product classification and product life cycle

Product
Dr. Gopal Thapa
Associate Professor
Tribhuvan University

Product
 Many people think a product is tangible but in
marketing a product is anything that can be
offered to a market to satisfy a want or need.
 It includes physical goods, services, experiences,
events, persons, places, properties, organizations,
information and ideas.
Dr. Gopal Thapa - Internal Analysis 2

Product
 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

Product includes:
 Physical goods
 Service
 Idea
 Event
 Experience
 Organization
 Inoformation
 People
 Place
 Property

Services
 Services are a form of product that consists of
activities, benefits, or satisfactions offered for sale
that are essentially intangible and do not result in
the ownership of anything.
 Features: Intangible, inseparable, perishable,
indivisible, variable
 E.g. banking, insurance, hotel, airline travel, retail,
communication, and repair etc.

Product and Service Classification
 Marketers classify products on the basis of:
 Durability and tangibility
 Nondurable goods: soap, toothpaste
 Durable goods: Clothing, furniture, TV
 Services: Banking, insurance
 Use (Consumer or industrial)
 Consumers goods
 Industrial goods
 Dr. Gopal Thapa - Internal Analysis 6

Consumer Product
 Consumer products are products and services
bought by final consumers for personal
consumption.
 Marketers usually classify these products and
services further based on how consumers go about
buying them
 Convenience goods
 Shopping goods
 Specialty goods
 Unsought goods Dr. Gopal Thapa - Internal Analysis 7

Consumer-goods Classification
 Convenience goods
 Shopping goods
 Specialty goods
 Unsought goods

Consumer Product
 Convenience product
 Staple product
 Impulse product
 Emergency product
 Shopping product
 Homogeneous product
 Heterogeneous product
 Specialty product
 Unsought product

Convenience goods
 Convenience products are consumer products and
services that customers usually buy frequently,
immediately, and with minimal comparison and
buying effort
 Convenience products are usually low priced, and
marketers place them in many locations to make
them readily available when customers need or
want them.
 E.g. Chocolate, soap, newspaper, bread etc.

Types of Convenience Product
 Staple product
 Impulse product
 Emergency product

Staples
 Staples are convenience goods consumers
purchase on a regular basis.
 A buyer might routinely purchase soap,
toothpaste, biscuits etc.

Impulse Product
 Impulse goods are purchased without any
planning or search effort, like candy bars and
magazines

Emergency Product
 Emergency goods are purchased when a need is
urgent—
 Umbrellas and raincoat during a rainstorm,
 boots and shovels during the first winter snow.
 Torch light, candle etc.

Shopping Product
 Shopping goods are those the consumer
characteristically compares on such bases as
suitability, quality, price, and style.
 Examples include furniture, clothing, and
television etc.
 Types:
 Homogeneous shopping product
 Heterogeneous shopping product

Homogeneous Shopping Product
 Homogeneous shopping goods are similar in
quality but different enough in price to justify
shopping comparisons.

Heterogeneous Shopping Product
 Heterogeneous shopping goods differ in product
features and services that may be more important
than price

Specialty Product
 Specialty goods have unique characteristics or
brand identification for which enough buyers are
willing to make a special purchasing effort.
 Specialty goods don’t require comparisons; buyers
invest time only to reach dealers carrying the
wanted products
 Dealers don’t need convenient locations, though
they must let prospective buyers know where to
find them.
 E.g.: Mercedes, Rado, Rolex etc.

Unsought Product
 Unsought products are consumer products that the
consumer either does not know about or knows
about but does not normally think of buying.
 Most major new innovations are unsought until
the consumer becomes aware of them through
advertising.
 Unsought goods require advertising and personal-
selling support and other marketing efforts
 E.g.: smoke detectors, anti-theft alarm, insurance
policy.

Marketing Consideration for
Convenience Product
 Customer buying behavior
 Frequent purchase; little planning, little
comparison or shopping effort; low customer
involvement
 Price :Low price
 Distribution : Widespread distribution; convenient
locations
 Promotion: Mass promotion by the producer
 Example: Toothpaste, magazines, and laundry
detergent

Shopping Product
 Customer buying behavior: Less frequent
purchase; much planning and shopping effort;
comparison of brands on price, quality, and style
 Price : Higher price
 Distribution : Selective distribution in fewer
outlets
 Promotion: Advertising and personal selling by
both the producer and resellers
 Example: Major appliances, televisions, furniture,
and clothing

Specialty Product
 Customer buying behavior: Strong brand
preference and loyalty; special purchase effort;
little comparison of brands; low price sensitivity
 Price: High price
 Distribution : Exclusive distribution in only one or
a few outlets per market area
 Promotion: More carefully targeted promotion by
both the producer and resellers
 Example: Luxury goods, such as Rolex watches or
fine crystal

Unsought Product
 Customer buying behavior: Little product
awareness or knowledge (or, if aware, little or
even negative interest)
 Price: Varies
 Distribution : Varies
 Promotion : Aggressive advertising and personal
selling by the producer and resellers
 Example: Life insurance and Red Cross blood
donations

Consumer Product
 High involvement product
 Low involvement product

Consumer Product
 Necessity product
 Luxury product

Consumer Product (based on life of product)
 Perishable product
 Durable product
 Non-durable product

Industrial Product
 Industrial products are those purchased for further
processing or for use in conducting a business.
 Thus, the distinction between a consumer product
and an industrial product is based on the purpose
for which the product is bought.
 If a consumer buys a vacuum cleaner for personal
use, it is a consumer product.
 If the same consumer buys the same vacuum
cleaner for office use, it is an industrial product.

Industrial-goods Classification
 Materials and parts
 Capital items
 Supply and services

 Materials and parts
 Raw materials
 Farm products
 Natural products
 Manufactured materials
 Component materials
 Component parts

 Capital items
 Installations
 Equipments: factory and office equipments
 Supplies
 Maintenance and repair items
 Operating supplies
 Business services
 Maintenance and repair services
 Business advisory services

Materials and parts
 Materials and parts are goods that enter the
manufacturer’s product completely.
 They fall into two classes: raw materials and
manufactured materials and parts.
 Raw materials in turn fall into two major groups:
farm products (wheat, cotton, livestock, fruits, and
vegetables) and natural products (fish, lumber,
crude petroleum, iron ore).

Materials and parts
 Farm products are supplied by many producers,
who turn them over to marketing intermediaries,
who provide assembly, grading, storage,
transportation, and selling services.
 The perishable and seasonal nature of farm
products gives rise to special marketing practices,
whereas their commodity character results in
relatively little advertising and promotional
activity.

Materials and parts
 Natural products are limited in supply.
 They usually have great bulk and low unit value
and must be moved from producer to user.
 Fewer and larger producers often market them
directly to industrial users.

Materials and parts
 Because users depend on these materials, long-
term supply contracts are common.
 The homogeneity of natural materials limits the
amount of demand-creation activity.
 Price and reliable delivery are the major factors
influencing the selection of suppliers.

Manufactured Materials and Parts
 Manufactured materials and parts fall into two
categories: component materials (iron, yarn,
cement, wires) and component parts (small
motors, tires, castings).
 Component materials are usually fabricated
further—pig iron is made into steel, and yarn is
woven into cloth.
 The standardized nature of component materials
usually makes price and supplier reliability key
purchase factors.

Manufactured Materials and Parts
 Component parts enter the finished product with
no further change in form, as when small motors
are put into vacuum cleaners and tires are put on
automobiles.
 Most manufactured materials and parts are sold
directly to industrial users.
 Price and service are major marketing
considerations, with branding and advertising less
important.

Capital items
 Capital items are long-lasting goods that facilitate
developing or managing the finished product.
 They fall into two groups: installations and
equipment.
 Installations consist of buildings (factories,
offices) and heavy equipment (generators, drill
presses, mainframe computers, elevators).
 Installations are major purchases

Installations
 They are usually bought directly from the
producer, whose sales force includes technical
staff, and a long negotiation precedes the typical
sale.
 Producers must be willing to design to
specification and to supply post sale services.
 Advertising is much less important than personal
selling.

Equipment
 Equipment includes portable factory equipment
and tools (hand tools, lift trucks) and office
equipment (desktop computers, desks).
 These types of equipment don’t become part of a
finished product.
 They have a shorter life than installations but a
longer life than operating supplies.
 They simply aid the production process.

Equipment
 Although some equipment manufacturers sell
direct, more often they use intermediaries because
the market is geographically dispersed, buyers are
numerous, and orders are small.
 Quality, features, price, and service are major
considerations.
 The sales force tends to be more important than
advertising, though advertising can be used
effectively.

Supplies and Business Services
 Supplies and business services are short-term
goods and services that facilitate developing or
managing the finished product.
 Supplies are of two kinds: maintenance and repair
items (paint, nails, brooms) and operating supplies
(lubricants, coal, writing paper, pencils).
 Together, they go under the name of MRO goods
 MRO: maintenance and repair items and
operating supplies

Supplies
 Supplies are the convenience products of the
industrial field because they are usually purchased
with a minimum of effort or comparison
 They are purchased on a straight-re buy basis

Supplies
 They are normally marketed through
intermediaries because of their low unit value and
the great number and geographic dispersion of
customers
 Price and service are important considerations
because suppliers are standardized and brand
preference is often not high.

Business Services
 Business services include maintenance and repair
services (window cleaning, computer repair) and
business advisory services (legal, management
consulting, advertising).
 Maintenance and repair services are usually
supplied under contract by small producers or
from the manufacturers of the original equipment.
 Business advisory services are usually purchased
on the basis of the supplier’s reputation and staff.

New Product Development Process
 Idea generation
 Idea screening
 Concept development and testing
 Marketing strategy and business analysis
 Product development
 Test marketing
 Commercialization

Product Life Cycle
 The product life cycle is an attempt to recognize
distinct stages in the sales history of the product.
 Philip Kotler

Stages of Product Life Cycle
 Introduction
 Growth
 Maturity
 Decline

Stages of Product Life Cycle
Features

Introduction Stage
 Slow sales growth
 Negative or low profits
 Innovator customers
 Few competitors
 High price

Growth Stage
 Rapid sales growth
 Rising profits
 Early adopter customer
 Growing competition
 Slightly lower price

Maturity Stage
 Slowdown in sales growth
 Stable profit
 Middle majority customers
 Intense competition
 Minimum price

Decline Stage
 Declining sales
 Declining profits
 Laggard customers
 Declining competition
 Increased price

Product Life Cycle
Marketing
Strategies

Introduction Stage
 High profile strategy
 Low profile strategy
 Preemptive penetration
 Selective penetration

Growth Stage
 Product quality improvement
 Adding new features and models
 Entering into new market segments
 Using new distribution channels
 Changing advertising theme

Maturity Stage
 Market modification
 Convert non-users users
 Enter into new market segments
 Win competitors customers
 Product modification
 Flanking (adding something new)
 Change product features
 Marketing mix modification

Decline Stage
 Product line contraction
 Withdrawal of all promotion
 Adopt single distribution channel
 Abandon the product

Any Queries?
Thank You

product classification and product life cycle

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