Product Concepts and Classifications

Concept and Classification of Product

• A product is any good or service offered for sale to satisfy a consumer's need or want
• It is the central focus of a business's marketing efforts
• Products may be classified based on different criteria

Tangible vs. Intangible Products

• Tangible products are physical goods, such as automobiles and clothing
• Intangible products are non-physical services, such as insurance and banking

Consumer vs. Industrial Products

• Consumer products are for personal or household use
• Industrial products are used in the production of other products or services

Durability

• Durable products can be used repeatedly over an extended period, such as furniture and automobiles
• Non-durable products are consumed or used up quickly, such as food and beverages

Level of Processing

• Raw materials are basic products obtained from nature, such as agricultural products and crude oil
• Manufactured products undergo processing or transformation, such as electronics and clothing

Use and Purpose

• Convenience products are inexpensive and frequently purchased items requiring minimal effort, such as candy and soft drinks
• Shopping products are less frequently purchased, involving more comparison before purchase, such as furniture and clothing
• Specialty products are unique or highly differentiated, requiring special effort to obtain, such as luxury goods and collectibles

Business Market Classification

• Installations are capital goods, like machinery and equipment, used to produce other goods or services
• Accessory equipment includes portable tools and office equipment used in production or delivery
• Raw materials are processed or transformed into finished products
• Supplies are consumable items, such as office or cleaning materials
• Business services are used in production or delivery and include consulting, advertising, or transportation

Management of Product Offerings

• Effective management of product mix is crucial for meeting customer needs and maintaining a strong brand identity

Product Mix

• The product mix refers to the entire range of products offered by a company
• It is the combination of all product lines and products offered to customers
• Product mix is designed to meet the diverse needs of the target market

Product Line

• A group of closely related products that serve a similar purpose, sold to the same customer group, or within a specific price range
• Apple's product lines include iPhones, iPads, and Macs

Line Depth

• Refers to the number of different variants or models within a product line
• The iPhone line has different models varying in features and storage capacities

Line Consistency

• Degree of similarity or relatedness among products within a product line
• High consistency means products share many common characteristics, making it easier for customers to recognize the line consistency
• End-use or application consistency: products within the line serve the same or similar end-use or application
• Design or style consistency: products within the line have a consistent design or style, often following a recognizable brand identity
• Price consistency: products within the line are priced within a similar range or follow a logical pricing structure
• Quality or performance consistency: products within the line offer similar levels of quality or performance

New Product Development Process Stages

• Organizations follow a series of steps to bring a new product idea to market
• Process involves ideation, concept development, product testing, launch, and post-launch evaluation

Idea Generation

• The initial step of generating new product ideas through various sources like customer feedback, market research, and competitor analysis

Idea Screening

• The organization evaluates and screens ideas based on criteria like market potential, fit with company goals, and technical feasibility

Concept Development and Testing

• Selected ideas are developed into detailed concepts with features, benefits, and target market
• These concepts are tested with potential customers through focus groups and surveys to assess viability

Business Analysis

• The organization evaluates commercial potential through market analysis and financial projections

Product Development

• Company proceeds with detailed designs, prototypes, and extensive testing to meet specifications and quality standards

Test Marketing

• Conducted before a full launch, product testing is introduced to a limited market for feedback and refinement

Commercialization

• Finalizing the production process and distribution channels, and implementing marketing strategies

Product Launch

• Introducing the new product to the market through marketing and promotional activities

Post-Launch Evaluation

• Monitoring performance, gathering feedback, and making is essential

Product Adoption Lifecycle

• Product adoption lifecycle: describes the stages consumers progress through from first learning about a new product to eventually becoming loyal

Awareness

• Creating product awareness through advertising, public relations, and social media

Interest

• Potential customers develop interest and attention through marketing

Evaluation

• Assessing the product's attributes, performance, and suitability.

Trial

• Focus on removing barriers to trial, such as offering money-back guarantees

Adoption

• Consumers decide to adopt the new product, perceiving superior value

Post-Adoption Evalution

• Evaluate satisfaction and experience, encourage purchases, brand loyalty and feedback

Consumer Adoption Process

• Individuals progress from learning about the product to making a purchase decision and integrating the product into their regular use

Relative Advantage

• Consumers are more likely to adopt a new product if they perceive it as offering significant advantages over existing alternatives in terms of performance, convenience, or cost-effectiveness

Compatibility

• New product aligns with consumers' existing values and behavior influences adoption

Complexity

• How easy to use the new product is, has a direct effect on adoption

Trialability

• Free samples, trial offers, or money-back guarantees to reduce perceived risk and encourage trial and adoption

Observability

• Generating social influence and accelerating adoption through the visibility

Social Influence

• The influence of social networks, opinion leaders plays a part in shaping consumer attitude

Factors Affecting Adoption Speed

• Clearer product benefit results in faster adaption
• How well a product integrates impacts user acceptance
• Easy to learn produces are most likely to be taken in quickly
• Test trials can accelerate adoption

Product Life Cycle Stages

• Each stage presents different challenges, opportunities, and strategies for the business

Introduction Stage

• Focus is to create product awareness and build initial demand

Growth Stage

• Maximize market share and strengthen product position against new competitors

Market Segmentation

• Segment the market based on customer needs, preferences, and usage patterns to identify opportunities

Product Line Extension

• Introduce variety to extend product line cater to different customers

Promotional Tactics

• Shift efforts toward brand-reinforcement and customer retention

Decline Stage

• Characterized by product innovation and re positioning

Product Innovation and Improvement

• Improve product functions and design for cutomer satisfaction

Rebranding and Repositioning

Align branding with current industry and customer perspective

Price Determination

• Cost: Cost of production, distribution influences pricing
• Demand: Influences pricing, businesses can charge higher prices if demand is up
• Competition: Affects pricing, business need to price competitively
• Target market influences decisions, high end target market influences

Major Pricing Objectives

• Profit maximization: Aim is to set the highest possible profit
• Market share growth: Lower prices to control market
• Target ROI: Achieve the investment via dev and marketing
• Penetration Pricing: Lower initial prices to gain market share

Internal Factors Affecting Price

• Cost, PLC, Marketing etc, all affect decision

External Factors Affecting Price

• Market Demand
• Competition
• Economic Factors
• Govt Regulations
• Consumer perceptions

Care Needed in Cutting/Raising Prices

• Effect on profitability
• What will the competitive dynamics face
• Customer perception and value?
• Maintain long term relationships