DEFINITION OF PRODUCT
In marketing, a product is anything that can be offered to a market that might satisfy a want or need. In retailing, products are called merchandise. In manufacturing, products are bought as raw materials and sold as finished goods.
According to Philip Kotler - A product is more than physical. A product is anything that can be offered to a market for attention, acquisition, or use, or something that can satisfy a need or want. Therefore, a product can be a physical good, a service, a retail store, a person, an organisation, a place or even an idea. Products are the means to an end wherein the end is the satisfaction of customer needs or wants.
OBJECTIVES OF PRODUCT MANAGEMENT-
1.Customers
Product managers must ensure that products meet or exceed customer needs.According to Pragmatic Marketing, enhancing user experience is an important objective for product management. That means working with customers and utilizing their feedback to ensure that products are easy to use, simple to maintain and capable of delivering value to customers.
Enhancing the user experience helps product managers to meet the important objective of maximizing customer satisfaction.
2. Success
The ultimate measure of product management is commercial success, according to Innovation Process Management including product development teams, marketing executives, quality managers and sales representatives.3. Delivery
Product managers have to meet time and budget objectives. To meet the demands of the market and counter competitive pressures, they must be able to conclude product development programs on time and on budget. That enables the company to reduce the time to bring new or improved products to market and stay ahead of the competitors.4. Marketing
Product management maximize revenue and profit by meeting customer needs. Some companies combine the role of product manager and marketing manager. In others, product managers work closely with marketing managers, using research from the marketplace to plan and prioritize product development programs, and briefing marketing teams on the benefits of new products so that they can develop effective customer communications.
PRODUCT CLASSIFICATION
I.CONSUMER PRODUCTS :
Products which are purchased by the ultimate final consumer for personal consumption and satisfying their needs and desires.A. BASED ON SHOPPING EFFORTS :
1. Convenience Goods
Those products customers buy often and without much thought or planning are classified as convenience goods.Consumers typically make a choice once on their brand preference for these products and repeat that choice over many purchases.
EXAMPLES -
Soap, condiments and toothpaste , Medicines , Toothpaste.
CHARACTERISTICS -
1.Products purchased at convenient locations , with least efforts and time .
2.These are products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently.
3. DEMAND - Regular and continuous , as the products are essential products .
4.PRICING-
Price per item tends to be relatively :
Low- Because of the high purchase volume by consumers .
Standardised -As most of the consumer products are branded .
5. MARKETING - Short term incentives such as discount offers , contests etc .
From the marketer’s perspective the low price of convenience products means that profit per unit sold is very low. In order to make high profits marketers must sell in large volume. Consequently, marketers attempt to distribute these products in mass through as many retail outlets as possible.
2 .Shopping Goods
Consumer goods in which buying decisions are detailed considerations of price, quality , suitability and value for products are classified as shopping goods.Example - Laptop , Jewellery , Furniture , Shoes , Television .
CHARACTERISTICS -
1. Durable in nature-survive many uses .
2. Profit margin is high.
3. High unit Price - So consumers compare the products of different companies before making selection .
4. Purchases of shopping products are generally pre- planned and there is a little degree of impulse buying in these products .
5. Retailers generally play an important role in the sale of shopping products as lot of persuasive effort is needed to convince the buyers to purchase them.
Generally durable Generally high price in contrast with convenience goods. Comparison is main factor in making purchase decisions. Purchase is generally pre planned Retailers have very important role to play.
http://www.gktoday.in/convenience-goods-shopping-goods-and-specialty-goods/
http://www.gktoday.in/convenience-goods-shopping-goods-and-specialty-goods/
3. Specialty Products
Consumer goods which have certain special features because of which customers make special efforts to purchase.EXAMPLE - Collection of artwork or antiques.
CHARACTERISTICS -
1. Tend to promote very strong brand identities, often resulting in strong brand loyalty among consumers.
2. DEMAND- Limited as relatively small number of people buy. It is relatively inelastic demand i.e , even if the price is increased , the demand does not come down .
3. PRICE - Products are generally costly .
4. These products are available for sale at few places as the number of customers is small to take extra efforts in the purchase of these products.
5. An aggressive promotion is required .
6. After sales services are very important for many of many of the speciality products.
4. Unsought Goods
The products classified as unsought goods are those that consumers don’t put much thought into and generally don’t have compelling impulse to buy.Examples include batteries or life insurance.
Consumers essentially buy unsought goods when they have to, almost as an inconvenience rather than the newest, latest, greatest product they can’t wait to purchase.
Marketing unsought goods will likely be most effective with lots of advertising and salespeople promoting the idea of unresolved needed .
B. BASED ON DURABILITY OF PRODUCTS :
1. Durable goods
A category of consumer products that do not need to be purchased frequently because they are made to last for a long time . They are also called consumer durables or durables.
Durables have an extended product life and are not typically worn out or consumed quickly when you use them.
EXAMPLES -
Refrigerator , Kitchen equipments , Cars , TV etc .
CHARACTERISTICS :
1.More expensive than non-durable goods .
2. Higher per unit margin .
3. Require greater personal selling efforts , after sales services.
2. Non Durable Goods :
They may be defined either as goods that are immediately consumed in one use or ones that have a lifespan of less than 3 years.
EXAMPLES- Soaps , Detergents , Toothpaste , stationary products .
CHARACTERISTICS :
1. Small margin .
2. Made available in many locations .
3. Needs heavy advertising .
A category of consumer products that do not need to be purchased frequently because they are made to last for a long time . They are also called consumer durables or durables.
Durables have an extended product life and are not typically worn out or consumed quickly when you use them.
EXAMPLES -
Refrigerator , Kitchen equipments , Cars , TV etc .
CHARACTERISTICS :
1.More expensive than non-durable goods .
2. Higher per unit margin .
3. Require greater personal selling efforts , after sales services.
2. Non Durable Goods :
They may be defined either as goods that are immediately consumed in one use or ones that have a lifespan of less than 3 years.
EXAMPLES- Soaps , Detergents , Toothpaste , stationary products .
CHARACTERISTICS :
1. Small margin .
2. Made available in many locations .
3. Needs heavy advertising .
II. INDUSTRIAL PRODUCTS:
Industrial products are mainly used for further production.
According to Philip Koter “Industrial products are products bought by
individuals and organizations for further processing or for use in
conducting a business”.
CHARACTERISTICS OF INDUSTRIAL PRODUCTS :
1. Number of Buyers-Limited .
Example : Sugar Cane is purchased by few producers of sugar , but sugar which is consumer product , purchased by many consumers .
2. Channel Levels - Shorter : Direct selling or one level channel .
3. Geographic Concentration : Highly Concentrated .
4. Derived Demand : The demand for industrial products is derived from the demand for consumer products .
EXAMPLE - The demand for leather will be derived from demand for shoes and other leather products in the market .
5. Role of Technical Considerations- Greater significance in the purchase of industrial products as they are complex .
6. Reciprocal Buying - Some big companies from basic industries like oil , steel , rubber and medicines resort to the the practice of reciprocal buying .Reciprocal buying is simply the practice of giving preference to suppliers who are also customers.
7. Leasing Out rather than purchase the industrial products is the trend because of heavy price of the products .
CHARACTERISTICS OF INDUSTRIAL PRODUCTS :
1. Number of Buyers-Limited .
Example : Sugar Cane is purchased by few producers of sugar , but sugar which is consumer product , purchased by many consumers .
2. Channel Levels - Shorter : Direct selling or one level channel .
3. Geographic Concentration : Highly Concentrated .
4. Derived Demand : The demand for industrial products is derived from the demand for consumer products .
EXAMPLE - The demand for leather will be derived from demand for shoes and other leather products in the market .
5. Role of Technical Considerations- Greater significance in the purchase of industrial products as they are complex .
6. Reciprocal Buying - Some big companies from basic industries like oil , steel , rubber and medicines resort to the the practice of reciprocal buying .Reciprocal buying is simply the practice of giving preference to suppliers who are also customers.
7. Leasing Out rather than purchase the industrial products is the trend because of heavy price of the products .
TYPES OF INDUSTRIAL PRODUCTS :
1. Materials and parts:
Raw materials are the basic materials that actually become part of the product and that enter the manufacturer’s product completely.
They are provided form mines, forests, oceans, farms and recycled solid wastes.
It has two types:-
a). Raw materials- Includes farm products like cotton , sugar cane , oil seed and natural products like minerals (Iron ore , Crude petroleum ) .
b). Manufactured materials and parts - Includes
- Component materials : grass , iron , plastic .
- Component Parts : Tyre Bulb , Steering , Battery .
2.Capital Items:
Capital items consist goods that are used in the production of finished goods like office accessories and operating materials.
It has two types:
a). Accessory equipment
b). Installations
3. Supplies:
Supplies facilitate productions, but they do not become part of he finished product.
EXAMPLES -Paper, pencils, oils, cleaning agents and paints .
4. Industrial Services:
Industrial services include maintenance and repair services such as machinery repair and business advisory services such as legal, management, consulting, advertising, marketing research services.
These services can be acquire internally as well as externally .
LEVELS OF PRODUCT
Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the same or exceeds the perceived value.
Kotler defined five levels to a product:
Kotler defined five levels to a product:
1. Core Product
This is the basic product and the focus is on the purpose for which the product is intended.
For example, a warm coat will protect from the cold and the rain.
2. Generic Product
This represents all the qualities of the product. For a warm coat this is about fit, material, rain repellent ability, high-quality fasteners, etc.
3. Expected Product
This is about all aspects the consumer expects to get when they purchase a product. That coat should be really warm and protect from the weather and the wind and be comfortable when riding a bicycle.
4. Augmented Product
This refers to all additional factors which sets the product apart from that of the competition. And this particularly involves brand identity and image.
EXAMPLE- The warm coat is in style, its colour trendy and made by a well-known fashion brand . But factors like service, warranty and good value for money play a major role in this.
EXAMPLE- The warm coat is in style, its colour trendy and made by a well-known fashion brand . But factors like service, warranty and good value for money play a major role in this.
5. Potential Product
This is about augmentations and transformations that the product may undergo in the future.
EXAMPLE- A warm coat that is made of a fabric that is as thin as paper and therefore light as a feather that allows rain to automatically slide down.
EXAMPLE- A warm coat that is made of a fabric that is as thin as paper and therefore light as a feather that allows rain to automatically slide down.
