Products & its components
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The document discusses various topics related to products and services, including: 1. It defines what constitutes a product and different types of products such as consumer goods, industrial goods, durable goods, and nondurable goods. 2. It outlines the new product development process which involves idea generation, concept development and testing, marketing strategy development, and commercialization. 3. It describes the product life cycle which consists of introduction, growth, maturity, and decline stages. 4. Additional topics covered include product attributes, branding, packaging, and labeling.
Products & its components
- 2. - Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Services are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. What is a product?
- 3. Levels of Product Core Customer Value Actual Product (brand names, features, quality level, design, packaging) Augmented Product (delivery & credit, after sales service, product support & warranty)
- 4. I. According to durability or tangibility. a. Durable goods – consumer goods that are used over an extended period of time. b. Nondurable goods – consumer goods that are quickly consumed, worn-out, or outdated. c. Services – are activities, tasks, benefits, or satisfactions that are offered for a price. II. According to type of end user or the purpose for which the product is to be used. a. Consumer goods – goods that are bought by household consumers for their own final consumption. b. Industrial goods – goods bought by business people for resale, for further processing or for use in producing other products. Classification of Products
- 5. Products Consumer Goods 1. Convenience Goods - are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort. a) Staples – bought by consumers regularly b) Impulse – bought by consumers without planning or search effort c) Emergency – bought by consumers when there is an urgent need for them. 2. Shopping Goods - are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. When buying shopping products and services, consumers spend much time and effort in gathering information and making comparisons. a) Homogeneous or uniform shopping goods – are evaluated by consumers as similar in quality and features but differing in price. b) Heterogeneous or non-uniform goods – have identifiable product differences. For these kinds of goods, cut, fit, style and look are more important to consumers than small price differences. Industrial Goods - Industrial products are those purchased for further processing or for use in conducting a business. 1. Raw Materials – industrial goods that are processed to become part of another product. a) Natural products – such as minerals, oil, sand and forest and sea products b) Agricultural products – such as eggs, milk, rice, wheat, fruits, and livestock 2. Manufactured Parts and Materials – include component parts and component materials. Component parts enter the finished product complete and without any change in its form. Component materials are usually processed further to become another finished product. 3. Installations – major capital items necessary for the manufacture of a final product.
- 6. Products Consumer Goods 3. Specialty Goods - are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. 4. Unsought Goods - are consumer products that the consumer either does not know about or knows about but does not normally consider buying. Most major new innovations are unsought until the consumer becomes aware of them through advertising. Industrial Goods 4. Accessory equipment – has substantial value and is used in an organization’s operations. They do not become part of the finished product and their life is shorter than that of installations but longer than that of operating supplies. 5. Operating Supplies – are low-priced goods with short lifespan that help in an organization’s operations without becoming part of the finished product.
- 7. Product Quality. Product quality is one of the marketer’s major positioning tools. Quality has a direct impact on product or service performance; thus, it is closely linked to customer value and satisfaction. In the narrowest sense, quality can be defined as ―freedom from defects.‖ Total quality management (TQM) is an approach in which all of the company’s people are involved in constantly improving the quality of products, services, and business processes. Product Features. A product can be offered with varying features. A stripped- down model, one without any extras, is the starting point. The company can create higher-level models by adding more features. Features are a competitive tool for differentiating the company’s product from competitors’ products. Product Style and Design. Another way to add customer value is through distinctive product style and design. Design is a larger concept than style. Style simply describes the appearance of a product. Product & Service Attributes
- 8. Eight major steps in new-product development process: 1. Idea Generation - the systematic search for new product ideas. A company typically generates hundreds of ideas, even thousands, to find a few good ones. Major sources of new-product ideas include internal sources and external sources such as customers, competitors, distributors and suppliers, and others. 2. Internal Idea Sources - using internal sources, the company can find new ideas through formal R&D. Beyond its internal R&D process, companies can pick the brains of its employees— from executives to scientists, engineers, and manufacturing staff to salespeople. Many companies have developed successful ―intrapreneurial‖ programs that encourage employees to envision and develop new-product ideas. 3. External Idea Sources - Companies can also obtain good new-product ideas from any of a number of external sources. a) Distributors - are close to the market and can pass along information about consumer problems and new- product possibilities. b) Suppliers - can tell the company about new concepts, techniques, and materials that can be used to develop new products. c) Competitors - companies watch competitors’ ads to get clues about their new products. They buy competing new products, take them apart to see how they work, analyze their sales, and decide whether they should bring out a new product of their own. d) Trade magazines, shows, and seminars; government agencies; advertising agencies; marketing research firms; university and commercial laboratories; and inventors. e) Customers themselves - the company can analyze customer questions and complaints to find new products that better solve consumer problems. Or it can invite customers to share suggestions and ideas. The New Product Development Process
- 9. 4. Crowdsourcing - many companies are now developing crowdsourcing or open-innovation new product idea programs. Crowdsourcing throws the innovation doors wide open, inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new-product innovation process. 5. Idea Screening - screening new-product ideas to spot good ideas and drop poor ones as soon as possible. 6. Concept Development and Testing - an attractive idea must be developed into a product concept. It is important to distinguish between a product idea, a product concept, and a product image. A product idea is an idea for a possible product that the company can see itself offering to the market. A product concept is a detailed version of the idea stated in meaningful consumer terms like detailing all of the product’s characteristics, color, style, design, cost, size, use, etc. A product image is the way consumers perceive an actual or potential product. Concept Testing - calls for testing new-product concepts with groups of target consumers to find out if the concepts have strong consumer appeal. The concepts may be presented to consumers symbolically or physically. Usually, consumers are presented with the idea in pictures or in written form. They are asked if they would use it, if they like it, if they would buy it and so on. The New Product Development Process
- 10. 7. Marketing Strategy Development - designing an initial marketing strategy for a new product based on the product concept. The marketing strategy statement consists of three parts. The first part describes the target market; the planned value proposition; and the sales, market share, and profit goals for the first few years. Thus: The target market is younger, well- educated, moderate- to high-income individuals, couples, or small families seeking practical, environmentally responsible transportation. 8. Business Analysis - a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives. 9. Product Development - developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering. 10. Test marketing - the stage of new-product development in which the product and its proposed marketing program are tested in realistic market settings. 11. Commercialization - Test marketing gives management the information needed to make a final decision about whether to launch the new product. The company must decide where to launch the new product—in a single location, a region, the national market, or the international market. The New Product Development Process
- 11. Five Stages: 1. Product development begins when the company finds and develops a new-product idea. During product development, sales are zero, and the company’s investment costs mount. 2. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. The introduction stage starts when a new product is first launched. It is the stage in which a new product is first distributed and made available for purchase. 3. Growth is a period of rapid market acceptance and increasing profits. The PLC stage in which a product’s sales start climbing quickly. 4. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. 5. Decline is the period when sales fall off and profits drop. The PLC stage in which a product’s sales decline. Product Life-Cycle Strategies
- 13. Brand – is a name, sign, symbol, or design or a combination of these that identifies the maker or seller of a product or service. Advantages of Branding: 1. Buyers/Customers a) Identification / conveys information b) Quality and value c) Reduce customer risk d) Makes many purchase decisions easier 2. Sellers a) Tells a story b) Provides legal protection c) It allows charging of premium prices d) Encourage channel partners’ suport e) Helps segments markets, targeting and positioning f) Enhance loyalty Brand Equity – is the value of a brand, based on the extent to which it has high brand loyalty, name awareness, perceived quality, strong brand associations, and other assets such as patents, trademarks, and channel relationships. Powerful brand names command strong consumer preference. Branding
- 14. Why do brands exist? 1. Identification – brands enable consumers to easily distinguish one product from another. 2. Protection – it enables owner of the brand name to enjoy the goodwill associated with the name so as not to be taken advantage by others. 3. Positioning – it enables the owner to communicate benefits of is product via competition. Criteria for choosing a brand name: 1. Distinctive – is the brand closely associated with another product? Ex. Betadine is associated with antiseptic external wound remedy but would a mouthwash succeed? 2. Word Association – does it have a pleasant meaning? 3. Legal Requirements – can it be registered? 4. Memorability – can your name be remembered easily? 5. Pronounciability – can it be pronounced easily? 6. Limitations – is the brand name too limiting to be used for expansion? Branding
- 15. - It is the activity of designing and producing the container or wrapper for a product. Criteria for choosing packaging materials: 1. Protection – Can the package give ample protection to the product? 2. Display Value – can it attract consumers? 3. Cost – will it be cost-efficient? 4. Convenience – is it easier to carry? Will the package be too heavy? 5. Size – what is industry practice? Any weight limit? What is minimum order quantity? What about average purchase size? Packaging
- 16. - Is also a part of packaging and consists of printed information appearing on or with the package. Labeling performs several functions: 1. It identifies the product or brand 2. It might describe several things about the product 3. It might promote the product through attractive graphics Label Development Process: Labeling Initial Design Consumer Test Final Design Profiling Delivery & Quality Check