INTRODUCTION TO A

PRODUCT

- BY :- SEEMA SINGH, AVINASH PATHAK , SUDEEP

SINGH & AKSHIT GARG

ACKNOWLEDGMENT

We would like to thank Dr. Priyank Azad for giving us this assignment that helped us in having a better understanding about what does product actually means. Without his guidance this would have not been possible.

CONTENTS What is product ? Three levels of product Importance of levels of product Classification of product Product life cycle

WHAT IS A PRODUCT ?

Any tangible or intangible offerings that is perceived as a bundle of benefits by the customers and attempts to satisfy their unsatisfied needs

THREE LEVELS OF PRODUCTS Core product Actual product Augmented product

CORE PRODUCT The terms “Core product” and “Actual

product” have a very slight differentiation between them but it is vital that marketers understand this difference. Only by defining your core product clearly, you can achieve marketing excellence. Core product is also known as benefits and is general intangible in nature. Lets take an example.

Supposing you are planning on launching your own car manufacturing unit. What would be your core product? Would it be the car itself? NO. The core product would be convenience to your customers.

ACTUAL PRODUCT The Actual product is the one which is

manufactured after a decision has been taken on what your core product is going to be. These products are quantifiable in nature and have properties like color, branding, quality etc. For example

 if your core product is a status symbol like BMW, your actual product will be a very high quality product with high pricing.

AUGMENTED PRODUCT The Augmented product, as the name

suggests, arise by themselves and are by products of the core and actual products. These might be complete products within themselves. Again taking the above example, if you are manufacturing a car, it needs regular servicing, warranty etc. Thus these become tertiary products or augmented products. There are business which are dedicated completely in providing augmented products such as service centers, AMC centers etc.

IMPORTANCE OF THESE THREE LEVELS OF PRODUCTThese three product levels play a vital

part in product management and are also important while deciding the marketing mix of a company. This is mainly because, if there was an augmented product attached to the actual product, then the promotions, placing and pricing of even these augmented products needs to be decided. Thus product decisions are generally the primary decisions of the marketing mix.

PRODUCT CLASSIFICATIONON THE BASIS OF PRODUCT

CHARACTERISTICS :DURABILITY, TANGIBILITY AND USE (consumer or industrial )

(1) NON-DURABLE (2) DURABLE (3) SERVICES

NON- DURABLES These are tangible goods normally

consumed in one or few uses eg: soap, shampoo. Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available at many locations, charge only a small mark up and advertise heavily to induce trial and build preference.

DURABLE These are tangible goods that

normally survive many uses. Normally require more personal selling and service, command a higher margin , and require more seller guarantees. Eg : refrigerators , machine tools ,and clothing

SERVICES These are intangible, inseparable ,

perishable and variable products. Normally require more quality control, superior credibility, and adaptability. Example :- hair cuts, legal advice and taxation services

PRODUCT CLASSIFICATIONON THE BASIS OF CUSTOMER SHOPPING

HABITS :(1) CONVENIENCE GOODS(2) SHOPPING GOODS(3) SPECIALTY GOODS(4) UNSOUGHT GOODS

CONVENIENCE GOODS are goods that the customer usually

purchases frequently, immediately, and with a minimum of efforts.

(A) Staples: Consumers purchase on a regular basis.

(B) Impulse Goods: are purchased without any planning or search efforts.

(C) Emergency Goods: are purchased when a need is urgent.

SHOPPING GOODS are goods that the customer , in the

process of selection and purchase, characteristically compares on such basis as suitability, quality, price and style.

(A) Homogeneous Shopping Goods: are similar in quality but different enough in price to justify shopping comparisons.

(B) Heterogeneous Shopping Goods: differ in product features and services that may be more important than price.

SPECIALTY GOODS are goods with unique characteristics or

brand identification for which buyer is willing to make a special purchasing effort.

UNSOUGHT GOODS are goods the consumer does not know

about or does not normally think of buying. These goods require advertising and personal selling support.

Time

ProductDevelop-ment

Introduction

Profits

Sales

Growth Maturity Decline

Losses/Investments ($)

Sales andProfits ($)

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STAGE 1 - INTRODUCTION The stage 1 is where the product is

launched. A product launch is always risky. You never know how the market will receive the product. There have been numerous failures in the past to make marketers nervous during the launch of the product. The length of the introduction stage varies according to the product.

CHARACTERISTICS OF STAGE 1 OF PLC Higher investments, lesser profits Minimal competition Company tries to induce acceptance

and gain initial distribution Company needs promotions targeted

towards customers to increase awareness and demand for the product

Company needs promotion targeted towards channel to increase confidence in the product

STAGE 2 – GROWTH Once the introductory phases are over, the

product starts showing better returns on investment. Your customers and channels begin responding. There is better demand in the market and slowly the product starts showing profits.

This is a stage where competition may step in to squash the product before it has completely launched. Any marketing mistakes done at this stage affect the product considerably as the product is being exposed to the market and bad news travels fast. 

CHARACTERISTIC OF STAGE 2 OF PLC Product is successfully launched Demand increases Distribution increases Competition intensifies Company might introduce secondary

products and support services Better revenue generation and ROI

STAGE 3 – MATURITY One of the problems associated with maturity

stages in a technologically advanced environment is the problem of duplication. 

Along with competition, Penetration pricing becomes a weapon for competitors. Competitors sell products with the same features at lesser prices thereby trying to penetrate in the market.

Along with competition, Penetration pricing becomes a weapon for competitors. Competitors sell products with the same features at lesser prices thereby trying to penetrate in the market.

CHARACTERISTICS OF STAGE 3 OF PLC Competition is high Product is established and promotion

expenditures are less Converting customers product to your

own is a major challenge in maturity stage

Little growth potential for the product Penetration pricing, and lower profit

margins The major focus is towards extending

the life cycle and maintaining market share

STAGE 4 – DECLINE 1 product, 10 competitors, minimum

profits, huge amount of manpower and resources in use – A typical scenario which a product might face in its last stage. In this stage the expenditures begin to equal the profits or worse, expenses are more than profits.

Thus it becomes a typical scenario for the product to exit the market. It also becomes advantageous for the company as the company can use resources it was spending on the declining product on an altogether different project.

CHARACTERISTICS OF STAGE 4 OF PLC Market is saturated Sales and profits decline Company becomes cost conscious A lot of resources are blocked in

rejuvenating the dead product. There are only three options left with the

company Re positioning or Rebranding of the product to

extend product life cycle Maintain the product as it is and reduce costs to

get maximum profits till the product can produce profits

Take the product off the market.

COURTESY Facts taken in this presentation are from

one of the best websites for marketing i.e., marketingteacher.com and marketing91.com

THE END