Product

Anything that can be offered to a market to satisfy a want or need.

Five Product Levels

Core benefit Basic product Expected product Augmented product Potential product

Product Classification Schemes

Durability Tangibility Use

Product Differentiation
Product form Design Ordering ease Delivery Installation Customer training Customer consulting Maintenance Features Performance Conformance Durability Reliability Reparability

PRODUCT CONCEPTS
Product Classifications
(Part 2 of 3)

Business Products used to create other products Characteristics of Business Products:

1. 2. 3. 4.

Derived demand Price elasticity Volatility of demand Buyer

Business Products used to create other products Production Operations Based Based

Raw Materials

Accessory Equipment

Component Parts

maintenance &
Process Materials

repair

Installations (Capital Projects)

Business Services

Consumer Products end users.

Durable & Non Durable Consumer Products
Durable goods Services

Non durable goods

Short Time of consumption

Conceptual Model

The Product Classification Sequence

CONSUMPTION BEHAVIOR (Leads to)

PRODUCT CLASSIFICATION Level of effort Level of reward Convenience Shopping Specialty

(Which leads to)

MARKETING MIX STRATEGY

Consumer Product Goods

Classification
Shopping Products Convenience Products Specialty Products

Unsought Products

Industrial Products

Is based on Level of Effort expended

. . To satisfy information needs & buying motives

CONVENIENCE GOODS
Convenience goods consumers use minimal effort for frequently purchased low cost items

Staples - goods purchased on a regular MILK basis (ex. milk, eggs) Emergency goods - purchased when the need is urgent (ex. umbrella, boots) Impulse purchases no conscious pre * planning
(Donut)

Convenience Products
Marketing Strategy Principles
- Intensive distribution Provide convenient locations and hours of operation - Self-Service/Pre sold Brand Name - Low Markup - Substantial substitution

Shopping Products
Shopping

considerable effort to evaluate

goods - consumers make a

Consumers make product comparison(s), They seek information before purchase, they are not impulsive Moderate substitutions are made Products last a considerable time Monetary & social costs may be high

TVs As a Shopping Product (2012 ---- 1950s)

Attribute-based Plasma LCD / LED screen Price-based
LOW PRICE

WARRANTY REMOTE CONTROL PICTURE SIZE

Brand Name

Homogeneous products select on price Heterogeneous products select on benefits

Shopping Good Principles

Homogeneous shopping goods have numerous substitutes which are similar in quality and features but they are different in price. Principle: you need to find a way to make your good stand out and make people want it (product differentiaion)

Marketing Strategy Principles

Product Differentiation (Quality,design,etc.) Selective Distribution Brand Name Focus Moderate Markup Somewhat Knowledgeable sales force

Specialty Products

Specialty goods - consumers make a

infrequently (seldom) purchased relatively expensive little or no substitution

significant effort to acquire the desired brand.

High involvement, well informed consumers High visibility to others

Specialty Products
Marketing Strategy Principles

- Have a knowledgeable sales force (pros)

Exclusive Distribution High Markup/exceptional service Be Innovative/cutting edge Maintain a differential advantage

Consumer Behavior Product Classification Market Strategy

Intensive Distribution Market Coverage Selective Distribution Exclusive Distribution Product Category (convenience) (shopping) (specialty)

WIDENING GULF THEORY

- Consumer behavior is so complex that marketers do not understand what consumers want - Conclusion: Product classifications overlap & have limited influence on strategy
CAUSES:

- Rapid technological changes - Fierce Competition - Changing consumer values

What Do You Think?

Do you think the consumer product classification sequence has an impact on marketing strategy?

Product mix

Product line

Product Mix - the total group of products offered consistency: relatedness of items Product Line - a group of closely related products

LAMPS Table Ceiling Desk

CONCEPTUALIZATION OF PRODUCT MIX

WIDTH

# of lines = 4 # of items = 12

L E N G T H

A wide product mix facilitates one stop shopping

PRODUCT MIX EXAMPLE

Width (# of product lines)
HAIR CARE Shampoo SALTY SNACKS Chips DENTAL CARE
Tooth Brush Tooth Paste Dental Floss

SOFT DRINKS Cola Ginger Ale

Conditioner Nuts Hair Spray Crackers Brush

Root Beer

Complimentary products peanut butter & jelly

THE GILLETTE PRODUCT MIX

Selected Product Items Product Lines Product Mix (% of Total 1985 Sales by line)

*Atra Razor & Cartridges *Trac II Razor & Blades *Disposable Razors
*Foamy Shaving Cream *Adorn Hair Spray *Silkience Shampoo *Right Guard Deodorant *Toni Hair Preparation

BLADES & RAZORS

33

TOILETRIES & COSMETICS

31

Product Portfolio Concept

. . The sales revenue (cash flow) for the complete mix of products is emphasized rather than (isolated) problems of individual products . . Focus on the interrelatedness among products A small percentage of the organizations products contribute to a large % of profits.(80/20 rule) Principles: Protect best sellers Delete marginal products Reallocate marketing support