7. What is a Product?
Our in-depth discussion of the marketing mix begins with the product variable, since firms usually make product decisions (i.e. what is of offered to the-market) before the distribution, promotion, and price decisions. A product is a bundle of tangible and intangible attributes that a seller offers to the potential buyer and that satisfies the buyer's needs or wants.
Quite often when we talk about products, we refer to what a company produces such as lawn mowers or food processors. These product conceptions, however, only deal with the tangible product attributes or physical dimensions-of the product attributes, involving such things as safety, prestige, services offered with the product (e.g. delivery, credit, maintenance contracts), and the product warranty. These intangibles are important because the consumer may value them and seek them out in a product. In addition, they help to differentiate the seller's product offering in a highly competitive marketplace.
Product position is the place the product occupies in the consumer's mind with respect to a small number of key attributes, which can be tangible or intangible. Product positioning is the process marketers go through in manipulating the marketing mix to achieve a particular product position.'
The marketer’s objective is to create a unique position for its product in the consumer's mind. A unique product position helps to protect a product from competitive onslaughts.
Product Classification
It is possible to classify products based on the consumer search characteristics: this approach gives us convenience, shopping, specialty, and unsought products.
A convenience product is purchased by the consumer with a minimum of time and effort. Consumer shopping effort is minimal because of the large number of retail stores that carry convenience products, the low price of these items, and because of the consumer’s familiarity with them. Typically, these products ere inexpensive and are purchased frequently; for example, chewing gum, cigarettes, a haircut, bread, milk, a taxi ride, gasoline, or beer.
A shopping product is purchased after the consumer shops around to find the best deal based on comparisons of price, quality, style, durability, and other product attributes that are felt to be important. Shopping products typically are more costly and purchased less frequently than convenience products, and thus the consumer can justify the increased shopping effort. Examples of shopping products are automobiles, home appliances, musical instruments, music lessons, and major clothing items, such as business suits.
A specialty product is one that the consumer desires and is willing to make a special effort to find and purchase, sometimes traveling long distances. Generally, these are products for which strong brand loyalty has developed such as Rolls Royce automobiles, Steinway pianos and Joy perfume.
An unsought product is one that the consumer does not yet want or know he or she can purchase. Since the consumer naturally does not recognize a need for these products and therefore must be informed or persuaded to recognize a need, companies that sell unsought products face a formidable marketing challenge. Examples of unsought products include encyclopedias, life insurance, and planned funerals.
Marketers need to determine how their target market views their product because this will have implications for overall marketing mix development.
8. Behavior of the Product Life Cycle
The product life cycle (PLC) represents the stages a product moves through from its introduction to the market to its disappearance from the market. Our discussion of the product life cycle will deal with the new product innovation or product class. The product life cycle can also be applied, with some modification, to a firm’s specific brands.
The product moves through four stages: introduction, growth, maturity, and decline. It should be emphasized, however, that the product life cycle concept is the idealization and will not capture the behavior pattern of all products. For example, products that are fads – Rubic’s cube, the hula-hoop, mood rings – may be introduced, grow rapidly and then quickly vanish from the market within twelve or eighteen months, never reaching the maturity stage. Other products, such as flashlights and automatic washing machines, have been on the market for decades and will not reach the decline stage in the foreseeable future.
In the introduction stage, sales grow slowly because customers are unfamiliar with the product and few people choose to be innovators. Throughout most of this stage, industry profits are negative, because production and marketing costs are high relative to sales volume and no scale economies (i.e. declining unit costs as output decreases) are being realized.
During the growth stage, sales grow rapidly because consumer trust and faith in the product rise dramatically and because the innovation begins to reach the masses. Profits climb rapidly because fixed production and marketing costs can be spread over a larger volume. Toward the end of the growth stage, however, profits begin to decline because of intensified competition as more companies enter this market. Most companies, like consumers, are not innovators and wait until the growth stage of a product before entering the market to compete for market share.
The maturity stage is the longest stage in the PLC. Industry sales level off in the maturity stage, and purchasing occurs -for replacement demand and population increases. Profits continue to decline as competitlon further intensifies. Marketing expenditures, especially for promotion, are very high because many competitors are fighting for a share of a no-growth market.
Finally, in the decline stage, marketers cut back on brand promotion because industry sales have dropped and consumers have found more suitable replacements. For examples, sales of black and white TVs declined because of the introduction of color TV, and wringer washer sales declined because of the invention of automatic washing machines. Although industry profits drop for obvious reasons in the decline stage, there may be a profit potential for a limited number of firms that continue to produce. For example, wooden wagon wheels reached the end of their product life cycle eighty years ago, but firms that continue to make them have a lucrative market niche because there is still a small but constant demand and little or no competition, For the same reason, even though there is little demand for wringer washers, Speed Queen continues to produce them.