Product:Marketing Mix, Levels of Product and Services, Consumer Products

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Principles of Marketing MGT301

Lesson 19

Lesson overview and learning objectives:

In this chapter we commence an examination of the marketing mix elements the so-called 4P's of

marketing, or if considering the extended marketing mix, the 7P's of marketing. 1st p of these 4PS

is Product is a complex concept that must be defined carefully.

A. 4PS

o Product

a. Marketing Mix

Marketing is a process that revolves around the customers and in order to meet the requirements

of the customer marketers formulate and design the marketing mix that is also known as 4Ps (

Four marketing activities--product, Price, Place and Promotion--that a firm can control to meet

the needs of customers within its target market ). The marketing mix variables are: Product:

Goods, services, or ideas that satisfy customer needs, Price: Decisions and actions that establish

pricing objectives and policies

and set product prices. Place:

Marketing is the involved

The ready, convenient, and

timely availability of products

process of determining the 4

and finally the Promotion:

P's of the Marketing Mix

Promotion can be defined as

activities that are used to inform

customers

about

the

Product

organization and its products.

These

elements

the

Price

marketing mix and strategies

related to these elements or the

variables are designed by

Promotion

keeping in view all the

environmental factors either

macro or micro that can

Place (Distribution)

influence the marketing in any

context. Today is the era of

value driven marketing, Value can be defined as a customer's subjective assessment of benefits

relative to the costs in determining the worth of a product. Customer is ready to pay the cost of

given product if that product is of some value. This value can be determined as a capability of the

product to satisfy the customer's needs and wants.

When ever customer or the consumer makes the purchasing decisions they (Consumers) don't buy

products; they buy benefits that can be functional benefits( relating to the practical purpose a

product serves) or the Psychological benefits (relating to how a product makes one feel) for the

reason being products are always purchased in order to fulfill certain needs that are definitely

fulfilled through acquiring certain benefits of the product. Today, as products and services become

more and more commoditized, many companies are moving to a new level in creating value for

their customers. To differentiate their offers, they are developing and delivering total customer

experiences. Whereas products are tangible and services are intangible, experiences are memorable.

Whereas products and services are external, experiences are personal and take place in the minds

of individual consumers. Companies that market experiences realize that customers are really

Principles of Marketing MGT301

buying much more than just products and services. They are buying what those offers will do for

them--the experiences they gain in purchasing and consuming these products and services.

b. WHAT IS A PRODUCT?

A product is anything that can be offered to a market for attention, acquisition, use, or

consumption and that might satisfy a want or need. It includes physical objects, services, persons,

places, organizations, and ideas.' Pure' Services are distinguished from 'physical' products on the

basis of intangibility, inseparability, variability and perish ability. Services are a form of product that

consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do

not result in the ownership of anything.

Product is a complex concept that must be carefully defined. As the first of the four marketing mix

variables, it is often where strategic planning begins. Product strategy calls for making coordinated

decisions on individual products, product lines, and the product mix.

a) Levels of Product and Services

As shown in the fig each product item offered to customers can be viewed on three levels.

Therefore product planners need to think about products and services on three levels:

1). The core product is the core, problem solving benefits that consumers are really buying

when they obtain a product or service. It answers the question what is the buyer really buying?

2). The actual product may have as many as five characteristics that combine to deliver

core product benefits. They are:

a). Quality level.

Augmentted

Augmened

Prroduct

P oduct

b). Features.

c). Design.

d). Brand name.

Installation

e). Packaging.

3).

The augmented

Packaging

product includes any additional

Brand

Features

Name

consumer services and benefits

Core

After-

Delivery

Benefiit or

built around the core and actual

Benef t or

Sale

& Credit

Serviice

Service

Serv ce

products.

Quality

Design

Level

Therefore, a product is more

than a simple set of tangible

features. Consumers tend to

Warranty

see products as complex

bundles of benefits that satisfy

Acttual

Acual

Corre

Co e

Prroduct

P oduct

Prroduct

P oduct

their

needs. When

developing products, marketers

must: 1). Identify the core consumer needs that the product will satisfy. 2). Design the actual

product and finally 3). Find ways to augment the product in order to create the bundle of

benefits that will best satisfy consumer's desires for an experience. The product. For example, a

Sony camcorder is an actual product. Its name, parts, styling, features, packaging, and other

attributes have all been combined carefully to deliver the core benefit--a convenient, high-quality

way to capture important moments. Sony must offer more than just a camcorder. It must provide

consumers with a complete solution to their picture-taking problems. Thus, when consumers buy a

Sony camcorder, Sony and its dealers also might give buyers a warranty on parts and workmanship,

instructions on how to use the camcorder, quick repair services when needed, and a toll-free

telephone number to call if they have problems or questions (augmented level).

Principles of Marketing MGT301

Therefore, a product is more than a simple set of tangible features. Consumers tend to see

products as complex bundles of benefits that satisfy their needs. When developing products,

marketers first must identify the core consumer needs the product will satisfy. They must then

design the actual product and find ways to augment it in order to create the bundle of benefits that

will best satisfy consumers.

b) Product Classification

There are three basic types of product classifications. Durable products are used to over an

extended period of time. Nondurable products are more quickly consumed, usually in a single use

or a few usage occasions. 'Pure' Services are activities or benefits offered for sale which are

intangible, inseparable from the consumer, perishable in that they are experiential and do not result

in ownership of anything. Either consumer or industrial customers can buy each of these

products. Consumer products are sold to the final end-user for personal consumption.

Individuals and other organizations to use in their administrative or processing operations buy

business-to-business products. Industrial products are the most widely used of these products and

consist of consumables such as paper clips or raw materials that are converted to finished

products. Lets discuss these classifications in detail:

I. Consumer Products

Consumer products are those bought by final consumers for personal consumption. Marketers

usually classify these goods further based on how consumers go about buying them. Consumer

products include convenience products, shopping products, specialty products, and unsought products. These

products differ in the ways consumers buy them and therefore in how they are marketed

Convenience products are consumer products and services that the customer

usually buys frequently, immediately, and with a minimum of comparison and

buying effort. Examples include soap, candy, newspapers, and fast food.

Convenience products are usually low priced, and marketers place them in many

locations to make them readily available when customers need them.

Shopping products 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. Examples include furniture,

clothing, used cars, major appliances, and hotel and motel services.

Shopping products marketers usually distribute their products through fewer

outlets but provide deeper sales support to help customers in their comparison

efforts.

Specialty products 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. Examples include specific brands and types of cars, high-

priced photographic equipment, designer clothes, and the services of medical or

legal specialists. A Lamborghini automobile, for example, is a specialty product

because buyers are usually willing to travel great distances to buy one. Buyers

normally do not compare specialty products. They invest only the time needed to

reach dealers carrying the wanted products.

Principles of Marketing MGT301

Unsought products are consumer products that the consumer either does not

know about or knows about but does not normally think of buying. Most major

new innovations are unsought until the consumer becomes aware of them through

advertising. Classic examples of known but unsought products and services are life

insurance and blood donations to the Red Cross. By their very nature, unsought

products require a lot of advertising, personal selling, and other marketing efforts.

II. Industrial Products

Industrial products are those purchased for further processing or for use in conducting a business.

Thus, the distinction between a consumer product and an industrial product is based on the

purpose for which the product is bought. If a consumer buys a lawn mower for use around home,

the lawn mower is a consumer product. If the same consumer buys the same lawn mower for use

in a landscaping business, the lawn mower is an industrial product.

The three groups of industrial products and services include materials and parts, capital items, and

supplies and services. Materials and parts include raw materials and manufactured materials and

parts. Raw materials consist of farm products (wheat, cotton, livestock, fruits, vegetables) and

natural products (fish, lumber, crude petroleum, iron ore). Manufactured materials and parts

consist of component materials (iron, yarn, cement, wires) and component parts (small motors,

tires, castings). Most manufactured materials and parts are sold directly to industrial users. Price

and service are the major marketing factors; branding and advertising tend to be less important.

The demand for industrial products is derived from the demand for consumer products. This is

known as "derived demand." Capital items are industrial products that aid in the buyer's

production or operations, including installations and accessory equipment. Installations consist of

major purchases such as buildings (factories, offices) and fixed equipment (generators, drill presses,

large computer systems, elevators). Accessory equipment includes portable factory equipment and

tools (hand tools, lift trucks) and office equipment (fax machines, desks). They have a shorter life

than installations and simply aid in the production process.

The final group of business products is supplies and services. Supplies include operating supplies

(lubricants, coal, paper, pencils) and repair and maintenance items (paint, nails, brooms). Supplies

are the convenience products of the industrial field because they are usually purchased with a

minimum of effort or comparison. Business services include maintenance and repair services

(window cleaning, computer repair) and business advisory services (legal, management consulting,

advertising). Such services are usually supplied under contract.

III. Organizations, Persons, Places, and Ideas

In addition to tangible products and services, in recent years marketers have broadened the

concept of a product to include other "marketable entities" namely, organizations, persons, places,

and ideas. Organizations often carry out activities to "sell" the organization itself. Organization

marketing consists of activities undertaken to create, maintain, or change the attitudes and

behavior of target consumers towards an organization. Both profit and nonprofit organizations

practice organizational marketing. People can also be thought of as products. Person marketing

consists of activities undertaken to create, maintain, or change attitudes or behavior toward

particular people. All kinds of people and organizations practice person marketing. Ideas can also

be marketed. In one sense, all marketing is the marketing of an idea, whether it is the general idea

of brushing your teeth or the specific idea that Crest provides the most effective decay prevention

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