 A Product Defined

A good, a service, or an idea received in an

exchange
It can be tangible (a good) or intangible (a service
or an idea) or a combination of both.
Service an activity benefit or satisfaction for
intangible and does not result in the ownership of
any thing
 Why Buyers Purchase a Product
To get the value and satisfaction that they think the product
will provide
 Warranty
Repair/Maintenance
Installation
Features Customer Service
Packages Delivery
Brand Augmented Product Credit
Quality Product Instructions
Appearance
Actual Product

Core Product

Basic Benefits
 Consumer Products
Productspurchased to satisfy personal
and family needs

industrial Products
Productsbought to use in an
organization’s operations, to resell, or to
make other products (raw materials and
components)
Consumer Industrial
 Convenience Goods  Expense
 Shopping Goods Items
 Specialty Goods  Capital Items
 Durable
 High & low
involvement
product
 Durable Products
Products that provide a benefit over a long period of
time
Examples: Refrigerator, Car, Furniture

 Non-Durable Products
Productsthat provide a benefit over a short period of
time because they are consumed or no longer useful
Examples: Toothpaste, Detergent, Newspaper
 Convenience Products (FMCG) –
 Fast-moving consumer goods
 Products that are low-priced, widely available, and
frequently purchased with little effort (low involvement)
 Examples: staples (milk, bread, gasoline), impulse
products (candy bars, gums), emergency products
(bandages, umbrellas)
 Focus: Drive consumers to consume more

 Shopping Products
 Productsselected with considerable time & effort (high
involvement)
 Examples: Shoes, laptops (attribute-based & price-based)
 Focus: Drive consumers to choose our brand
 Specialty Products
Products that have unique characteristics to the
buyer, who would devote significant effort to
acquire.
Examples: Favorite restaurants, Rolex watch
Focus: Drive consumers to go and buy
focusing on esteem needs.

 Unsought Products
Products that consumers have little awareness or
interest in until they are needed
Examples: Retirement plans, insurance
Focus: Be available at an affordable price in
order to drive consumer’s choice
Convenience Products Shopping Products
Buy frequently & immediately Buy less frequently
> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods

Specialty Products Unsought Products

Special purchase efforts
> Unique characteristics New innovations or
> Brand identification unindentified needs or core
> Products consumers don’t
> Few purchase locations
want to think about.
>Require much advertising &
personal selling
 High involvement products:
 where the buying decision is an important one with a fairly high
level of perceived risk.

 Such purchases are closely tied to the consumer’s

ego and self-image. They involve some risk to the
consumer: financial (high-priced items), social
(products important to the peer group), or
psychological (the wrong decision may cause some
concern and anxiety).
 These products are not as important to the
consumer; and financial, social, and psychological
risks are not nearly as great. In such cases, it may
not be worth the consumer’s time and effort to
search for information about brands and to consider
a wide range of alternatives. Therefore, a low
involvement purchase generally entails a limited
process of decision making.
 Service—Any activity or benefit that
one party can offer to another that is
essentially intangible and does not
result in the ownership of anything.
 Service is transferred of benefits
 Intangibility Inseparability
Services cannot be It is impossible to
seen, tasted, felt, separate the production
heard, or smelled of a service from its
before purchase
consumption
Services

Variability

Even the same service Services cannot be

performed by the same stored for later sale or
individual for the same use
customer can vary
 Product Life Cycle – shows the stages
that products go through from
development to withdrawal
from the market
Sales
Development Introduction Growth Maturity Saturation Decline

Time
 Introduction
 The initial stage of a product’s life cycle—its
first appearance in the marketplace—when
sales start at zero and profits are negative
 Why new products fail
 Lack of resources, knowledge, and marketing
skills to successfully launch the product
 High expenditures
 Growth
 The stage of a product’s life cycle when
sales rise rapidly and profits reach a peak
and then start to decline
 More competitors enter the market
 Product pricing is aggressive
 Brand loyalty becomes important
 Gaps in market coverage are filled
 Promotion expenditures moderate
 Production efficiencies lower costs
 Maturity
 The stage of a product’s life cycle when the sales curve
peaks and starts to be stable some times decline as well as
profits .
 Intense competition
 Emphasis on improvements and differences in competitors’
products
 Weaker competitors lose interest and exit the market
 Advertising and trade promotions predominate
 Distribution sometimes expands to the global market
 Strategic objectives for maturity stage
 Focusing on R-D
 Maintain market share
 Increase share of customer
 Decline
 The stage of a product’s life cycle when
sales fall rapidly
 Pruning items from the product line
 Cutting promotion expenditures
 Eliminating marginal distributors
 Planning to phase out the product
 Strategic choices
 Amendment the product
 harvesting
 Divesting the product when losses are
sustained and a return to profitability
is unlikely
 Table 10-4 Explanations of the stages of Product life cycle
Stages Brief explanations
The product is being designed.
Suitable ideas are tested.
Development Decision is to be made whether or not to produce the product.
If OK, the business begins to produce.
The product is new in the market.
Sales are still low and increasing.
Introduction Promotion is needed to increase the sales and make it aware widely.
Product is still not profitable.
The product is established in the market.
Sales begin to grow rapidly.
Growth The product becomes very profitable.
The business needs to seek new opportunities and enlarge the market.
The product has a stable market share.
The growth levels off in the sales.
Maturity Sales have reached the top.
Competitors have entered the market.
The business needs to consider new product development or innovate the product.
 Too many competitors have entered the market.
Some businesses are forced out of their business.
Saturation Businesses have to develop some extension strategies to extend their product life cycle. For example,
find new uses of the product; finding new markets for the product; changing components of the
products, etc.
Sales decline.
Consumers have changed their taste or styles.
Decline New products have to be produced by competitors
Businesses have to develop new products or improve the old product with new technology or simply
give up the product.
• Marketing Strategy Implications of the
Product Life Cycle
PP12-1 How stages of the product life cycle relate to a firm’s
marketing objectives and marketing mix actions

Stage of the product life cycle

Sales revenue

Introduction Growth Maturity Decline

or profit

Total industry
sales revenue

+ Total industry profit

0
–
Marketing
Marketing Gain
Gain Stress
Stress Maintain
Maintain Harvesting
objective
objective Awareness
Awareness differentiation
differentiation brandloyalty
brand loyalty Harvesting
Competition
Competition None
None+few
+few Growing
Growing Many
Many Reduced
Reduced
Product One More Full
Full
Product One Moreversions
versions product
productline
line
Best
Bestsellers
sellers
Price Skimming
Skimmingor or Gain Defend
Defendshare,
share,
Price penetration
penetration Gainshare,
share,deal
deal profit
profit
Stay
Stayprofitable
profitable
Stress
Stress Reminder Minimal
Promotion
Promotion Inform, educate competitive
Inform, educate competitive Reminder Minimal
differences oriented
oriented promotion
promotion
differences
Place
Place Limited
Limited More Maximum
Maximum concentrared
(distribution)
(distribution) Set up dis network
Set up dis network More Dealer
Dealerloyalty
loyalty concentrared
 Reasons for Product Failure
 Product’s value or features did not match
customer needs
 Ineffective or inconsistent branding that failed
to convey the right message or image to
customers
 Technical or design problems
 Poor market timing
 Overestimation of market size
 Ineffective promotion
 Insufficient distribution
 To penetrate and grow the customer base
in the existing market ,company may cut
prices, improve its distribution network,
invest more in the marketing and
increase existing production capacity.
 In addition company must try to
maximize the use of distribution channel
by making attractive deals with large
variety of distributors.
 Companies could make some
modifications in the existing product to
give increase value to the customer for
their purchase or launch new product in
the same market.
 This strategy is about reaching new
customer segments or expanding by
targeting new geographic areas.
 It is about entering
new market with new
product
 grow the customer
base in the existing
market through
making a large
advertisement
illustrating that
Danaone used all
over the year not
only in Ramadan.
 DANONE make
some modifications
in the existing
product to give
increase value to
the customer for
their purchase
 DANONE modify
existing product to
target a specific
layer in society
 At 2010 DANONE
buy Bebelac milk
products to open a
new market in
babies nutrition
market.
 i n N e w
Stages
Product
l o p m e n t
D ev e
• Expensive, time-consuming, and
risky.
• Only 1/3 of new products
become success stories.
• Each step requires a “go or no-
go” decision.
 Product
l o p m e n t
D ev e
Stages
 Stage 1: Generating ideas for
new offerings
 Stage 2: Screening
 Stage 3: Concept development
and business analysis phase
 Stage 4: Product development
 Stage 5: Test marketing
 Stage 6: Commercialization