Topic 5 Slides Explana1on

The Product

Slide 2: This topic will cover in detail what a 'product is. All products pass through a Life Cycle' -
Marketers term this the "Product Life Cycle". This topic explains what the 'Product Life Cycle' is, and
how it can be used in managing a product, as well as the aEributes and benefits associated with a
product.

Slide 3: Gives the learning outcomes for this topic.

Slide 4: The basic understanding of a 'Product’ is oIen seen as a physical, tangible item. However,
over recent years we have experienced a merging of the 'Product’ and the 'Service' in many
marketplaces, to become what many call the 'Product/Service' i.e. a liEle of each! A term that has
been developed from this coming together of the Product and the Service is the 'total product.

Slide 5: Three component parts make up a product:

•An idea

•A Service

•A Good

At its final stage, the product may well encompass all three of these components or only one or two
of them.

Slide 6: Dibb, Simkin, Pride and Ferrel in their text offered a definiRon of these component parts as "
complexity of tangible and intangible aEributes such as: FuncRonal, Psychological and Social.

• The funcRonality of the product

• Its specific psychological elements

• It social use in socieRes

Slide 7: An example might be a box of chocolates. This is representaRve of "a tangible physical enRty"

Slide 8: We might define the service element of a product as:

"the applicaRon of both the human and the mechanical to people or objects"

Slide 9: A product can do a number of things; it may offer concepts and images. It may solve
problems and resolve issues or even change or adjust the environment.

New Products are a source of extra or new business and profit. Thousands of people across the world
have many great ideas for new products, however in the end they do not deliver the promised
features and benefits and unfortunately, they end up going out of business

Slide 10: These staRsRcs published in 2008 are quite surprising:

• 42% of all new packaged consumer products fail

• 22% of new industrial products - here obviously oIen more R & D to ensure a need
• 22% of service products fail - maybe users did not want that service, or in the delivered
service was not very good
Slide 11: FAB analysis;

• FEATURES

• ADVANTAGES

• BENEFITS

Slide 12: Both products and services can have features. A good salesperson will highlight these
during a sale and encourage the buyer to see that through the features of the product/service.

Slide 13: People buy the 'advantages’ that they can see in the product which will offer saRsfacRon to
them. These advantages are what the buyer sees or perceives over the compeRtor's product or
service. It might be cheaper, easier to obtain, easier to distribute etc.

Slide 14: It is the 'benefits that are most important to the consumer i.e., what does it do for me?

Product/Service benefits are very subjecRve, some things may be adored by one customer and
disliked by another. We oIen call these the "perceived" benefits as it is the way the customer sees
the product for themselves. It might be noted that poor salespeople highlight the benefits of a
product whilst good salespeople talk about features to customers.

Slide 15: Within product theory we can also idenRfy what is termed the three core benefits:

• Core Benefit
• Real Benefit
• Enhanced Benefit

Slide 16: The 'Core Benefit' - this is simply the reason why this product or service exists, i.e., what it
does or what it offers buyers/customers.

The 'Real Benefit' - this is what extra things the product/service has that others do not.

'Enhanced Product - does the organisaRon, that makes the product or delivers the service really
know its customers/buyers and what they want - does this show in the product/service? Are there
any addiRonal benefits?

Slide 17: This funcRon enables us as marketers to put together what we call 'boxes of benefits.' For
example:

• We can target specific buyers

• We can tell buyer's that we care about you

• And we can take this big box of benefits and PROMOTE It to the target customers so that they
purchase.

Slide 18: A good way to explain the Product Life Cycle is to use the example of human life - which
goes through a life cycle from birth to death. Products do exactly the same - starRng at the stage
where they are being researched, and ending when no-one wants to buy them anymore.
The Product Life Cycle remains one of the important models in markeRng as it enables us to trace
and track products, and then make important decisions about what to do with the product as it
passes through its life cycle.

Slide 19: The 'Product Life Cycle consists of FOUR very KEY stages

• The Introductory stage

• The Growth stage
• The Maturity stage
• The Decline stage

We oIen see the 'PLC illustrated as an /y graph with Rme as the horizontal scale and sales/income as
the verRcal scale.

Slide 20: We will now look at each of these specific stages in greater depth.

The 'Introductory' stage

This is the company launching the product into the marketplace following its research and
development, product tests and trials.

• CreaRng awareness in the market-place about our new product - this involves lots of
promoRon/markeRng communicaRons.
• We need to educate potenRal buyers about what our product does.
• We need to persuade potenRal buyers that our product is beEer than the
• compeRRon.
• We need to persuade distributors to stock it so we can get it to customers when
• they want to buy it.
• What we see is:
• Slow growth
• Low profits
• High cost for promoRon/markeRng communicaRons i.e. launch costs

Slide 21: The 'Growth' Stage

This is where buyers are becoming interested and sales are beginning to grow.

What we see is;

Distributors wanRng stock to saRsfy buyer demands.

• Buyers receiving and responding to our promoRon/markeRng communicaRons are beginning

to purchase.
• Buyers telling other potenRal buyers that our product is worth buying - we oIen refer to this
as 'Word of Mouth' communicaRons.
• We begin to see income and a small profit.
• The growth in sale leads to internal cost savings.

Buyers are becoming interested and sales are beginning to grow.

Slide 22: The 'Maturity' Stage

This is the peak of our Product Life Cycle what marketers oIen refer to as the 'Steady State' or
'SaturaRon'.
What we see is:

Repeat sales are high buyers like the product.

• Market begins to become saturated - oIen more compeRtors.

• Price compeRRon - beEer products.
• Sales begin to slow down - no customer growth.
• Sales peak and then begin to decline.
• This is also a big market decision to be made at this stage.

Do we let the product go into decline? Do we change the product - update it to meet or beat the
compeRtors for example?

Most products in today's marketplaces are in this maturity stage unless they are brand new products.

Slide 23: The 'Decline' Stage

What we see is:

OIen the whole market declines i.e., there is less interesRng these types of products as a whole not
just the product specific to your business.

• New products have arrived cheaper maybe or beEer.

• Buyers move on to newer and beEer products.
• Sales decline even further.
• Distributors do not want any new stock.

Slide 24: We have to acknowledge that all products and services go through a series of

phases:

• They are ‘LAUNCHED’

• They 'GROW’
• They 'DIE'

Our job as marketers is to track and monitor their progress and to support them with markeRng skills
their journey through the Product Life Cycle.

Slide 25: We must learn to manage products through their Product Life Cycle rather than just let
them driI through it without support or control.

We also have to maintain research and development - creaRvity and innovaRon ensures that we stay
ahead, have the best products, know when to update and change them. It enables us to conRnue to
respond to our customers' demands and requirements.

Slide 26: A growing problem with all products is maintaining our rights to them.

It is becoming easier to copy products. We can patent products, but this can be very expensive and
may not be successful. AlternaRvely, we may take offenders to court if we can idenRfy and find them.