PRODUCTPRODUCT

WHAT IS A PRODUCT ?WHAT IS A PRODUCT ?

A product is anything that has a capacity to satisfy customer needs n wants.

A product is anything that can b offered to a market for attention, acquisition that satisfy a want.

The term product covers both goods and services.

DEFINITIONSDEFINITIONS

Product◦Anything offered to a market for

attention, acquisition, use, or consumption that might satisfy a need or want. It includes physical objects, services , persons, places, organisations and ideas.

PHILIP KOTLER

PRODUCT DIMENSIONSPRODUCT DIMENSIONS

Managerial dimensions- Core product- The related product features- The related product servicesConsumer dimensionsSocial dimensions

PRODUCTS CLASSIFICATIONPRODUCTS CLASSIFICATION

UnsoughtProducts

UnsoughtProducts

SpecialtyProductsSpecialtyProducts

ShoppingProducts

ShoppingProducts

ConvenienceProducts

ConvenienceProducts

ConsumerProducts

ConsumerProducts

IndustrialProducts

IndustrialProducts

PRODUCTSPRODUCTS

PRODUCT CLASSIFICATIONPRODUCT CLASSIFICATION

ConvenienceShoppingSpecialtyUnsought

Frequent purchases bought with minimal buying effort and little comparison shopping

Low priceWidespread

distributionMass promotion by

producer

Types of Consumer Products

ConvenienceShoppingSpecialtyUnsought

Less frequent purchases

More shopping effort for comparisons.

Higher than convenience good pricing

Selective distribution in fewer outlets

Advertising and personal selling

Types of Consumer Products

ConvenienceShoppingSpecialityUnsought

Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity

High priceExclusive distributionCarefully targeted

promotions

Types of Consumer Products

ConvenienceShoppingSpecialtyUnsought

Little product awareness and knowledge (or if aware, sometimes negative interest)

Pricing variesDistribution variesAggressive

advertising and personal selling by producers and resellers

Types of Consumer Products

Types of industrial Types of industrial productsproducts Raw Materials Equipments ( installations,

accesory equipments.plant and machinery)

Fabricated parts and materials Operating supplies

New-Product Development New-Product Development and and Life-Cycle StrategiesLife-Cycle Strategies

DefinitionDefinitionNew Product Development

◦Development of original products, product improvements, product modifications, and new brands through the firm’s own R & D efforts.

New Product Development New Product Development StrategyStrategy

New products can be obtained through development.

New products suffer from high failure rates.

Several reasons account for failure.

Stages of the New Product Stages of the New Product Development ProcessDevelopment ProcessStage 1: Idea Generation

◦ Internal idea sources: R & D

◦ External idea sources: Customers, competitors, distributors,

suppliers

Stages of the New Product Stages of the New Product Development ProcessDevelopment Process

Stage 2: Idea Screening◦ Product development costs

increase substantially in later stages so poor ideas must be dropped

◦ Ideas are evaluated against criteria; most are eliminated

Stages of the New Product Stages of the New Product Development ProcessDevelopment Process

Stage 3: Concept Development and Testing◦ Concept development creates a

detailed version of the idea stated in meaningful consumer terms.

◦Concept testing asks target consumers to evaluate product concepts.

Stages of the New Product Stages of the New Product Development ProcessDevelopment Process

Stage 4: Business Analysis◦ Sales, cost, and profit projections

Stage 5: Product Prototype◦ Prototype development and

testing

Stages of the New Product Stages of the New Product Development ProcessDevelopment Process

Stage 6: Test Marketing◦ Standard test markets◦ Controlled test markets◦ Simulated test markets

Stage 7: Commercializationo Launching of the product

Product Life Product Life CycleCycle

Time

ProductDevelop-

ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

Product Life-Cycle Product Life-Cycle StrategiesStrategiesThe Product Life Cycle (PLC) has

Five Stages

◦Product Development, Introduction, Growth, Maturity, Decline

Product Life-Cycle Product Life-Cycle StrategiesStrategies

Product development

IntroductionGrowthMaturityDecline

Begins when the company develops a new-product idea

Sales are zeroInvestment costs

are highProfits are negative

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PLC Stages PLC Stages

Product Life-Cycle Product Life-Cycle StrategiesStrategies

Product development

IntroductionGrowthMaturityDecline

Low salesHigh cost per

customer acquiredNegative profits Innovators are

targetedLittle competition

PLC Stages PLC Stages

Marketing Strategies: Marketing Strategies: Introduction StageIntroduction Stage

Product – Offer a basic productPrice – Use cost-plus basis to setDistribution – Build selective

distributionAdvertising – Build awareness

among early adopters and dealers/resellers

Sales Promotion – Heavy expenditures to create trial

Product Life-Cycle Product Life-Cycle StrategiesStrategies

Product development

IntroductionGrowthMaturityDecline

Rapidly rising salesAverage cost per

customerRising profitsEarly adopters are

targetedGrowing competition

PLC Stages PLC Stages

Marketing Strategies: Growth Marketing Strategies: Growth StageStageProduct – Offer product extensions,

service, warrantyPrice – Penetration pricingDistribution – Build intensive

distributionAdvertising – Build awareness and

interest in the mass marketSales Promotion – Reduce

expenditures to take advantage of consumer demand

Product Life-Cycle Product Life-Cycle StrategiesStrategies

Product development

IntroductionGrowthMaturityDecline

Sales peakLow cost per

customerHigh profitsMiddle majority are

targetedCompetition begins to

decline

PLC Stages PLC Stages

Marketing Strategies: Maturity Marketing Strategies: Maturity StageStage

Product – Diversify brand and models

Price – Set to match or beat competition

Distribution – Build more intensive distribution

Advertising – Stress brand differences and benefits

Sales Promotion – Increase to encourage brand switching

Product Life-Cycle Product Life-Cycle StrategiesStrategies

Product development

IntroductionGrowthMaturityDecline

Declining salesLow cost per

customerDeclining profitsLaggards are

targetedDeclining competition

PLC Stages PLC Stages

Marketing Strategies: Decline Marketing Strategies: Decline StageStageProduct – Phase out weak itemsPrice – Cut priceDistribution – Use selective

distribution: phase out unprofitable outlets

Advertising – Reduce to level needed to retain hard-core loyalists

Sales Promotion – Reduce to minimal level