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“At the heart of a great brand is a great product. Product is a key element in the market offering. Market leaders generally offer products and services of superior quality that provide unsurpassed customer value”. Philip Kotler

WHAT IS A PRODUCT? Many people think a product is a tangible offering, but it can be more than that. A Sony

Blue-ray player, a haircut from salon Ramzi, a BNS Musical show, management services from PriceWaterhouse, advice from an attorney are all products. A Product is defined as follows:

As anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

(Philip Kotler – 12th edition) A Product could be any of the following:

A physical good – Car, LED TV, Bicycle, Computer, iphone

Person – Lionel Messi, David Becham, Politicians, CEO’s

Place – London, Sydney, Paris, New York

Organization – UNICEF, WHO, CIM, Proctor and Gamble, General Electric

Idea - Safe driving, Family Planning, Environmental campaigns

Services – Banking, Telecom, Health care, Transportation, Education

Experiences – Disney, movies

Products are bundle of benefits that the customer value. Benefits may be tangible or

intangible. (a) Tangible Attributes

o Availability /Delivery o Performance (usefulness, effectiveness, efficiency)

o Price o Design (appearance, feel etc) o Packaging (durability, convenient size, information given)

(b) Intangible Attributes

o Image o Perceived Value

Today, as products and services become commoditized, many organisations 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 organisation. (Examples: Disney, Nike)

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THE THREE LEVELS OF A PRODUCT

Level 1: The Core Product The fundamental level is the core benefit: the service or benefit the customer is really

buying. For example, in the case of a car this might be, “transport”, a hotel guest is buying "rest and sleep"; the purchaser of a drill is buying "holes”. Marketers must see themselves as benefit providers.

Level 2: The Actual or Basic Product

At the second level, the marketer must turn the core benefit into a basic product. They

need to develop product features, design, quality level, a brand name and packaging.

For example for a car: design, efficiency, air bags, power steering etc.

Level 3: The Augmented Product

At the third level, the marketer prepares an augmented product around the core benefit and the actual product by offering additional services and benefits that differentiates

the organisation’s offer from competitors. So for example for a car: after sales support, customer service, free inspection and advice, delivery and credit, and so on. In many ways, this is where the product can meet and exceed the customers’ desire beyond

their expectations. Today’s competition mainly takes place at the augmented product level.

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PRODUCT CLASSIFICATIONS Products fall into one of two general categories such as Consumer products and Industrial or Business to Business products.

CONSUMER PRODUCTS

Products bought by final consumers for personal consumption. Marketers usually

classify these products on how consumers go about buying them. Consumer products include Convenience products, shopping products, speciality products and unsought products. Convenience Products. These are relatively inexpensive and frequently

purchased consumer products. The consumer puts little effort into the purchasing decision and convenience takes priority over brand loyalty. Examples would include soap, toothpaste, milk powder, soft drinks etc. These are further classified as:

o Staple Goods - bread, milk, toothpaste o Impulse goods – chocolate, magazines, perfume

o Emergency products – umbrellas, medicine, battery

Shopping Products. These are less frequently purchased consumer products

that customers compare carefully on suitability, quality, price and style. This sort of purchase is usually only made after a good deal of advance planning and

shopping around. Appliances, bicycles, cameras, furniture, clothing, airline and banking services are a few examples of shopping products.

Speciality Products. These are consumer products with unique characteristics

or brand identification for which a significant group of buyers are willing to make a special purchase effort. Examples include specific brands and types of cars,

watches, high priced photographic equipment, designer clothes and the services of medical and legal specialists. Buyer’s normally does not compare speciality products.

Unsought Products. These are consumer products that the consumer either does not know about or knows about but does not normally think of buying.

Classic examples are mail catalogues, life insurance, magazine subscriptions, encyclopaedias and blood donations. By their nature, unsought products require a lot of advertising, personal selling and other marketing efforts.

INDUSTRIAL PRODUCTS/BUSINESS-TO-BUSINESS PRODUCTS

Industrial products are those purchased for further processing or for use in conducting

a business. Thus the distinction between a consumer and industrial product is based on the purpose for which the product is purchased.

Industrial or business-to-business products are as follows:

Capital Equipment: consists of all the buildings and fixed equipment that have

to be in place for production. Such items tend to be infrequently purchased and, given that they are expected to support production over a long lifetime and they

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can represent a substantial investment. Capital equipment include plant and machinery, large fixed computer installations, generators, elevators and sometimes

products are custom made to perform specific functions.

Accessory equipment: Equipment that does not become a part of the final

physical product but is used in production or office activities. These include office equipment such as copiers, fax machines, portable computers, telephone systems and factory equipment such as hand tools, trucks. These have a shorter life span

than major equipment and simply aid in the production process.

Raw materials: Are the basic materials that become part of the physical product.

Components and Parts: Are finished goods in their own right, which simply have to be incorporated into the assembly of the final product with no further

processing. Intel microchip in most PC’s, Good-year tyres and head lamp units in most automobiles are a few examples.

Supplies and Services: Supplies include office stationery, cleaning materials

and services include financial, janitorial, legal, equipment maintenance and printing.

THE PRODUCT RANGE

A company’s product range (or product portfolio, assortment or mix) is all the product lines and ranges that a company offers to its customers.

A product line is a group of products or brands that are closely related in terms of their functions and the benefits they produce. The key considerations under this heading are:

Length of product mix Breadth or width of product mix

Depth pf product mix Product Mix Consistency

Length of Product mix The length of a company’s product mix is the total number of individual products or services in the entire product mix.

Breadth/width of Product mix The breadth or width of a company’s product mix relates to the number of product lines

that the company possesses. Eg: cosmetics, hair-care, toiletries and health products) Depth of Product mix

The depth of a company’s product mix refers to the average number of products in each product line. Eg: cosmetics would include moisturiser, cleanser, toner, lipstick, eye shadow etc.

Product mix consistency

Product mix consistency refers to how closely related the various product lines are in terms of use, channels of distribution, promotion or in other similar ways.

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BRANDING WHAT IS A BRAND? Perhaps the most distinctive skill of professional marketers is their ability to create,

maintain, protect and enhance brands of their products and services.

A brand is a name, term, sign, symbol or design or a 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.

(The American Marketing Association)

Brand represents the consumer’s perceptions and feelings about a product and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers.

Consumers view a brand as an important part of a product, and branding can add value to a product. For example, most consumers would perceive a bottle of Christian Dior

perfume 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.

Thus, Brand is essentially a sellers promise to consistently deliver a specific set of features, benefits and services to the buyers. It is a process of establishing an

identification system and a product image in a consumer’s mind. Very often people define themselves by the brands they buy.

IMPORTANCE OF BRANDING The Consumer

Easier product identification

Communicates feature and benefits

Helps product evaluation Establishes product’s position in the market

Reduces risk in purchasing Creates interest/character for product

The Marketer

Helps to create loyalty

Defends against competition Creates differential advantage

Allows premium pricing

Helps targeting/positioning Increases power over retailer

The Retailer

Benefits from brand marketing support

Attracts customers

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PACKAGING Kotler defines Packaging “as all activities of designing and producing the container for a product”.

Packaging is an important part of the product that not only serves a functional purpose, but also acts as a means of communicating product information and brand character.

FUNCTIONS/ADVANTAGES OF PACKAGING

Protection of contents from damage, deterioration or tampering.

As a promotional tool – by packaging attractively a marketer can get the attention

and can be used to print sales promotion information

Acts as a silent salesman in self service shops

Instant recognition of the company or brand

User convenience – storage and carrying

Provide information – how to use the product/safety, expiry information

Compliance with government regulations/ legal function

Must be hygienic and environmental friendly/recyclable

Management information as bar codes can be used to track sales

Preserves the product when not in use.

PRODUCT LIFE CYCLE CONCEPT The Product Life Cycle (PLC) concept reflects the theory products like human beings, live a life. They are born (introduction), they grow up (growth), they mature (maturity) and eventually die (decline).

The Product Life Cycle (PLC) is a valuable concept to help understand the stages

through which a product offer will pass from its introduction to its withdrawal from the market. That is its sole value. It cannot be used for forecasting or evaluation, because

there is no way to quantify the curve.

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Stages of the Product Life Cycle

The following are the stages the product goes through from its introduction to

withdrawal:

Development Stage

The development stage takes place before the product launch and here the product development process takes place. Marketing research in the form of testing the product’s acceptance takes place during this stage. Investment is very high in the form

of R&D and development costs. Some organisations attempt to ensure secrecy during this stage while others use this time for informing that a new product is forthcoming.

Introduction Stage

The introduction stage of the life –cycle begins at a product’s first appearance in the market-place, when sales are zero and profits are negative. Profits are below zero because a new product incurs research and development costs. Unit costs are high

because of low output. Pocket calculators, DVD players, LCD TV, mobile phones and computers were all expensive when launched. The product, for the time being a loss

maker. Growth Stage

During this stage, sales rise rapidly and the product starts to make profits. As production increases unit cost fall. Since demand increases prices tend to remain fairly

static for a time. However, the prospect of mass production and a strong market will attract competitors so that the number of producers is increasing. With the increase of

competition, manufactures must spend a lot of money on product improvement, sales distribution and promotion in order to obtain a dominant or strong position in the market.

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Maturity Stage

Due to severe competition the rate of sales growth slows down and the product reaches a period of maturity. Eventually sales will decline so that there is overcapacity of

production in the industry. During this stage a few weaker competitors are squeezed out. The remaining producers seek means of prolonging the life cycle by modifying it and searching for new market segments. Decline Stage

The sales of most product offers and brands eventually dip. The decline may be slow or rapid. Sale may plunge to zero or they may drop to low level when they continue for

many years. This is the decline stage. Sales decline for many reasons, including technological advances, shifts in consumer tastes, and increased competition. Table below summarises the key characteristics of each stage of the product Life cycle concept.

Table: Characteristics of Product Life Cycle

Introduction Growth Maturity Decline

Marketing

Objective

Create

Awareness

Stress

Differentiation

Maintain Brand

loyalty

Harvesting

Deletion

Competition None Growing Stable Declining

Product Basic Product Offer product extensions

Diversify brand and models

Phase out weak items

Price Skimming or Penetration

Price to gain market share

To defend share and profit

Reduce price

Promotion Inform, educate

and entice trial

Stress

competitive differences

Remind

Reinforce & repeat purchase

Minimal

Promotion

Distribution Limited More outlets Maximum outlets

Fewer outlets

The Value of PLC Concept to Marketers

It is an important tool for forecasting and strategic planning

Products have a limited life – eventually all products will become obsolete and

will disappear

It shows the trend in sales and profitability

It emphasises the need to review marketing objectives and strategies as the product passes through the various stages. Different strategies to be adapted at

different stages

Identifies the key decision points where strategies and/or tactics must change.

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Limitations of the PLC Concept

Many products do not have a life-cycle as such at all.

The stages of PLC are difficult to distinguish and identify - Identifying where one

stage ends and another begins is often difficult. There is no way that any of the decision points can be predicted with accuracy – it is for each manager to use his best judgement.

The traditional S-shaped curve does not always occur in practice.

The product life-cycle concept ignores the application of the marketing mix activities.

Strategic decisions can change a product’s life cycle - by repositioning a product

in the market, its life can be extended,

ANSOFF’S PRODUCT-MARKET EXPANSION GRID (GROWTH STRATEGY)

One useful device for identifying growth opportunities is the product/market expansion grid developed by Ansoff and gives the marketer four strategic options to achieve sales

growth.

M A R

K E

T

The four strategic options are:

Market Penetration This is a strategy of expanding sales based on existing products in existing markets. This is the least risky approach to growing sales and involves selling more units of current products to current markets. There are essentially three approaches:

Firstly, you can encourage your current customers to buy more products.

Secondly, you should try to gain your competitor’s customers by developing competitive advantage.

Thirdly, you can try to convert non-users to users.

Present

Problem child

Market Penetration

New Market Development

Product Development

Diversification

Present New

Product

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Market Development The company seeks increased sales by taking its present products into new markets.

Again, there are essentially three possible options:

Firstly, you could consider new market segments. Secondly, identify new geographic markets through Regional, national or

international expansion. Thirdly, new distribution channels could be sought, such as direct mail, vending

machines and web sites or advertising in other media. Product Development The company seeks increased sales by developing improved products for its present markets. Options are:

The company can develop new products features or content.

The company also can create different quality versions of the product. The company can develop additional models and sizes.

Diversification The company seeks increased sales by developing new products for new markets and is the most risky strategy to employ.

Nature and Characteristics of a Service

An organisation must consider the following service characteristics when designing marketing programs:

Characteristics of Service Marketing

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a) Intangibility: means that services cannot be seen, tasted, felt, heard, or smelled

before they are bought. This means a customer finds it difficult in evaluating a service before purchase. For example, a person undergoing cosmetic surgery cannot see the result before the purchase and it is virtually impossible to judge how

enjoyable a holiday would be before taking it.

Therefore, the service provider’s task is to make the service tangible in one or more

ways by using tangible cues to service quality. For example, a travel agent may show pictures and videos of the holiday destination, display testimonials from satisfied customers and provide details in a brochure of the kinds of entertainment

available.

Because prior evaluation is impossible customers rely on the experience of others to guide the choice of services (seeking opinions from other consumers). Professional services offered by doctors, lawyers, accountants, educational institutes, airline and

banking services are often selected by personal recommendation and also would heavily depend on consumer’s perceptions of their integrity and trustworthiness.

b) Inseparability: means services are produced and consumed at the same time and cannot be separated from their providers – which means simultaneous production and consumption. If a service employee provides the service, then the employee

becomes part of the service. Because the customer is also present as the service is produced, provider-customer interaction is a special feature in service marketing. This illustrates the importance of the service provider, which is an integral part of

the satisfaction gained by the consumer.

For example a haircut, a medical operation, a holiday and a live musical concert are

produced and consumed at the same time. This contrasts with a physical good, which is produced, stored and distributed through distribution channels before being

purchased and consumed.

Often, in the customer’s eyes, the receptionist in a hotel, a service engineer from a

computer organisation, or the airline cabin crew member represents the organisation. Thus, the recruitment process, training, motivating and rewarding front line staff, are of fundamental importance in the achievement of high standards

of service quality.

c) Variability: means that the quality of services may vary greatly depending on who

provides them and when, where, and how they are provided.

Two restaurants within the same chain may have variable service owing to the

capabilities of their respective managers and staff, or within the same hotel, one registra¬tion-desk employee may be cheerful and efficient, whereas another standing just a few feet away may be unpleasant and slow or a restaurant, generally

could control its food quality but not the variability in food preparation and delivery.

The potential for variability in service quality emphasizes the need for rigorous

selection, training, and rewarding in staff in service organisations. Training should

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emphasize the standards expected of personnel when dealing with customers. Evaluation systems should be developed that allow customer feedbacks on their

experience with staff and a reward system could be implemented to reward top performers.

d) Perishability: means that services cannot be stored for later sale or use. They cannot be produced in advance and held in stock until required. A hotel room or an airline seat that is not occupied represents lost revenue that cannot be gained on

another day. If a physical product is not sold, it can be stored for sale later. Therefore it is important to match supply and demand for services.

The perishability of services is not a problem when demand is steady. However, when demand fluctuates service firms often have difficult problems. Thus, service

firms often design strategies for producing a better match between demand and supply. Hotels/resorts charge lower prices in the off-season to attract more guests, restaurants usually hire part time employees to serve during peak hours and mobile

operators offer reduced mobile call charges at off peak hours to stimulate off- peak demand.

e) Ownership: means services do not result in the transfer of ownership. The purchase of a service only gives the customer access to or the right to use a facility, not ownership. An airline or train seat can be reserved for a journey, but it is not

owned.

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List of References

Kotler, Philip and Gray, Armstrong, (2008) “Principles of Marketing” Prentice Hall

Kotler, Philip and Gray, Armstrong, and Y, Agnihotri, Prafulla and ul Haque, Eshan

(2013) “Principles of Marketing – A south Asian Perspective” Prentice Hall

Sylvester, GS, (2014) “Preliminary Certificate in Marketing” Study text by Sri

Lanka Institute of Marketing