GROUP 4

Jerick Tayona
Garjones Felicisimo
Jeck Talabon
Darwin Pamia
Bernard Timbal
Jolly Tugado
Module 2: Product

Introduction

 The product is described as a “Heart of Marketing.” It is the most

important element of the marketing mix. In fact, the product is the
starting point of all marketing activities.
•In common language, “a product is a set of tangible, physical and
chemical attributes assembled
• A product is any object which has an identifiable physical
existence.
 Product is the bundle of utility (satisfaction) which the buyer receives
as the result of a lease or purchase. It includes the physical good or
service itself (its form, taste, odor, color or texture), the function of
the product in sure, the package, the label, the warranty, the
manufacturer’s and retailer’s service, after-sale service, the
confidence or prestige received by the brand and the manufacturer’s
and retailer’s reputation, and any other symbolic utility received from
possession or use of the goods or service.
Lesson 1: Definition of Product

Product

  According to W. Anderson, “a product is a bundle of utilities

consisting of various product features and accompanying services.”
  According to C P Stephenson, “a product is everything the
purchaser gets in exchange for money.”
  By analyzing the above definitions we can define the product
as “anything that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a want or need.”
Characteristic of Product

  It may be tangible or intangible

  It consists of associated attributes such as brand, package,
warranty, etc.
  It has exchange value
  It has the ability to satisfy consumer needs and wants
Classification of Product
Lesson 2. Product Mix and Product Line

Product Mix

 • It is also known as “Product Assortment”

 • Defined as the set of all product lines and items that a particular seller
offers for sale to buyers
 In other words, the total number of product lines that a company offers
to its customers is called product mix. The number of products within
the product line is called as the product items.
Product Line

 A product line is a group of related products under a single brand sold

by the same company. According to William J. Stanton, product line is
defined as “a broad group of products intended for essentially similar
uses and possessing reasonably similar physical characteristic,
constitute a product line.”
A product Line possesses the following
characteristics:
1. A group of product closely related to each
2. They are intended for same uses of their function in similar manner
3. They may possess similar physical characteristics.
 4. Sold to the same customer group.
 5. Marketed through the same types of outlets with given price lines.

Examples: Home furnishing, Men’s accessories, appliances.

Major Product Line Strategies
 1. Expansion of product mix
- Increasing the number of product lines.
Examples: Hanes for men added a new line, the Hanes for ladies
• This expansion strategy is implemented if there is a manifestation of market
demand for new lines or assortment.
2. Contraction of product mix.
a. Eliminating a complete line. Phasing out as ‘deadwood’ product line.
b. Simplifying assortment within a line. Decreasing number of styles, sizes,
colors or other product mix depth or breadth.
•This strategy is implemented if market demand is very low and cannot even
offset maintenance costs.
 3. Alteration of existing product. Redesigning of an industrial product or new
packaging design for consumer products.
 4. Positioning of the product. This is the consumer’s perception of a product,
its image against competitors’ products and other products being sold by the
same company.
 5. Trading up and trading down. Trading up is adding high-priced, well-known
brand in order to increase sales existing low-priced items. This appeals to
consumers’ psychological comparison between a high priced item equivalent
to a better quality product.
 Trading down is adding low-priced products in order to increase sales of
existing high-priced items. This appeals to mass market-who may not enter
an outlet known to have high priced line, but being aware of it’s trading down
strategy, may buy from this store.
 6. Product differentiation and market segmentation. Market segmentation had
been defined earlier. Product differentiation involves creation of consumer
awareness about the different features of a product. This consumer
education about the product can be effectively achieved by using advertising
as a tool.
Lesson 3. Product Planning and Development

“New” Product

 - A new product is a good, service, or idea that is perceived by some

potential customers as new.
Categories of “New” Product

 Innovative Products – these exist out of the real need, and no subtitle
can be available. Products where a company pioneered in the concept
and other may just follow.
 Replacement Products – those with significant difference from
existing products. These product when introduced may phase out the
old product concept.
 Imitative Product – these are products new to the imitating company
but not from other companies. Imitation of a patented product can be
illegal, so what can be possible is partial adoption of product idea.
Product Planning

 • It is the process of determining in advance that line of products which

secure maximum net returns from the markets targeted.
 • It is a process of constantly reviewing and revising product portfolio of
a firm with an objective of security, a balanced sales growth, cash flow
and risk.
 • It is a process of deciding in advance by the firm about what type of
products it should develop and sell in the market so that the product
behaviors and deciding whether it should continue in the product line or
any modification is required as to suit the changing consumer needs.
New Product Development

Every entrepreneur knows that productivity is one of the key

ingredients for successful product development. Hence, a new
product development is a very vital component of product policy and
product management.
According to PDMA i.e. Product Development and Management
Association, new product development means, “improve the
effectiveness of people engaged in developing and managing new
products both manufactured goods and new services. This mission
includes facilitating the generation of new information, helping to
convert this information into knowledge which is in a usable format,
and making this new knowledge broadly available to those who might
benefit from it”.
 Product Development Process

Concept
Screening of New Product
Idea Generation Development & Business Analysis Test Marketing Commercoalization
Ideas Development
Testing
• Idea Generation
Product ideas may come from external sources or internal sources.
Suggestions for possible development may originate from company’s own
salespeople, non-marketing employees, middlemen like distributors or dealers
of goods, competitive products, research companies, inventors and best source
are the consumers.

• Screening of New Ideas

Not all the ideas generated can be feasible. This step chooses the best ideas
by considering whether they are compatible with resources, objectives,
demand, cost and above all, profitability. Feasible ideas may be considered for
further study.
• Concept Development and Training
At this stage, marketer incorporate consumer meaning into product ideas.
Concept testing helps the company to choose the best among the alternative
product concepts. Consumers are called upon to offer their comments on the
precise written description of the product concept viz., the attributes and
expected benefits.
 Standard Testing - here testing done on small number of
representative cities.
 Controlled Testing: testing done on few stores that have agreed to
carry new products for a fee.
 Stimulated Testing: testing done on shopping environment by
providing a sample to consumers.
• Business Analysis
Once the management has decided on the marketing strategy it can evaluate the
attractiveness of the business proposal. Business analysis involves the review of
projected sales, costs and profits to find out whether they satisfy a company’s
objectives. If they do, the product can move to the product development stage.
• Product Development
This stage includes 3 types, when a paper idea is duly converted into a physical
product. It includes: Prototype development giving visual image of the product
Consumer testing of the model or prototype Branding, packaging and labeling.
• Test Marketing
At this stage the product and the marketing program are introduced to more
realistic market settings. Test marketing gives the marketer an opportunity to tweak
the marketing mix before going into the expense of a product launch. Cost of test
marketing can be enormous and it can also allow competitors to launch a “me-too”
product or even sabotage the testing so that the marketer gets skewed results.
• Commercialization
At this stage new product development has gone main stream, consumers are
purchasing the goods and technical support is consistently monitoring progress.
Keeping distribution pipelines loaded with products is an integral part of this
process too. Refreshing advertisements during this stage will keep products name
firmly supplanted into the minds of customers who induces to make purchases.
Product Life Cycle

• The PLC is a phase of five cycle which helps the marketer to make a pre-
plan before making entry of a new product into the market.
• The PLC provides market characterized by more sales and bad market
characterized by low sales. In short, it deals with increasing sales volume
and sales revenue.
• Once the product gets commercialized it competes with rivals, for making
sales and earning profits. Product have a length of life this is called PLC.
• In other words, PLC is a process where a product introduced to a market,
grows in popularity and then removed from market.
Marketing Strategy
 Marketing strategy is refers to the process of unified, comprehensive
and integrating the marketing plans in order to maintain marketing
position, company image and try to hold profitability at desired levels.
Product Life Cycle
• Introduction Stage
Once a product has been developed, the first stage is its introduction
stage. In this stage, the product is being released into the market.
When a new product is released, it is often a high-stakes time in the
product's life cycle - although it does not necessarily make or break
the product's eventual success.
• Growth Stage
By the growth stage, consumers are already taking to the product and
increasingly buying it. The product concept is proven and is becoming
more popular - and sales are increasing.
• Maturity Stage
When a product reaches maturity, its sales tend to slow or even stop-
signaling a largely saturated market. At this point, sales can even start
to drop. Pricing at this stage can tend to get competitive, signaling
margin shrinking as prices begin falling due to the weight of outside
pressures like competition or lower demand. Marketing at this point is
targeted at fending off competition, and companies will often develop
new or altered products to reach different market segments.
•Decline Stage
Although companies will generally attempt to keep the product alive in the
maturity stage as long as possible, decline for every product is inevitable.
In the decline stage, product sales drop significantly and consumer
behavior changes as there is less demand for the product. The company's
product loses more and more market share, and competition tends to
cause sales to deteriorate.
Reasons Why New Products Fails

Some new products, while still experiencing introductory or competitive stages in the product life
cycle fail, due any of these reasons:
1. Inadequate market analysis. Inability to determine market demand, buying motives and
overestimation of potential sales of the new product which can be the result of insufficient
marketing information.
2. Product deficiencies. This means poor quality of new products.
3. Lack of effective marketing effort. Insufficient marketing strategies as follow-up after
introductory marketing programs.
4. Higher cost than anticipated. Possible presence of inflation rate where prices of raw
materials had increased from idea generation to commercialization periods.
5. Competitive strength and reaction. Ease of competitive entry, where other companies may
simultaneously beat timing of introduction.
6. Poor timing of introduction. This can be a premature or post mature product introduction.
7. Technical or production problems. Inability to supply the quantity demanded.
Possible Solution to avoid Product
Failure
1. Organizational changes aimed at strengthening new product planning.
2. Better marketing research to evaluate market need and prospect.
3. Improved screening and evaluation of ideas and products.
To be successful in employing the solutions mentioned, the company
should have at least one of these three advantages:
 Product advantage. Emphasizing that the new product is of better
quality and has a more reasonable price than products of competitors.
 Marketing advantage. Using greater number of distribution outlets or
intensive distribution, as applicable to the new product, compared to
competitors.
 Advertising advantage. Greater number of mass media usage or
effective advertising structure.
 THE END
OF SLIDE SHOW!