Module 3. Elements of marketing mix – I. product

Lesson 12


12.1 Introduction

Consumers have needs. They purchase products to satisfy the needs. A product is a physical item offered by an organization to consumers to satisfy their needs and wants. The purchased products possess both tangible characteristics (physical product itself) and also intangible aspects like warranty, image etc. it is a part of benefit comprising of key product features and associated services. A product is referred to as need satisfying entity. A product is the focus of marketing plan of an organization and is responsible for success or failure of the organization. A product can take variety of forms such as physical goods (Book), services (banks), Experiences (mountain expeditions), events (football world cup), proposition (Hinduism), places (Karnal), nations (Sri Lanka), properties (farm house), organizations (National Dairy Research Institute), and information (website).

12.2 Components of Product

A product purchased by consumer is not simply a physical entity. Product provides utility, but it is not only its function. Consumers get satisfaction from non utility features of products also. Following are the major components of a product: Basic constituents, associated aspects, brand name, packaging, label, product line and product mix etc.

12.2.1 The core or the basic constituents of the product

This is the first component in the total personality of any product. For example pears soap possesses total product personality. It is presented as soap with special qualities. The oval shape, the brown colour, special fragrance, brand name, the price, the most important thing is its transparency and its positioning as a special soap for winter season etc. All such aspects add up to product personality. In this example the basic product is soap. The total product personality is mainly dependent upon basic product. If it bad, it is not possible to develop a good final total product.

12.2.2 The associated aspects

These are the aspects which positively contribute to the total product personality. Marketing organizations generally use associated product aspects to increase total personality of the product. In case of ‘Pears soap’ example, the transparent nature of the soap, oval shape, brown colour and special fragrance are the associated aspects of the product.

12.2.3 Brand name

It is defined as the name, term, symbol or design or combination of them responsible for differentiating products and services offered by different organizations. Brand name is very useful in promotion.

12.2.4 The packaging

The main function of package used to be ‘To protect the product’. Packaging prevents spoilage and aids in handling of the product at various points of storage in distribution channel. In today’s competitive world, the package also carries out the major function of sales promotion. The packaging material, its colour size and finish, its possibility to gain use, label of the package etc influence the aasthetics and sales appeal of the product.

12.2.5 The label

It supplies the information about the product in written form so that consumer become aware about the product, its ingredients, its characteristic features, its shelf life, method of storage and other important details. Now a day the information is supplied in machine recordable bar code form.

12.2.6 Product line and product mix

For an organization producing many products, the term product mix and product line are commonly used. Product mix denotes list of all the products produced by the organization. Product line refers to group of similar products. For example, product mix of TATA group of companies includes products ranging from automobiles, food items, insurance, communication etc. Automobile segment of TATA group consists of product lines of trucks, cars etc.

12.3 Levels of Products

Each product consists of different levels. Knowledge of these levels helps marketing organization for appropriate positioning of their products.

12.3.1 Core product

This indicate the reasons for purchasing a product by the consumers, for example a farmer is purchasing a tractor for performing the agricultural operations in the fields, a middle income family purchase economy car for travelling with family and a higher income person purchase car as a status symbol.

12.3.2 Basic product

This includes the physical tangible aspects of the product. An economy car should have minimum additional accessories to keep price of the car low and a fuel efficient engine. A luxury car should have additional accessories.

12.3.3 Expected product

This includes normal expectations from a product by the consumers. An owner of luxury car expects that, the car should possess all the latest accessories and a good look which differentiates it clearly from the other mid segment and economy segment car.

12.3.4 Augmented product

This level includes the additional features which exceed the consumers’ expectations.

12.3.5 Potential product

This includes all the possible transformations and due to addition of all possible features is called a potential product. In case of luxury car, the features such as move with the help of computer, it can also be air lifted and fly in traffic jam, and many more.

12.4 Classification of Products

Products can be classified based upon durability, tangibility and user type i.e. who uses the product. Durability indicate the approximate life for which product can be safely used by consumer. Tangibility tells about the physical characteristics of product. User type indicate the type of consumer i.e. whether individual consumer or industrial consumer.

12.4.1 Classification based upon durability and tangibility Non durable goods

These are tangible goods generally consumed in one or very few uses. Due to its frequent use, these products are purchased very often. Marketers need to ensure that products of this category are widely available, only small margin is kept above cost of production and heavily advertised. The examples include household consumption goods, ready to eat food items etc. Durable goods

These are tangible goods which generally last for many years. Manufacturers keep higher margins on them. As they are used for more years, guarantee and warrantees are associated with them. For example, video instruments, music systems, automobiles. Services

These are intangible, non-separable, variable and perishable in nature. For example, automobile repair, medical professionals services, teaching, etc.

12.4.2 Consumer goods

These are classified, based upon shopping habits, into following categories: Convenience goods

These include goods which are frequently and instantly purchased without making an elaborate purchasing effort. For example, newspapers, washing and bathing soaps, toiletries etc. Convenience goods are further categorized into following three types.

Staple goods: Goods which are purchased by consumers regularly such as tooth paste and soaps.

Impulse goods: Goods which are purchased by consumer on an impulse, immediately without carrying out any search effort or any planning. For example, chocolates, wafers.

Emergency goods: Goods which are purchased when an urgent need arises. For example, seasonal clothes like rain coat, woolen cloths.

12.4.3 Shopping goods

Goods which are purchased by consumers after undergoing a process of comparison of alternatives on aspects of price, quality, suitability, style etc. For example, second hand automobiles, home furniture. Shopping goods can be homogeneous or heterogeneous. Goods which have same quality but variable price to facilitate comparison on the basis of price by consumers are referred as homogeneous shopping goods.

Goods which have different product features which help consumers to differentiate goods and help make a purchase decision are called heterogeneous shopping goods. Specialty goods

Goods which posses unique characteristics or brand identification which induce many consumers to make a special purchase effort. For example, man’s cloth-wear, automobiles, electronic goods. As each brand is unique, there is no comparison and consumer will wait and even go too far off locations (dealers) to purchase the good. Unsought goods

Goods which are not known by the consumers or normally they do not think of purchasing it. Thus, it is essential for marketers to undertake advertising and other selling support activity. For example, encyclopedias, fitness equipment, etc.

12.4.4 Industrial goods classification

In industries, goods are produced. For production of goods, various raw materials, equipments, services etc are required. The output of one industrial unit may become raw material for any other industrial unit or it may reach consumer for final consumption. The goods used in industrial production are classified into following categories: Materials and parts

These are the goods which enter into the production process and become part of manufacturer’s product. They can be natural raw materials or manufactured materials and component parts. Natural raw materials include different agricultural products (crops output, fruits) or animal products (marine products). Material parts may include various types of metal components like aluminum, copper and component parts like nut, bolt, rivets, and other such items. Capital items

These include long lasting goods which help in manufacture of other goods in the production process. They are of two types: installations (buildings and heavy equipment) and equipment (hand tools, computers). Supplies and business services

These include short term goods which help in manufacture of other goods in the production process. They are of two type viz. maintenance & repair items (painting) and operating supplies (stationery, lubricants, etc.).

12.5 Management of Product Policy

Making decisions for product policy is the focus of product management. Product policy management involves finding answers for the following questions: Types of products to be manufactured? Which market segments are to be targeted? What should be width of product mix and length of each product line? What should be the product positioning strategy? What should be the policy regarding brand?

Management of product policy includes appraisal of product line and individual product, product differentiation, product positioning, brand decisions, packaging decisions, new product development and managing product life cycle.

12.5.1 Product line appraisal and individual products

A business organization and its products are affected by environmental changes. No product can regain supremacy for all the time. Competition and consumer preferences may reduce the product’s sale. It is necessary for marketing organization to conduct continuous product line appraisal and implement necessary modifications, like introducing new products and removal products which have entered the decline stage and there is no possibility of revival.

12.5.2 Product differentiation decisions

This involves making product/brand distinct and different from the competing brands. Differentiation can be achieved on product, channel or promotion. There is maximum scope for product differentiation. This aims at introducing certain real or psychological differences in comparison with other competitive products. The main task for the marketer is to see that consumers must perceive the product as different from other competing products by large number of consumers. Product differentiation strategy is used by almost all firms as it helps to compete with others on non price criteria.

12.5.3 Product positioning

It means fixing the exact place of the product in the target market. It involves decision with respect to how and around which distinguishing features; the product offer has to be concluded and communicated to the buyers. In applying product positioning the organization performs SWOT analysis (Strength, Weakness, Opportunities, threats) of one’s own organization as well as that of the competitors so as to obtain the best possible position for their product. Factors like luxury, economy, fashion etc are used by organizations for positioning.

12.5.4 Brand decision

These decisions are important part of product management policy. With this the organization creates assets from brand name. In today's competitive world, brand names are very much essential for promotional purpose. Without brand name, promotional aspects cannot be carried out. For creating a brand, first of all a name is chosen to give product identity. For purpose of increasing recognition, a symbol is provided with name. Then the major task involves developing unique image for the brand and to build its personality over the long term. To build brand personality is a very difficult task. In different product categories only some brands become successful. Uninterrupted hard work and a strong support of top management to marketing programme are essential to make a brand established in the market. Successful brands become asset of the organization and help to earn higher profits for a long period. In branding decision, selecting an appropriate brand name is very crucial. Brand name should be distinct, easy to spell, recognize and remember. For example the brand name 'Amul' stands for Anand Milk Union Limited as well as it is related with Sanskrit word Amulya i.e. precious.

12.5.5 Packaging decision

In today’s competitive world, packaging material has become an important decision criteria for organizations. With increase in competition, the organizations rely on innovative packaging materials to create a distinctive edge. Value addition and more benefits are produced by package to the consumers. Package materials, package asthetics and package structure and convenience are the important factors to be considered in making packaging decisions. A variety of materials can be used as packaging material considering its suitability with the product and cost. The type of packaging materials include paperboard cartoons, paper bags, corrugated boards, metal containers (Tin), Aluminum foils, low density and high density polyethylene metalized polyester film. Shape and size of package, the type of material, the finish, colour, labeling, branding on the package are important package aesthetic factors increasing the sales appeal. Package size and convenience is also responsible for product appeal.

New Product development and managing product life cycle are also the most important criteria to be considered in product management policy which are discussed in further lessons.

Last modified: Wednesday, 29 August 2012, 10:45 AM