Understanding Products and Marketing

A product is a bundle of attributes including features, functions, benefits, and uses that a person receives in an exchange.
The term "product" encompasses anything offered by a firm to provide customer satisfaction, which may be tangible (like physical goods) or intangible (such as ideas or services).
Example types of products:
- Ideas: Concept of recycling
- Physical Goods: A pair of jeans
- Services: Banking services
Products are broadly categorized into:
- Consumer Products: Purchased by final consumers.
- Business Products (also known as Industrial or B2B Products): Purchased by industries or firms. Business products can be further classified into:
- Production Goods: Raw materials or component parts used in the final product.
- Support Goods: Machinery, fixed equipment, software systems, and tools that assist in the production process.
Some products, such as computers, may exist in both consumer and business categories depending on the buyer.
The product is essential in the marketing mix as it addresses whether it meets customer expectations and desires.
Companies should focus on customer perspectives rather than just their capabilities to avoid investing in unsuccessful product enhancements.

There are four levels of a product:
1. Core Product
2. Tangible Product
3. Augmented Product
4. Promised Product

Satisfies the most basic need of the customer.
- Example Scenarios:
- Healthy snack bar: customer might seek health, convenience, or hunger relief.
- Sneakers: a student might seek basic footwear, status, or a sense of freedom.
The identification of the core product is complex and individualized. Marketers need to understand the target customer deeply to identify what constitutes the core product.

Comprises the actual physical product that can be perceived by touch.
Tangible aspects include:
- Features of the product (e.g., quality level, brand name, design, packaging).
Example:
- A consumer choosing a car at age 20 might prioritize gas mileage and styling, while at age 45, they might consider power and brand prestige.

Consists of the tangible product and all accompanying services that enhance the product experience.
These additional elements help consumers evaluate and differentiate between product offerings.
For instance, shopping in a department store involves the core product (clothing), tangible product (design, quality), and augmented services (restrooms, customer service).
Example from Dow Chemical: Reputation for outstanding customer service enhances their augmented product through services that go beyond mere product delivery.

Refers to the long-term result or aspirations a customer seeks when they purchase a product.
It can be financial (like resale value) or aspirational (health, happiness, status).
Often, the promised product is tied more closely to a person's long-term aspirations compared to the core product's immediate focus.

Debate exists regarding the treatment of services as products.
Some argue differences are significant and warrant unique strategies; others see products as unified.
In marketing, the term "product" is broadly applicable to include goods and services.
Importance of the service sector:
- Accounts for nearly 50% of average consumer expenditures, 70% of jobs, and two-thirds of U.S. GNP.

Intangibility: Services cannot be touched or owned; only experienced. Example: Professional sports event.
Simultaneous Production and Consumption: Services are produced and consumed simultaneously (e.g., haircuts).
Low Standardization: Service quality can vary greatly due to human factors (e.g., different performances by the same service provider).
High Buyer Involvement: Consumers often customize or significantly influence the service characteristics based on personal preferences.

Marketing strategies must account for the unique nature of services, differing from goods.
The service continuum illustrates where various products lie, showing that pure goods and pure services have unique characteristics requiring tailored marketing strategies.

Zappos illustrates the concept of augmented product significantly:
- Goal is exceptional customer service to enhance the shopping experience, not just selling footwear.
- Offers higher-value services (100% satisfaction guaranteed return policy, free shipping, and premium delivery) that differentiate it from competitors.

The PLC consists of five stages:
1. Product Development
2. Market Introduction
3. Growth
4. Maturity
5. Decline
Each stage has distinct characteristics regarding costs, sales volumes, profitability, and competitive landscape.

Stage 1: Product Development:
- Investment made, no sales.
Stage 2: Market Introduction:
- High costs, slow sales, demand creation needed.
Stage 3: Growth:
- Costs reduced, significant sales volume increase, rising profitability.
Stage 4: Maturity:
- Peak sales volume, saturation reached, emphasis on brand differentiation.
Stage 5: Decline:
- Diminishing sales volume, increased cost, focus on production efficiency.

The new-product development process typically comprises:
- Phase I: Generating and Screening Ideas
- Phase II: Developing New Products
- Phase III: Commercializing New Products
Each phase includes stages such as idea generation, screening, development, testing, and launch.

Idea Generation: Creative brainstorming from various sources; includes SWOT analysis and customer feedback.
Screening Product Ideas: Initial viability checks using internal rating criteria.
Business Case Analysis: Assessment of market opportunity, costs, and fit within product portfolio.
Technical and Marketing Development: Technical specifications and marketing strategies crafted.
Test Marketing: Conducting limited tests to evaluate market response.
Launch: Full commercial rollout of the product.
Evaluation: Post-launch data collection to guide future improvements.

User-Centered Design: Emphasizes optimal product development based on user needs and behaviors.
Lean Startup Methodology: Focuses on quick market testing using a minimum viable product (MVP) to iteratively enhance the product before full market introduction.