Product EC

UNIT III - The Product Introduction A product is anything that is offered to a market for attention, acquisition, use, or consumption to satisfy the needs and wants of customers. It is the core element of marketing because it provides value to consumers. A product can be a physical good, service, idea, place, person, organization, or experience. According to Philip Kotler: "A product is anything that can be offered to a market to satisfy a want or need." For example:  A smartphone is a physical product.  Banking is a service product.  Online education is a digital service.  Tourism is an experience product. Definition William J. Stanton: "A product is a set of tangible and intangible attributes, including packaging, color, price, quality, brand, and seller's services, which satisfy the buyer." Characteristics of a Product 1. Satisfies Customer Needs o Every product is created to fulfill a specific need or solve a problem. 2. Provides Utility o Products create value by providing utility in terms of form, place, time, and possession. 3. Can Be Tangible or Intangible o Tangible: Mobile phone, furniture, books. o Intangible: Insurance, education, consultancy. 4. Has a Life Cycle o Every product passes through introduction, growth, maturity, and decline stages. 5. Offers Value o Customers compare the benefits received with the price paid. 6. Can Be Modified o Products are continuously improved according to customer preferences and technological developments. 7. Has Brand Identity o Products are distinguished through brand names, logos, packaging, and trademarks. Levels of a Product Marketing experts identify five levels of a product. 1. Core Benefit The fundamental benefit the customer seeks. Examples:  Hotel → Rest and comfort  Car → Transportation  Laptop → Computing 2. Basic Product

The physical product with essential features. Examples:  Hotel room  Laptop  Refrigerator 3. Expected Product Features customers normally expect. Examples:  Clean hotel room  Free Wi-Fi  Warranty on electronics 4. Augmented Product Additional services or benefits beyond expectations. Examples:  Free installation  Home delivery  Extended warranty  24×7 customer support 5. Potential Product Future improvements and innovations. Examples:  AI-enabled smartphones  Self-driving vehicles  Smart home appliances Components of a Product A product consists of several elements. 1. Brand Name Helps customers identify the product. Examples:  Apple  Samsung  Nike 2. Quality Determines customer satisfaction. High-quality products increase customer loyalty. 3. Design A good design improves functionality and appearance. Example: Apple products are known for elegant design. 4. Features Additional functions increase product value. Example:  Face recognition

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Fast charging Water resistance

5. Packaging Protects the product and attracts buyers. Functions:  Protection  Convenience  Promotion  Identification 6. Labeling Provides information about:  Ingredients  Manufacturing date  Expiry date  Instructions  Price 7. Warranty Provides assurance regarding product quality. Example:  1-year replacement warranty. 8. After-Sales Service Services provided after purchase. Examples:  Installation  Repair  Maintenance  Customer support Importance of a Product Products are important for both businesses and consumers. Importance to Consumers  Satisfies needs and wants  Improves quality of life  Saves time  Provides convenience  Offers value for money Importance to Business  Generates revenue  Builds brand image  Creates competitive advantage  Increases customer satisfaction  Ensures business growth Types of a products Products are broadly classified into two major categories based on the purpose for which they are purchased:

1. Consumer Products 2. Industrial Products 1. Consumer Products Meaning Consumer products are goods and services purchased by individuals or households for personal use and not for resale or further production. Definition According to Philip Kotler: "Consumer products are products bought by final consumers for personal consumption." Characteristics of Consumer Products  Purchased for personal or family use.  Usually bought in small quantities.  Decision-making is influenced by income, taste, fashion, and advertising.  Widely available through retail outlets.  Demand depends on consumer preferences. Types of Consumer Products Consumer products are further classified into four categories. A. Convenience Products Meaning Convenience products are goods that consumers purchase frequently, immediately, and with minimal effort or comparison. Characteristics  Low-priced items.  Purchased regularly.  Easily available.  Little planning required.  Low customer involvement.  Frequently advertised. Examples  Toothpaste  Soap  Milk  Bread  Newspapers  Soft drinks  Biscuits Marketing Strategy  Intensive distribution  Attractive packaging  Competitive pricing  Mass advertising  Wide retail availability Advantages  High sales volume  Frequent purchases  Strong brand recognition B. Shopping Products

Meaning Shopping products are items that consumers purchase after comparing quality, price, features, and style. Characteristics  Higher price than convenience products.  Purchased less frequently.  Customers compare alternatives before buying.  Moderate customer involvement.  Sold through selected retail stores. Examples  Furniture  Television  Mobile phones  Clothing  Home appliances  Watches Marketing Strategy  Selective distribution  Product demonstrations  Sales assistance  Advertising emphasizing quality and features Advantages  Higher profit margins  Better customer relationships C. Specialty Products Meaning Specialty products possess unique characteristics or strong brand identity, leading customers to make a special effort to purchase them. Characteristics  High-priced products.  Strong brand loyalty.  Unique features.  Customers are willing to travel or wait to obtain them.  Limited distribution. Examples  Rolex watches  Ferrari cars  Apple MacBook Pro  Louis Vuitton handbags  Luxury perfumes Marketing Strategy  Exclusive dealerships  Premium pricing  Brand image building  Personalized customer service Advantages  High profitability  Strong customer loyalty  Prestigious brand image

D. Unsought Products Meaning Unsought products are those that consumers do not normally think about purchasing or may not even know exist until a need arises or they are promoted. Characteristics  Low consumer awareness.  Purchase occurs only when needed.  Requires personal selling and promotion.  Often associated with emergencies or future planning. Examples  Life insurance  Funeral services  Fire extinguishers  Emergency medical equipment  Blood donation services Marketing Strategy  Awareness campaigns  Personal selling  Educational advertising  Direct marketing Advantages  Essential during emergencies.  Stable long-term demand in specific markets. 2. Industrial Products Meaning Industrial products are goods and services purchased by businesses for production, operations, resale, or organizational use, rather than for personal consumption. Definition Industrial products are purchased to assist in producing other goods and services or to support business operations. Characteristics  Purchased by organizations.  Larger order quantities.  Technical evaluation before purchase.  Emphasis on quality, reliability, and cost.  Long-term supplier relationships are common. Types of Industrial Products A. Raw Materials Meaning Raw materials are natural resources or agricultural products used in manufacturing finished goods. Examples  Cotton  Iron ore  Timber  Wheat  Crude oil  Rubber

Characteristics  Directly become part of the finished product.  Purchased in bulk.  Quality is critical. B. Manufactured Materials and Parts Meaning These are processed materials and components that become part of the finished product. Examples  Steel sheets  Glass panels  Electronic chips  Car tyres  Engine components Characteristics  Further processed or assembled.  Manufactured to specifications.  Important for production quality. C. Capital Items Meaning Capital items are long-term assets used in production and business operations. Examples  Factory buildings  Machinery  Computers  Industrial robots  Warehouses Characteristics  High investment.  Long useful life.  Purchased infrequently.  Require careful evaluation. D. Supplies and Business Services Meaning These support daily operations but do not become part of the finished product. Examples Supplies  Cleaning materials  Office stationery  Lubricants  Printer ink Business Services  Maintenance services  Legal services  Accounting services  Security services  IT support Characteristics

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Regularly consumed. Lower cost. Essential for efficient operations.

Product Life Cycle (PLC) and Its Stages Introduction The Product Life Cycle (PLC) is a marketing concept that explains the journey of a product from its creation to its withdrawal from the market. Like a living organism, every product has a life cycle. It is introduced into the market, grows in popularity, reaches maturity, and eventually declines due to changing customer preferences, technological advancements, or increased competition. Understanding the Product Life Cycle helps managers develop effective marketing strategies, allocate resources efficiently, and make informed decisions regarding product improvement, pricing, promotion, and distribution. Definition According to Philip Kotler: "The Product Life Cycle (PLC) is the course of a product's sales and profits over its lifetime." Stages of the Product Life Cycle The Product Life Cycle consists of five stages: 1. Product Development Stage 2. Introduction Stage 3. Growth Stage 4. Maturity Stage 5. Decline Stage 1. Product Development Stage Meaning The Product Development Stage is the first stage of the Product Life Cycle. During this stage, the company develops a new product idea and converts it into a marketable product. Since the product has not yet been launched, there are no sales or profits. This stage involves research, product design, prototype development, testing, and market analysis. Characteristics  No sales revenue.  High research and development (R&D) expenditure.  Product ideas are evaluated and tested.  High risk because many products fail before launch.  Focus on innovation and customer needs. Example A company designing and testing a new AI-powered laptop before introducing it to customers. 2. Introduction Stage Meaning The Introduction Stage begins when the product is launched in the market for the first time. Customers become aware of the product, but sales are generally low because acceptance is gradual.

The company spends heavily on advertising and promotional activities to create awareness and encourage trial purchases. Characteristics  Low sales volume.  High promotional and advertising costs.  Little or no profit.  Limited competition.  Slow customer acceptance.  Limited product availability. Marketing Strategies Product Strategy  Offer a high-quality product.  Introduce attractive packaging.  Provide warranties and customer support. Pricing Strategy Two pricing methods are commonly used: a) Price Skimming  High introductory price.  Suitable for innovative products.  Helps recover development costs quickly. b) Penetration Pricing  Low introductory price.  Attracts a large number of customers.  Helps gain market share quickly. Promotion Strategy  Heavy advertising.  Product demonstrations.  Free samples.  Sales promotions.  Social media marketing. Distribution Strategy  Limited distribution.  Selection of reliable dealers.  Focus on key markets. Example A newly launched smartwatch entering the market. 3. Growth Stage Meaning The Growth Stage begins when customers accept the product and demand increases rapidly. Sales rise significantly, and the business starts earning profits. Competitors notice the product's success and introduce similar products into the market. Characteristics  Rapid increase in sales.  Increasing profits.  Growing customer acceptance.  More competitors enter the market.  Wider distribution.  Improved production efficiency. Example

Electric vehicles (EVs) experiencing rapid growth in many markets. 4. Maturity Stage Meaning The Maturity Stage is the longest stage of the Product Life Cycle. Sales reach their highest level, and the market becomes saturated because most potential customers already own the product. Competition is intense, and companies focus on retaining existing customers. Characteristics  Highest sales volume.  Stable or slowly declining profits.  Market saturation.  Intense competition.  Frequent price competition.  Product differentiation becomes important. Example Products such as toothpaste, detergents, and packaged soft drinks. 5. Decline Stage Meaning The Decline Stage occurs when product sales and profits decrease due to changing technology, changing consumer preferences, or the introduction of better alternatives. The company must decide whether to continue, modify, harvest, or discontinue the product. Characteristics  Declining sales.  Falling profits.  Reduced customer demand.  Fewer competitors.  Excess production capacity. Reasons for Decline  Technological advancement.  Changing customer preferences.  Better substitute products.  Increased competition.  Government regulations. Example DVD players and fax machines after the widespread adoption of streaming services and digital communication.