PRINCIPLES OF

MARKETING
UNIT 3 :Product
PRODUCT
 Product refers to a good, service or idea consisting of a
bundle of tangible and intangible attributes that satisfies
consumers and is received and exchanged for money or
some other unit of value.

 In other words, products can be offered to a market that

might satisfy a want or need.

 The customers’ changing needs and wants, the rapid

technological changes compels the marketer to make
frequent changes in their existing product line.

 To align themselves with the changing demands of the

markets.
PRODUCT
 Product is a considered to be a key element in marketing and begins
with formulating an offering to meet customers’ needs and wants.

 It is anything which can be offered to a market to satisfy a need or

want.

 A product is actually a complex, multidimensional concept.

 “Products” comprises of tangible, physical products as well as

services.

 It is much more than just a physical object.

 It is anything which can be offered to a market to satisfy a need or

want. It helps to fulfil the need, desire or expectation of the
consumer.
PRODUCT
 It is the sum total of all physical, symbolic, emotional, and
service attributes.

 Products include physical goods, services, experiences,

events, persons, places, properties, organisations,
information, and ideas.

 Through products, the customers can avail the complete

bundle of benefits or satisfactions.

 According to Philip Kotler – ‘A product may be defined as a

set of tangible, intangible and associate attributes capable
of being exchanged for a value with the ability to satisfy
consumer and business needs.’
IMPORTANCE OF PRODUCT:

 Product is the first and most important element in the

marketing mix of a firm.

 Product is the starting point of all marketing activities,

because the ultimate objective of every business
enterprise is to sell its product at a price which yields a
reasonable profit

 All the marketing efforts of the enterprise begin with the

product and end with the product.

 A product is more than just physical object. In other

words, a television is more than just television.

 It means that a product (television) must satisfy the needs

and wants of the consumers.
IMPORTANCE OF PRODUCT:
 If a product fails to satisfy consumer needs and demands,
no other ingredient of marketing mix will be fully
successful .

 Hence, product planning and development assumes great

significance in the marketing programme.

 People do not buy a product. They buy benefits.

 A product or service will be purchased by a prospective

customer if he knows:
 (i) That it exists,
 (ii) Where it can be purchased,
 (iii) What its price is, and
 (iv) That it is likely to meet the need for which it is required.
 IMPORTANCE OF PRODUCT:
The 4 As are determined by 4 Ps, but their order is
reversed as follows:
 Awareness is developed by Promotion
4 As

4 Ps
 ii. Availability by Place

 iii. Affordability is a function of Price

 iv. Acceptability is determined by the Product


PRODUCT AND SERVICE
DIFFERENTIATION
 Product Differentiation
1. FORM
 Many products can be differentiated in form—the size, shape, or physical
structure of a product
 Although essentially a commodity, it can be differentiated by dosage
size, shape, color, coating, or action time.

2) FEATURES : Most products can be offered with varying features that

supplement their basic function.

3) CUSTOMIZATION: Marketers can differentiate products by

customizing them.

4) PERFORMANCE QUALITY : Most products occupy one of four

performance levels: low, average, high, or superior. Performance quality
is the level at which the product’s primary characteristics operate
PRODUCT & SERVICE DIFFERENTIATION
 Product Differentiation
1. DURABILITY
 A measure of the product’s expected operating life under natural or stressful
conditions, is a valued attribute for vehicles, kitchen appliances, and other durable
goods.

2) RELIABILITY : Reliability is a measure of the probability that a product will not

malfunction or fail within a specified time period. Buyers normally will pay a
premium for more reliable products

3) REPAIRABILITY : Is a measure the ease of fixing a product when it malfunctions or

fails. Ideal repairability would exist if users could fix the product themselves with
little cost in money or time.
4) Many computer hardware and software companies offer technical support over the phone,
by fax or e-mail, or via real-time chat online.

5) STYLE :
 Describes the product’s look and feel to the buyer. It creates distinctiveness that
is hard to copy.
 Car buyers pay a premium for Jaguars because of their extraordinary looks.
Aesthetics play a key role in such brands as Apple computers, Montblanc pens,and
PRODUCT & SERVICE DIFFERENTIATION
 Service Differentiation
1. ORDERING EASE : Refers to how easy it is for the customer to place an
order with the company

2) DELIVERY : Refers to how well the product or service is brought to the

customer. It includes speed, accuracy, and care throughout the process. Today’s
customers have grown to expect speed: pizza delivered in one-half hour,
eyeglasses made in one hour, cars lubricated in 15 minutes.

3) INSTALLATION : Refers to the work done to make a product operational in

its planned location. Ease of installation is a true selling point for buyers of
complex products like heavy equipment and for technology novices.

4) CUSTOMER TRAINING :
 Helps the customer’s employees use the
 vendor’s equipment properly and efficiently. General Electric not only sells
and installs expensive X-ray equipment in hospitals, it also gives extensive
training to users
PRODUCT & SERVICE DIFFERENTIATION
 MAINTENANCE AND REPAIR
Maintenance and repair programs help customers keep purchased
products in good working order
PRODUCT CLASSIFICATIONS
 Marketers classify products on the basis of
 Durability & Tangibility,
 use (consumer or industrial).

 Each type has an appropriate marketing-mix strategy.

 The classification of a product affects the pricing, place,

promotion, and distribution policies of an organization
PRODUCT CLASSIFICATIONS
On basis of Durability & Tangibility Products fall into three
groups according to durability and tangibility:

 1. Nondurable goods are tangible goods normally

consumed in one or a few uses.

 Ex: beer and shampoo.

 Because these goods are purchased frequently, the

appropriate strategy is to make them available in many
locations, charge only a small markup, and advertise
heavily to induce trial and build preference.
PRODUCT CLASSIFICATIONS

 2. Durable goods are tangible goods that normally survive many

uses:
 Ex: Refrigerators, machine tools, and clothing.
 Durable products normally require more personal selling and
service, command a higher margin, and require more seller
guarantees.

 3. Services are intangible, inseparable, variable, and perishable

products that normally require more quality control, supplier
credibility, and adaptability.
 Examples include haircuts, legal advice, and appliance repairs
 PRODUCT CLASSIFICATIONS

On the basis of shopping habits terms of their relative cost and how
they enter the production process
CONSUMER-GOODS CLASSIFICATION
 1. Convenience goods
 Purchased frequently, immediately, and with minimal effort.
 Examples include soft drinks, soaps, and newspapers.

 Staples are convenience goods consumers purchase on a regular

basis. A buyer might routinely purchase Heinz ketchup, Crest tooth
paste.

 Impulse goods are purchased without any planning or search

effort, like candy bars and magazines.

 Emergency goods are purchased when a need is urgent—umbrellas

during a rainstorm, boots and shovels during the first winter snow.

 Manufacturers of impulse and emergency goods will place them

where consumers are likely to experience an urge or compelling
need to purchase.
CONSUMER-GOODS CLASSIFICATION

2. Shopping goods
 Are those the consumer characteristically compares on such
bases as suitability, quality, price, and style.
 Examples include furniture, clothing, and major appliances.

 Homogeneous shopping goods are similar in quality but

different enough in price to justify shopping comparisons.

 Heterogeneous shopping goods differ in product features

and services that may be more important than price. The
seller of heterogeneous shopping goods carries a wide
assortment to satisfy individual tastes and trains salespeople
to inform and advise customers.
CONSUMER-GOODS CLASSIFICATION

3. Specialty goods
 Specialty goods have unique characteristics or brand
identification for which enough buyers are willing to make a
special purchasing effort.
 Examples include cars, stereo components, and men’s suits. A
Mercedes is a specialty good because interested buyers will
travel far to buy one.
 Specialty goods don’t require comparisons;
 Buyers invest time only to reach dealers carrying the wanted
products.
 Dealers don’t need convenient locations, although they must let
prospective buyers know where to find them.

 For example, if an individual wants Canon camera of 15 megapixels with

Electro-Optical System (EOS) technology then he/she will not purchase
any substitute product.
CONSUMER-GOODS CLASSIFICATION

4. Unsought goods

 Unsought goods are those the consumer does not know about or
normally think of buying, such as smoke detectors.
 Classic examples of known but unsought goods are life insurance,
gravestones.

 Unsought goods require advertising and personal-selling support.

 INDUSTRIAL-GOODS CLASSIFICATION
 Industrial goods classified in terms of their relative cost and how they
enter the production process:
A. Materials and parts: Materials and parts are goods that enter the manufacturer’s
product completely. They fall into two classes
1. Raw materials:
 Farm products (wheat, cotton, livestock, fruits, and vegetables) .

 Farm products are supplied by many producers, who turn them over to marketing
intermediaries, who provide assembly, grading, storage, transportation, and selling
services

 Natural products (fish, lumber, crude petroleum, iron ore)

2. Manufactured materials :
1. component materials (iron, yarn, cement, wires) : are usually fabricated further—pig
iron is made into steel, and yarn is woven into cloth.
The standardized nature of component materials usually makes price and supplier
reliability key purchase factors.

2. component parts (small motors, tires, castings) : e finished product with no further
change in form,

B. Capital items, and

 INDUSTRIAL-GOODS CLASSIFICATION
B. Capital items are

 Capital items are long-lasting goods that facilitate developing or managing

the finished product. They include two groups:
1. Installations. Installations consist of buildings (factories, offices) and heavy
equipment (generators, drill presses, mainframe computers, elevators).
Installations are major purchases.
 They are usually bought directly from the producer, whose sales force
includes technical personnel, and a long negotiation precedes the
typical sale.
 Producers must be willing to design to specification and to supply post
sale services. Advertising is much less important than personal selling.

2. Equipment goods includes portable factory equipment and tools (hand

tools, lift trucks) and office equipment (personal computers, desks). These
types of equipment don’t become part of a finished product. They have a
shorter life than installations
B. Supplies and business service : short-term goods and services that facilitate
developing or managing the finished product. Supplies are of two kinds:
maintenance and repair items (paint, nails, brooms) and operating supplies
(lubricants, coal, writing paper, pencils).
FIVE PRODUCT LEVELS FOR
ADDING MORE CUSTOMER VALUE
FIVE PRODUCT LEVELS FOR
ADDING MORE CUSTOMER VALUE
 (i) Core benefit – The most important attribute is the
fundamental service or benefit for which a customer is
really buying, for example – A hotel guest is buying rest
and sleep.

 (ii) Basic Product – Adding physical dimensions to the

product like bed, bathroom, towels, closet, etc.

 (iii) Expected Product – A set of attributes and conditions

buyers normally expect when they purchase the product.
For example – a hotel guest expects a clean bed, working
electrical fittings and a relative degree of quietness.

FIVE PRODUCT LEVELS FOR
ADDING MORE CUSTOMER VALUE
 (iv) Augmented Product – It means to provide something
beyond the expectations of the customer. For example – A
TV with remote control, fresh flowers, fine dining etc.

 (v) Potential Product – It includes all the possible

augmentations and transformations the product or offering
might undergo in future because of general change in
behavioural trends and developments.
PRODUCT MIX
 A product mix (also called a product assortment) is the set of all
products and items a particular seller offers for sale.

 A product mix consists of various product lines

 The four dimensions to a company's product mix include

width, length, depth and consistency

 The width of a product mix refers to how many different

product lines the company carries.
PRODUCT MIX
 These four product mix dimensions permit the company to
expand its business in four ways.

 It can add new product lines, thus widening its product mix.

 It can lengthen each product line.

 It can add more product variants to each product and deepen its
product mix.

 Finally, a company can pursue more product line consistency.

 To make these product and brand decisions, it is useful to

conduct product line analysis.
PRODUCT MIX

 The length of a product mix refers to the total number of items in the mix. In Table it is 20.

 The depth of a product mix refers to how many variants are offered of each product in the line.
 If Tide came in two scents (Mountain Spring and Regular),
PRODUCT MIX
 The consistency of the product mix describes how closely
related the various product lines are in
 end use,
 Production requirements,
 Distribution channels, or some other way.

 P&G’s product lines are consistent in that they are

consumer goods that go through the same distribution
channels.
 Thus, Nestle’s
product mix will be
a combination of
the all the product
PRODUCT MIX lines within the
company.
 Product mix
 Is a combination of total product lines within a company.
 A company like HUL has numerous product lines like
Shampoos, detergents, Soaps etc. The combination of all
these product lines is the product mix.

Product line
 The product line is a subset of the product mix. The
product line generally refers to a type of product within an
organization.
 As the organization can have a number of different types of
products, it will have similar number of product lines
 Thus, in Nestle, there are
 milk based products like milkmaid,
 Food products like Maggi,
 chocolate products like Kitkat and other such product lines
PRODUCT MIX
Product line consistency
 The lesser the variations between the products, the more is
the product line consistency.
 For example, Amul has various product lines which are all
dairy related. So that product mix consistency is high.

 But Samsung as a company has many product lines which

are completely independent of each other.
 Like Air conditioners, televisions, smart phones, home
appliances, so on and so forth.
 Thus the product mix consistency is low in Samsung.
MANAGING PRODUCT LINE
 Product line analysis
 Product Line length
 Product line modernization
 Line pruning
PRODUCT MIX STRATEGIES

 Expansion of Product Mix

 Contraction of Product Mix
 Altering Existing products
 Positioning the products
 In relation of competitor’s product-coke Vs
Pepsi
 In relation to target Market-Johnson & Johnson
 In relation of product class-Tropicana
 Positioning by price & quality-Lifestyles
 Trading up/Trading Down
BRANDING
 According to American Marketing Association - Brand is “A
name, term, design, symbol, or any other feature that identifies
one seller’s good or service as distinct from those of other
sellers.

 The legal term for brand is trademark.

 A brand may identify one item, a family of items, or all items of

that seller. If used for the firm as a whole, the preferred term is
trade name.”
BRANDING
 According to Philip Kotler - “Brand is a name, term, sign,
symbol, design, or a combination of them, intended to identify
the goods or services of one seller or group of sellers and to
differentiate them from those of competitors”

 Branding is “a seller’s promise to deliver a specific set of

features, benefits and services consistent to the buyers.”

 Branding is a process of creating a unique name and image for a

product in the mind of consumer, mainly through advertising
campaigns.
 A brand is a name, term, symbol, design or combination of these
elements, used to identify a product, a family of products, or all
products of an organisation.
BRANDING
 Branding is an important component of product planning process
and an important and powerful tool for marketing and selling
products.
 Brand as a concept :Offerings from a known name
 A name , term, sign, symbol, design or the combination of all
these three
 It conveys the following:-
 Attributes
 Benefits
 Values
 Culture
 Personality
 User
BRANDING
 Every brand has an association in the mind of
the customer. That association may be
positive or negative.

 It is an emotional association.

 The customer loves some brands, hates some

and is neutral, undecided or indifferent
towards some brands.
IMPORTANCE OF BRANDING
 Every day, hundreds or thousands of brand messages hit a
customer’s mind, seeking her attention.

 This all clutter has created a lot of confusion in the customer’s

mind.

 The unique benefits and value that a brand promises distinctly

separate one brand from the other brands in the customer’s
mind, making it easier for her to make a choice.
IMPORTANCE OF BRANDING
 Branding contributes to building a bond between the customer
and the product or service.

 In the long term, this helps in creating a huge loyal customer

base.

 Branding enables a customer make comparative analysis of the

products on offer, reducing the risk of making a wrong choice.

 Branding makes it easier to communicate the benefits and value

of our product to them
BRAND ELEMENT CHOICE CRITERIA
 There are six criteria for choosing brand elements.

 The first three—memorable, meaningful, and likable—are “brand

building.

 The latter three—transferable, adaptable, and protectable—are

“defensive” and help leverage and preserve brand equity against
challenges.
BRAND ELEMENT CHOICE CRITERIA
 1.Memorable—How easily do consumers recall and recognize the
brand element, and when—at both purchase and consumption?
Short names such as Tide, Crest, and Puffs are memorable brand
elements.

 2. Meaningful—Is the brand element credible? Does it suggest the

corresponding category and a product ingredient or the type of
person who might use the brand.

 3.Likable—How aesthetically appealing is the brand element? A

recent trend is for playful names that also offer a readily
available URL, like Motorola’s ROKR and RAZR cell phones.
BRAND ELEMENT CHOICE CRITERIA

 4. Transferable—Can the brand element introduce new products in

the same or different categories? Does it add to brand equity across
geographic boundaries and market segments?

 The Amazon is famous as the world’s biggest river, and the name
suggests the wide variety of goods that could be shipped, an
important descriptor of the diverse range of products the company
now sells.

 5.Adaptable—How adaptable and updatable is the brand element?

 6. Protectable—How legally protectable is the brand element? How

competitively protectable? Names that become synonymous with
product categories—such as, Xerox, and Fiberglass—should retain
their trademark rights and not become generic.
 ELEMENTS OF BRANDING
 Brand Name - It is also called Product Brand. It can be a word, a group of words,
letters, or numbers to represent a product or service. For example - Pepsi, iPhone 5,
and etc.
 Trade Name - It is also called Corporate Brand. It identifies and promotes a company
or a division of a particular corporation. For example - Dell, Nike, Google, and etc.
 Brand Mark - It is a unique symbol, colouring, lettering, or other design element. It is
visually recognisable, not necessary to be pronounced. For example - Apple's
apple, or Coca-cola's cursive typeface.
 Trade Mark - It is a word, name, symbol, or combination of these elements. Trade
mark is legally protected by government. For example - NBC colourful peacock,
or McDonald's golden arches. No other organisation can use these symbols.
 Trade Characters - Animal, people, animated characters, objects, and the like that
are used to advertise a product or service, that come to be associated with that
product or service. For example - Keebler Elves for Keebler cookies
BRAND ASSET® VALUATOR MODEL
BRAND DYNAMICS™ PYRAMID
TYPES OF BRANDS

 Manufacturer’s Brand-Branded directly by

the manufacturer-Dell, Epson, Apple, Coca
Cola, McDonalds

 Private/ Reseller Brand-Developed & owned

by reseller- Grocery products, Textiles -
towels, washcloths, bed sheets

 Generic brands-not specifically advertised by

sellers.
 products (such as milk)
BRAND EQUITY

 Combination of assets & liabilities associated

that brand that enhances/ depreciates the
value of brand.
 It has five major determinants:-
 Awareness, quality perception, loyalty,
patents & trademarks
BRAND SPONSORSHIP

 A form of publicity which is done to support/

link organization's name with a particular
event, most commonly, sporting events or an
activity which evolves large number of public
gathering

BRAND STRATEGY DECISION
 Identification of available resources
 The company’s commitment
 Capabilities to take initiative
 Lineextension-Fair glow cream & soap
 Brand extension-Snickers used to create Snickers Ice Cream Bars.
 Brand Rejuvenation-
 Brand Re-launch-McDonald's made America fat; now it looks
like Starbucks and serves salads
 Brand Proliferation-Brand proliferation is when a firm
puts out new brand names under the same Brand
Cannibalization
 HLL has different brands in shampoo product line offering a wide
range of choice for customer of every segment
BRAND STRATEGY DECISION
 Multi brands-
 Procter & Gamble (P&G) – Is an American consumer goods
company, that sells 23 different brands. For example, Tide,
Pampers, Gillette, Ace, Head & Shoulders, etc.

Unilever – Is the biggest manufacturer of ice-cream and a

multinational consumer goods company, that also produces
several worldwide brands. For instance, Persil, Axe, Rexona,
Sunsilk, Dove, Lipton and more.
 New brand name
BRAND STRATEGY DECISION
 Co brands
 When riders are Sitting for an Uber ride can choose from their own
playlists to determine what they'll listen to. his smart co-branding
partnership helps fans of Uber and Music Apps alike enjoy better
experiences thanks to the app. And they might be more interested in
picking

 Athletic brand Nike and technology giant Apple have been working
together since the early 2000s, when the first line of iPods was
released.
 The co-branding partnership started as a way to bring music from
Apple to Nike customers' workouts using the power of technology:
Nike+iPod created fitness trackers and sneakers and clothing that
tracked activity while connecting people to their tunes.
BRAND REJUVENATION-
PACKAGING
 Process of the developing a design & a
container for the product.
 A secured, transparent & easy-to-use
packaging helps in having the better sales

PACKAGING
 Packaging includes all the activities of designing and producing
the container for a product.

 Packages might have up to three layers.

 Cool Water cologne comes in a bottle (primary package)
 In a cardboard box (secondary package)
 In a corrugated box (shipping package) containing six dozen
bottles in cardboard boxes.

 The package is the buyer’s first encounter with the product.

 A good package draws the consumer in and encourages product
choice. In effect, they can act as “five-second commercials” for
the product.
 VARIOUS FACTORS CONTRIBUTE TO THE GROWING
USE OF PACKAGING AS A MARKETING TOOL:
 Self-service. An increasing number of products are sold on a self-serve basis.
 The effective package must perform many sales tasks:
 Attract attention,
 Describe the product’s features,
 Create consumer confidence, and
 Make a favorable overall impression.

 • Consumer affluence. Rising affluence means consumers are willing to pay a

little more for the convenience, appearance, dependability, and prestige of
better packages.

 Company and brand image. Packages contribute to instant recognition of

the company or brand. In the store, they can create a billboard effect, such
as Garnier Fructis with its bright green packaging in the hair care aisle.

 • Innovation opportunity. Unique or innovative packaging such as resealable

spouts can bring big benefits to consumers and profits to producers.
PACKAGING OBJECTIVES::

 1. Identify the brand.

 2. Convey descriptive and persuasive information.
 3. Facilitate product transportation and protection.
 4. Assist at-home storage.
 5. Aid product consumption
IMPORTANCE OF PACKAGING

 To attract the attention of the customer

 Communicates through verbal & non-verbal
tools
 Highlight the utility of the product
 Informs about the content about the product
LABELING
 The label can be a simple attached tag or an elaborately
designed graphic that is part of the package.

 It might carry a great deal of information, or only the brand

name. Even if the seller prefers a simple label, the law may
require more.

 Marketers combine labelling and packaging to attract attention

and persuade potential purchasers to purchase the goods.
 These two components of branding convey all information to
customers regarding product usage, such as how to transport,
recycle, or dispose of it, as well as its packaging.

 It is a key part in the customer decision-making process since

when purchasing a product, consumers rely on the information
provided on the label.
TYPES OF LABELLING

 BRAND LABEL
 It is a label that contains information about the brand to which a
product belongs.
 The brand label denotes the product’s brand name, trademark or
logo and does not include any other information outside the
brand name.
 Some examples of brand labels include L.G., Samsung, Whirlpool,
and Raymond.
TYPES OF LABELLING

 GRADE LABEL
 A grade label denotes the quality or grade level of a product.
Such labels describe the features of the product and the
organization use such labels to categorize their items based on
their quality.

 Grade label highlights the quality or grade of the product. For

example, Jai Engineering Works Ltd., Kolkata manufactures fans
under the brand name of Usha which are of various types on the
basis of quality. On this vary basis they have the labels of deluxe,
prima or continental. Such a type of label is known as grade
label.
TYPES OF LABELLING

 Descriptive Label:

 A descriptive label is one that indicates significant information

about a product. Such label includes product ingredients, distinct
uses, instructions, precautions for usage, producers information,
date of manufacture, weight, size, and value of product.

 INFORMATIVE LABEL
 Informative labels contain a lot of information and provide
specific details regarding the product. It differs from descriptive
labelling in that it provides detailed instructions on how to use
the product and how to take care of it. These labels include
recipes, thorough clearing directions, and other similar
information.
FUNCTIONS OF LABELLING

 IDENTIFICATION
 Labeling gives a product a distinct identity that distinguishes it
from others on the market.

 Customers may quickly identify the goods due to the label that is
affixed to it. It prevents people from becoming confused and
substituting competing products.

 Users may readily identify products from diverse brands such as

Tata tea, Horlicks, and Lux based on their labeling.
FUNCTIONS OF LABELLING

 GRADING
 Labelling categorizes things into distinct grades. For example,
one sort of goods can be classified as A, B, C, or D.

 CONSUMER PROTECTION
 Labelling protects consumers from manufacturer deception or
manipulation of facts. It provides accurate information on the
goods, allowing customers to make informed purchasing decisions
PRODUCT-SUPPORT SERVICES
 Categories of Service Mix

 The service component can be a minor or a major part of the

total offering. We distinguish five categories of offerings:

 1. Pure tangible good—a tangible good such as soap, toothpaste,

or salt with no accompanying services.
 2. Tangible good with accompanying services—a tangible good,
like a car, computer, or cell phone, accompanied by one or more
services. Typically, the more technologically advanced the
product, the greater the need for high-quality supporting
services.
 3. Hybrid—an offering, like a restaurant meal, of equal parts
goods and services. People patronize restaurants for both the
food and its preparation
PRODUCT-SUPPORT SERVICES
 Major service with accompanying minor goods and services—a
major service, like air travel, with additional services or
supporting goods such as snacks and drinks.

 This offering requires a capital-intensive good—an airplane—for

its realization, but the primary item is a service.

 5. Pure service—primarily an intangible service, such as

babysitting, psychotherapy, or massage.
CONTINUUM OF EVALUATION FOR
DIFFERENT TYPES OF PRODUCTS
DIFFERENCE BETWEEN
SERVICES AND GOODS
THE PRODUCT LIFE CYCLE
 A company’s positioning and differentiation strategy must change
as the product, market, and competitors change over the product
life cycle (PLC). To say a product has a life cycle is to assert four
things:
 1. Products have a limited life.
 2. Product sales pass through distinct stages, each posing
different challenges, opportunities, and problems to the seller.
 3. Profits rise and fall at different stages of the product life
cycle.
 4. Products require different marketing, financial,
manufacturing, purchasing, and human resource strategies in
each life-cycle stage
PRODUCT LIFE CYCLES
 Most product life-cycle curves are portrayed as bell-shaped
 This curve is typically divided into four stages: introduction,
growth, maturity, and decline.

 1. Introduction—A period of slow sales growth as the product is

introduced in the market. Profits are nonexistent because of the heavy
expenses of product introduction.
 2. Growth—A period of rapid market acceptance and substantial profit
improvement.
 3. Maturity—A slowdown in sales growth because the product has
achieved acceptance by most potential buyers. Profits stabilize or
decline because of increased competition.
 4. Decline—Sales show a downward drift and profits erode.
PRODUCT LIFE CYCLES
NEW PRODUCT DEVELOPMENT
 New product development is a task taken by the company to
introduce newer products in the market. Regularly there will
arise a need in the business for new product development.

 There are 7 stages of new product development and they are as

follows

 1. Idea Generation:
 Idea generation In this you are basically involved in the
systematic search for new product Ideas.

 A company has to generate many ideas in order to find one that

is worth pursuing. The Major sources of new product ideas
include internal sources, customers, competitors, distributors
and suppliers.
NEW PRODUCT DEVELOPMENT
2. Idea Screening :
 The purpose of idea generation is to create a large pool of ideas.
 It, is helpful at this stage to have a checklist that can be used to
rate each idea based on the factors required for successfully
launching the product in the marketplace and their relative
importance.
 Against these, management can assess how well the idea fits with
the company’s marketing skills and experience and other
capabilities. Finally, the management can obtain an overall rating
of the company’s ability to launch the product successfully
NEW PRODUCT DEVELOPMENT
3.. Concept Development and Testing :

 A product concept is a detailed version of the idea stated in meaningful

consumer terms.
 An attractive idea has to be developed into a Product concept.

 After being exposed to the concept, consumers are asked to respond to it

by answering a set of questions designed to help the company decide
which concept has the strongest appeal.

 The company can then project these findings to the full market to
estimate sales volume.
NEW PRODUCT DEVELOPMENT
4.. Marketing Strategy Development:

 The strategy statement consists of three parts:

 The first part describes the target market, the planned product positioning
and the sales, market share and profit goals for the first few years.
 The second part outlines the product’s planned price, distribution, and
marketing budget for the first year.
 The third part of the marketing strategy statement describes the planned
long-run sales, profit goals, and the marketing mix strategy. Business
Analysis –
 Once the management has decided on the marketing strategy, it can
evaluate the attractiveness of the business proposal.
 Business analysis involves the review of projected sales, costs and profits
to find out whether they satisfy a company’s objectives. If they do, the
product can move to the product development stage.
NEW PRODUCT DEVELOPMENT
5. Product Development:

 Here, R&D or engineering develops the product concept into a physical

product. This step calls for a large investment.

 It will show whether the product idea can be developed into a full-
fledged workable product.

 First, R&D will develop prototypes that will satisfy and excite customers
and that can be produced quickly and at budgeted costs.

 When the prototypes are ready, they must be tested. Functional tests are
then conducted under laboratory and field conditions to ascertain
whether the product performs safely and effectively.
NEW PRODUCT DEVELOPMENT
6. Test Marketing :

 If the product passes the functional tests, the next step is test marketing:
the stage at which the product and the marketing program are
introduced to a more realistic market settings.

 Test marketing gives the marketer an opportunity to tweak the marketing

mix before the going into the expense of a product launch
NEW PRODUCT DEVELOPMENT
7. Commercialization :

 The final step in new product development is Commercialization.

Introducing the product to the market – it will face high costs for
manufacturing and advertising and promotion.

 The company will have to decide on the timing of the launch

(seasonality) and
 The location (whether regional, national or international).

 This depends a lot on the ability of the company to bear risk and the
reach of its distribution network.
NEW PRODUCT DEVELOPMENT
PROCESS
CONSUMER ADOPTION
PROCESS.
 Adoption is an individual’s decision to become a regular
user of a product and is followed by the consumer-loyalty
process.

 New-product marketers typically aim at early adopters and

use the theory of innovation diffusion and consumer
adoption to identify them.

 The consumer-adoption process is the mental steps

through which an individual passes from first hearing
about an innovation to final adoption.
STAGES IN CONSUMER ADOPTION PROCESS.

 They are:
 1. Awareness—The consumer becomes aware of the innovation
but lacks information about it.
 2. Interest—The consumer is stimulated to seek information
about the innovation.
 3. Evaluation—The consumer considers whether to try the
innovation.
 4. Trial—The consumer tries the innovation to improve his or her
estimate of its value.
 5. Adoption—The consumer decides to make full and regular use
of the innovation.
CONSUMER ADOPTION
PROCESS.
 The new-product marketer should facilitate movement through
these stages.

 A water filtration system manufacturer might discover that many

consumers are stuck in the interest stage;

 they do not buy because of their uncertainty and the large

investment cost.

 But these same consumers would be willing to use a water

filtration system at home on a trial basis for a small monthly fee.

 . The manufacturer should consider offering a trial-use plan with

option to buy.
FACTORS INFLUENCING THE
ADOPTION PROCESS.
 Marketers recognize the following characteristics
of the adoption process:

 Differences in individual readiness to try new products,

 The effect of personal influence,
 Differing rates of adoption, and
 Differences in organizations’ readiness to try new products.
READINESS TO TRY NEW PRODUCTS
AND PERSONAL INFLUENCE
 The five adopter groups differ in their value orientations and their
motives for adopting or resisting the new product:

1. Innovators
 are technology enthusiasts;
 They are venturesome and enjoy tinkering with new products and
mastering their intricacies.

 In return for low prices, they are happy to conduct alpha and beta
testing and report on early weaknesses.

2. Early adopters
 Are opinion leaders who carefully search for new technologies that
might give them a dramatic competitive advantage.
 They are less price sensitive and willing to adopt the product if
given personalized solutions and good service support.
READINESS TO TRY NEW PRODUCTS
AND PERSONAL INFLUENCE
 Early majority :
 Are deliberate pragmatists who adopt the new technology when
its benefits are proven and a lot of adoption has already taken
place. They make up the mainstream market.

 Late majority
 Are skeptical conservatives who are risk averse, technology shy,
and price sensitive.
 • Laggards are tradition-bound and resist the innovation until the
status quo is no longer defensible.
TIME OF ADOPTION OF INNOVATIONS

Adopter Categorization on the Basis of

Relative Time of Adoption of Innovations
PORTER’S GENERIC BUSINESS
STRATEGIES
 Why porter's generic competitive strategy:
 Porter’s develop to help an organization outperform rivals
within an industry and to successful position itself against five
forces
 Referred as generic can be applied to diff org and diff
industries

 Competitative advantage derived from two approaches

• Lower Cost
• Differentiation
 Competitive scope cold be a broad target or a narrow target

• Porters uses matrix to suggest there could be basically three

types of competitive strategy
 PORTER’S GENERIC COMPETITIVE
STRATEGIES
Competitive advantage Org. seeks to
achieve Lowest
cost position in the
industry without
sacrificing its
product quality.
“ Low cost
Airlines”

Competitive
scope
Cost leadership Strategy

Involves a firm being the lowest cost producer within the industry

Allow the firm to outperform rivals within industry bcz it can

charge lower prices. Broad base

lower cost base allows it to earn profit and make superior profit
High market share, standardized product
Org need to invent in technology
Whatever strategic target organization broad or narrow segment ,organization choose
to concentrate its resource & capabilities on it .

Porters warns – Not to pursue 3 strategies simultaneously

THANK YOU