P R O D U C T C O N C E P T & P R O D U C T M I XDocument Transcript
PRODUCT CONCEPT & PRODUCT MIX
M.B.A, ABA, BALASORE
There are two essentials in marketing i.e. product(goods & services) & marketing(buyers & sellers). Without these
two essentials there can be no marketing. Markets & products are the foundations on which the whole study of
marketing is based. The transfer of ownership can not take place, unless there are both a market & a product.
What is a product?
“A product is a bundle of physical service & symbolic particulars expected to yield satisfactions or benefits to the
buyer”. :- PHILIP KOTLER
“A product is anything that can be offered to a market for attention, acquisition , use or consumption, that might
satisfy a want or need”. :- PHILIP KOTLER
Products that are marketed include physical goods, services, persons, places, organizations & ideas.
Goods – Something is considered a good if it is a tangible item. That is, it is something that is felt, tasted, heard,
smelled or seen. For example, bicycles, cellphones, and donuts are all examples of tangible goods. In some cases
there is a fine line between items that affect the senses and whether these are considered tangible or intangible.
We often see this with digital goods accessed via the Internet, such as listening to music online or visiting an
information website. In these cases there does not appear to be anything that is tangible or real since it is
essentially computer code that is proving the solution. However, for our purposes, we distinguish these as goods
since these products are built (albeit using computer code), are stored (e.g., on a computer hard drive), and
generally offer the same benefits each time (e.g., quality of the download song is always the same).
Services – Something is considered a service if it is an offering a customer obtains through the work or labor of
someone else. Services can result in the creation of tangible goods (e.g., a publisher of business magazines hires a
freelance writer to write an article) but the main solution being purchased is the service. Unlike goods, services are
not stored, they are only available at the time of use (e.g., hair salon) and the consistency of the benefit offered
can vary from one purchaser to another (e.g., not exactly the same hair styling each time).
Ideas – Something falls into the category of an idea if the marketer attempts to convince the customer to alter
their behavior or their perception in some way. Marketing ideas is often a solution put forth by non-profit groups
or governments in order to get targeted groups to avoid or change certain behavior. This is seen with public
service announcements directed toward such activity as youth smoking, automobile safety, and illegal drug use.
Importance of product
It is said that nothing happens to our market unless there is a sale or purchase of a product. Product is the soul of
all our marketing activities. Without a product no marketing can be imagined. So the main responsibility of
management should be to know its product well. The importance of product can be judged from the following
I. Product is the central point of all marketing activities
All marketing activities revolves around the product. All activities i.e. selling, purchasing, advertising, distribution,
promotion etc. are useless unless there is a product. Product is the soul of an organization, without it nothing can
II. Product is the starting point of planning
Planning of marketing activities includes distribution, sales promotion, price, advertising etc. & they are done on
the basis of nature quality & demand of the product. It is the product planning that decide other policies.
III. Product is an end
The main objective of all marketing activities is to satisfy the customers needs & specifications. Various policy
decisions are techniques to provide customer benefits, utilities & satisfaction through product. Thus product is an
end i.e. customer satisfaction.
Thus it is clear that the product is a must for marketing activities.
Five levels of product (the customer value hierarchy) :
In planning its market offer or product, the marketer needs to think through five product levels i.e. core benefit,
basic product, expected product, augmented product, & potential product.
I. Core benefit:
The most fundamental level is core benefit, which means the fundamental service or benefit that the customer is
EXAMPLES: A hotel guest is buying “rest & sleep”
II. Basic product:
At the 2nd level , the marketer has to turn the core benefit into a basic product or generic product.
EXAMPLES: A hotel room includes a bed, bathroom , towels, desk ,& dresser etc.
III. Expected product:
At the 3rd level the marketer provides an expected product i.e. a set of attributes & conditions buyers normally
expect when they purchase this product.
EXAMPLES: Hotel guests expect a clean bed, fresh towel, working lamps & a relative degree of quiet.
IV. Augmented product:
At the 4th level the marketer prepares an augmented product. An augmented product is that exceeds the customer
expectations, in other words additional services & benefits that distinguishes the company’s offer from that of
EXAMPLES: A hotel can augment its products by cable services, fresh flowers, rapid check-in, check-out, fine
dining & room services.
Today’s competition essentially takes place in product augmentation level.
V. Potential product:
At the 5th level stands the potential product, Which indicates the augmentations & transformations that the
product might undergo in the future. Where as the augmented product describes what is included in the product
today, the potential product points to its possible evolutions.
In this level the marketers search aggressively for new ways to satisfy customers & distinguish themselves from
EXAMPLES: Unexpected changes in technology, attributes, features, styles, colours, grade & quality.
The product classification
Marketers have traditionally classified products on the basis of characteristics : Durability, Tangibilty & Use
(consumer or industrial)
a) Durability & tangibility:
Products can be classified into 3 groups according to durability & tangibility, such as:
I. Non-durable goods:
These goods are tangible goods normally consumed in one or few uses.
EXAMPLES: Beer, soap etc.
These goods are consumed quickly & purchased frequently.
II. Durable goods:
These are tangible goods which survive many years.
EXAMPLES: Refrigerators, machine tools, clothings.etc.
They are intangible, inseparable,variable & perishable products. They require more quality control, supplier
credibility & adaptability.
EXAMPLES: haircuts, legal advices, repairing etc.
Consumer goods Industrial goods
Non-durable goods. Materials & parts.
Durable goods. Capital items.
Services. Supplies & business services.
b) Consumer goods:
The goods designed for the ultimate consumers or the house holds are called consumer goods. Consumers
can be classified on the basis of shopping habits, such as: convenience, shopping, specialty & unsought
I. Convenience goods:
The consumer goods which a customer purchases regularly & frequently & with minimum efforts are called
convenience goods. This category includes a wide range of household products.
EXAMPLES: Cigarettes, newspapers, grocery products, toilet products etc.
The convenience goods can be subdivided into 3 types: STAPLES, IMPULSE & EMERGENCY goods.
The goods the consumer purchases on regular basis. EXAMPLES: Colgate toothpaste, Mysore sandal
soaps, Britannia marie biscuits.etc.
These goods are purchased without any planning or search effort. EXAMPLES: Chocolates, Ice-creams,
Candy’s, Potato chips etc.
These goods are purchased when needs are urgent. EXAMPLES: Raincoats in rainy days, Sweaters in
II. Shopping goods:
These goods are bought by customers on the comparison of quality, price-suitability & style. Selection of
these goods thus becomes a ingredient of the buying motive of the customer. Products of this group are
more complex than convenience goods. There is a high degree of differentiation as well as they are durable
These goods are purchased less frequently & are than convenience goods.
EXAMPLES: Readymade garments, shoes, sarees & jewellery, electronic goods.
III. Specialty goods:
These goods tend to carry a high price tag relative to convenience & shopping products. Here
consumption may occur at the same rate as sh0pping products, but the consumers are much more
selective. These goods are durable, comparatively high priced & infrequently purchased.
Here brand loyalty plays a vital role in buying motives of the consumers.
EXAMPLES: Luxury ctv, four-wheelers, air-conditioners, expensive champagnes, etc.
IV. Unsought products:
Those products that the customer does not know or does not normally thought of buying.
EXAMPLES: Life insurance, Encyclopedias, Reference books.
Unsought goods require advertising & personal selling support.
c) Industrial goods:
Industrial goods are those goods which are meant for producing other goods. Products sold within the B2B
Market falls in to this categories. They are classified in terms of their relevance in production process &
I. Raw materials:
These are products obtained through mining, harvesting, fishing etc. They are key ingredients in
the production of higher order products.
EXAMPLES: Iron Ore, Cotton, Natural Rubber etc.
II. Processed materials:
These are products created through processing of basic raw materials . In some cases processing
refines original raw materials, while in other cases the processing combines different raw materials
to creating something new.
EXAMPLES: Steel, Lead, Batteries etc
These are products used to help with production or operation activities.
EXAMPLES: Conveyor Belts, Boilers, Lathe tools, Welding equipments, Calculators, Type writers,
IV. MRO Products (Maintenance, Repair, Operating):
These are short term goods & services that facilitate developing or managing finished product.
These are also called supplies. Maintenance & repair supplies include: paint, nails, brooms etc.
operating supplies means: lubricants, coals, writing paper, pencils etc.
At the heart of a great brand is a great product. Product is a key element in the market offering. One of the
major management aspect involved in product policy is the decision concerning product-mix. Product-mix
is very important now-a-days, since most of the manufacturers are diversifying their products. The product
policy decisions are made of these different levels: product mix, product items & product lines. These 3-in–
one elements make the product effective.
Product mix is the list of all products offered for sale by a company.
According to Philip kotler a product mix or product assortment is the set of all products & items a
particular seller offers for sale.
A product mix consists of various product lines.
EXAMPLE: The consumer product portfolio of NIRMA Ltd. Consists of : fabric-care products, personal-care
products, food products etc. in each of these categories, the company has different brands & variants.
The product-mix is 4 dimensioned, as a company’s product mix contains width, length, depth &
consistency. Let’s discuss these 4 fold dimensions:
I. The width:
The width of product mix refers to how many different product lines in the company carries. The
word width refers to the extent of different product lines in the product mix offered by an
II. The depth:
The word depth applies to the number of product items offered by an organization within a
particular product line. It means the variants offered of each product in the line.
EXAMPLE: Lux comes in 2 sizes & 4 fragrances, so it has a depth of 2×4=8
III. The length:
The length of the product mix refers to the total number of items in the mix. We can calculate the
average length of a line by dividing the total length by number of lines.
EXAMPLE: If there are 30 items in a product mix & 10 product lines, then average length of a line:
3o÷10= 3 items.
IV. The consistency:
Consistency refers to the close relationship of various product lines either to their end use or to
production requirements or to distribution channels or to other variables.
EXAMPLE: HUL product lines are consistence in the sense they all are consumer goods & go
through the same distribution lines.
Another example of Bajaj electrical, all its products falls under the category of “Electronic
But TATA’S product lines are not consistent as it manufactures heavy machineries, softwares,
telecommunication, consumer goods etc. here the different product lines have no relationship in
Thus an optimal product-mix is required by all organizations, which helps the company for
attracting, retaining & growing customers & establishing a high reputation for it self.
To be successful in marketing, producers & middlemen need carefully planned strategies for managing
their product mixes. The major product mix decisions are:
I: positioning, ii: expansion, iii: alternations & iv: contraction.
a) Product positioning:
It means positioning in relation to a competitor. It involves in developing the image in the minds of
the customer that the product is superior to its competitors.
In positioning the important strategies are:
I. Attribute positioning:
In this way of positioning, the benefits that customers get in using the product are highlighted.
II. Competitive positioning:
In this strategy the firm establishes its product next to the leader & trying to uproot in a specific
III. Lifestyle positioning:
A product may be positioned as a life style component. For example: Many of today’s kitchen
appliances like microwave ovens etc. are positioned like this.
b) Product mix expansion:
Product mix expansion is done by increasing the depth within a particular line or number of lines a
company offers to customers. When company adds a similar item to an existing product line with
the same brand name, this is called line extension. Thus line extension is a way to expand the
product mix. The main reason for line extension may be that the firm wants to appeal to more
market segments by offering a wider range of choices for a particular product.
Another way to expand product mix is mix extension. It is a strategy to add new product line to
company’s present assortment.
c) Product mix alternation:
Product alternation means an act of improving an established product. This is more profitable &
less risky than developing a completely new product. For example: A product may be redesigned to
be available in separate styles for girls & boys.
d) Product mix contraction:
This strategy is carried out by eliminating an entire line or by simplifying the assortment within the
line. The main aim of product contraction strategy is higher profit from fewer products.