MARKETING Lesson 6: PRODUCT

6.1 Module Overview and Objectives

Module Overview:

Product is a key element in the overall market offering. Marketing-mix planning begins with
formulating an offering that brings value to target customers. This offering becomes the basis upon
which the company builds profitable relationships with customers. In this lesson, the importance of the
product. service, and experience will be discussed.

Objectives:

At the end of the lesson, the learners should be able to:

1. Define the product and;

2. Differentiate the product, services, and experiences.

6.2 Jumpstart

In marketing, a product is anything in the form of goods, services, or ideas consisting of a bundle of
tangible and intangible attributes that can be offered to a market that might satisfy a want or need and is
received in exchange for money or something else of value. There are three components of a product,
namely:

1. Core product - this is the end benefit for the buyer. The core product is what the buyer is
really buying.
2. Formal product - this is the actual physical or perceived characteristics of the product
including its level of quality, special features, styling, branding, and packaging.
3. Augmented product - these are the support items that complete the total product offering such
as after-sales service, warranty, delivery, and installation.

6.3 The Classification of Products and Services

Marketers may classify products and services into two types.

Consumer products refer to products that are purchased by customers for their consumption. These
products are primarily for personal, family, and/or household purposes.

Industrial products on the other hand refer to any products purchased by individuals or institutions for
the purpose of implementing a business. These products are goods that are sold to other businesses and
used to produce other goods.
Types of consumer products:

1. Convenience products - These are products that consumers purchase regularly for consumption. The
price of these products is usually low and/or affordable.

2. Shopping products - These are products consumers purchase infrequently compared to convenience
products. Customers exert effort on getting information on the brands before deciding to buy.

3. Specialty products - These are products that have unique attributes and brand recognition for which
consumers are ready to exert special effort.

4. Unsought products - these are products or services that consumers are either not aware of the brand’s
existence or have awareness of the brand however not usually consider buying it.

Industrial Product Clusters:

1. Materials and parts - These are materials or manufactured materials and parts.

2. Capital Items - These are products that help the companies in operation and production, installation,
and accessory equipment.

3. Supplies and services - These include operating supplies, repair, maintenance.

6.4 Developing Products and Services

The marketers must consider the benefits of the products and services to be prioritized. These product
attributes are the ones being communicated and delivered to the customers. Attributes are seen through
product design and style, quality, and features.

Design and Style. To add value to the product, companies enhance the design and style of the product.
In this way, brands will be more distinct and look special in the eyes of the buyers.

Quality. This is one of the major considerations of marketers in positioning a product. Quality has a
direct relationship with product performance. it is considered determinants of customer value and
satisfaction.

Features. To establish product distinction, companies may consider developing product features. It will
help the company to attain competitive advancement. Companies often introduce valued new features
to create market superiority.

6.5 Establishing Products and Services

In establishing products and services, marketers must think of the following product strategies:
 A. Branding - it refers to the name, term, signs, symbols, design, or combinations of these,
which serve as identification of the products, services, or institutions that separate them from
their competitors.
B. Packaging - it pertains to the process of designing and producing containers or wrappers for
products. The fundamental role of the package is to secure the product's condition.
C. Labeling - from simple tags to intricate graphics, label plays a vital role in creating an
identity to the brands. it serves as the identification or ID card of the brand because it tells
many things about the product's name, origin, symbol, content, dimension, and usage.
D. Product support service - as part of the customer's overall brand experience, support
service is essential in building a healthy relationship with customers.

6.6 Discovering New Product Development Strategy

With the fast-changing trends in the market today, companies should establish a stable stream of new
products. Companies may acquire new products through the procurement of companies that produce
commodities. On the other hand, companies may also develop new products through the enhancement
of their original product.

Every marketer should have a strong grip on the concept of new product development to successfully
give birth and nourishes the growth of new products. Certain stages have to be considered in doing this.

Stages in new product development include:

1. Idea Generation Stage - Great products come from simple ideas that are carefully polished by the
skillful hands of the marketing team. Marketers should be resourceful in generating and gathering ideas
for new products. Potential ideas for new products may come from sources like market research,
customers, employees, consultants, distributors, and suppliers.

2. Idea Screening Stage - All ideas may seem promising. However, marketers should dive into the
idea and explore it to find out if the idea has the potential to bring triumph to the company. The process
may be rigorous, but it pays to be meticulous as early as this stage.

3. Concept development and Testing Stage - After selecting potential ideas, it will go through the
process of conceptualization and testing. Concepts may undergo different forms. From a product idea,
the marketers will transform it into a product concept, a more detailed description of a product idea.
Then, the product concept should be visualized as an actual and potential product using the consumer's
lenses.

The product concepts will be tested by a group of target customers as participants to see the feasibility.
Marketers may present the concepts to the target customers using symbols or concrete concepts. The
insights that marketers will get from the participants will be essential in developing new products.

4. Marketing Strategy and Development Stage - In this stage, marketers will develop a marketing
strategy based on the tested and treated new product concept. The marketers should identify critical
strategic marketing elements like target audience, marketing objectives, product positioning, pricing,
distribution plan, and promotional tools.
5. Business Analysis Stage - In this stage, the marketers should focus on the review of product sales,
cost, and profit. It is not enough to think of the feasibility of the product. marketers should also
consider the financial worth of the new product to the company.

6. Product Development Stage - in this stage, the prototype of the new product is being designed and
produced. The produced prototype will face series of testing. it will be presented to selected people
representing the target segment of the market to make sure that the product is ready, and there is no
need for further modification.

7. Test Market Stage - The companies will select a specific geographical area to check the product's
marketability. Thus, the product will be launched in a particular area. In this stage, the performance
marketing mix strategy will be monitored and evaluated. The result of the observation will be the basis
if the product needs adjustments or completely passes the tests and ready for grand launching in the
national market.

8. Commercialization - In this stage, the new product is assumed to be ready for national launching.
Marketers must be conscious of the timing of the launch, the distribution and availability of the
product, and the promotional tools to be used.

6.7 Product Life Cycle

As consumers, people purchase millions of products every year. Just like humans, these products have a
life cycle. Older, long-established products eventually become less popular, while in contrast, the
demand for new, more modern goods usually increases quite rapidly after they are launched.

Since most companies know the different product life cycle stages, and that the products they trade all
have a limited life span, the majority of them will invest a lot in new product development in order to
make certain that their businesses continue to grow.

The product life cycle has four very clearly defined stages, each with its own characteristics that mean
different things for businesses that are trying to manage the life cycle of their particular products.

1. Introduction Stage - this stage of the cycle could be the priciest for a company launching a new
product. The size of the market for the products is small, which means sales are low, although they will
be increasing. On the other hand, the cost of things like research and development, consumer testing,
and the marketing required to launch the product can be very high, especially if it's a competitive
sector.

2. Growth Stage - the growth stage is normally characterized by a strong growth in sales and profits.
Since the company begin to benefit from economies of scale in production, the profit margins, as well
as the overall amount of profit will increase. This makes it feasible for businesses to put in more money
in the promotional activity to take full advantage of the potential of this growth stage.

3. Maturity Stage - During the maturity stage, the product is established and the aim for the
manufacturer is now to keep the market share they have built up. This is most likely the best
competitive time for most products and businesses to invest sensibly in any marketing they undertake.
They also need to consider any product modifications or improvements to the production process which
might give them a competitive advantage.

4. Decline Stage - Eventually, the market for a product will start to get smaller, and this is what's
known as the decline stage. This reduction could be due to the market becoming saturated, or because
the consumers are switching to a different type of product. While this decline may be unavoidable, it
may still be possible for companies to make some profit by switching to less expensive production
methods and cheaper markets.

6.7.1 Product Extension

As that life cycle nears an end, the company must decide what to do to extend the product life span.
Here are some strategies that can help in product life extension.

1. Re-Packaging - Re-packaging provides a new way for the company to give a mature product a new
image, particularly if the product's earlier image has limited its target audience. Fresh packaging can
draw in a new part of the market by tapping into that market's visual preferences.

2. Discounting - Designing a new pricing strategy does not have to be a short-term alternative for a
mature product. In some cases, re-pricing the product by discounting it can reach out to a target market
that has normally seen the product as being just out of reach.

3. Re-branding - Re-branding a mature product can be a somewhat extreme approach to extending its
life cycle, but it can also be a valuable method. Re-branding results in changing not only the packaging.
The name and total appearance of the product could be changed also.

4. Expanding Abroad - In some cases, a product life cycle can only go so far in one place. Expanding
the product in a foreign country to reach out to a totally unserved market can make longer the product
life cycle on a different level.