Product

Product 

• The marketing definition for a product is: a good service of idea 

• If an idea is expanded, a product is a good, service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers’ needs and is received ( by consumers ) in exchange for money or some other unit of value.

• This idea is a little different from what people have thought of in terms of “ products’ of the past 

  • A product hasn’t always been thought of as being a service or idea 

• The product is, in essence, anything of value that can be exchange concept to marketing 

• Products also incorporate both tangible ( physical traits ) and intangible ( perceived, felt, experienced ) attributes 

• Products embody,  not just the physical or measurable characteristics of an item, but also how consumers “ feel” about it 

Types of Products 

• Useful to classify products into different types 

• Two main classifications are 

  • Consumer vs. industrial goods 

  • Durable vs. non- durable goods 

Consumer Goods 

• Goods purchased by the ultimate consumers, these can be further classified into four categories 

• Convenience goods 

  • Frequently and involve minimal shopping effort ( milk, chewing gum, pop, etc ) 

  • These goods are generally inexpensive and can be bought at many different types of stores

  • These consumers are not particularly brand loya, will accept substitutes and are often price conscious 

  • Marketers focus on building awareness of their brand and recognize that easy availability is very important in determining sales 

• Shopping Goods 

  • These mare more expensive than convenience goods and require effort deliberation and thought purchase decisions are made 

  • Can only be bought at particular types of stores 

  • They often go through 5 stages of consumers decision process 

  • Examples may be cars, electronics, and consumers are brand conscious 

  • Marketers focus on differentiating their brands from competitors

• Specialty goods 

  • Usually very expensive and can only be purchased at a very limited number of stores 

  • Availability is not important here, but rather exclusiveness is sought after 

  • Marketers stress the uniqueness and status of their brand 

• Unsought Goods

  • Often not characterized by price or availability.

  • There are generally purchased very infrequently 

  • Consumers generally do not go looking for these products 

    • Life insurance 

    • Educational gonds; this stupid school 

    • Anti- smoking aids 

  • Marketers emphasize awareness, because it is the key to educating the consumer to buy their product 

• Industrial goods 

  • They are not purchased by the ultimate consumers, but by other producers who then manufacture consumer goods ( or other industrial products ) 

  • These goods assist in providing products for resale and are bought by companies to be put into production to be used in the manufacturing other goods 

  • The sale of industrial goods is the result of derived demand 

• Durable and Non- Durable Goods 

  • Durable goods last over an extended periods and are therefore purchased only infrequently ( cars, laptops, computers, washing machines ), non- durables ( consumables ) ( batteries , cereal, pencils ) are used up  in one or a few users and must be purchased again and again 

  • Printers and printer cartridges are a good example of durable and non- durable goods 

  • Consumers have to be encouraged to repeatedly keep busting the consumable, and in the other the message must reach the consumer mostly at the point in time when the consumer is considering buying a durable item 

• New products 

  • Launching a new product is one of the most important and riskiest things that a company does 

  • A business perspective this sounds pretty grim considering that new product launches cost several hundred million dollars 

  • What can marketers ( and they are the ones ultimately responsible for new product introductions ) 

    • Poor concept: no one wants it, it doesn't satisfy any consumer needs 

    • Inadequate selection and targeting ( wrong consumers are being targeted ) 

    • Inadequate differentiation ( the new product is perceived as very similar to existing products and doesn’t provide any reasons for consumers to switch ) 

    • Marketing mix issues

      • Poor execution 

      • Poor quality 

      • Bad timing ( too early, too little, too late ) 

      • No access to buyers ( distributions weakness ) 

  • It is important to keep in mind that proper market research can help a product grow rapidly, primacy of consumer’s needs, so the new product would be expected to satisfy consumer needs 

  • Finding and targeting appropriate consumer segments allows the product to be launched in an area of the market that differentiates it from competitors 

• The product life cycle 

• Key concept of understanding products ios that every product has a life cycle from birth to death 

• Starting with the peak being in the second growth cycle, but it does decline with time 

• For instance, as technology grows the need for a product such as CDs decreases as the technology we use nowadays is able to support the demands we need, so the product declines in sales with time. 

1. Introduction stage 

   • In this stage, the products are new and have just been introduced to the market 

   • customers / consumers are not familiar with this concept 

   • Normally in this phase the product has a lot to learn, so there are still large parts of  research and development that needs to happen, meaning many companies are losing money in this phase. 

2. Growth Stage ( pt 1 ) 

   • In this phase it is when the sales begin to take off and increase greatly 

   • Generally happens once a level of awareness is cross 

   • This time more competition and company must continue to inform potential customers about their competitive advantages 

3. Maturity stage: growth 2.0 

   • The company’s profits also peak around this time 

   • The company now focuses on defending its market share and reminding consumers of the value of the product and its differentiation from competition. 

4. Decline stage and the profits for the firm 

   • This is when sales start to fall

   • The firm will generally harvest the product and eventually delete it from their product line ( stop manufacturing it ) 

• Diffusion of innovation 

  • The figure shows the different categories of consumers who adopt the new product at different speeds 

    • innovators : motivated by being pioneers and buying the latest and greatest product

      • They are a very small group , they have a high risk tolerance 

    • Early adopters: value trying something new, but are not as informed about new products as innovators 

      • Marketers have realized that a skimming pricing strategy works well for both these groups because of their willingness to pay higher prices 

    • Majority: buy the new product when there are enough others who have already tried it and the bugs have been discovered and fixed

      • Has an average tolerance of risk and is generally price sensitive 

    • Late adopters ( sometimes referred to as laggards ) 

      • The last segment of the market ot adopt the new product 

      • Extremely risk averse and want a competitive price

• Certain characteristics of an innovation may serve to improve or detract from it chances of adoption by consumers ( and the time frame offer which adoption takes place 

  • It’s perceived complexity ( the more complex the product is viewed as the slower consumers adopt ) 

  • Its compatibility in use with present behaviour patterns and complementary products ( a product that is more similar in sue to existing behaviour, the faster it will spread ) 

  • The eas with which it’s features ( especially its benefits ) can be observed and communicate ( the easier this is, the easier it is for word of mouth to occur and spread the message - and the adoption- faster ) 

  • The degree of risk: weather that would be physical, financial and or social attached to adoption of the innovation in preference to existing products or procedures: the higher the perceived risk of buying the new product, the bigger the barrier to quick adoption ) 

  • The extent to which the innovation can be tried on a limited basis before being adopted on a large scale. Permanent basis ( easy trial reduces the risk of buying something new and hence helps faster adoption. ) 

• Diffusion is different to everyone depending on their definition of perceived risk 

Awareness -> Knowledge -> Evaluation -> Trial -> Adoption