Product Characteristics

and Marketing Strategy

GORDON E. MIRACLE

There is real need for in-creasingly rigorous generali-zations and analytical nnodelsof the behavior of the ele-ments in any given market-ing system.

The model presented hereprovides a means of pre-dicting, or justifying, a mar-keting mix for a product withgiven characteristics.

Journal of Marketing, Vol. 29 (January,1965), pp. 18-24.

ACCORDING to Webster, a science is "any branch or depart-ment of systematized knowledge considered as a distinct

field of investigation or object of study." By this definition, mar-keting certainly may be designated as a science, albeit a sciencein the early stages of development. Scholars and students of mar-keting are concerned with the collection, analysis, and interpreta-tion of marketing knowledge; and some progress has been madein systematizing and classifying marketing phenomena.

In recent years social scientists have begun to employ a methodknown in the physical sciences as systems analysis. As one socialtheorist has observed: •

"As judged by history of the physical, biological, and socialsciences, study in any field is apt to begin with a none-too-ordered description of phenomena in the field, followed by acataloguing of them on bases that seem to make sense. Asunderstanding grows, the systems of classification become moreclosely related to the functioning of interacting elements. Grad-ually, generalizations about functioning are reached which areuseful in predicting future events. As the generalizations gainin rigor, they take the form of analytical models of the behaviorof the elements being studied. They take the form, that is, ofsystems."^

The development of marketing knowledge seems to be goingthrough similar stages.

A system is a set of interdependent or interacting elements.The investigation of the factors that determine the state ofthe system is called systems analysis. This type of analysismay be applied to a business firm as well as to a society or otherorganization. Exogenous and endogenous factors may be examinedto determine their influences on the firm in its movement towardan equilibrium.

Exogenous factors influencing the business firm include a pro-fusion of economic, sociological, political, and cultural circum-stances and trends. Endogenous factors influencing the movementof a firm toward equilibrium include the several elements in afirm's marketing program, usually described as the firm's market-ing mix. The marketing mix, in its general form, includes deci-sions and activities of business firms in the areas of productpolicy, channel policy, promotional policy, and pricing policy.^

1 Everett E. Hagen, On the Theory of Social Change (Homewood,Illinois: The Dorsey Press, Inc., 1962), p. 4.

2 Neil H. Borden, "A Note on the Concept of the Marketing Mix," inEugene J. Kelley and William Lazer, Editors, Managerial Market-ing: Perspectives and Viewpoints (Homewood, Illinois: Richard D.Irwin, Inc., 1958), pp. 272-275.

18

Product Characteristics and Marketing Strategy 19

The term "marketing mix" suggests a relation-ship between interacting, elements. The develop-ment of the term constituted a step forward inthe classification of interrelated marketing efforts.Although more is becoming known about the re-lationships among elements of the marketing mix,it is still common practice to think of it as a blendof marketing efforts, essentially nonquantifiable,the development of which often depends on experi-ence, judgment, and perhaps a measure of goodfortune.

The concept of a system provides a means of im-proving further the framework within which wethink about the interrelationships between andamong marketing activities. After all, a businessfirm engages in marketing activities (endogenousfactors in the system) in order to adapt to itsenvironment (exogenous factors). This adaptationis intended to move the firm toward an equilibriumin which the level of operation is such that thegoals of the firm are being achieved.

The Characteristics of Goods Theory

An observable relationship exists between thecharacteristics of a product and the approximatemarketing mix for that product. This is by nomeans a startling assertion. However, up to thepresent, there appears to be no systematic state-ment of the relationships between product char-acteristics and each of the elements in the market-ing mix.

Historically, one of the most widely acceptedclassification of goods has been that of convenience,shopping, and specialty goods. The definitions ofthese goods are based on conumer buying habits.^They focus on consumer behavior and assist inanswering questions as to why the consumer"shops" for some goods but not for others. Al-though the classification is helpful in guiding mar-keting policies, it is not altogether satisfactory.*If a businessman classifies his product in the tradi-tional manner, the relationships between productclassification and marketing policies still may bequite uncertain.

The theory presented here is a revision and anextension of "The Characteristics of Goods Theory"proposed by Leo V. Aspinwall.'' But whereas Aspin-wall discusses the characteristics of goods theory

3 Melvin T. Copcland, "Relation of Consumers' BuyingHabits to Marketing Methods," Harvard BusinessReview, Vol. 1 (April, 1923), pp. 282-289.

4 Richard M. Holton, "The Distinction Between Con-venience Goods, Shopping Goods, and SpecialtyGoods," JOURNAL OF MARKETING, Vol. 23 (July, 1958),pp. 53-56.

6 Leo V. Aspinwall, "The Characteristics of GoodsTheory," in William Lazer and Eugene J. Kelley,Editors, Managerial Marketing; Perspectives andViewpoints (Homewood, Illinois: Richard D. Irwin,Inc., 1962), pp. 633-643.

only in respect to channels of distribution and pro-motional policy, the theory presented here is broad-ened to include the areas of product and pricingpoilcy.

Definition of Product Characteristics

If product characteristics are to be utilized toexplain marketing policies and methods, each dis-tinguishing characteristic must be reasonably sta-ble during the period of time the explanation is tobe valid. Also, each characteristic must be uni-versal in the sense that it is to some degree afeature of all products.

A product is defined by most modem marketersas the sum of the physical and psychological satis-factions the buyer receives when he makes a pur-chase.6 For example, when he makes a purchasethe consumer receives an article with certainphysical characteristics, or a service with certainfeatures; he receives the item at a convenient loca-tion; he is able to purchase at a convenient time;he receives an item about which he has some knowl-edge (from the salesperson or from consumer ad-vertising) .

While the product may not be absolutely perfectfrom the point of view of each consumer, produc-ers and sellers usually attempt to offer a "totalproduct" that suits a large number of consumersreasonably well. The "bundle of utilities" pur-chased by the consumer is "collected" by incurringproduct development costs, channel costs, promo-tional costs, and other marketing costs. The "totalproduct," in a broad sense, includes all of the fea-tures and conveniences for which the consumer paysin the retail selling price of the item.

Considerable ambiguity often exists in the defini-tions of product characteristics, consumer charac-teristics, and market characteristics. The amount oftime and effort spent in purchasing a product mayseem to be a consumer characteristic. But if con-venience of location is part of the "bundle of utili-ties" and hence part of the "total product" forwhich the consumer pays, it seems reasonable thatthe "short" length of time the consumer spends

Harry L. Hansen, Marketing: Text, Cases, and Read-ings (Homewood, Illinois: Richard D. Irwin, 1961),p. 312.

• ABOUT THE AUTHOR. Gordon E.Miracle is Assistant Professor of Market-ing at the Graduate School of BusinessAdministration, The University of Michi-gan. Dr. Miracle has acted as a market-ing consultant to a number of businessfirms.

Tha idea for this article came original-ly from a consulting assignment with amanufacturing firm that desired a theo-retical justification and explanation of itsmarketing activities.

20

Productcharacteristic

(see list)

1

2

346

67

8

9

PRODUCT

/

Very low

Very lowVery lowVery lowVery low

Very lowVery high

Very high

Very high

TABLE 1CHARACTERISTICS OF FIVE

II

Low

Low

Low

LowLow

Low

Mediumto highMediumto highHigh

Group

III

Mediumto highMediumMediumMediumMedium

MediumLow

Low

Mediumto high

Journal

GROUPS

IV

High

HighHighHighHigh

HighLow

Low

Low tomedium

of Marketing, January, 1965

V

Very high

Very highVery highVery highVery high

Very highVery low

Very low

Very low

searching for a place to buy a pack of cigarettesis a characteristic of the product. The "conveni-ence" is provided as one feature in the "bundle ofutilities." Another way of stating this point is thatthe nature of the product determines how muchtime (or what kinds of effort) consumers will wishto spend in buying the product. Thus, "consumer"and "market" characteristics may be described interms of product characteristics.

Redeflning consumer and market characteristicsin terms of product characteristics permits devel-opment of a single list of characteristics instead ofseveral.

Classification of Products

Observation of a large number of "products" in-dicates certain "product characteristics":

1. Unit value2. Significance of each individual purchase to

the consumer3. Time and effort spent purchasing by consum-

ers4. Rate of technological change (including, fash-

ion changes)5. Technical complexity6. Consumer need for service (before, during,

or after the sale)7. Frequency of purchase8. Rapidity of consumption9. Extent of usage (number and variety of con-

sumers and variety of ways in which theproduct provides utility)

By reviewing a list of products (for example,candy bars, hardware, radios, automobiles, andelectronic computers) the variations in productcharacteristics can be observed in detail. Unit valueranges from low to high; the significance of eachindividual purchase to the consumer ranges fromlow to high; and so on down the list.

Products such as candy bars would be rated lowfor the first six characteristics, and high for thelast three. For electronic data processing equip-ment, the opposite would tend to be true for eachproduct characteristic. Hardware items or radioswould be rated somewhere between. Thus, if prod-ucts are arrayed on a continuum, they might rangefrom such items as cigarettes and razor blades atone extreme, to steam turbines or large specializedmachine tools at the other.

For convenience in exposition, it was decided to"break up" the array of products into five arbi-trarily chosen groups, ranging from one extremeto the other, and including in each group someexamples of items with similar product character-istics. The following groups were chosen:

Group I: Examples are cigarettes, candy bars,razor blades, soft drinks.

Group II: Examples are dry groceries, proprie-tary Pharmaceuticals, small hardware items,industrial operating supplies.

Group III: Examples are radio and televisionsets, major household appliances, women'ssuits, tires and inner tubes, major sportingand athletic equipment.

Growp IV: Examples are high quality cameras,heavy farm machinery, passenger automobiles,high quality household furniture.

Group V: Examples are electronic office equip-ment, electric generators, steam turbines, spe-cialized machine tools.

Table 1 shows the variation in product characteris-tics for each group.

It is, of course, an artificiality to classify prod-ucts by groups; and it would be more accurate toplace products on a continuum, or within a spec-trum ranging from one extreme to another. Leo As-pinwall utilizes the "color classification" to expressthe idea of gradation of products on the basis of

Product Characteristics and Marketing Strategy 21

Productgroup

IIIIIIIV

V

TABLE 2

PRODUCT POLICY

Degree to which a manufacturer offers product varieties(for example: style, color, m.odel, flavor, price) to consumers

Only one, orvery fewvarieties

X

Few Severalvarieties varieties

X

X

Manyvarieties

X

Differentvariety forevery sale

X

their characteristics. He utilizes red and yellow asthe extremes of the spectrum, indicating that theblend of these colors produces orange—in fact,various shades of orange. 'Products in Group Iwould be classified as "red" goods. Products inGroups II, III, IV, and V range from orange toyellow.

A product might not always remain in the sameclassification. It might fall initially into Group IIIor IV; then, as larger numbers of consumers grad-ually accept it, as time and effort spent in purchas-ing is reduced, as consumer needs for service de-cline, and as other characteristics change, the prod-uct may move into Group II, or even Group I. At alater time marketers may succeed in improvingor differentiating a product so that it is again inGroup III or IV.

Product Policy

An important aspect of marketing is the deter-mination of the number of variations in productsthat are to be offered: the degree of product homo-geneity or heterogeneity.

The problem for the businessman is to determinethe effective demand for various product features—for example, style, color, model, quality level, anddurability. The marketer must communicate thisknowledge effectively to designers and productionpersonnel, so that a product line can be developedthat is consistent with the desires of consumers,the state of technology, the firm's capabilities, andother uncontrollable factors.

If the unit value or size of purchase is low, fre-quently the product will be highly standardized;perhaps only on variety within a brand categorywill be offered for sale—for example. Baby Ruthcandy bars or Lucky Strike cigarettes. Likewise, ifthe significance of each individual purchase is low,and if the time and effort spent in the purchasingprocess is low, product variety offered by eachmanufacturer tends to be low. Also, when the rateof technical change is low, few varieties tend to beoffered; manufacturers are able to develop a prod-

uct that remains suitable to consumers for an ex-tended period of time.

Also, technically simple products often tend to bestandardized to few varieties or a single variety.Likewise, a lack of consumer need for service oftenis associated with a standardized product. Thesecharacteristics with a rating of low or very low aretypical of products in Group I.

On the other hand, very high frequency of pur-chase, rapidity of consumption, and broad usage ofthe product by a large number of consumers ofdiverse types, typically are associated with productsin this group. Therefore, as indicated in Table 2,a suitable product policy for products in Group I isto keep very low the varieties of products offeredfor sale.

For products in Groups II, III, and IV, withsuccessively higher values of characteristics 1through 6 and successively lower values of charac-teristics 7, 8, and 9, the number of varieties offeredtends to increase. At the other extreme, for prod-ucts with a very high value for characteristics 1through 6, and a very low value for characteristics7, 8, and 9, the other extreme is reached in respectto the number of varieties offered.

Usually each product is "custom built" or "cus-tom installed" according to the needs of each cus-tomer; every product sold is different from thatsold to another customer.

Marketing Channel Policy

Channel policies include selection of the types ofdistributors and number of each type. Intensity ofdistribution usually refers to the number of dis-tributors utilized, from among those which mightbe suitable. A policy of intensive distributionmeans utilization of all available outlets regardlessof their characteristics.

The selection of distributors according to theircapability and suitability is called selective dis-tribution. A policy of highly selective distributionis understood to mean the utilization of only a few(selected) outlets. The extreme case would be for a

22 Journal of Marketing, January, 1965

TABLE 3

MARKETING CHANNEL POLICY

Intensity of distributionHighly

selective, orModerately Sonxe Considerable direct sale to

Product group Intensive intensive selectivity selectivity customers

IIIIIIIVV

X

manufacturer to utilize no middlemen at all, thatis, to sell directly to consumers or users, and eitherassume the wholesale and retail functions or passthem on to the consumer or user.

Intermediate policies, between the extremes ofintensive and selective distribution, are indicatedin Table 3. Moderately intensive distribution refersto the situation in which products are sold in awide variety of outlets, but somewhat limited tocertain classes. Some selectivity in distributionrefers to the policy of selling products through alarge number of outlets but limited somewhat tothose with desired characteristics. Considerable se-lectivity means that the number and types of out-lets are limited to those with specifically desirablecharacteristics.

When the unit value is very low; when the sig-nificance of each individual purchase is low; whenlittle time and effort are spent in the purchasingprocess; when the rate of technological change islow; when the product is not complex technically;when consumers need little service; and when thefrequency of purchase, rapidity of consumption, andextent of usage are high, highly intensive distribu-tion usually is preferred over selective distribution.At the other extreme, when the values of charac-teristics are just the opposite, highly selective dis-tribution is the rule. Various intermediate valuesof characteristics for products in Groups II, III,and IV suggest a range of policies between theextremes.

Note also that products in Group I typically aresold through a relatively long channel of distribu-tion, while products in Group V often are soldthrough the shortest of channels—direct to useror consumer.''' In fact, in Table 3 the phrase"length of channel" could be used with some valid-ity instead of "intensity of distribution."

Promotional Policy

A major aspect of promotional strategy is todecide how much effort is to be placed on mass

'^ Aspinwall, same reference as footnote 5, at page 635.

media consumer advertising vis-a-vis the amountof effort on personal selling.

For products in Group I, observation suggeststhat the emphasis usi^ally is on consumer adver-tising. In the extreme case a firm may have nosalesforcG at all. On the other hand, products inGroup V depend almost entirely upon personalselling effort, although advertising in trade mag-azines may play a supplementary role. Productsin Groups II, III, and IV require a combination ofconsumer advertising and personal selling, as illus-trated in Table 4.

Pricing Policy

The pricing policy of a firm depends upon thedegree to which a firm has control over price. Ifthe firm has no control, if prices are set "in themarket place" by custom or by any other meansbeyond the control of the firm, there is no need forthe firm to have any pricing policy at all (exceptto sell or not to sell at the going price).

Thus, a starting point in establishing a firm'spricing policy is to specify the degree of controlwhich the firm has over price. It is only after thishas been ascertained that the businessman can tumto the specific tasks of price determination andprice administration.

The degree of control that a firm has over priceof its products seems to vary according to theenumerated product characteristics. As shown inTable 5, firms have little control over prices ofitems in Group I, relatively more control in themiddle groups, and the highest degree of controlin Group V.

Pricing policies are established with regard to(1) the degree of variation from customer to cus-tomer, and (2) the degree of adherence to listprices versus dependence on negotiating the pricefor each sale. As can be observed in Table 6, prod-ucts in Group I usually show little variation inprice, whereas prices of products in Group V changerelatively more frequently and often are substan-tially different for different customers purchasingsimilar products. Concomitantly, the prices of prod-

Product Characteristics and Marketing Strategy 23

Product group

IIIIIIIVV

Product group

IIIIIIIVV

Product group

I

II

III

IV

V

TABLE 4

PROMOTIONAL POLICY

Relative emphasis on mass media consumer advertising andpersonal selling

Sold almostentirely byconsumer

advertising

X

Very little

X

Consumeradvertising

and personalSold selling both

primarily needed; neitherby consumer of predominantadvertising importance

X

X

TABLE 5

PRICING POLICY

Soldprimarily

by personalselling

X

Degree to which seller controls price

Slightly Moderately

X

X

TABLE 6

PRICING POLICY

Significantly

X

Sold almostentirely bypersonalselling

X

Substantially

X

Variations in prices over time, short tenn, seasonally,cyclically, or by custom^er categories.

Stable

X

Slight Moderatevariation variation

X

X

Significantvariation

X

Subst<mtialvariation

X

ucts in Group V are likely to be established inde-pendently for each sale. The prices of products inGroup I are not often negotiated in this manner.

The Marketing Mix

of summary, the marketing mix forGroup I should be substantially as

By wayproducts infollows:

1. Relatively little effort and money spent onproduct development. Since a standard varietyof the product is suitable for a broad group ofcustomers, there is relatively less need for

frequent change than for products in othergroups.

2. Considerable effort spent in achieving inten-sive distribution. Products must be availablequickly and conveniently.

3. Heavy consumer advertising—little or nopersonal selling. Consumers typically are pre-sold by advertising.

4. Relatively little effort and time spent on pric-ing. Firms have little control over price;variations in price are relatively infrequent;prices are not negotiated between seller and

24 Journal of Marketing, January, 1965

consumer.At the other extreme, we would expect to find

that products in Group V usually are:1. Custom built.2. Sold directly from manufacturer to user.3. Sold primarily by salesmen, rather than ad-

vertising.4. Sold on the basis of an individually negotiated

price.The marketing mix of products in Group V would

involve relatively heavy efforts in the area of prod-uct policy; the marketing channel would be short,perhaps direct; personal selling is relatively moreimportant than mass media; and considerable timeand effort are spent on the determination and nego-tiation of price.

The marketing mix of products in Groups II, III,and IV can be characterized as modifications of thetwo extremes.

Conclusions

Knowledge of the product characteristics can beutilized to predict the nature of the marketing mixwhich is suitable for a given product. The predic-tion is, of course, an approximate ideal for a prod-uct with given characteristics. As a practical mat-ter, the ability of a firm to engage in the indicatedmarketing methods may be limited in a number of

ways, such as financial capabilities, or availabilityof personnel with the requisite skills, or manage-ment talent.

The primary contribution of the present theoryis a modest increase in the analytical character ofthe marketing mix. Hopefully the next steps willbe to develop more precise measures of the func-tional relationships among the elements in themarketing mix.

Businessmen may find the present theory handyas a shorthand method of ascertaining an appro-priate marketing mix for a new product. Or ifpolicies not in accordance with the theory are beingfollowed, a businessman may be well advised toreview carefully the reasons for his policies. Itmay even happen that the characteristics-of-goodstheory will point the way to profitable policychanges.

As another example, a firm faced with the needto justify in a court of law its past marketingmethods might use the theory as a broad frameworkto illustrate the reasons for its past decisions. Orthe model might serve to direct the attention ofresearchers into relevant channels, or provide as-sistance to executives in the tasks of organizingmarketing facts as a basis for making marketingdecisions.

•MARKETING MEMO-

The Image and Reality . . .Images can inspire, images can repel. The dissonance between the original and

the idealized image can inspire cooperation toward closing the gap. Left open toowide and long, it becomes an abyss from which the beholder shrinks. Big He orwhite lie, an image is a likeness, no more. Its substance is not the calculated act orits publicity. It is the daily grind, the big things and the little things which all ofus are doing and being asked to do every day.

Powerful communication cannot cover up low stature for long. We may feel wecannot let merit be its own apostle. But those who recognize it are surely its bestboosters. Provided the organization continues to strive toward realizing reasonableideals implicit in the projected image there seems little to complain about.

—Karl H. Stein, "Perspectives of Images,"Business and Society, Vol. 3 (Spring,1963) p. 37.