BBA/BBM/BBS/BBA-BI/BIM/BCIS MBA/MBS/MBM

1. Semester – 5th

2. CHAPTER - FIVE
Product

3. Anything that can be offered to a market for
attention, acquisition, use or consumption and that
might satisfy a want or need.
Products include physical objects, services, events,
persons, places, ideas or mixes of these entities.

4. Almost everything that we come across in our daily life is a
product: morning newspaper, program appearing on the TV
screen.
All of them have some utility, all of them cater to & satisfy
some needs of some people. So in simple terms, we can
define a product as a “need satisfying entity”.

5. PRODUCT
A product is anything , tangible or intangible which can
be offered to a market for attention, acquisition use or
consumption that might satisfy a need or want.
– Philip Kotler
A product is a set of tangible and intangible attributes
including packaging, color , price , quality , brand plus
the seller services and reputation.
– W.J. Stanton

6. Product
4
PRODUCT
Product
Quality
Physical Characteristics
Of Goods
Price
Brand
Packaging
Design
Product
Warranty
Colour
Sellers
Reputation
Sellers
Service

7. CONCEPT OF PRODUCT
1. Tangible Concept
2. Intangible Concept
3. Augmented Concept
4. Total Concept

8. Levels of Products
6
Product
Core
Product
Actual
Product
Augmented
Product
Features
Design
Packaging
Quality
Level
Brand
Name
After Sale
Service
Warranty
Installation
Delivery
&
Credit

9. First Level : Core Product / Basic Constituent :
The most basic level is the “core benefit”, which addresses the question
“What is the buyer really buying?”
Thus, when designing products marketers must first define the core
problem solving benefits or services that consumers seek.
Second Level : Actual Product / Associated Features:
The product planners must turn the core benefit into an actual product.
They need to build / develop product and service features, design, a
quality level, a brand name and packaging.

10. Third Level : Augmented Level :
Finally the product planners must build an “augmented product” around
the core benefit and actual product by offering additional consumer
services & benefits.
“Consumers see products as complex bundles of benefits that satisfy
their needs.”

11. Product Classification
• Consumer Products: Products purchased to satisfy personal and
family needs are consumer products. Food Items, Clothes ,
Cosmetics ,Car etc.
• Industrial Products: Products bought for use in an organization
or to make other products are industrial products. Fuel, Raw
Material, Machines etc.

12. 11
Consumer Product Classification
CP are further classified based on “how consumers go about buying
them”.
• Convenience Products
• Shopping Products
• Unsought Products
• Specialty Products

13. 12
a)Convenience Products :
are consumer products that consumer buys frequently immediately and
with a minimum of comparison & buying effort.
E.g. soap, inexpensive candy, newspaper, fast food,
In other words, they are tangible products that the consumer knows
enough about before going out to buy it & then actually buys it with a
minimum of effort.
A consumer is willing to accept any of the several brands & thus will
buy the one that is most accessible.
Convenience goods typically have a low unit price, are not bulky & are
not generally affected by fad & fashion.

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Convenience products are usually low priced and marketers place
them in many locations to make them readily available when
customers need them.
Retailers usually carry several brands of the same type of convenience
item.
b) Shopping Products :
are less frequently purchased consumer products, that consumers
compare carefully on suitability, quality, price and style.
While buying Shopping Products consumers spend much time & effort
in gathering information and making comparisons.
E.g. furniture, clothing, hotel & airline services

15. 15
Marketers of such products usually distribute their products through
fewer outlets;
But provide deeper sales support to help customers in their
comparison efforts.
c) Unsought Products :
are consumer products that the consumer either does not know about or
knows about but does not normally think of buying.
Are purchased when a sudden problem must be solved or when
aggressive selling is used to obtain a sale that otherwise would not take
place.
In general the consumer does not think of buying these products
regularly.
E.g. Emergency automobile repairs, insurance are examples of unsought
products.

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Most major new innovations are unsought until the consumer becomes
aware of them through advertising.
Thus, by their nature these products require a lot of advertising, personal
selling and other marketing efforts.
d) Specialty Products :
are consumer products with unique characteristics or brand
identification for which a significant group of buyer is willing to make a
special purchase effort.
In other words, a tangible product for which consumers have a strong
brand preference & are willing to spend substantial time & effort in
locating the desired brand is called a Specialty Product.

17. 19
Buyers normally do not compare Specialty Products.
They invest only the time needed to reach dealers carrying the wanted
products / desired brand.
E.g. specific brands or types of cars (BMW), high priced technical
goods, designer clothes (Armani, Versace)

18. 21
2.Industrial Products : are those purchased for further
processing or for use in conducting a business.
There are 3 groups of industrial products:
• Materials & Parts
• Capital Items
• Supplier & Services

19. 22
a) Materials & Parts :
include raw materials and manufactured materials & parts.
Raw materials consist of farm products or goods that become a part of
another tangible product prior to being processed – wheat, cotton,
livestock, fruits, vegetables.
Natural Products – fish, crude petroleum, iron ore.
Manufactured Products – cement, wire.

20. 23
b) Capital Items :
are fully manufactured product that are used in the production of other
product or for providing services . There are two categories of capital
items – installation and equipment.
Installation consists of major purchases such as buildings (factories &
offices) & fixed equipment (generators, computer systems).
Accessory equipments consist of portable factory equipment & tools
(hand tools, lift, trucks)
c) Suppliers & Services :
Supplies include operating supplies – lubricants, coal, paper, pencil.
Repair & maintenance items like paint, nails, brooms.

21. Product Life Cycle
• A product passes through certain distinct stages during its life
and this is called Product Life Cycle.
• There are four distinct stages in a PLC :
• # Pioneering / Introduction Stage
• # Growth Stage
• # Maturity Stage
• # Decline Stage

22. PLC is normally presented as a sales curve. Most
PLC curves are portrayed as bell shaped.
2
Intro
Growth
Maturity
Decline
Sales
Time
Product Life Cycle

23. 1)Pioneering Stage :
During the market pioneering stage, the product is in its introductory
stage.
-Sales are low
-Product may undergo problems.
-Profit seems a remote possibility.
-Demand has to be created & developed.
3
Customers have to be prompted to try out the product.
Promotional expenditures are at their highest ratio to sales because of
the need to :
- Inform potential consumers
- Induce product trial
- Secure distribution in retail outlets

24. Crucial decision to be taken at this stage is the pricing strategy.
-If the product is new thus no past data or comparisons are available &
the firm normally opts for one of the following pricing strategies:
Some Features:
Slow growth of sales
Market pioneers buy the product
Small production level
Technological Problem
Higher Price
Negative Profit
No Competition

25. 2) Growth Stage :
Is marked by rapid climb in sales.
Demand for product increases & size of the market grows.
New competitors enter, attracted by new opportunities.
The competitor introduces new product features & expands distribution.
14
Product Life Cycle

26. Strategy :
 Company improves product quality, adds new features & improves
styling.
 It adds new models, product of different sizes, flavors & so forth to
protect the main product.
 Enters new market segments.
 Increases distribution coverage & enters new distribution channels.
15
Product Life Cycle
 Re - looks at pricing.
 Company shifts from product awareness advertising to product
preference advertising.

27. • Some Features:
• Sales increase rapidly
• New buyer group
• Technological Improvement and new features
• New Market Segments
• Stable price and promotion levels
• High profit

28. 3) Maturity Stage :
Demand tends to reach a saturation point.
Price competition becomes intense.
Competitors begin marking down prices, increasing their advertising &
sales promotion
Dealers have become multi-brand dealers & have started dictating terms.
17
Strategy :
 Companies abandon their weaker products.
 Companies prefer to concentrate their resources on their more
profitable products & on new products.
 Companies spends on R&D to find better versions of the product.
 Company tries considers modifying the market, product or the
marketing mix.

29. 18
Some Features:
Early majority and late majority are major buyers
Tough competition
Slower growth of sales
Price cuts
Heavy promotion
Lower profits

30. 4) Decline Stage :
Sales begins to fall
Demand for product shrinks probably due to :
- new & functionally advanced products becoming available in the
market or
- the market becomes apathetic to the product
- consumer taste shifts
- increasing domestic & foreign competition.
23
Slow
Rapid
As sales& profit decline, some firms withdraw from the market.
Those remaining may prune their product offerings.
They may drop the smaller market segments & marginal trade channels,
or they may cut the promotion budget & reduce their prices further.

31. 25
Strategy :
The firm’s first task is to identify those products in the decline stage by
regularly reviewing sales, market shares, costs & profit trends.
Then the management must decide whether to maintain, harvest or drop
each of these declining products.
 Companies abandon their weaker products.
 Management may decide to maintain its brand without change in the
hope that competitors will leave the industry or management may
decide to reposition or reformulate the brand in hopes of moving it
back into growth stage of the PLC.

32. New Product Development
• The Development of original products, product
improvements, product modification and new brand
through the firm’s own R & D efforts.
• Generally Company develop new product in two ways –
• Acquisition – by buying a whole company or a license to
produce someone else’s product.
• New product development – NPD through the company’s
own research and development department.

33. NPD PROCESS
• Idea Generation – The systematic search for new product ideas.
Ideas include internal sources and external sources such as
customer, competitor, distributor and supplier.
• Idea Screening – Screening new product ideas in order to spot
good ideas and drop poor ones as soon as possible.
• Concept Development & Testing
A. Concept Development - An attractive idea must be developed
into a product concept.
B. Concept Testing – Testing new product concept with a group of
target customers to find out if the concepts have strong consumer
appeal.

34. Marketing Strategy Development – Designing an initial marketing strategy for
a new product based on the product concept.
.MSD consist of three parts – Finding target market, the planned product
positioning and sales , market share and profit goals for the company
Business Analysis – A review of the sales, costs and profit projections for a
new product to find our whether these factors satisfy the company's objectives.
Product Development – Developing the product concept into a physical
product in order to ensure that the product idea can be turned into a workable
product.
Test Marketing – The stage of new product development in which the product
and marketing program are tested in more realistic market settings.
Commercialization – Introducing a new product into the market.

35. Individual Product Decision
12
Product
Attributes
Branding
Packaging
Labeling
Product
Support
Services

36. 1.Product Attributes Decision
Developing a product or services involves defining the benefits
that it will offer. These benefits are communicated and delivered
by products attributes such as quality, features, and style &
design.
• Product Quality – The ability of a product to perform its
functions, it includes the product’s overall durability, reliability,
precision, ease of operation and repair and other valued
attributes.
• Product Features – Features are a competitive tool for
differentiating the company’s product from competitor’s
product.
• Product Design – Simply describes the appearances of a
product.

37. 17
2) Branding :
is a name, term, sign, symbol or design or a combination of these
intended to identify the goods or services of one seller or group of
sellers and to differentiate them from those of competitors.
- Consumers view a brand as an important part of a product and
branding can add value to a product.
Brands speak about quality, features, Trust etc.
Components of Branding:
- Brand Name
- Brand Mark
- Trade Mark

38. Branding Objective:
a. Design Brand loyalty
b. Develop Brand awareness
c. Achieve brand image
d. Get favorable brand attitude
e. Customer loyalty
f. Brand equity
Importance of Branding:
a. Product identification and choice
b. Promotion
c. Value Building
d. Product Position
e. Quality Assurance
f. Prestige and status

39. Packaging
• The activities of designing and producing the container of
wrapper for a product. It plays major role for communicating.
• The package includes a product’s primary container
(toothpaste tube)
• Also include secondary package that is thrown away when the
product is about to used. i.e. Carton Box
• Traditionally, the primary function of the package was to
contain and protect the product.
• But now it is seen as a marketing tool So consumers can
differentiate one product from the other.

40. Packaging Objective:
• Containment
• Protection
• Identification
• Communication
• Promotion
• Product Differentiation
Importance of Packaging
• Convenient
• Attractive
• Communicative
• Economic
• Environmentally friendly

41. Labeling
• A label is that part of the product in which the brand
name, brand mark , information about the product , its
use, ingredients , date of manufacture, manufactures'
name and addresses etc.
Product Support Services
Product support services is also known as customer services that
is part of the augmented product design. It includes :
Handling Customer Complaints
Credit Support
Technical Support
Repair and Maintenance

42. 18
Product Mix Decisions : Product Mix is a set of all product lines and
items that a particular seller offer for sale.
- Complete set of all products offered for sale by a company.
- Product Mix is composed of several product lines.
- Product Mix has 4 dimensions : width, length, depth & consistency.
Product Mix Width: refers to the number of different product lines the
company carries.
Product Line Length: refers to the total number of items the company
carries in its product line.
- Number of items / brands in the line.

43. Product Line Depth : refers to the number of versions offered of each
product in the line.
- The total number of items under each brand in the line;
in terms of variants, shades, models, pack sizes.
Consistency : of the product mix refers to how closely related the
various product lines are in
-end use,
-production requirements,
-distribution channels or in some other way.

44. 23
Product Line 1
BATH SOAPS
Product Line 2
FABRIC WASH
Product Line 3
BEVERAGES
Dove
Liril
Le Sancy
Pears
Rexona
Lifebuoy
Hamam
Breeze
Jai
Moti
Lux
Surf
Rin
Wheel
Sunlight
Ala
Bru
Brooke Bond Red Label
Lipton Green Label
Taaza
Taj Mahal
HUL Product Mix
PRODUCT MIX
WIDTH
PRODUCT
LINE
LENGTH
Different Shapes
Different Packs
PRODUCT
LINE
DEPTH

45. Product Line Decision
• A group of products that are closely related because they
function in a similar manner, are sold to the same
customer groups are marketed through the same types of
outlets or fall within given price ranges.
The product line strategy involves four basic decision:
Product line expansion
Product line contraction
Product line modernization
Product line Featuring

46. Service Marketing
• A service is any act or performance that one party can offer to another
that is essentially intangible and does not result in the ownership of
anything. Its production may or may not be tied to a physical product.
• - Philip Kotler
• The demand for services expands with social development , cross
cultural exchanges and growth in per capita incomes of people. E.g.
• Hotel Industry
• Health Services
• Educational Services
• Internet based Services
• Banking Services
• Transportation
• Communication

47. 2
Nature of Service Marketing
Service Intangibility:
Services can not be seen, tasted, felt, heard or smelled before purchase.
Service Inseparability:
A major characteristic of services – they are produced and consumed at
the same time and can not be separated from their providers, whether the
providers are people or machines.
Service Variability:
A major characteristics of services – their quality may vary greatly,
depending on who provides them and when, where and how.
Service Perishability:
A major characteristics of service - they can not be stored for later sale
or use.

48. Service Marketing Strategies
• Service Profit Chain:
• Successful service companies focus their attention on
both their customers and their employees. They
understand the service profit chain which links service
firm profits with employee and customer satisfaction.. This
chain consists of five links:
• Internal Service Quality: Superior employee selection and
training, a quality work environment and strong support
for those dealing with customers which results in.
• Satisfied and Productive Employees: More satisfied, loyal
and hard working employees, which results in…

49. • Greater Service Value: More effective and efficient customer
value creation and service delivery , which results in…
• Satisfied and loyal Customers: Satisfied customers who remain
loyal, repeat purchase and refer other customers, which results
in…
• Healthy service profit and growth: More profit in firm invest more
in its employees that result in higher service quality.
• Service Differentiation
• Differentiation factors are competitive advantages a firm is able to
exercise in a market in relation to its competitors. Differentiation
strategy creates values for customers for which the customers are
willing to pay.

50. Tools for service Differentiation:
• Service Differentiation
• Process Differentiation
• Personnel Differentiation
• Physical Evidence Differentiation
• Image Differentiation
• Service Quality
• Service Productivity