, logos, and branding are also important product and service decision to consider.
.

LEARNING ACTIVITY 3

Continue reading the topic on the ebooks, Principles of Marketing by Kotler, P. & Armstrong, G. (2018) on
pages 249-253, Kotler P. & Keller K.L. (2016) on pages 393-397.

Product Designing (Code: T7_PD)

Using your mask (of any kind), design them with all the available resources at home. If you would sell them,
identify the following:
 Branding
 Features (description, materials used, etc)
 Packaging and labels
 Target market for your mask
Wear them, take a picture and I will be choosing the best ones (fit, design, packaging, other details!).

Marketing Debate (T7_D)

With Products, Is It Form or Function?

 The “form vs. function” debate applies in many arenas, including marketing. Some marketers believe
product performance is the be-all and end-all. Other marketers maintain that the look, feel, and other
design elements of products are what really make the difference.
 Take a position: Product performance is the key to brand success versus Product aesthetics are the
key to brand success.

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D. PRODUCT LIFE CYCLE

After launching the new product, management wants that product to enjoy a long and happy life. Although it
does not expect the product to sell forever, the company wants to earn a decent profit to cover all the effort
and risk that went into launching it. Management is aware that each product will have a life cycle, although its
exact shape and length is not known in advance.

The PLC has five distinct stages:

1. Product development 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 is a period of slow sales growth as the product is introduced in the market. Profits are
nonexistent in this stage because of the heavy expenses of product introduction.
3. Growth is a period of rapid market acceptance and increasing profits.
4. Maturity is a period of slowdown in sales 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.
5. Decline is the period when sales fall off and profits drop.

LEARNING ACTIVITY 4

Continue reading the topic on the ebooks, Principles of Marketing by Kotler, P. & Armstrong, G. (2018) on
pages 289-297. Also watch this video and take notes of new insights that you have learned.
 MBA 101: Marketing, Product Life Cycle: https://www.youtube.com/watch?
v=jYbc4HfhPuQ&list=PLz6vBjtZI-VkdMRYe6qjR3rMCmjwd5TMl&index=4

Reflection Question/s: (Code: T7_RQ3)

 Describe the product life stages in terms of characteristics, marketing objectives and strategies.
 Do all products follow all stages of the PLC? If yes, why do you think so? If no, cite some products in
the Philippines that have undergone all stages and products that did not and what the reason behind
why they did not.

Quiz #8
 Review all the lessons in this module and prepare short quiz. I will be sending the link of the quiz. You
can only answer once and make sure you answer them when you’re ready. Answer the questions as
honest as possible. You know the drill: Do not ask your classmates for the questions and learn on
your own 

SUMMARY

 Broadly defined, 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 include physical objects but also services, events,
persons, places, organizations, ideas, or mixtures of these entities. Services are products that consist of activities,
benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotel, tax preparation,
and home-repair services.
 A product is more than a simple set of tangible features. Each product or service offered to customers can be
viewed on three levels. The core customer value consists of the core problem solving benefits that consumers
seek when they buy a product. The actual product exists around the core and includes the quality level, features,
design, brand name, and packaging. The augmented product is the actual product plus the various services and
benefits offered with it, such as a warranty, free delivery, installation, and maintenance.

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Study Guide in Mgt 101: Management and Marketing in the 21 st Century Module No. 6

 Products and services fall into two broad classes based on the types of consumers who use them. Consumer
products— those bought by final consumers—are usually classified according to consumer shopping habits
(convenience products, shopping products, specialty products, and unsought products). Industrial products—
those purchased for further processing or for use in conducting a business—include materials and parts, capital
items, and supplies and services. Other marketable entities— such as organizations, persons, places, and ideas—
can also be thought of as products.
 Services are characterized by four key aspects: they are intangible, inseparable, variable, and perishable. Each
characteristic poses problems and marketing requirements. Marketers work to find ways to make the service
more tangible, increase the productivity of providers who are inseparable from their products, standardize
quality in the face of variability, and improve demand movements and supply capacities in the face of service
perishability.
 Services marketing strategy calls not only for external marketing but also for internal marketing to motivate
employees and interactive marketing to create service delivery skills among service providers.
 Each product has a life cycle marked by a changing set of problems and opportunities. The sales of the typical
product follow an S-shaped curve made up of five stages. The cycle begins with the product development stage
in which the company finds and develops a new product idea. The introduction stage is marked by slow growth
and low profits as the product is distributed to the market. If successful, the product enters a growth stage,
which offers rapid sales growth and increasing profits. Next comes a maturity stage in which the product’s sales
growth slows down and profits stabilize. Finally, the product enters a decline stage in which sales and profits
dwindle. The company’s task during this stage is to recognize the decline and decide whether it should maintain,
harvest, or drop the product. The different stages of the PLC require different marketing strategies and tactics.

REFERENCES

Kotler, P. & Armstrong, G. (2018). Principles of Marketing. (17th Ed.) Pearson Education Limited

Kotler, P. & Keller, K.L. (2016). Marketing Management (14th Ed). Pearson Education Limited

https://www.linkedin.com/pulse/internal-vs-external-marketing-francois-pretorius/

Videos

 Characteristics of services: https://www.youtube.com/watch?v=D2f507ExIco

 Services Marketing Triangle Explained with Examples: https://www.youtube.com/watch?
v=3jm4hJ5_n0U
 MBA 101: Marketing, Product Life Cycle: https://www.youtube.com/watch?
v=jYbc4HfhPuQ&list=PLz6vBjtZI-VkdMRYe6qjR3rMCmjwd5TMl&index=4
 10 Industries Booming Due To The Coronavirus on https://www.youtube.com/watch?v=GIr5bKGxZU0

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