Three Levels of a product
The concept of “three levels of a product” actually comes in play when you are
finalizing a product for your business or when you want to analyze a product. Just
like any business, a product too has its hierarchy. A product can be divided into a
series of different features and benefits which helps in its segmentation targeting
and positioning. Thus the three levels of the products are the ones which help to
define the product in a better manner. These three levels are
1) Core product
2) Actual product
3) Augmented product
The terms “Core product” and “Actual product” have a very slight differentiation
between them but it is vital that marketers understand this difference. Only by
defining your core product clearly, you can achieve marketing excellence. Core
product is also known as benefits and is general intangible in nature. Let’s take an
Supposing you are planning on launching your own car manufacturing unit. What
would be your core product? Would it be the car itself?
NO. The core product would be convenience to your customers. Your customers
can also travel by bus or taxi. But they prefer cars because of convenience as well
several times because of status symbol. Thus the core product in case of Tata cars
will be convenience and value for money whereas in case of BMW it will be Status
Thus the concept of core product is simple. The Actual product is the one which is
manufactured after a decision has been taken on what your core product is going
to be. Thus, from the above example, if your core product is a status symbol, your
actual product will be a very high quality product with high pricing. On the other
hand if the product is a convenience product, the production would be on the
basis of Value for money. Actual products are quantifiable in nature and have
properties like color, branding, quality etc.
The Augmented product, as the name suggests, arises by themselves and are by
products of the core and actual products. These might be complete products
within themselves. Again taking the above example, if you are manufacturing a
car, it needs regular servicing, warranty etc. Thus these become tertiary products
or augmented products. There are business which are dedicated completely in
providing augmented products such as service centers, AMC centers etc.
Also remember that the three levels of product are not only useful for Tangible
products but for Intangible product like services as well. For example – If an IT
company makes software, the core product could be better operations and
management for their customers. The actual product may be dedicated to
multiple facets of the organization for which the software needs to be
programmed, and the augmented product may be the maintenance of this
software and regular up gradation. Thus even the service products have their own
These three product levels play a vital part in product management and are also
important while deciding the marketing mix of a company.
This is mainly because, if there was an augmented product attached to the actual
product, then the promotions, placing and pricing of even these augmented
products needs to be decided. Thus product decisions are generally the primary
decisions of the marketing mix.
New Product Development
In business and engineering, new product development (NPD) is the
complete process of bringing a new product to market. A product is a
set of benefits offered for exchange and can be tangible (that is,
something physical you can touch) or intangible (like a service,
experience, or belief). There are two parallel paths involved in the NPD
process: one involves the idea generation, product design and detail
engineering; the other involves market research and marketing
analysis. Companies typically see new product development as the first
stage in generating and commercializing new product within the overall
strategic process of product life cycle management used to maintain or
grow their market share
Idea Generation is often called the "NPD" of the NPD process.
Ideas for new products can be obtained from basic research using a SWOT
analysis (Strengths, Weaknesses, Opportunities& Threats). Market and consumer
trends, company's R&D department, competitors, focus groups, employees,
salespeople, corporate spies, trade shows, or ethnographic discovery methods
(searching for user patterns and habits) may also be used to get an insight into
new product lines or product features.
Lots of ideas are generated about the new product. Out of these ideas many are
implemented. The ideas are generated in many forms. Many reasons are
responsible for generation of an idea.
Idea Generation or Brainstorming of new product, service, or store concepts -
idea generation techniques can begin when you have done your OPPORTUNITY
ANALYSIS to support your ideas in the Idea Screening Phase (shown in the next
The object is to eliminate unsound concepts prior to devoting resources to them.
The screeners should ask several questions:
Will the customer in the target market benefit from the product?
What is the size and growth forecasts of the market segment / target market?
What is the current or expected competitive pressure for the product idea?
What are the industry sales and market trends the product idea is based on?
Is it technically feasible to manufacture the product?
Will the product be profitable when manufactured and delivered to the customer
at the target price?
Concept Development and Testing
Develop the marketing and engineering details
Investigate intellectual property issues and search patent databases
Who is the target market and who is the decision maker in the purchasing
What product features must the product incorporate?
What benefits will the product provide?
How will consumers react to the product?
How will the product be produced most cost effectively?
Prove feasibility through virtual computer aided rendering and rapid prototyping
What will it cost to produce it?
Testing the Concept by asking a number of prospective customers what they think
of the idea - usually via Choice Modelling.
Estimate likely selling price based upon competition and customer feedback
Estimate sales volume based upon size of market and such tools as the Fourt-
Estimate profitability and break-even point
Beta Testing and Market Testing
Produce a physical prototype or mock-up
Test the product (and its packaging) in typical usage situations
Conduct focus group customer interviews or introduce at trade show
Make adjustments where necessary
Produce an initial run of the product and sell it in a test market area to determine
New program initiation
Finalize Quality management system
Publish technical communications such as data sheets
Engineering operations planning
Resource plan publication
Program review and monitoring
Contingencies - what-if planning
Commercialization (often considered post-NPD)
Launch the product
Produce and place advertisements and other promotions
Fill the distribution pipeline with product
Critical path analysis is most useful at this stage
New Product Pricing
Impact of new product on the entire product portfolio
Value Analysis (internal & external)
Competition and alternative competitive technologies
Differing value segments (price, value and need)
Product Costs (fixed & variable)
Forecast of unit volumes, revenue, and profit
These steps may be iterated as needed. Some steps may be eliminated. To reduce
the time that the NPD process takes, many companies are completing several
steps at the same time (referred to as concurrent engineering or time to market).
Most industry leaders see new product development as a proactive process
where resources are allocated to identify market changes and seize upon new
product opportunities before they occur (in contrast to a reactive strategy in
which nothing is done until problems occur or the competitor introduces an
innovation). Many industry leaders see new product development as an ongoing
process (referred to as continuous development) in which the entire organization
is always looking for opportunities.
For the more innovative products indicated on the diagram above, great amounts
of uncertainty and change may exist which makes it difficult or impossible to plan
the complete project before starting it. In this case, a more flexible approach may
Because the NPD process typically requires both engineering and marketing
expertise, cross-functional teams are a common way of organizing projects. The
team is responsible for all aspects of the project, from initial idea generation to
final commercialization, and they usually report to senior management (often to a
vice president or Program Manager). In those industries where products are
technically complex, development research is typically expensive and product life
cycles are relatively short, strategic alliances among several organizations helps to
spread the costs, provide access to a wider skill set and speeds up the overall
Also, notice that because both engineering and marketing expertise are usually
critical to the process, choosing an appropriate blend of the two is important.
Observe (for example, by looking at the See also or References sections below)
that this article is slanted more toward the marketing side. For more of an
engineering slant, see the Ulrich and Eppinger, Ullman references below.
People respond to new products in different ways. The adoption of a new
technology can be analyzed using a variety of diffusion theories such as the
Diffusion of Innovations theory.
A new product pricing process is important to reduce risk and increase confidence
in the pricing and marketing decisions to be made. Bernstein and Macias describe
an integrated process that breaks down the complex task of new product pricing
into manageable elements.
The Path to Developing Successful New Products points out three key
processes that can play critical role in product development: Talk to the customer;
Nurture a project culture; Keep it focused.
Product life cycle
Product Life Cycle
The Product Life Cycle (PLC) is used to map the lifespan of a product. There are
generally four stages in the life of a product. These four stages are the
Introduction stage, the Growth stage, the Maturity stage and the Decline stage.
The following graph illustrates the four stages of the PLC:
Image copyright www.mba.com
There is no set time period for the PLC and the length of each stage may vary. One
product's entire life cycle could be over in a few months. Another product could
last for years. Also, the Introduction stage may last much longer than the Growth
stage and vice versa.
The Four Stages of the Product Life Cycle
1. Introduction: The Introduction stage is probably the most important stage in
the PLC. In fact, most products that fail do so in the
Introduction stage. This is the stage in which the product is initially promoted.
Public awareness is very important to the
success of a product. If people don't know about the product they won't go out
and buy it.
There are two different strategies you can use to introduce your
product to consumers. You can use either a penetration
strategy or a skimming strategy. If a penetration strategy is used then prices are
set very high initially and then gradually
lowered over time. This is a good stategy to use if there are few competitors for
your product. Profits are high with this
strategy but there is also a great deal of risk. If people don't want to pay high
prices you may lose out. The second
pricing strategy is a skimming strategy. In this case you set your prices very low at
the beginning and then gradually
increase them. This is a good strategy to use if there are alot of competitors who
control a large portion of the market.
Profits are not a concern under this strategy. The most important
thing is to get you product known and worry about
making money at a later time.
2. Growth: If you are lucky enough to get your product out of the Introduction
stage you then enter this stage. The Growth stage is
where your product starts to grow. In this stage a very large amount of money is
spent on advertising. You want to
concentrate of telling the consumer how much better your product is than your
There are several ways to advertise your product. You can use TV
and radio commercials, magazine and newspaper
ads, or you could get lucky and customers who have bought your product will give
good word-of-mouth to their
If you are successful with your advertising strategy then you will see
an increase in sales. Once your sales begin to
increase you share of the market will stabilize. Once you get to this point you will
probably not be able to take anymore
of the market from your competitors.
3. Maturity: The third stage in the Product Life Cycle is the maturity stage. If
your product completes the Introduction and Growth
stages then it will then spend a great deal of time in the Maturity stage. During
this stage sales grow at a very fast rate
and then gradually begin to stabilize. The key to surviving this stage is
differentiating your product from the similar
products offered by your competitors. Due to the fact that sales are beginning to
stabilize you must make your product
stand out among the rest.
4. Decline: This is the stage in which sales of your product begin to fall. Either
everyone that wants to has bought your product or
new, more innovative products have been created that replace yours. Many
companies decide to withdrawal their
products from the market due to the downturn. The only way to increase sales
during this period is to cut your costs
reduce your spending.
Very few products follow the same cycle. Many products don't even make it
through all four stages. Some stages even bypass stages. For example, one
product may go straight from the Introduction stage to the Maturity stage. This is
the problem with the PLC. There is no set way for a product to go. Therefore,
every product requires a great deal of research and close supervision throughout
its life. Without proper research and supervision your product will probably never
get out of the first stage.
Product life cycle strategies
Done in ppt see
A type of product manufactured by a company under a particular name.
Definition of 'Brand'
A distinguishing symbol, mark, logo, name, word, sentence or a combination of
these items that companies use to distinguish their product from others in the
Investopedia explains 'Brand'
Once a brand has created positive sentiment among its target audience, the firm
is said to have built brand equity. Some examples of firms with brand equity -
possessing very recognizable brands of products - are Microsoft, Coca-Cola,
Ferrari, Sony, The Gap and Nokia.
Legal protection given to a brand name is called a trademark.
The process involved in creating a unique name and image for a product in the
consumers' mind, mainly through advertising campaigns with a consistent theme.
Branding aims to establish a significant and differentiated presence in the market
that attracts and retains loyal customers.
Definition: The marketing practice of creating a name, symbol or design that
identifies and differentiates a product from other products
An effective brand strategy gives you a major edge in increasingly competitive
markets. But what exactly does "branding" mean? Simply put, your brand is your
promise to your customer. It tells them what they can expect from your products
and services, and it differentiates your offering from that of your competitors.
Your brand is derived from who you are, who you want to be and who people
perceive you to be.
Are you the innovative maverick in your industry? Or the experienced, reliable
one? Is your product the high-cost, high-quality option, or the low-cost, high-
value option? You can't be both, and you can't be all things to all people. Who you
are should be based to some extent on who your target customers want and need
you to be.
The foundation of your brand is your logo. Your website, packaging and
promotional materials--all of which should integrate your logo--communicate
Your brand strategy is how, what, where, when and to whom you plan on
communicating and delivering on your brand messages. Where you advertise is
part of your brand strategy. Your distribution channels are also part of your brand
strategy. And what you communicate visually and verbally is part of your brand
Consistent, strategic branding leads to a strong brand equity, which means the
added value brought to your company's products or services that allows you to
charge more for your brand than what identical, unbranded products command.
The most obvious example of this is Coke vs. a generic soda. Because Coca-Cola
has built a powerful brand equity, it can charge more for its product--and
customers will pay that higher price.
The added value intrinsic to brand equity frequently comes in the form of
perceived quality or emotional attachment. For example, Nike associates its
products with star athletes, hoping customers will transfer their emotional
attachment from the athlete to the product. For Nike, it's not just the shoe's
features that sell the shoe.
Defining your brand is like a journey of business self-discovery. It can be difficult,
time-consuming and uncomfortable. It requires, at the very least, that you answer
the questions below:
What is your company's mission?
What are the benefits and features of your products or services?
What do your customers and prospects already think of your company?
What qualities do you want them to associate with your company?
Do your research. Learn the needs, habits and desires of your current and
prospective customers. And don't rely on what you think they think. Know what
Once you've defined your brand, how do you get the word out? Here are a few
simple, time-tested tips:
Get a great logo. Place it everywhere.
Write down your brand messaging. What are the key messages you want to
communicate about your brand? Every employee should be aware of your brand
Integrate your brand. Branding extends to every aspect of your business--how
you answer your phones, what you or your salespeople wear on sales calls, your
e-mail signature, everything.
Create a "voice" for your company that reflects your brand. This voice should be
applied to all written communication and incorporated in the visual imagery of all
materials, online and off. Is your brand friendly? Be conversational. Is it ritzy? Be
more formal. You get the gist.
Develop a tagline. Write a memorable, meaningful and concise statement that
captures the essence of your brand.
Design templates and create brand standards for your marketing materials. Use
the same color scheme, logo placement, look and feel throughout. You don't need
to be fancy, just consistent.
Be true to your brand. Customers won't return to you--or refer you to someone
else--if you don't deliver on your brand promise.
Be consistent. This tip involves all the above and is the most important tip on this
list. If you can't do this, your attempts at establishing a brand will fail.