Describe the nature of product in marketing management.
Explain the concept of the goods–services continuum.
Define the term product, including the core, actual and augmented product.
Explain product classifications, and contrast the differing types of consumer products and business-to-business products.
Explain services classifications and discuss the marketing of services.
Chapter Objectives (2)
Discuss an extended notion of product that includes marketing persons, experiencing events, places, political ideas, causes, non-profit services, and fundraising endeavours.
Outline the range of individual product decisions marketers make, discussing the product attributes of quality, features and design.
Discuss branding, and contrast the differences among line extensions, brand extensions, multibrands and new brands.
Chapter Objectives (3)
Illustrate product line and product mix decisions, describing stretching and filling the product line length, line modernisation, line featuring and line width.
List some of the considerations marketers face in making international product decisions, including whether or not to standardise or adapt product and packaging.
What is a Product?
A product is anything that can be offered to a market with the objective of satisfying a consumer need or want.
It can include physical goods; services; people; places; organisations and ideas .
It is everything, both favourable and unfavourable, that the consumer receives in an exchange with the seller
Can be viewed on 3 levels
The most basic level is the core product , which addresses the question:
- what is the buyer really buying?
The actual product may have as many as five elements: the quality level; the features; the styling; a brand name, and the packaging.
The augmented product - the additional consumer services and benefits that are built around the core and actual products
Descriptions of a product's quality, features, style, brand name, and packaging identify the:
The three Levels of Product
An example of each level
Consumer Products are those bought by final consumers for personal consumption. Four types:
Consumer goods and services that the customer usually buys frequently, immediately, and with the minimum of comparison and buying effort .
Consumer goods and services that the customer, in the process of selection and purchase, compares on the basis of suitability; quality; price; and style .
Consumer goods and services with unique characteristics or brand identification, for which a significant group of buyers is willing to make a special purchase effort.
Consumer goods and services that the consumer either doesn’t know about, or knows about but doesn’t normally think of buying.
Table 8.2 Marketing Considerations for Consumer Products
Business-to-business (B2B) products are bought by organisations or individuals for further processing; for use in running a business; or to on-sell to others.
The three groups of business products:
Materials and parts - industrial goods that enter the manufacturer’s product completely, including raw materials and manufactured materials and parts.
Capital items - industrial goods and services that enter the finished product partly, including installations and accessory equipment.
Supplies and services - industrial goods and services that don’t enter the finished product at all.
Figure 8.4 Classification of Business Products
Business / Industrial product
The purpose is to:
Manufacture other products;
Assist in running a firm’s business; or
Simply on-sell to consumers and end-users
A product is categorised as a ‘Consumer’ product or as a ‘Business’ product, based on the purpose for which it is purchased - the intended use
Services products deliver something that is intangible: the buyer receives value from the purchase, but it does not result in the consumer owning anything that endures.
Continuing significant growth in the number and value of Services products, particularly in the ‘developed’ nations.
Characteristics of Services
The key characteristics that differentiate Services products from physical goods:
Inseparability/ High personal involvement
Synchronous delivery/ consumption
Difficult to assess the suitability of the product in advance
Because of this, the physical elements become extra important
Purchase takes on extra significance
Buyer involvement contributes to the outcome
Different level of quality in production
Standardisation, and use of technology can help to minimise the variation
Increased importance of ‘people’
Product is often ‘sold’ before it is produced
Product is not produced in advance
Need for firm to link supply with demand
Service Quality Measures
There is usually a much higher level of people involvement (both buyer and seller) with Services products than with goods.
Services purchases usually involve people in ‘service encounters’; Services are experiential in nature, and often require special measures, such as ‘mystery shoppers’, to assess the quality of the product.
Extending the Classification of Goods and Services
Combines the marketing of Services elements with the marketing of goods, particularly the experiential aspects of sporting, entertainment and other staged events.
People such as athletes/ sports stars need to be marketed as a ‘personality’ before being used for endorsements.
Politicians can be marketed in a similar manner.
Politicians market themselves, their political ideologies, and their political party in an attempt to gain voter support.
Marketing an idea or social cause such as nuclear-free living or catching public transport to and from work.
In cause-related marketing, a firm might position its brand on the basis that it will donate part of the value of its sales to a particular cause.
Conducted by organisations who are not motivated by profit. The aim is to make a sufficient trading surplus to enable the operation to continue.
Promoting the added-value elements available through customer participation and connection with the product, and managing all related aspects of the relationship.
The Firm’s Product Decisions
1. Product Attributes
Is the ability of a product to perform its functions.
Includes the product’s durability; reliability; precision; ease of use; and repairability.
Quality should not be viewed as a problem to be solved; it is a competitive opportunity.
May include several models of a product (e.g. cars) offering varying features. Helps to differentiate from competitors. Must relate cost of features to value.
Process of designing a product’s style and function. Creating a product that is attractive; easy, safe and inexpensive to use and service; simple and economical to produce and distribute.
Branding is a major strategic decision that can add value to a product.
Viewed by consumers as an important part of the product.
Powerful brands will gain strong recognition and attract significant consumer loyalty, and can usually command a higher price
Brands with strong consumer loyalty are better protected against the strategies of competitors. This is high brand equity .
The brand is the combination of functional and emotional benefits delivered by a product.
Consumers are looking for something they can associate with - a means of linking with a particular product that delivers ‘value’.
Consumers are attracted to a product that :
Is dependable; has high quality; is consistent over a period of time; offers ‘value-for-money’; and can deliver a positive experience each time (satisfaction).
A brand can be:
A name; term; sign; symbol; or design (or a combination of these) intended to identify a firm’s product, and to help differentiate it from competing products
The most enduring meanings of a brand are its:
attributes and benefits
values, benefits, attributes, and personality
personality, attributes, and benefits
values, culture, and personality
attributes, benefits, and values
To Brand or Not to Brand
Branding can deliver significant benefit, so it is a major part of product marketing.
Some products are classified as ‘generic’. These are plainly packaged, and are less expensive versions of everyday products.
In Australia, the market share for generics tends to fluctuate, but major supermarkets are developing their own generic labels.
Created and owned by the producer of the product.
Created and owned by a reseller of the product.
Some companies are licensed to use brand names or symbols previously created by other manufacturers.
The practice of using the established brand names of two different companies to promote the same product.
Brand Sponsor Decision
Arnott's biscuits with M&M candies in them would be an example of the use of a __________ strategy.
It may be necessary for a firm to reposition its product, due to:
a competitor launching a new brand that cuts into the firm’s market share.
a shift in consumer wants
Repositioning could be an easier, more beneficial option than introducing a completely new brand.
The firm might need to change both the product and the product image to better satisfy any new customer expectations.
Promote the product
Protect the product
Enable easy storage
Help consumes with selection
Provide information, e.g. how-to-use instructions
Highlight product features and benefits
Product Line Decisions
A product line is a group of products that are closely related because they function in a similar manner; are sold to the same customer groups; are marketed through the same types of outlets; or fall within given price ranges.
Product line length
Stretching both ways
Figure 8.8 Product Line Stretching Decisions
Product Mix Decisions
A product mix is the set of all product lines and items that a particular seller offers for sale.
The product mix can be described as having: breadth; length; depth; and consistency.
Breadth is the number of different product lines.
Length is the total number of items the company offers.
Depth is the number of versions of each product in the line.
Consistency is how closely the various product lines are in terms of consumer usage; production requirements; and methods of distribution.