Comprehensive Product Decisions Notes

Chapter 7: Product Decisions

Product & Types of Product
  • Definition of a Product:
    • A product is anything that can be offered to a market for attention, acquisition, use, or consumption to satisfy a want or need. (Kotler, 2014)
    • Products may be tangible, intangible, or a combination of both.
  • Example: A tangible product could be a smartphone (visible and touchable), while an intangible product could be a software service (cannot be touched but provides utility).
Levels of a Product
  • Core Benefit:
    • The main benefit that fulfills the customer’s need.
    • Example: For a smartphone, the core benefit might be communication.
  • Generic Product:
    • The basic physical item, including its features (shape, size, color, brand, packaging).
    • Helps in establishing market presence.
  • Expected Product:
    • Attributes and conditions that buyers expect during purchasing.
    • Example: A smartphone typically comes with a warranty and customer support.
  • Augmented Product:
    • Additional services or benefits beyond the expected product, which differentiate it from competitors.
    • Example: A smartphone may include a special customer support service or free software updates.
  • Potential Product:
    • Future enhancements that may satisfy or delight customers in ways not currently realized.
    • Example: New functionalities in smartphones through software updates.
Product Classifications
  • Based on Nature:
    • Tangible Product: Physical items that can be touched.
    • Intangible Product: Non-physical services or experiences.
  • Based on Consumer Type:
    • Consumer Products: Buy for personal consumption (e.g., clothes, food).
    • Industrial Products: Buy for business purposes (e.g., machinery, materials).
Consumer Product Types
  • Convenience Goods:
    • Frequently purchased, little comparison (e.g., snacks, toiletries).
  • Shopping Goods:
    • Purchased occasionally, compared carefully (e.g., clothing, electronics).
  • Specialty Goods:
    • Rarely purchased, brand loyal (e.g., luxury cars).
  • Unsought Goods:
    • Purchased as needed, often without prior awareness (e.g., life insurance).
Industrial Product Types
  • Material and Parts:
    • Inputs for manufacturing (e.g., steel, microchips).
  • Capital Items:
    • Long-term assets for operations (e.g., machinery).
  • Supplies:
    • Consumables used in operations (e.g., office supplies).
Product Life Cycle (PLC)
  • Definition:
    • The PLC describes the course of a product's sales and profits over its lifetime.
  • Phases of PLC:
    • Introduction, Growth, Maturity, Decline
    • Costs: High during introduction and growth; low during maturity and decline.
    • Sales: Begin low, peak in growth and maturity, then decline.
    • Profits: Start low, rise sharply during growth, and fall during decline.
    • Competitors: Few in the introduction phase, many in growth and maturity; few again in decline.
  • Marketing Objectives:
    • Different objectives during each PLC stage (awareness, market share, profit maximization, etc.).
Growth Decisions: Product-Market Expansion Grid
  • Existing Product/Existing Market:
    • Increase market share with existing products—low risk.
    • Strategies include customer retention and competitor elimination.
  • Existing Product/New Market:
    • Expand into new market segments—moderate risk.
    • Requires market research and new distribution channels.
  • New Product/Existing Market:
    • Develop new products for the existing market—higher risk.
    • Involves research and development.
  • New Product/New Market:
    • Enter new markets with new products—highest risk.
    • Requires strong capabilities in terms of capital and market understanding.
Brand Concepts
  • Definition of Brand:
    • A brand is a name, symbol, term, or a combination used to identify a product and distinguish it.
  • Brand vs. Trademark:
    • A trademark is legally registered for protection.
  • Brand Elements:
    • Brand Name: Part that can be spoken.
    • Brand Mark/Logo: The symbol or design that does not include spoken words.
Product Packaging
  • Definition of Packaging:
    • A specialized product used for containing and protecting items, facilitating transportation and consumption.
  • Functions of Packaging:
    • Protection, presentation, preservation, portability, promotion, and preparation.
  • Decisions on Packaging Characteristics:
    • Consider size, shape, material, and color to enhance consumer appeal and reflect brand image.
  • Information in Packaging:
    • Important details like product quality, manufacturer data, safety instructions, and legal requirements must be included in packaging.