Principles of Marketing

1. Outcome 3
PRODUCT
Principles of Marketing

2. What is a Product?
A product is anything that
can be offered to a market to
satisfy a need or want.

3. What is a Service?
A service is a form of
product that consist of
activity or benefit that one
party can offer.

4. Goods Services
Tangible( A thing) Intangible (an activity or process)
Production and distribution separated
from consumption
Production, distribution, and
consumption are simultaneous
Homogeneous • Heterogeneous
Mostly non perishable, can be kept in
stock
Perishable, cannot be kept in stock
• Core value produced in a factory • Core value produced in buyer-seller
interactions
• Customers do not participate in the
production
Customers participate in production
Transfer of ownership • No transfer of ownership

6. Product Classification
Convenience
Unsought
Shopping
Specialty
1. Consumer Products

7. Product Classification
Materials and parts
Supplies/
business services
Capital items
2. Industrial Products

8. Consumer products
Product and services bought by final consumer for
personal use.

9. Convenience products
Convenience products are consumer products
that the customer buys frequently, immediately with
a minimum of comparison and buying effort. EX:
Match boxes, soft drinks, candles, socks, etc.

10. Shopping Products
Shopping Products are less-frequently- purchased
products that customers compare carefully on
suitability, Quality, Price and Style. Ex: Home
appliances, automobiles, etc.

11. Specialty Products
Specialty Products are Consumer products with
unique characteristics or brands and the buyers will
make a special purchase effort. Ex: Luxury goods
like, Mercedes Benz etc.

12. Unsought products
Unsought products are consumer products that
the consumer either does not know about or knows
about but does not normally think of buying. Ex:
insurance.

13. Industrial Products
Industrial Products: Products brought by
individuals or organizations for further processing or
for use in conducting business. Ex: Ball bearings,
nuts & bolts, screws, machinery, raw materials, etc.

14. Product Decisions
1. Product Attributes– quality, features, style, and design.
2. Branding – name, term, symbol, or design or
combination of these to identify goods and services, and to
differentiate them from competitors.

15. 3.Packaging – activity of designing and producing
the container or wrapper for a product.

16. 4. Labeling – simple tags attached
 to the products.
5. Product Line – group of product that are closely related;
function in a similar manner; sold to the same type of
customers; marketed through the same type of distribution
channels.

17. Product line

19. https://www.youtube.com/watch?v=i2xRUE0e8q4

20. New Product Development
Development of original products, product
improvements, product modification and new brands
through the firm’s own brand and effort.

21. IDEAPAINT

22. EXAMPLES
 Following are some common examples of product development.
 Packing wheat flour in retail bags for household consumption.
 Packing cooking oil in retail pouches for
 household consumption.
 Modify desktop computers into
light-weight laptops to ease portability.
 Convert a simple airplane into
a fighter jet to achieve a greater speed.

23. Major stages in New Product Development
1. Idea generation
2. Idea screening
3. Concept development and concept testing
4. Marketing strategy development
5. Business analysis
6. Product development
7. Test Marketing
8. Commercialization

24. 1. Idea Generation
Search many ideas through internal sources and
external sources such as:
 Employees
 Research and Development
 Management
 Customers
 Competitors
 Suppliers

25. 2. Idea Screening
Screening new product ideas in order to spot the good
and drop the poor ones.

27. 3. Concept Development and Concept
Testing
Testing new
product concept
with a group of
target
consumers to
find out if it has
STRONG
APPEAL.

28. 4. Market Strategy Development
Designing an initial marketing strategy for a new
product.

29. 5. Business Analysis
Review of sales, cost, and profit projections and to
find out if it satisfies company objectives.

30. 6. Product Development
Developing the product concept into a physical
product to ensure the product idea can be turned
into workable product.

31. 7. Test Marketing
To test how consumers and the dealers react to
handling, using, and purchasing the real product.

32. 8. Commercialization
Introducing a new product into the market; final
decision is taken to launch the product.

33. Product Life Cycles and Marketing
Strategies
Product Life Cycle
The progression of a product
through four stages: introduction,
growth, maturity, and decline.
MP3s
DVDs
CDs
Cassettes
LP records

34. The Four Stages of the Product Life
Cycle
FIGURE 10.2

35. The Product Life Cycle
Introduction Stage
 The stage of a product’s life cycle when
 New product is launched,
 the sales are low,
 Profit is small,
 Cash flow is negative, (Situation where the cash outflows
during a period are higher than the cash inflows during the
same period)
 few competitors.
 Distribution is limited,
 Price is high.
 Product is basic.
 Examples: E books, personal digital video, recorders

36. The Product Life Cycle (cont’d)
Growth Stage
 The stage of a product’s life cycle when
 Sales starts climbing
 Profit increases,
 Cash flow is moderate,
 new competitors enter the market,
 Opportunity for large-scale profit.
 Examples cell phones, internet shopping
sites

37. Maturity Stage
 The stage of a product’s life cycle when
 Sales growth slows,
 more competitors,
 Customers are more,
 Product is mass marketed,
 Cash flow is high, and
 Profits decline.
 Examples. Microwave ovens, personal
 computers
The Product Life Cycle (cont’d)

38. Decline
 The stage of a product’s life cycle when
 Sales decline fast,
 Shift in customer tastes,
 improved technologies and
 increased competition,
 Price cutting,
 low cash inflow and profit.
 Kodak’s film products. Because of digital
photography
The Product Life Cycle (cont’d)

40. The World’s
Most Innovative Companies
Apple
Google
Toyota
General Electric
Microsoft
Procter & Gamble
3M
Walt Disney
IBM
Sony
Wal-Mart
Honda
Starbucks
Target
BMW
Samsung