What Is a Product?

 Products are:
►Anything that can be offered to a market for
attention, acquisition, use, or consumption
and that might satisfy a want or need.
• Includes physical objects, services, events,
persons, places, organizations, ideas, or some
combination thereof.

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 What Is a Service?
 Services are:
►Any activity or benefit that one party can
offer to another that is essentially intangible
and does not result in the ownership of
anything.
• E.g., banking, hotel, airline, retail, tax
preparation, home repairs.

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 Products and Technology
 High tech products:
► Those products that reflect state-of-the-art-
technology, highly sophisticated and involves
scientific knowledge.
► E.g., laser and digital technology

 Mid tech products:

► Those products that are less sophisticated with new
uses of existing resources.
► E.g., TV and spare parts.

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 Products and Technology
 Low tech products
►Those products that involves slight changes
in existing products and are made easily.
E.g., toys, printers

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 Products Classification
 Industrial products:
► Those purchased for further processing or for use
in conducting business
► Distinction between consumer and industrial
products is based on the purpose for which an item
is bought.
 Consumer products:
► Products and services bought by final consumers
for personal consumption
► Also included are other marketable entities
► Classified by how consumers buy them

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 Types of Consumer Goods
 Convenience goods:
►Purchased frequently and immediately with
little comparison shopping
►Low priced

►Widespread distribution with many

convenient locations
►E.g., candy, soda, newspapers

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 Types of Consumer Goods
 Shopping products:
► Bought less frequently, more planning and effort,
brand comparisons on basis of price, quality, style
► Higher price

► Selective distribution in fewer purchase locations

► Advertising and personal selling is undertaken by

both producer and reseller
► E.g., furniture, clothing, cars, appliances

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 Types of Consumer Goods
 Specialty products:
► Strong brand preference and loyalty, special
purchasing effort, little comparison shopping
► High price

► Exclusive distribution in only one or a few outlets

per market area
► Carefully targeted promotion by both producer
and reseller
► E.g., Rolex watches

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 Types of Consumer Goods
 Unsought products:
►Little product awareness or knowledge of the
brand, sometimes negative interest
►Pricing strategies vary
►Distribution strategies vary
►Require aggressive advertising and personal
selling by both producer and resellers
►E.g., life insurance, blood donation

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 Product Development Process

 New product development:

►The development of original products,
product improvements, product
modifications, and new brands through the
firm’s own product development efforts.
 New product innovation is very
expensive and very risky.
►70% to 90% of new consumer products fail
within 12 months
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 New-Product Failures
 Why do new products fail?
►Overestimation of market size
►Design problems
►Incorrectly positioned, priced, or advertised
►Pushed despite poor marketing research
findings
►Excessive development costs
►Competitive reaction

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Product Development Process
 Idea generation
 Idea screening
 Concept development and testing
 Marketing strategy development
 Business analysis
 Product development
 Test marketing
 Commercialization
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Product Development Process
 Idea generation:
►Internal sources:
• Company employees at all levels
►External sources:
• Customers
• Competitors
• Distributors
• Suppliers
• Outsourcing
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Product Development Process
 Idea screening:
► Process used to spot good ideas and drop poor ones.
 Concept development and testing:
► Product idea:
• Idea for a possible product that the company can see itself
offering to the market.
► Product concept:
• Detailed version of the new-product idea stated in meaningful
consumer terms. Product proposal
► Concept testing:
• Testing new-product concepts with groups of target consumers
to find out if the concepts have strong consumer appeal.

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Product Development Process
 Marketing strategy development:
► Part One:
• Describes the target market, planned value
proposition, sales, market share, and profit goals.
► Part Two:
• Outlines the product’s planned price, distribution,
and marketing budget.
► Part Three:
• Describes the planned long-run sales and profit
goals, marketing mix strategy.

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Product Development Process
 Business analysis:
► Involves a review of the sales, costs, and profit projections
to assess fit with company objectives.
► If results are positive, project moves to the product
development phase.
 Product development:
► Develops concept into a physical product
► Calls for a large jump in investment
► Prototypes are made
► Prototypes must have correct physical features and convey
psychological characteristics
► Prototypes are subjected to physical tests

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Product Development Process
 Testing marketing:
►Product and program are introduced in a
more realistic market setting
►Not needed for all products

►Can be expensive and time consuming, but

better than making a major marketing
mistake

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Product Development Process
 Commercialization:
►Must decide on timing (i.e., when to
introduce the product)
►Must decide on where to introduce the
product (e.g., single location, state, region,
nationally, internationally)

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