MARK 2013

Principles of Marketing
----------------------------------------------------
Second Semester 2017 – 2018
Section 1- 1
Prepared by: GONZALES, BRYAN P.
Submitted to: Dr. Rosemariebeth Dizon

ASSIGNMENT NO. 5
DEFINE/DESCRIBE

A. Product definition
The organizations that are production-oriented look at a product basically as a manifestation of
resources used to produce it and the organizations that are marketing oriented view a product from
the target consumer’s perspective as a bundle of benefits by benefits I mean to say functional as
well as emotional benefits. Accordingly they will have to see how their consumers view their
products. Most of the organizations have realized that there is no need to prepare a marketing mix
for a product that offers few consumers benefits, because that product will not sell.
So we can say that a product therefore is a bundle of physical, chemical and / or intangible
attributes that have the potential to satisfy present and potential customer wants. In addition to
the physical Good itself, other elements include the warranty, installation, after sales service
accessories and package. A customer buying an air-conditioner and a maintenance contract from
Carrier Aircon is buying a different product than another who buys the same model without the
maintenance agreement. Now lets discuss the levels, that are present in a product
https://www.marketing91.com/what-is-a-product/

In general, a product is defined as a “thing produced by labor or effort” or the “result of an act or a
process. ” The word “product” stems from the verb “produce”, from the Latin prōdūce(re) “(to) lead
or bring forth. ” Since 1575, the word “product” has referred to anything produced.
In marketing, a product is anything that can be offered to a market that might satisfy a want or
need. In retail, products are called merchandise. In manufacturing, products are purchased as raw
materials and sold as finished goods. Commodities are usually raw materials such as metals and
agricultural products, but the term can also refer to anything widely available in the open market.
In project management, products are the formal definition of the project deliverables that form the
objectives of the project.product is any good, service, or idea that can be offered to a market to
satisfy a want or need.
https://courses.lumenlearning.com/boundless-marketing/chapter/what-is-a-product/

Definition: A product is the item offered for sale. A product can be a service or an item. It can be
physical or in virtual or cyber form. Every product is made at a cost and each is sold at a price. The
price that can be charged depends on the market, the quality, the marketing and the segment that
 is targeted. Each product has a useful life after which it needs replacement, and a life cycle after
which it has to be re-invented. In FMCG parlance, a brand can be revamped, re-launched or
extended to make it more relevant to the segment and times, often keeping the product almost the
same.
Description: A product needs to be relevant: the users must have an immediate use for it. A
product needs to be functionally able to do what it is supposed to, and do it with a good quality.
A product needs to be communicated: Users and potential users must know why they need to use
it, what benefits they can derive from it, and what it does difference it does to their lives.
Advertising and 'brand building' best do this.
A product needs a name: a name that people remember and relate to. A product with a name
becomes a brand. It helps it stand out from the clutter of products and names.
https://economictimes.indiatimes.com/definition/product

A good, idea, method, information, object or service created as a result of a process and serves a
need or satisfies a want. It has a combination of tangible and intangible attributes (benefits,
features, functions, uses) that a seller offers a buyer for purchase. For example a seller of a
toothbrush not only offers the physical product but also the idea that the consumer will be
improving the health of their teeth.
Law: A commercially distributed good that is (1) tangible personal property, (2) output or result of a
fabrication, manufacturing, or production process, and (3) passes through a distribution channel
before being consumed or used.
Marketing: A good or service that most closely meets the requirements of a particular market and
yields enough profit to justify its continued existence.
http://www.businessdictionary.com/definition/product.html

B. Industrial Product
An industrial product is a good used by a company for business consumption. It is distinct from a
consumable good, which is purchased by individuals for personal and family consumption.
https://bizfluent.com/info-8159691-industrial-products.html

Machinery, manufacturing plants, materials, and other goods or component parts for use or
consumption by other industries or firms. Demand for industrial goods is usually based on the
demand for consumer goods they help produce (called derived demand). They are classified as (1)
Production goods, that enter the production of a final product, such as the raw materials and
component parts, or (2) Support goods, that assist in the production process, such as fixed
equipment and machinery, instruments, jigs, tools, etc.
http://www.businessdictionary.com/definition/industrial-goods.html

These are the products which are not directly used by the end customers but are used by the
industries. There are various characteristic and features which are not required by the normal
customers in day to day life but only are required by the industries. So products are designed
 keeping in mind the industrial requirement and specific to them. These products will be called as
industrial product.
https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/1732-industrial-
product.html

The products which are used as inputs to produce consumer products are known as industrial
products. For example raw material, machinery, tools, lubricants etc. These products are used for
non personal& business purposes. Manufacturers, transport agencies, banks & insurance
companies, mining companies etc. are the main parties involved, in marketing of industrial
products.
http://www.businessmanagementideas.com/marketing/classifications-of-products-in-marketing-
consumer-and-industrial-products/2261

C. Commodities
A reasonably interchangeable good or material, bought and sold freely as an article of commerce.
Commodities include agricultural products, fuels, and metals and are traded in bulk on a
commodity exchange or spot market.
http://www.businessdictionary.com/definition/commodity.html

A physical substance, such as food, grains, and metals, which is interchangeable with another
product of the same type, and which investors buy or sell, usually through futures contracts. The
price of the commodity is subject to supply and demand. Risk is actually the reason exchange
trading of the basic agricultural products began. For example, a farmer risks the cost of producing a
product ready for market at sometime in the future because he doesn't know what the selling price
will be.
More generally, a product which trades on a commodity exchange; this would also include foreign
currencies and financial instruments and indexes.
http://www.investorwords.com/975/commodity.html#ixzz5A4dUUbse

A commodity is a basic good used in commerce that is interchangeable with other commodities of
the same type; commodities are most often used as inputs in the production of other goods or
services. The quality of a given commodity may differ slightly, but it is essentially uniform across
producers. When they are traded on an exchange, commodities must also meet specified minimum
standards, also known as a basis grade.
https://www.investopedia.com/terms/c/commodity.asp

economics, a commodity is an economic good or service that has full or substantial fungibility: that
is, the market treats instances of the good as equivalent or nearly so with no regard to who
produced them.[1] The price of a commodity good is typically determined as a function of its
market as a whole: well-established physical commodities have actively traded spot and derivative
markets. Most commodities are raw materials, basic resources, or agricultural products, such as
iron ore, sugar, or rice.
 https://en.wikipedia.org/wiki/Commodity

A commodity is a type of widely-available product that is not markedly dissimilar from one unit to
another.
Within a category of commodity, one item or unit can be substituted for another with similar
results. Examples of commodities, in the traditional sense, include sugar, wheat, rubber, fuel oil,
cattle, gold, aluminum and wool – among a great number of other products. Other products, such
as wind and solar power and greenhouse gas offsets are considered to be emerging commodities,
for which the market is developing but not yet mature.
By definition, a commodity product lacks a unique selling point. In an IT context, the term usually
differentiates typical consumer products from specialized or high-performance products. A
commodity, in this context, is a low-end but functional product without distinctive features. A
commodity computer, for example, is a standard-issue PC that is widely available for purchase.
As technologies and markets for a given product mature, it is more likely to be considered a
commodity, at least in its more basic implementations. According to some market analysts, the
increasing ubiquity of smartphones and the consistency of features from one brand to another
means that the products are becoming commodities.
http://whatis.techtarget.com/definition/commodity

D. Specialty Good
Item that is extraordinary or unique enough to motivate people to make an unusual effort to get it.
Examples are designer clothes, exotic perfumes, limited-edition cars, stunning designs, works of
famous painters.
http://www.businessdictionary.com/definition/specialty-good.html

In marketing, products are separated into three major categories: convenience, shopping and
specialty products. Convenience goods are inexpensive items that are frequently purchased, such
as milk and eggs. Shopping goods are higher-priced items that consumers typically comparison
shop for, such as refrigerators and washing machines. Specialty products are products not
purchased on a regular basis and consumers do extensive research before purchasing these items.
Specialty products are typically expensive are unique in nature—meaning not easily substituted.
http://smallbusiness.chron.com/specialty-products-marketing-1507.html

Consumer goods can be categorized into convenience goods, shopping goods, and speciality goods.
The classification scheme is based on the way consumers purchase. This system is based on the
definition that convenience and speciality goods are both purchased with a predetermined pattern
in mind. In the case of the convenience good, the pattern is that the most accessible brand will be
purchased; in the case of a speciality good, the pattern is that only a specific brand will be
purchased. For example, if the customer utilizes an outlet because it is the most accessible, it
would be considered, for that customer at least, a convenience store; while one in which the
consumer shops even if he/she has to go considerably out of his/her way to reach it, would be
considered a speciality store. A shopping good is one in which the consumer does not have a
 predetermined pattern in mind. Likewise a shopping store is one which the consumer will
undertake a search to select a store to patronize.
https://en.wikipedia.org/wiki/Speciality_goods

Specialty goods have particularly unique characteristics and brand identifications for which a
significant group of buyers is willing to make a special purchasing effort. Examples include specific
brands of fancy products, luxury cars, professional photographic equipment, and high-fashion
clothing. For instance, consumers who favour merchandise produced by a certain shoe
manufacturer or furniture maker will, if necessary, travel considerable distances in order to
purchase that particular brand. In specialty-goods markets, sellers do not encourage comparisons
between options; buyers invest time to reach dealers carrying the product desired, and these
dealers therefore do not necessarily need to be conveniently located.
https://www.britannica.com/topic/marketing/Market-research-firms#ref394108

consumer goods for which the customer has strong preference and is prepared to search for
extensively to select and purchase the most suitable.
https://www.monash.edu/business/marketing/marketing-dictionary/s/specialty-goods

E. Convenience Goods
Convenience goods are those that the customer purchases frequently, immediately, and with
minimum effort. Soaps and newspapers are considered convenience goods, as are common staples
like ketchup or pasta. Convenience-goods purchasing is usually based on habitual behaviour, where
the consumer will routinely purchase a particular product. Some convenience goods, however, may
be purchased impulsively, involving no habit, planning, or search effort. These goods, usually
displayed near the cash register in a store in order to encourage quick choice and purchase, include
candy, razors, and batteries. A slightly different type of convenience product is the emergency
good, which is purchased when there is an urgent need. Such goods include umbrellas and snow
shovels, and these are usually distributed at a wide variety of outlets so that they will be readily
available when necessary.
https://www.britannica.com/topic/marketing/Market-research-firms#ref394103

A convenience good is a consumer item that is widely available and purchased frequently with
minimal effort. Because a convenience good can be found readily, it does not typically involve an
intensive decision-making process. Convenience goods, such as newspapers and candy, are
different than specialty goods, such as cars, which are more expensive and often carry a greater
opportunity cost for the consumer.
https://www.investopedia.com/terms/c/convenience-good.asp

Widely distributed and relatively inexpensive goods which are purchased frequently and with
minimum of effort, such as gasoline (petrol), newspapers, and most grocery items.
http://www.businessdictionary.com/definition/convenience-goods.html
 The items which are bought frequently, immediately and with minimum shopping efforts are
convenience goods. These include candy, ice-cream, cold drinks, cigarettes, magazines, medicines
etc. the shops which keep the convenience goods are called convenience stores. Often
convenience goods are non durable.
https://www.gktoday.in/convenience-goods-shopping-goods-and-specialty-goods/

Convenience Goods are the goods for which people do not shop and which they prefer to buy at
convenient places and at satisfactory prices. In the case of convenience goods, the gain resulting
from shopping around to compare price and quality is not considered worth the extra time, money
and effort required. The consumer is willing to accept any of several substitutes and thus he will
buy the one which is most accessible. In other words, the convenience goods may be defined as
those goods for which the probable gain from making price and quality comparisons is thought to
be small relative to the consumers’ appraisal of searching costs in terms of time, money and effort.
http://www.knowledgiate.com/types-of-convenience-goods/

Consumer goods can be categorized into convenience goods, shopping goods, and speciality goods.
The classification scheme is based on the way consumers purchase. This system is based on the
definition that convenience and speciality goods are both purchased with a predetermined pattern
in mind. In the case of the convenience good, the pattern is that the most accessible brand will be
purchased; in the case of a speciality good, the pattern is that only a specific brand will be
purchased. For example, if the customer utilizes an outlet because it is the most accessible, it
would be considered, for that customer at least, a convenience store; while one in which the
consumer shops even if he/she has to go considerably out of his/her way to reach it, would be
considered a speciality store. A shopping good is one in which the consumer does not have a
predetermined pattern in mind. Likewise a shopping store is one which the consumer will
undertake a search to select a store to patronize.
https://en.wikipedia.org/wiki/Speciality_goods

F. Product Line
a series of different products which form a group, all made by the same company
http://www.businessdictionary.com/definition/product-line.html

A product line is a group of related products produced by one manufacturer, for example products
that are intended to be used for similar purposes or to be sold in similar types of shops.
https://www.collinsdictionary.com/dictionary/english/product-line
A product line is a group of related products under a single brand sold by the same company.
Companies sell multiple product lines under their various brands. Companies often expand their
offerings by adding to existing product lines, because consumers are more likely to purchase
products from brands with which they are already familiar.
https://www.investopedia.com/terms/p/product-line.asp#ixzz5A4mbQlZ5
A product line is a group of products that are closely related to each other by function, customer
group, market, or price range.
https://study.com/academy/lesson/product-lines-definition-lesson-quiz.html

A product line is a group of products that are closely related to each other by function, customer
group, market, or price range.
https://study.com/academy/lesson/product-lines-definition-lesson-quiz.html

all of the products carried by a manufacturer, wholesaler, or retailer.

a group of products of the same manufacturer having similar or related characteristics and
intended for similar or related markets.
http://www.dictionary.com/browse/product-line

1. Discuss the key attributes of food products.

Understanding the physicochemical properties of food products makes it possible to develop

products with characteristics that meet consumer requirements. The major challenge in the
development and reformulation of products is to align sensory parameters such as flavour and
texture with consumer wishes. Foods are complex materials in which major sensory changes can be
caused by small changes in formulation or process. For many companies, the complex physical and
chemical processes that occur in the product are a insight into the physicochemical properties of
food at all levels, from molecular to macroscopic and sensory. This knowledge allows companies to
control product qualities in a more targeted way during development.

How structure determines consumer appreciation

The structure of a product often determines how it is experienced and appreciated by consumers.
Take bread, for instance, where the crispness of the crust is a major texture characteristic.
Wageningen Food &Biobased Research can measure texture through various standardised
methods. In addition, we make phase transition diagrams of physical and chemical processes which
determine different product characteristics. These diagrams are used to steer the processes in a
targeted way.

For foods with a foamy structure, such as aerated dairy, sweets, bread and beer, stability and
aeriness are important quality parameters. We map the physicochemical structure of these types
of product in detail using various techniques, including X-ray tomography (XRT). This technology
allows us to create 3D images of food at a spatial resolution of a micron. We can thereby determine
with high precision how the structure of a product changes due to a recipe adjustment and over
time, for example under the influence of deformation, humidification, heating and storage.
A product’s attributes are what makes it distinct from other products. Attributes include things like
size, color, flavor, package type and other features that are relevant to the category. From a
consumer perspective, these attributes are what determine the consideration set and influence the
ultimate purchase decision. From a retail perspective, product attributes help define how aisles,
departments and shelf sets are organized. Manufacturers use attributes to help define their
products’ competitive set. (Note: “Attributes” are also known as “characteristics,” depending on
your data supplier.)

When thinking about products, the largest thing is usually a category while the smallest is an
individual item. There are times when you need to look at the entire category (to see if it’s just
your brand that’s declining, for example, or the whole category) and other times when you need to
look at items (to show retailers where your items rank within the category when selling in new
items or when recommending changes to item assortment). There are also many other levels
between category and item that are important and useful to look at. Product attributes tell you
something about various aspects of a product and allow you to get at these other levels. Looking at
product segments based on different attributes allows you to keep on top of important trends and
more easily identify growth opportunities: Which is growing faster – small or large sizes? sweet or
savory flavors? cans or pouches? floral, herbal, fresh or unscented? low sodium or gluten free?
You get the idea!
The most commonly used product attribute is probably brand, one of the many attributes available
for all items in your database. Take a look at the following table to see some of the attributes
associated with 3 different beverage products: There are 9 attributes listed and each attribute can
have only one value. All the items that are in your database are coded for several different
attributes, all of which must be visible by looking at the package. Some attributes apply to all
products. These include things like Manufacturer, Brand, Category and Size. Other attributes are
only relevant for certain categories. In the example above, the value for Sub-Brand for the Poland
Spring item says “Not Applicable” because there is no Sub-Brand. Similarly, the attribute
Sweetener is not relevant. Food and Beverage products have Flavor as an attribute, but Household
and Personal Care products often have Scent or Fragrance instead. Due to the current interest in
Health & Wellness among consumers, there are dozens of attributes just having to do with things
like Organic, Sodium, Sugar, Fat, Gluten and other health claims. These extra attributes can be
made available on your IRI/Nielsen database, but for an additional charge. SPINS is a company that
specializes in the natural and organic space, and they offer the most extensive attribute coding
related to Natural products and Health & Wellness claims.

Safety – Unglamorous but the most important factor. Safety hazard examples include pathogens (E.
coli), heavy metals (mercury) and pesticide residues. If a food product doesn’t meet basic safety
requirements, it won’t ever make it into your kitchen. When comparing food choices, safety is not a
point of differentiation because most safety risks have been eliminated for the consumer by using
good manufacturing practices and processing. Wild harvested insects are not recommended for
consumption because there is a risk that they may have picked up pesticide residue along their
travels.

Convenience: Often taken for granted, convenience varies widely.

Not convenient: dry chick peas

Convenient: canned chick peas

Very convenient: prepared hummus

When it comes to edible insects, processing live insects can be quite a handful for the chef. Raising
your own insects takes devotion. Providing minimally processed and processed insects is a possible
opportunity to gain further acceptance of edible insects

Taste – This is the space where most of the competition takes place. After all, taste is king. If
someone doesn’t like the taste of a food, they are not going to eat it again. Taste is usually a
tradeoff between other factors. Canned crickets are more convenient than frozen but the taste and
texture is probably better in frozen crickets. Crickets are visually striking which does not earn them
any points. People generally don’t like the idea of an insect looking back at you when you are about
to eat it. Turning crickets into a flour is an excellent way to by-pass this issue. If poached or fried
insects are being prepared… chop them up.

Health – Based on large food company behavior, health only has one category, nutrition. America’s
food system is not doing an adequate job addressing socio-economic costs. Brands are quick to tell
you how much fiber is in their product but they don’t tell you if it’s GMO fiber or if it’s highly
processed fiber. It doesn’t help that individual consumers are not aware that their food choices
also have far reaching environmental, social and economic influences. Health is why people should
stop

2. Categories of New Product

The term new product can mean different things. Six different categories of new products can be
identified that are all quite different from each other. Still, they are all called new products. Let’s
investigate the different categories of new products and what the term new product may actually
mean.

The six categories of new products range from new-to-the-world products (sometimes called really
new products), as well as a range of minor repositionings and cost reductions. The list containing
the six categories of new products may include things you would exclude. For instance, can we
have a new item just by repositioning an old one (telling customer it is something else)? Yes, we
can have a new product then. You might consider this to be only a new use, but the firm still went
through a process of discovery and development. And a new use may occur in a completely
separate division. For example, the Dove soap name has, by now, been extended to almost two
dozen box soaps and almost as many liquid body washes.

The Six Categories of New Products

As you see, we have to broaden our definition of new products to include the following six
categories of new products.

1. New-to-the-world Products (really new Products)

The alternative expression for new-to-the-world products (really new products) already indicates
that this is what most people would define as a new product. These products are inventions that
create a whole new market. Examples: Polaroid camera, the iPod and iPad, the laser printer and so
on.

2. New-to-the-firm Products (new Product Lines)

Products that take a firm into a category new to it. The products are not new to the world, but are
new to the firm. The new product line raises the issue of the imitation product: a “me-too”.
Examples: P&G’s first shampoo or coffee, Hallmark gift items, AT&T’s Universal credit card and so
on.

3. Additions to existing Product Lines

These are simple line extensions, designed to flesh out the product line as offered to the firm’s
current markets. Examples: P&G’s Tide Liquid detergent, Bud Light, Special K line extensions
(drinks, snack bars, and cereals).

4. Improvements and Revisions to existing Products

Current products made better. Examples: P&G’s Ivory Soap and Tide power laundry detergent have
been revised numerous times throughout their history, and there are countless other examples.

5. Repositionings

As we already discussed before, you may have an argument about whether repositions are actually
new products. Yet, they can be considered as new products, as the firm undertakes a new products
process. Repositionings are products that are retargeted for a new use or application. Examples:
Arm & Hammer baking soda repositioned as a drain or refrigerator deodorant; aspirin repositioned
as a safeguard against heart attacks. Also includes products retargeted to new users or new target
markets. Marlboro cigarettes were repositioned from a woman’s cigarette to a man’s cigarette
years ago.

6. Cost Reductions

Finally, cost reductions complete the six categories of new products. Cost reductions refer to new
products that simply replace existing products in the line, providing the customer similar
performance but at a lower cost. May be more of a “new product” in terms of design or production
than marketing.
Differences between the Categories of New Products

All the categories of new products are considered new products, but it is clear to see that the risks
and uncertainties greatly differ, and the categories need to be managed differently.

3. Product Life Cycle

Four stages exist to the product life cycle after a product is introduced to the market. Some
marketing experts speak of a fifth state, which is more developmental in nature. Nevertheless,
different dynamics occur during each of the four product life cycle stages, which affects a
company's advertising, pricing and product strategies. Managers and business owners must be
cognizant of the four stages of the product's life cycle, as failure to monitor it can drastically hinder
sales and profits.

Introduction State
The introduction stage of the product life cycle is when people start finding out about it. Product
quality is important during this state, as companies want to build repeat business. Additionally, a
company may either choose to price its products relatively high or lower than average. Companies
can quickly recoup production costs with higher prices. However, a company many use a lower
pricing strategy to build market share or a loyal customer base.

Growth Stage
If the demand for the product is high, sales will soar in the growth stage. Companies may also add
product variety to appeal to more customers. Companies will usually keep their prices stable during
the growth stage, according to QuickMBA.com, an online business reference site. Companies are
using the higher profit margins for advertising or gaining additional business from repeat
customers. Companies will usually need to hire more people during the growth stage to better
service customers. Advertising departments may increase their expenditures to appeal to a broader
audience.

Maturity Stage
During the maturity stage, the market becomes more saturated. It becomes more difficult to add
customers. Some companies will add new features to their products to draw customers away from
competitors. Companies may also try to find new uses for products or markets for their products to
extend the lives of their products. For example, a consumer product company may start selling its
soaps to factories and plants. Therefore, companies will usually stress their differences from
competitors in their advertisements and promotions. Companies may also lower prices when more
competitors enter the market. Some competitors will likely lower prices, so other companies will
do likewise to avoid losing customers.
Decline Stage
Products inevitably become outmoded or obsolete. The black and white television is an example.
During the decline stage, companies may make final attempts to differentiate their products or find
new markets for them. However, some companies will introduce new products, especially if
technology is changing. Their existing products may be sold or discontinued.