Understanding Products and Classifications

What is a Product?

• Product refers to anything that can be offered in a market for acquisition, usage, or consumption to satisfy a need or want. This includes services, events, persons, places, organizations, ideas, or a combination of these.
• Services are activities, benefits, or satisfaction offered for sale, essentially intangible and not resulting in ownership.
• Experiences embody the customer benefits from purchasing a product or service.

Tangible vs. Intangible Products

• Tangible products are touchable, like goods.
• Intangible products are intangible, like services, and are not stored but available only at the time of usage.

Product Classifications

• Durable Goods: Tangible products used repeatedly over a long period.
• Non-Durable Goods: Tangible products consumed quickly within one or a few uses.
• Services: Characterized by intangibility, inseparability (cannot be separated from the provider), variability (quality varies based on provider, time, place, and method), and perishability (cannot be stored).

Levels of Products

• Core Benefits: Represent the fundamental problem-solving benefits sought by the customer.
• Actual Product: Includes the product's design, brand name, and packaging, delivering the core benefits.
• Augmented Product: Encompasses additional services or benefits surrounding the actual product.

Product Classification

• Consumer Product: Products and services bought by final customers for personal use.
• Industrial Product: Products purchased by individuals or organizations for further processing or business use.

Consumer Product Classification

• Convenience Product: Purchased frequently, immediately, with minimum comparison and effort. Example: Sugar, candy, newspaper.
  • Staple Product: Bought regularly for regular use. Example: Flour, rice, bread.
  • Impulse Product: Bought with minimal planning and effort. Example: Newspapers, magazines, candy.
  • Emergency Product: Purchased during emergencies or critical situations. Example: Plasters, umbrellas.
• Shopping Product: Carefully compared based on suitability, quality, price, and style. Example: Furniture, clothing, handphones.
  • Homogeneous Product: Products viewed as essentially similar, with customers primarily seeking the lowest price. Example: Clothing, accessories.
  • Heterogeneous Product: Have unique features, varying quality and price, making comparisons difficult. Example: Televisions, handphones.
• Specialty Product: Unique characteristics or brand identification, with consumers making a special purchase effort. Example: Ferrari car, Rolex watch, Birkin Hermes handbag.
• Unsought Product: Products consumers are unaware of or do not usually consider buying. Example: Life insurance, Funeral services, Blood donations.

Industrial Product Classification

• Materials and Parts: Raw materials (wheat, fruits, fish, petroleum) and manufactured materials/parts (iron, cement, tires) sold directly to industrial users.
• Capital Items: Industrial products aiding production/operations.
  • Installations: Buildings, generators, elevators.
  • Accessory Equipment: Lift trucks, fax machines, desks.
• Supplies and Services:
  • Supplies: Operating supplies (paper, coal) and repair and maintenance items (nails, paint).
  • Business Services: Maintenance/repair services (window cleaning, computer services), business advisory services (consultations, advertising).

Product Life Cycle Strategies

• Product Life Cycle (PLC): The stages a product's sales and profits evolve through over its lifespan.
  • Product Development: New product idea development; zero sales; high investment costs; negative profits.
  • Introduction: New product launched, slow sales growth, little to no profit, high distribution and promotion expenses.
  • Growth: New product satisfies the market, sales increase, new competitors emerge, price stability/decrease, increased profits, promotion and manufacturing costs benefit from economies of scale.
  • Maturity: Long-lasting stage, slowdown in sales, many suppliers, substitute products, overcapacity leads to competition, marketing mix modification necessary.
  • Decline: Sales decline or level off, product may need to be maintained, harvested, or dropped.

Modifying Strategies in the Product Life Cycle

• Market Modifying: Increase consumption through targeting new users, increasing usage by existing customers, or entering new market segments.
• Product Modifying: Changing product characteristics (quality, features, styles, packaging).
  • Improve product quality and performance (durability, reliability, speed, taste).
  • Improve styling and attractiveness (flavors, colors, ingredients, packaging).
• Marketing Mix Modifying: Adjusting one or more marketing mix elements: product, price, promotion, or distribution channels.