Understanding Products: Goods, Services, and Examples

What is a Product?

• People purchase a bundle of value and not just the products themselves.
• A product is a combination of physical goods, services, and symbolic attributes designed to meet a customer's needs.

What are Goods and Services?

• Services are intangible tasks fulfilling consumer and business needs.
• Goods are tangible products which customers can perceive through senses like sight, smell, taste, hearing, and touch.
• The goods-services continuum displays a spectrum ranging from a pure good to a pure service.

Most Admired Companies

• Apple, Starbucks, IBM, GE, Google, Amazon, Tatas-Taj, L&T-EAIC, Reliance, WalMart, Infosys, Wipro, and Amul are among some of the most admired companies.

Goods or Services - Product Classes

• Consumer (B2C) Products are intended for use by end consumers.
• Business (B2B) products contribute directly or indirectly to the output of other products for resale and are also called industrial/organizational products.
• Some products, such as refrigerators or courier services, can fall into both B2C and B2B categories.

Development of Product Lines

• A product line is a set of related products.
• There is growth limitations if a company concentrates on a single product.

The Product Mix

• A product mix includes the combination of product lines and individual product offerings.
• Product mix width refers to the number of product lines a firm offers.
• Product mix length refers to the number of different products offered.
• Product mix depth refers to the variations in each product a firm markets.

Product Mix Decisions

• Marketers assess a firm's product mix effectiveness in terms of its depth, length, and width.
• Firms may expand their product mixes by acquiring product lines from other firms.
• Line extension involves developing individual offerings appealing to different market segments, while remaining tightly linked to the existing product line.

The Product Lifecycle

• The Introductory Stage involves products potentially introducing new technology to a product category.
• Technical issues and financial losses are common.
• The Growth Stage involves sales volume increasing as new consumers make initial purchases, and early buyers repeatedly purchase the product.
• In the Maturity Stage, sales of a product continue to grow early on, but eventually plateau as the number of potential customers dwindles.
• The Decline Stage experiences innovations and shifts in consumer preferences, leading to a decline in sales.
• Examples in each stage include:
• Introduction - Fiat Abarth cars and lightweight carry-on bags
• Growth - Free Wi-Fi, HDTV, GPS systems, video conferencing, smartphones, and iPads
• Maturity - MP3 players, laptops, and microwaves
• Decline - Pagers, desktop computers, and landline phones

Extending The Product Lifecycle

• Increasing the purchase frequency among current consumers will boost sales, even without new buyers.
• Attracting new consumers who haven't previously used the product will extend the product lifecycle.

New Products, Successes and Failures

• An insignificant point of difference is a common reason for new product failures.
• Insufficient market analysis and a poor product definition are some reasons for new product failure.
• Too little market attractiveness is a common reason for product failure.
• Products with poor designs, poor usability, or insensitivity to customer needs on critical factors do not succeed.
• Timing is a critical component to new product success.
• The number of raw, unwritten ideas starts out at 3000, which ultimately ends up as just 1 commercially successful product.

Winning Products

• Key factors that affect the product success rate are:
• Having a distinct point of difference or a superior product.
• Having a well-defined product before development commences.
• Synergy, or fit, with the firm's R&D and manufacturing capabilities.
• Quality of execution of technological & marketing mix activities.
• Market attractiveness with large markets and high growth.

Stages in the New-Product Process

• New-Product Strategy Development involves identifying new product niches and what the firm does well in the current market.
• Idea Generation involves developing concepts for products.
• Ideas come from employees, consumers, R&D and comeptitors by using brainstorming.
• Screening and Evaluation requires separating good product ideas from bad ones inexpensively.
• Screening process involved weighted point systems and concept tests.
• Business Analysis identifies the product’s features and its marketing strategy, then makes financial projections
• This involves economic, marketing, production, legal, and profitability analyses.
• Development involves creating the prototype product, and testing it in the laboratory and on consumers.
• Market Testing tests the prototypes from the Development stage on a limited scale.
• This involved simulated and test markets.
• Commercialization is the final process of positioning a product into the marketplace.

Competitor Advantage

• Is an advantage gained by offering consumers greater value than competitors offer.

Competitor Map

• Includes a visualization of direct and indirect competitors.
• Example, Eastman Kodak, includes camera manufacturers like Olympus and Fuji, retailers of film, and companies like Shutterfly and Adobe that share photos.

Generic Strategies (Porter)

• Overall Cost Leadership involves low production and distribution costs.
• Differentiation involves creating a unique product line and marketing program.
• Focus involves concentrating efforts on serving select market segments.

Competitive Strategies

• Competitive positions are classified as market leader, market challenger, market follower, and market nicher.
• Market leaders can expand the total demand by encouraging greater product usage, finding new users, and promoting new product uses.
• Protecting market share and expanding market share are common goals.
• A market challenger can attack the market leader, a smaller firm, or a regional firm.
• A sustainable competitive advantage is key to success.
• Attacks can be full frontal or indirect
• Market followers will focus on improving profit instead of market share.
• Market followers can learn from market leaders.
• Serving market niches by targeting sub-segments. -Good strategy for small firms with limited resources

Balancing Customer and Competitor Orientation

• Companies may become excessively competitor-centered, at the expense of customer focus.
• Types of companies:
• Competitor-centered companies
• Customer-centered companies
• Market-centered companies

Threat of Substitution

• Determined by buyer propensity to substitute, relative price performance of substitutes, buyer switching costs, and perceived differentiation of the product.

Primary Characteristics of Segments Segmentation

• Segmentation bases include characteristics describing why segments differ.
• Descriptors are characteristics helping find and reach segments.
• Business Markets consider industry, size, location, and organizational structure.
• Customer Markets consider age/income, education, profession, lifestyles, and media habits.

Business Markets - Macro/Micro Segments

• Macro-segments is the first stage, the "rough cut", considering Industry & Firm size.
• Micro-segments, the second stage, the "fine cut", considers different customer needs, wants, and values within each macro-segment.

Relevant Segmentation

• Geography may be a relevant segmentation descriptor.

Irrelevant Segmentation

• Segmentation by education is irrelevant.

Variables to Segment and Describe Markets

• Consumer markets can be segmented by needs, wants, demographics, lifestyle, usage, and brand loyalty.
• Industrial markets are segmented by size, location, technology, and purchasing procedures.

Segmentation Strategy

• Segmentation is critical for understanding customers and their choices.

STP as Business Strategy

• Segmentation involves identifying segmentation bases and segmenting the market, then developing profiles of the resulting segments.
• Targeting involves evaluating the attractiveness of each segment and selecting target segments.
• Positioning involves identifying possible positioning concepts for each target segment, selecting the chosen concept, developing it, and communicating it.
• These strategies will create and claim value.

Explore the definition of a product as a bundle of value, encompassing physical goods, services, and symbolic attributes. Differentiate between tangible goods and intangible services, understanding the goods-services continuum. Examples of admired companies across various sectors are also provided.