This document discusses product decisions, including defining products as bundles of attributes that satisfy buyers. It distinguishes goods from services and classifies products for consumer and business markets. Consumer products are divided into convenience, shopping, specialty, and unsought categories. Business products include installations, accessory equipment, components, raw materials, supplies, and services. The document also covers levels of a product, developing product lines and mixes, the stages of the product life cycle, extending the life cycle, and decisions about deleting products.

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Product DecisionsProduct Decisions

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What is a Product?What is a Product?
 Product:Product: bundle of physical, service, and
symbolic attributes designed to enhance
buyers’ want satisfaction

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What are Goods and Services?What are Goods and Services?
 Service:Service: intangible task that satisfies
consumer or business user needs
 Goods-services continuum:Goods-services continuum: device that
helps marketers to visualize the differences and
similarities between goods and services

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 Characteristics that distinguish services from
goods:
Intangibility
Inseparability
Perishability
Difficulty of standardization
Frequent requirement of
interaction between buyer
and Seller
Variability

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Classifying Goods and Services forClassifying Goods and Services for
Consumer and Business MarketsConsumer and Business Markets
 Consumer productsConsumer products: products destined for
use by ultimate consumers
 Business (or B2B) productsBusiness (or B2B) products: those that
contribute directly or indirectly to the output of
other products for resale
Also called industrial or organizational
products

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Types of Consumer ProductsTypes of Consumer Products

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 Convenience productConvenience product: good or service that
consumers want to purchase frequently,
immediately, and with minimal effort
Impulse goods and services are
purchased on the spur of the moment.
Staples are convenience goods and
services that consumers constantly replenish
to maintain a ready inventory.
Emergency goods and services are bought
in response to unexpected and urgent needs.

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 Shopping productShopping product: good or service
purchased only after the customer compares
competing offerings from competing vendors
on such characteristics as price, quality, style,
and color
Typically cost more than convenience
purchases.
Include tangible items.
Shopper lacks complete information and
gathers information during the buying
process.

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 Specialty productSpecialty product: good or service with
unique characteristics that cause the buyer to
value it and make a special effort to obtain it
 Unsought productUnsought product: good or service
marketed to consumers who may not yet
recognized in the need for it

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Types of Business ProductsTypes of Business Products

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 InstallationInstallation: major capital investment by a
business buyer that typically involves expensive
and relatively long-lived products, such as a
new factory or piece of heavy machinery
 Accessory equipmentAccessory equipment: capital product, usually
less expensive and shorter-lived that insulation,
such as a laptop computer
 Component parts and materialsComponent parts and materials: finished
business products that become parts of buying
firms’ final products, such as spark plugs for
new cars

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 Raw materialsRaw materials: business product, such as a
farm product (wheat, cotton, soybeans) or
natural product (coal, lumber, iron ore) that
become part of a final product
 SuppliesSupplies: products that represent regular
expenses necessary to carry out a firm’s daily
operations but are not part of the final product.

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 Business servicesBusiness services: intangible product
purchased to facilitate a firm’s production
and operating processes such as financial
services, leasing of vehicles, legal advice
and consulting

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Levels of ProductLevels of Product
Brand
Name
Quality
Level
Packaging
Design
Features
Delivery
& Credit
Installation
Warranty
After-
Sale
Servic
Core
Benefit
or
Service
Core
Benefit
or
Service
ActualActual CoreCore
Augmented
Product
Augmented
Product

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Development of Product LinesDevelopment of Product Lines
 Product LineProduct Line: a series of related products
Motivation
Desire to Grow
Enhancing the Company’s Position in
the Market
Optimal Use of Company Resources
Exploit the Product Life Cycle

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 A company’s assortment of product lines and
individual offerings
Product Width--the number of product lines
offered.
Product Length--the number of different
products a firm sells.
Product Depth--variations in each product that
a firm markets in its mix.
The Product MixThe Product Mix

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 Product Mix DecisionsProduct Mix Decisions
A firm may lengthen or widen its product
mix
A Company may decide to add variations
that will attract new users
A product may be pruned or altered, and
new product may extend the product life
cycle
Line extension: introduction of a new
product that is closely related to other
products in the firm’s existing line

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The Product Life CycleThe Product Life Cycle
 Product life cycleProduct life cycle: progression of products
through introduction, growth, maturity, and
decline stages

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 Introduction StageIntroduction Stage
Firm works to stimulate demand for the
new market entry
Promotional campaigns stress features
Additional promotions to intermediaries
attempt to induce them to carry the product
Although prices are typically high, financial
losses are common due to heavy
promotional and research-and-
development costs

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 Growth StageGrowth Stage
Sales volume rises rapidly
Firm usually begins to realize substantial
profits
Success attracts competitors
Firm may need to make improvements to
the product
Additional spending on promotion and
distribution may be necessary

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 Maturity StageMaturity Stage
Industry sales continue to grow, but
eventually reach a plateau
Many competitors have entered the
market, and profits began to decline
Differences between competing products
diminish
Available supplies exceed industry demand
for the first time
Competition intensifies and heavy
promotional outlays are common

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 Decline StageDecline Stage
Innovations or shifts in consumer
preferences cause an absolute decline in
industry sales
Industry profits fall -- sometimes become
losses
Firms cut prices in a bid for the dwindling
market
Manufacturers gradually drop the declining
items from their product lines

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Extending the Product Life CycleExtending the Product Life Cycle
 Marketers usually try to expand each stage of the
life cycle for their products as long as possible
 Product life cycles can stretch indefinitely as a
result of decisions designed to:
Increase the frequency of use by current
customers
Increase the number of users for the
product
Find new uses
Change package sizes, labels, or product
quality

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Product Deletion DecisionsProduct Deletion Decisions
 Product lines must sometimes be pruned and
marginal products eliminated
 This decision is typically faced during the late
maturity and early declined stages of the
product life cycle
 An unprofitable item may be continued in
order to provide a complete line for
customers