Week 5 - Product Flashcards
What is a product?
The product is what the marketer takes to the market to get consumers to buy or engage in some type of exchange
Products rarely stay the same and will change to suit new technology and changing states
Goods, services, and ideas
A product is defined as a good,service or idea offered to the market for exchange
Goods are physical, tangible offerings that are capable of being delivered to a customers
Service are intangible offerings to the market
An idea can also be offered to the market in the form of a concept, issue
The total product concept
The total product concept is a way of viewing a product as the totality of value and benefits it provides to the customer
It is crucial for marketers to understand that when customers choose a product, they do not purchase a ‘thing’; rather, they buy a solution to a problem
Variations of product
Core Product
Expected Product
Augmented Product
Potential Product
Core Product
The fundamental benefit that responds to the customer’s problem of an unsatisfied need or want. For example, for a car, the core product is transportation.
Expected Product
This encompasses the tangible aspects, such as design, quality, and features.
Augmented Product
These are additional benefits that enhance the customer experience, such as warranties, customer service, or free delivery.
Potential Product
The potential product includes future upgrades, new features, or improvements that could be introduced. e.g. software updates that enhance security or add new functions, hardware upgrades, or compatibility with upcoming accessories
Product Relationships
The relationships between the organisation’s products can be described as follows
- Product item
- Product line
- Product mix
Product Item
This is the basic unit of a product, representing a unique model or version. A product item refers to a specific product within a line that has unique characteristics, such as brand, size, or price. For instance, within Apple’s offerings, the iPhone 15 Pro would be a product item.
Product Line
A product line is a group of related products that are marketed under a single brand and share similarities, such as purpose, target audience, or price range. Products in a line often vary in features or specifications but are fundamentally similar. For example, Apple’s iPhone series, which includes different models like the iPhone 15, iPhone 15 Plus, iPhone 15 Pro, etc., represents a product line.
Product Mix
Also known as the product assortment, the product mix encompasses the entire range of products that an organisation offers. It includes all product lines and items a company sells. For example, Apple’s product mix includes multiple product lines like the iPhone, iPad, Mac, Apple Watch, and AirPods. The diversity and depth of the product mix reflect the company’s strategy for meeting different consumer needs and market demands.
Product classification
Consumer products are classified into one or more of the following main categories
- Shopping product
- Convenience product (Staple, impulse, emergency)
- Specialty products
- Unsought product
Shopping Products
- Involve moderate to high engagement with decision-making
- Expected to last a long time
- Purchased relatively infrequently
- Sell in low volume
e.g. Electrical appliances, furniture, cameras, clothing
Convenience Products
Frequently purchased & sold in high volumes.
Three further categories
- Staple Products (Essentials to consumer’s everyday life - Food)
- Impulse Products (Goods which are purchased quickly because of sudden urges - Candy bar)
- Emergency Products (Items which are bought to meet immediate and unexpected needs - umbrella when raining)
Specialty Products (1)
Unique characteristics desired by their buyers
Consumers know exactly what they want, pre-selected by consumer
No close substitutes or alternatives
Specialty Products (2)
Available at a limited number of outlets
Purchased infrequently
Sell in low-volume
E.g Luxury bags (Hermès, Chanel, and Louis Vuitton)
Unsought Product
Unknown or unconsidered by the consumer
Challenge = making consumers aware
Marketing communication efforts = crucial
Product Classification
Business-to-business products are products purchased by individuals and organisations for use in the production of other products or for use in their daily business operations
Business-to-business products can be classified into three categories:
- Parts and materials (Raw materials, components)
- Equipment
- Service and supplies
Product Life Cycle
- New product development
- Introduction
- Growth
- Maturity
- Decline
New Product Development
- Idea generation
- Screening
- Concept evaluation
- Marketing strategy
- Business analysis
- Product development
- Test marketing
- Commercialisation
Product Adopotion
Awareness - The consumer becomes aware of the new product - consumer knows a little about the product
Interest - The consumer is interested in the product and finds more information about it
Evaluation - The consumer evaluates the information and decide whether or not to try it
Trial - The consumer tries the product and see if its satisfy their needs and wants
Adoption - The consumer buys the product and evaluates it and determines whether they will repurchase it.
Introduction
Considerable investment required
Goal: Build awareness and interest
Lag in building sales
Sales recoup R&D costs
Minor profits towards the end
Growth
Increase in popularity, sales and profit
Dependent on welcomingness of market
Competitors begin to enter the market with similar products
Maturity
Novelty wears off
Competitors more of and established
Sales peak and profitability falls
Decision to determine future of the product
- Change marketing mix (move back to growth)
- Leave the market and allow decline
Decline
Sales and profits fall
New products entering
Little interest
Drop or change the product
The diffusion of innovation
The diffusion of innovation describes how innovations are adopted by the market over time
It suggests that the influence of social groups on the decisions made by individuals how new products and ideas are adopted
The diffusion of innovation categories of innovaters
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Innovators
People who they send the product out to (reviewers, famous people)
Early Adopters
People who buy the product straight after release
Early Majority
People who buy the product once it becomes popular
Late Majority
People who gets the product towards the end of popular life cycle
Laggards
People who buy the product once the hype is over
Product Differentiation
Product differentiation is the creation of products and product attributes that distinguish one product from another (e.g. design, brand, image, quality and features)
Most of the product’s differentiating features are part of the augmented product layer.
Branding
Brand - Refers to a collection of symbols intended to create an image in the customer’s mind that differentiates a product from competitors’ products
- Name
- Logo
- Slogan
- Design
Brand Name
A brand name is part of a brand that can be spoken and can include words, letters and numbers.
A brand mark is a part of a brand not made up of words - it often consists of symbols and designs
To protect the brand, an organisation can register it as a trade mark with the relevant body. (e.g. IP Australia, or the Intellectual Property Office of New Zealand)
Brand Equity
A well-known brand can be precious to an organisation in financial and non-financial terms. The added value that a brand gives a product is known as Brand Equity.
For marketers, the brand:
- Identifies the organisation’s product
- Differentiates the organisation’s products from competing products
- Attracts customers
- Helps introduce new products
- Facilitates the promotion of same-brand product
Brand Equity
Brand loyalty: exists when the customer show a highly favourable attitude towards a specific brand
Brand equity metrics: Measuring the value of brands is extremely useful to organisations
High brand equity can be a valuable asset for a company and provide a strong competitive advantage
Brand Equity Metrics
Brand assets (e.g. trademarks and patents)
Stock price analysis
Replacement cost
Brand attributes
Brand loyalty
Willingness-to-pay analysis
Brand assets
these are tangible assets tied to a brand, like trademarks, patents, and copyrights, which legally protect brand identity, logos, slogans, and proprietary technology.
Stock price analysis
This examines how the brand’s equity affects its publicly traded stock price. Strong brand equity often leads to higher investor confidence, which can drive up stock prices, indicating the brand’s perceived value in the market
Replacement cost
This is the estimated cost of recreating a brand from scratch, including marketing, advertising, and building customer loyalty. It reflects the financial value invested in establishing the brand’s reputation, visibility, and consumer trust, underscoring the cost of building similar brand equity.
Brand attributes
Unique characteristics or qualities associated with the brand, such as reliability, innovation, and quality. Positive brand attributes enhance brand recognition and consumer trust
Brand Loyalty
This measures how likely consumers are to repeatedly purchase the brand’s products or services. High brand loyalty reflects substantial brand equity, as loyal customers tend to be less price-sensitive and more resistant to switching to competitors.
Willingness-to-Pay Analysis
This assesses the premium customers are willing to pay for a brand’s products or services over similar, unbranded items. A high willingness to pay indicates strong brand equity, as customers perceive added value or unique benefits that justify the higher price.
Brand Strategies
When developing brands within a product mix, an organisation may decide to pursue the following possible strategies
- Individual Branding
- Family Branding
- Brand Extension
Individual branding
Uses a different brand on each product, giving each its own specific identity
Family Branding
Uses the same brand on several of the organisation’s products
Brand Extension
Gives an existing brand name to new product in a different category
Brand Ownership
Manufacturer Brands
Private Label Brands
Generic Brands
Licensing
Franchising
Manufacturer Brands
Are owned by producers and are the most common type of brand
Private Label Brands
Are owned by sellers, such as wholesalers or retailers, and are not identified with the manufacturer
Generic Brands
Are those products that only indicate the product category
Licensing
Some organisations can enter a licensing agreement to use the names and symbols of other brand for a fee
Franchising
Has many parallels of licensing
Co-Branding
Co-branding is the use of two or more brand names on the same product
- Capitalise on the brand equity of multiple brands
- Improve the perceived value of a product
- maintain existing branding after another organisation’s brands are acquired
Packaging
Packaging can become an important recognisable way for customers to identify a particular product much like a brand
Packaging (2)
Marketers may want to change the package to
- express to customers that the product has changed in some way
- Update the style of package or logo to broaden the customer appeal
- Emphasises certain elements to further differentiate it from the competition
Labelling
Usually, it forms parts of the package and provides identifying, promotional, legal and other information.
At its most basic level, the label identifies the product and the brand name but can provide helpful information. (Product name, brand)
Some of the information provided on labels is compulsory. (Ingredients for allergens)
Approaches to management
Managing the product may require coordination and cooperation across different business departments.
A business may employ product managers to manage particular products or product lines , or brand managers to manage a particular brand within the organisation’s portfolio of brands
Approaches to management (2)
Another alternative is to appoint a market manager who will be responsible for managing the marketing activities aimed at a particular part of the target market.
Managing products through the life cycle
Marketers must determine which lifecycle stage their products is in to make appropriate decisions related to the marketing mix
Line extensions are the most common form of ‘new’ product. They are variations or derivatives of an existing product added to the product line, rather than superseding the original product (each iPhone model builds upon the previous generation introducing new features, variation in size & enhancements like improved camera)
Managing products through the life cycle 2)
There may be the need to change an aspect of the marketing mix to reposition the product
Eventually, products may become obsolete. Product obsolescence may be either planned or unplanned
