Unit-4 Products, Services and Brands

Meaning of Product

A product is the item offered for sale. A product can be a service or an item. It can be physical or in virtual or cyber form.  Every product is made at a cost and each is sold at a price.  The price that can be charged depends on the market, the quality, the marketing and the segment that is targeted. 

Product and Service Classification

Product and service classification is a way of categorizing offerings based on various attributes such as characteristics, usage, and consumer perceptions. This classification helps businesses understand their offerings better, strategize marketing efforts, and identify opportunities for growth. Here are common classifications for both products and services:

Product Classification:

1. Consumer Products:

• Consumer products are goods purchased by individuals or households for personal use or consumption. They are further categorized into:
  • Convenience Products: Inexpensive, frequently purchased items with little effort in comparison shopping (e.g., snacks, toiletries).
  • Shopping Products: Products consumers compare based on price, quality, style, and features before making a purchase (e.g., clothing, appliances).
  • Specialty Products: Unique, high-involvement products with strong brand loyalty and specific purchase intentions (e.g., luxury cars, designer clothing).
  • Unsought Products: Products consumers do not actively seek or know about until a need arises (e.g., funeral services, insurance).

2. Industrial Products:

• Industrial products are goods used by businesses to produce other goods or services. They are categorized into:
  • Materials and Parts: Raw materials, components, and supplies used in manufacturing processes (e.g., steel, electronic components).
  • Capital Items: Long-term investments such as machinery, equipment, and buildings used in production processes (e.g., machinery, computers).
  • Supplies and Business Services: Consumable items and services necessary for business operations but not directly incorporated into the final product (e.g., office supplies, maintenance services).

Service Classification:

1. Business-to-Consumer (B2C) Services:

• Services provided directly to individual consumers for personal use. Examples include:
  • Hospitality Services: Accommodation, food, and entertainment services (e.g., hotels, restaurants, theme parks).
  • Personal Services: Services aimed at improving individuals’ well-being or appearance (e.g., salons, fitness centers, spas).
  • Healthcare Services: Medical, dental, and wellness services provided to individuals (e.g., hospitals, clinics, pharmacies).
  • Retail Services: Services provided by retailers to assist customers in purchasing goods (e.g., customer support, delivery services).

2. Business-to-Business (B2B) Services:

• Services provided to other businesses to support their operations or enhance their capabilities. Examples include:
  • Consulting and Professional Services: Advisory, consulting, and professional services provided to businesses (e.g., management consulting, legal services, accounting).
  • Information Technology (IT) Services: Technology-related services such as software development, IT support, and cloud computing.
  • Logistics and Supply Chain Services: Services related to transportation, warehousing, inventory management, and distribution.
  • Financial Services: Banking, insurance, investment, and other financial services provided to businesses (e.g., commercial banking, insurance brokerage, investment banking).

Understanding the classification of products and services helps businesses develop targeted marketing strategies, optimize their offerings, and cater to the specific needs and preferences of their target customers. It also guides businesses in pricing, distribution, and positioning decisions to achieve competitive advantage and drive growth.

Product Mix Decision

Product mix decisions refer to the strategic choices made by a business regarding the assortment of products or services it offers to its customers. These decisions are critical in shaping the overall product portfolio and aligning it with the company’s objectives, target market preferences, and competitive landscape. Here are key elements involved in product mix decisions:

1. Product Width:

• Product width, also known as product variety or breadth, refers to the number of different product lines offered by a business. Decisions regarding product width involve determining how many distinct product categories or lines the company will offer. For example, a company may offer multiple product lines such as electronics, clothing, and home appliances.

2. Product Length:

• Product length refers to the total number of products within each product line. Decisions regarding product length involve determining the range of product variations or models offered within a particular product category. For example, within the electronics product line, a company may offer various models of smartphones, laptops, and tablets.

3. Product Depth:

• Product depth refers to the number of different variations or versions available for each product within a product line. Decisions regarding product depth involve determining the extent of product differentiation, such as size, color, features, or configurations. For example, a smartphone product line may offer different versions with varying storage capacities, colors, and price points.

4. Product Consistency:

• Product consistency refers to the degree of similarity or relatedness between different product lines within the company’s product portfolio. Decisions regarding product consistency involve evaluating the synergy and compatibility between product lines and ensuring they align with the company’s overall brand image, values, and target market preferences.

5. Product Mix Expansion or Contraction:

• Businesses must periodically assess their product mix and decide whether to expand by introducing new products or services, or contract by discontinuing or phasing out underperforming or outdated products. These decisions are influenced by factors such as market trends, customer preferences, competitive dynamics, and resource allocation considerations.

6. Strategic Fit and Alignment:

• Product mix decisions should be aligned with the company’s overall strategic objectives, market positioning, and competitive strategy. Businesses must consider how each product line contributes to the company’s growth, profitability, and competitive advantage, and ensure the product mix reflects the company’s strengths and capabilities.

7. Market Segmentation and Targeting:

• Product mix decisions should take into account the diverse needs, preferences, and behaviors of different customer segments. By offering a diverse product mix that caters to various customer segments, businesses can better address market demand, enhance customer satisfaction, and capitalize on different market opportunities.

Overall, product mix decisions play a crucial role in shaping the company’s product portfolio and determining its competitive position in the market. By carefully evaluating and managing the product mix, businesses can optimize their offerings to meet customer needs, achieve strategic objectives, and drive long-term success.

Branding

A branding is which add a dimension that differentiates from a product to product. Managing brand is the major task in marketing. Once the product is established in a market over a period of time a company sells the Brand, not product or service.

Product brands refer to the individual products of a company and are the foundation of its brand world. They are at the lowest and most granular hierarchy level of the brand architecture. Examples of well-known product brands are Coca-Cola, Nutella, and Ariel.

Service Branding is a strategy in which a provider’s services become its products, which can Product brands focus on the material performance, while the customer benefit of a service brand lies in immaterial performances. Service brands are not limited to any sector; they exist for instance in the fields of telecommunications, financial services, tourism, and as online platforms. then be uniquely marketed to optimize reach and sales.

Examples of pure service businesses include airlines, banks, computer service bureaus, law firms, plumbing repair companies, motion picture theaters, and management consulting firms. 

Corporate branding is a way for companies to market themselves in order to give themselves an edge against their competition. They make a series of important decisions in order to accomplish this, such as pricing, mission, target market, and values. For example, Microsoft, Nestlé etc are both consumer and corporate brands. 

Personal branding is the process of creating a brand identity for a person or a company. As the name suggests, this is a brand for you or your business.

Essentially, it is how you project your brand and its values to the world and ensure that your target audience knows who you are, what you stand for, and why it’s worth choosing you over your competitors.

Everyone has their own personal brand. Just like with corporate brands, people will perceive you in a certain way. By taking charge of your personal brand, you can determine what people think and feel when they interact with you.

For instance, companies like Nike have put a lot of time and effort into cultivating an image as a company for athletes and fitness enthusiasts. Nike conveys this identity in everything it sells, its marketing techniques and even its social media presence.

Packaging

In simple terms, packaging refers to designing and developing the wrapping material or container around a product that helps to

Identify and differentiate the product in the market,

Transport and distribute the product,

Store the product,

Promote the product,

Use the product properly.

Labelling

Labeling refers to the process of attaching or affixing labels or tags to products, packages, or containers to convey information about their contents, usage, ingredients, safety warnings, and other relevant details. These labels serve as a means of communication between manufacturers, sellers, and consumers, providing essential information to help consumers make informed purchasing decisions and use products safely and effectively.

Service Marketing

Service marketing refers to the process of promoting and selling intangible services, rather than physical products. It involves understanding the unique characteristics of services, identifying target customers, and developing strategies to attract, satisfy, and retain customers. Service marketing is essential for service-based businesses such as healthcare providers, banks, airlines, hotels, consulting firms, and telecommunications companies. Here are key elements and strategies involved in service marketing:

1. Understanding the Characteristics of Services:

• Services possess unique characteristics such as intangibility, inseparability, variability, and perishability. Service marketers must understand these characteristics and tailor their marketing strategies accordingly.

2. Identifying Target Customers:

• Service marketers identify and segment target customers based on demographics, psychographics, behaviors, and needs. Understanding the specific needs and preferences of target customers helps in developing personalized marketing messages and offerings.

3. Creating Value Propositions:

• Service marketers develop compelling value propositions that highlight the unique benefits and advantages of their services. They emphasize factors such as quality, reliability, convenience, customization, and customer experience to differentiate their offerings from competitors.

4. Promoting Brand Image and Reputation:

• Building a strong brand image and reputation is crucial in service marketing. Service marketers focus on enhancing brand visibility, credibility, and trustworthiness through advertising, public relations, social media, and other promotional channels.

5. Managing Customer Relationships:

• Service marketing emphasizes the importance of building and maintaining strong relationships with customers. Service providers prioritize customer satisfaction, loyalty, and retention through effective communication, responsiveness, and personalized interactions.

6. Ensuring Service Quality and Consistency:

• Service quality is a critical factor in service marketing. Service providers strive to deliver consistent, high-quality services that meet or exceed customer expectations. Continuous monitoring, feedback mechanisms, and service improvement initiatives help maintain service quality standards.

7. Offering Additional Value-Added Services:

• Service marketers often offer value-added services to enhance the overall customer experience and differentiate their offerings. These may include complementary services, customization options, loyalty programs, and after-sales support.

8. Utilizing Technology and Innovation:

• Technology plays a significant role in modern service marketing. Service providers leverage digital platforms, mobile apps, data analytics, and automation to enhance service delivery, streamline processes, and personalize customer experiences.

9. Measuring and Evaluating Performance:

• Service marketers use key performance indicators (KPIs) such as customer satisfaction scores, retention rates, service usage metrics, and revenue growth to measure the effectiveness of their marketing efforts and make data-driven decisions for continuous improvement.

Service marketing requires a customer-centric approach, strategic planning, and ongoing adaptation to changing market dynamics and customer needs. By focusing on delivering value, building relationships, and maintaining service excellence, service marketers can drive growth, profitability, and long-term success for their businesses.

Characteristics of Service

Services possess unique characteristics that distinguish them from tangible products. These characteristics, often referred to as the “Four I’s,” include:

1. Intangibility:

• Services are intangible, meaning they cannot be seen, touched, or felt before they are consumed. Unlike physical products, which can be inspected and evaluated prior to purchase, services are experienced only after they are delivered. This intangibility makes it challenging for customers to assess the quality of services beforehand, requiring service providers to focus on building trust and credibility through branding, testimonials, and other means.

2. Inseparability:

• Services are often produced and consumed simultaneously, meaning that the production and delivery of services are inseparable from the customer’s experience. Unlike manufacturing, where products can be produced in advance and stored for later consumption, services are typically delivered in real-time and require direct interaction between the service provider and the customer. This inseparability can result in variability in service quality, as the customer’s experience may be influenced by factors such as the skill and attitude of the service provider, the environment in which the service is delivered, and other situational factors.

3. Inconsistency or Variability:

• Services are inherently variable in nature, meaning that the quality and consistency of service delivery may vary from one interaction to another, even within the same service provider. This variability can be influenced by factors such as the human element in service delivery, the complexity of the service process, and the involvement of multiple service providers or touchpoints. Service providers must strive to minimize variability and ensure consistency in service quality through training, standardization of processes, and quality assurance measures.

4. Perishability:

• Services are perishable, meaning they cannot be stored or inventoried for future use. Unlike physical products, which can be produced in advance and stored until needed, services are typically consumed at the time of production and cannot be saved for later. This perishability poses challenges for service providers in managing capacity, pricing, and demand fluctuations. Service providers must effectively manage capacity utilization, optimize scheduling and resource allocation, and implement dynamic pricing strategies to maximize revenue and minimize waste.

Understanding these characteristics is essential for service providers to effectively manage and market their services, address customer needs and preferences, and deliver exceptional customer experiences. By recognizing the unique challenges and opportunities presented by these characteristics, service providers can develop strategies to enhance service quality, build customer loyalty, and drive business success.

New Product Development Process

A new product is any product or service that is introduced to the market for the first time or significantly improved upon to meet changing consumer needs, technological advancements, or market demands. New products can range from tangible goods such as electronic devices and food products to intangible services like software applications and consulting services.

New Product Development Process:

The new product development process typically involves several stages, each aimed at systematically bringing a new product from concept to market. These stages may vary depending on the industry, company size, and specific product characteristics. Here’s a simplified overview of the new product development process:

1. Idea Generation: The process begins with the generation of ideas for new products or improvements to existing products. Ideas can come from various sources such as market research, customer feedback, brainstorming sessions, competitor analysis, and internal R&D efforts.
2. Idea Screening: Once ideas are generated, they are evaluated and screened to identify those with the most potential for further development. Screening criteria may include market demand, feasibility, profitability, alignment with company objectives, and strategic fit.
3. Concept Development and Testing: Selected ideas are developed into product concepts that outline the key features, benefits, and value propositions of the proposed product. These concepts are then tested with target consumers to gather feedback, assess interest, and refine the concept based on consumer preferences and needs.
4. Business Analysis: In this stage, a thorough analysis is conducted to assess the financial viability and business potential of the proposed product. Factors such as estimated sales volumes, production costs, pricing strategy, revenue projections, and return on investment (ROI) are evaluated to determine whether the product is economically feasible.
5. Prototype Development: If the business analysis yields positive results, a prototype or working model of the product is developed to test its functionality, performance, and design. Prototypes allow for further refinement and iteration based on feedback from internal stakeholders and potential customers.
6. Market Testing: Before full-scale production and launch, the product is tested in a limited market or controlled environment to gauge consumer response, validate demand, and identify any potential issues or challenges. Market testing may involve pilot launches, test markets, or focus groups to gather insights and fine-tune marketing strategies.
7. Commercialization: Finally, if the product successfully passes through all previous stages and meets the necessary criteria, it is ready for full-scale production and commercialization. This involves manufacturing, distribution, marketing, and sales efforts to bring the product to market and capture consumer interest.

Example:

Let’s consider the example of a technology company developing a new smartphone:

1. Idea Generation: The company gathers input from market trends, customer feedback, and internal R&D to identify opportunities for a new smartphone that incorporates innovative features and addresses evolving consumer needs.
2. Idea Screening: Potential smartphone concepts are evaluated based on market demand, technological feasibility, competitive landscape, and strategic fit within the company’s product portfolio.
3. Concept Development and Testing: A few promising smartphone concepts are developed into detailed product concepts, which are then tested with focus groups and target consumers to assess interest, preferences, and usability.
4. Business Analysis: The company conducts a comprehensive financial analysis to estimate production costs, projected sales volumes, pricing strategy, and potential return on investment for each concept.
5. Prototype Development: Based on the selected concept, the company creates a prototype of the new smartphone to test its functionality, design, and performance. Feedback from internal stakeholders and beta testers is used to refine the prototype.
6. Market Testing: The prototype is tested in a limited market or among select groups of consumers to gather feedback, assess demand, and refine marketing strategies before a wider launch.
7. Commercialization: Upon successful market testing and refinement, the company proceeds with full-scale production, marketing campaigns, and distribution channels to launch the new smartphone to the public, aiming to capture market share and generate revenue.

Product Lifecycle Strategies

Product lifecycle strategies refer to the different approaches that businesses can adopt to manage their products throughout their lifecycle, from introduction to decline. These strategies help businesses maximize sales, profitability, and market share at each stage of the product’s lifecycle. Here are common product lifecycle strategies:

1. Introduction Stage:

• During the introduction stage, the focus is on building awareness and generating initial sales for the new product. Strategies may include:
  • Heavy investment in marketing and advertising to create awareness and educate consumers about the new product.
  • Offering promotional pricing or introductory discounts to encourage trial and adoption.
  • Targeting early adopters and opinion leaders to generate positive word-of-mouth.
  • Securing distribution channels and building relationships with retailers to ensure availability.

2. Growth Stage:

• In the growth stage, sales and market acceptance of the product increase rapidly. Strategies may include:
  • Expanding distribution channels and entering new markets to capitalize on growing demand.
  • Investing in product improvements, innovation, and differentiation to maintain a competitive edge.
  • Increasing marketing efforts to defend market share and attract new customers.
  • Adjusting pricing strategies to maximize revenue and profitability as demand increases.

3. Maturity Stage:

• The maturity stage is characterized by stable sales and increased competition. Strategies may include:
  • Differentiating the product through branding, features, or value-added services to maintain market share.
  • Implementing pricing strategies such as discounts, bundling, or loyalty programs to retain customers.
  • Exploring new market segments or geographic regions to extend the product’s lifecycle.
  • Streamlining operations and reducing costs to improve profitability in a competitive market.

4. Decline Stage:

• In the decline stage, sales and profitability decline as market saturation and obsolescence occur. Strategies may include:
  • Harvesting the product by reducing investment and focusing resources on more profitable products or segments.
  • Extending the product’s lifecycle through product modifications, repositioning, or finding new uses or applications.
  • Exiting the market by discontinuing the product and reallocating resources to more promising opportunities.
  • Selling or licensing the product to another company that may be able to revitalize it or extract residual value.

5. Diversification and Innovation:

• Throughout the product lifecycle, businesses may pursue strategies such as diversification or innovation to introduce new products or extend existing ones. This can help mitigate the risks associated with a declining product and sustain growth and competitiveness in the market.

By understanding and implementing appropriate product lifecycle strategies, businesses can effectively manage their product portfolios, optimize resource allocation, and capitalize on market opportunities at each stage of the product’s lifecycle.

Check out other notes on marketing:

Unit -1 Introduction To Marketing

Unit-2 Marketing Analysis

Unit-3 Market Segmentation

Unit-4 Products, Services and Brands

Unit -5 Pricing

Unit-6 Distribution Channel and Logistics

Unit-7 Promotion

Click here to see the examination questions.

Click here to see the solution.