PRODUCT

THE PRODUCT
 A product is anything that can be
offered to a market to satisfy a want or
need.
 The product is the total package of
benefits the customer receives when he
or she buys.
 Products that are marketed include
physical goods, services, experiences,
events, persons, places, properties,
organizations, informations, and ideas.
 THE PRODUCT

 Products are almost always

combinations of the tangible and
intangible. The entire package is
sometimes referred to as the
augmented product.
 The mix of tangibles and intangibles
in the augmented product varies
from one product or service to
another.
 THE PRODUCT
 Product is a key element in the
market offering. Marketing mix
planning begins with formulating an
offering to meet target customers’
needs or wants.
 The customer will judge the offering
by three basic elements : product
features and quality, services mix
and quality, and price
appropriateness.
DIFFERENCE BETWEEN SERVICES
AND PHYSICAL GOODS
Physical Goods
•Tangible
•Homogeneous
•Production and distribution
separated from consumption
[customers do not(normally)
participate in the production
process]
•Non-perishable (can be kept
in stock)
Services
-Intangible
-Heterogeneous
-Production distribution &
consumption simultaneous
process [customers normally
participate in the production
process]
-Perishable(cannot be kept
in stock)
 SERVICE CHARACTERISTICS AND
MARKETING IMPLICATIONS

Service Characteristics Marketing Implications

 Intangibility Cannot be stored
No patents
No ready display
Pricing is difficult
 Heterogeneity Quality control difficult
 Inseparability Consumers involved in
production and affect
the transaction
 Perishability No inventorisation
 PRODUCT LEVELS

 In planning its market offering,

the marketer needs to think
through five levels of the
product.
 Each level adds more customer
value, and the five constitute a
customer value hierarchy.

( Contd…. )
 FIVE LEVELS OF THE PRODUCT

(1) Core
(5) Potential
Product
Product
(2) Basic
Product

(3) Expected
(4) Augmented Product
Product
 Product Levels
Core Benefit
(Rest and sleep)

Basic Product
(Bed, bathroom, towels)

Expected Product Customer-value

(Clean bed, fresh towels) Hierarchy
Augmented Product
(Free Internet; free
breakfast)

Potential Product
(Future augmentations)
 FIVE LEVELS OF THE PRODUCT
 (1) Core Product / Core Benefit : The
fundamental service or benefit that the
customer is really buying.
 (2) Basic Product : At the same level, the
marketer has to turn the core benefit into
a basic product.
 (3) Expected Product : A set of attributes
and conditions buyers normally expect
when they purchase this product.
 FIVE LEVELS OF THE PRODUCT

 (4) Augmented Product : The marketer

prepares an augmented product that
exceeds customer expectations.
 Today’s competition essentially takes
place at the product-augmentation level.
( In less developed countries, competition
takes place mostly at the expected
product level ). ( Contd.….. )
 FIVE LEVELS OF THE PRODUCT
( Augmented Product )
 According to Levitt : The new
competition is not between what
companies produce in their factories, but
between what they add to their factory
output in the form of packaging, services,
advertising, customer advice, financing,
delivery arrangements, warehousing, and
other things that people value.
 FIVE LEVELS OF THE PRODUCT
Some things should be noted about
product-augmentation strategy :
 First, each augmentation adds cost. The
marketer has to ask whether customers
will pay enough to cover the extra cost.
 Second, augmented benefits soon become
expected benefits. For gaining
competitive advantage one will have to
search for still other features and
benefits.
 FIVE LEVELS OF THE PRODUCT
( product-augmentation strategy )
 Third, as companies raise the price of
their augmented product, some
competitors can offer a “ Stripped-down ”
version at a much lower price. Thus
alongside the growth of fine products we
see the emergence of lower-cost products
for the clients who simply want the basic
product.
 FIVE LEVELS OF THE PRODUCT
 (5) Potential Product : encompasses all the
possible augmentations and transformations
the product might undergo in the future.
Companies search for new ways to satisfy
customers and distinguish their offer.
 ( Successful Companies add benefits to their
offering that not only satisfy customers but also
surprise and delight them. ) “ The best way to
hold customers is to constantly figure out how to
give them more for less. ”
 PRODUCT DIFFERENTIATION
The challenge before the product marketers is to
create relevant and distinctive product
differentiation. The product differentiation may
be based on :
 Physical Differences ( eg., features, performance,
conformance, durability, reliability, design, style,
packaging )
 Availability Differences ( eg., available from
stores or orderable by phone, mail, fax, internet )
 PRODUCT DIFFERENTIATION

 Service Differences ( eg., delivery,

installation, training, consulting,
maintenance, repair )
 Price Differences ( eg., very high price,
medium price, low price, very low price )
 Image Differences ( eg., symbols,
atmosphere, events, media )
 EIGHT DIMENSIONS OF PRODUCT
QUALITY

 Features : characteristics that

supplement the product’s basic function.
 Performance Quality : the level at which
the product’s primary characteristics
operate.
 Conformance Quality : the degree to
which all the produced units are identical
and meet the promised target
specifications.
 EIGHT DIMENSIONS OF PRODUCT
QUALITY

 Durability : measures of the product’s

expected operating life under natural and
/ or stressful conditions.
 Reliability : measure of the probability
that a product will not malfunction or fail
within a specified period.
 Reparability : measure of the ease of
fixing a product that malfunctions or
fails.
 EIGHT DIMENSIONS OF PRODUCT
QUALITY

 Style : the product’s looks and feel to the

buyer.

 Design : the totality of the features that

affect how a product looks and functions
in terms of customer requirements.
 PRODUCT CLASSIFICATION

ON THE BASIS OF PRODUCT

CHARACTERISTICS :DURABILITY,
TANGIBILITY AND USE (consumer or
industrial )
(1) NON-DURABLE
(2) DURABLE
(3) SERVICES
( CONTD . )
 Product Classifications
Durability and Tangibility

Nondurable goods

Durable goods

Services
 PRODUCT CLASSIFICATION

ON THE BASIS OF CUSTOMER

SHOPPING HABITS :

(1) CONVENIENCE GOODS

(2) SHOPPING GOODS
(3) SPECIALITY GOODS
(4) UNSOUGHT GOODS
 Product Classifications
• Staples
Consumer-Goods
• Impulse goods
• Emergency goods
Specialty goods

Convenience goods

Shopping goods Unsought goods

 INDUSTRIAL GOODS
CLASSIFICATION

 Can be classified in terms of how they

enter the production process and their
relative costliness.
 (1) Materials and Parts
 (2) Capital Goods
 (3) Supplies and Business Services
 Product Classifications
Materials and Parts Industrial-Goods
Manufactured
materials
Capital Items
Raw materials
Installations

Supplies and Equipment

business Services