Product is the first of the 4Ps of Marketing Mix that marketing departments and marketing managers need to consider in their marketing plans. Every business needs to make a decision which product or products to offer to its customers to meet the corporate aim and business objectives.
The product has to be right to meet the needs and wants of the customers.
While customers might buy a product for the first time when they see it advertised or encouraged by a low price, without a product meeting customers’ expectations, they will not buy it again.
What is meant by the term product?
A product is either a tangible good or an intangible service, or a combination of both, supplied by a business in order to satisfy needs and wants of customers. It can be anything offered to the market including physical objects, services, persons, places, organizations or even ideas.
Products are the end result of a production process sold to the market for profit mainly for consumption, but also for attention or acquisition.
Products include both goods and services. A good has a physical existence such as coffee beans, cars, computers, washing machines, candies, airplanes, etc. A service has no physical existence such banking, transportation, education, insurance, entertainment, etc.
A product can be sold either to private individuals like you and me, to other businesses to support production processes or to governments to serve the general public.
Both products and services shall fulfill urgent needs and desires of customers.
A product is supposed to add value
Intense market competition forces businesses to constantly develop new products.
Most importantly, products must add value to customers to have a chance of success in the marketplace. They need to be developed having the target customer in mind.
It is each customer who determines the added value. Generally, value added comes in two broad forms:
- Functional Value. This is what the product actually does.
- Emotional Value. It includes psychology and feel-good factor behind the purchase of a product.
Business managers should create a value package for their products. A value package is everything about a product that the consumer evaluates when deciding to buy it. This includes both tangibles and intangibles features of a product such as price, packaging, store appearance, delivery method, past experience, brand image, company reputation, etc.
Products must also have good design. Product design refers to both the physical aspects of a product and the process of adding value through marketing to the product.
Classification of products: Consumer Products & Producer Products
Products can be classified as consumer products and producer products (industrial products). It is the reason for purchase that determines whether the product is classified as a consumer product or producer product. It is also worth remembering that different marketing strategies will be used depending on the type of product.
Let’s now take a look at specific features of consumer products and producer products (industrial products).
Consumer Products
Consumer products are sold to end users who are private individuals for their own personal use. Consumer products include consumer goods and consumer services.
Consumer goods: a tube of toothpaste, a pair of sports shoes, a chocolate bar, etc.
Consumer services: personal bank accounts, doctor’s treatment of a patient, television program, etc.
Consumer products can be further classified into Low Involvement Products (LIP) and High Involvement Products (HIP).
A. LOW INVOLVEMENT PRODUCTS (LIP)
These are products where consumers do not need to think too much before purchasing them.
a. Fast Moving Consumer Goods (FMCG). Everyday convenience products. For example, fruits and vegetables, food items sold in grocery stores, convenience stores and supermarkets, etc. Fast Moving Consumers Goods (FMCG) are purchased very frequently by customers like every day or a few times a week.
b. Perishables. Products that last very short and must be consumed right away otherwise will disappear. For example, ready food, flowers, coned ice-cream, newspapers, TV news, etc. Perishables are purchased less frequently.
B. HIGH INVOLVEMENT PRODUCTS (HIP)
These are products where consumers do need to think and consider a lot before purchasing them.
c. Consumer durables. Very long-tasting items. For example, cars, bicycles, home furniture, diamonds, etc. Consumer durables are purchased irregularly and very infrequently, often once or twice in the customer’s lifetime.
d. Specialty products. Exclusive and highly expensive items. For example, designer jewelry, customer-made sports cars, exotic foreign holidays, unique seafood and herbs, etc. Specialty products have premium prices, account for a very high proportion of customers’ incomes and are purchased maybe only once or twice in their lifetime.
Producer Products
Producer products, or industrial products, are sold to other businesses for commercial purposes to help in running of a business. They are used in the production process to make other products.
Producer goods: a bottle-filling machine, raw materials such as steel, glass or rubber, a hospital bed, new desks for the corporate office, components, etc.
Producer services: corporate bank accounts, office cleaning, building a factory, etc.
In reality, many products such as furniture, minivans, smartphones, computers, banking or insurance can cater for both personal use and commercial use. Their classification will different though based on who buys the product – either an individual or a business.
Why is a product the key part of Marketing Mix?
Thinking about a product starts with discovering customer expectations through market research regarding features, performance, quality, durability reliability, appearance, etc.
The product must be differentiated (1) to be chosen instead of competitors’ product and right to establish customer loyalty in the long-term. Each of the products moves through its life cycle (2) on the marketplace. As the business creates more products over the years, managers will find themselves managing the whole product portfolio (3).
CONCEPT A: Differentiation
One of the most important aspects of marketing is to create Unique Selling Point (USP) for the product to distinguish it from competitors. Products can be differentiated through functions, branding, quality, additional services, packaging, after-sales care, etc. What makes one product different from another is the benefit of that product for the customer who determines the value added.
CONCEPT B: Product Life Cycle (PLC)
Products go through stages ranging from development to withdrawal from the market. Product Life Cycle (PLC) shows the different stages that one product passes through with investment, sales and profit expected at each stage. The product moves through its development, introduction to the market, growth, reaching maturity until eventually declining and dying being removed from the shops. A product’s life is measured using the value of sales. The speed at which a product moves through its life cycle varies considerably between different products and markets. The good news is that a product’s life can be prolonged using extension strategies. Additionally, unlike human beings, products can be reborn.
CONCEPT C: Product Portfolio
Businesses should manage their products carefully over time to ensure that they continue meeting customer needs and wants. Product Portfolio shows the range of products at different stages of the product life cycle serving different market segments. One widely-known model of product portfolio planning, management and analysis used by business is called The Boston Matrix. It enables to effectively manage groups of brands and product lines. Products are classified into four categories linking growth rates, market shares and cash flows. Managing Product Portfolio is important for the cash flow of a business organization to avoid having a vacuum – meaning no new products being developed and sold.
Classification of products: Product Line, Product Range, Product Mix
Businesses, especially large firms, tend to sell many related products in different varieties in order to cater to large customer base, increase sales revenue and maximize profits.
Let’s look at the differences between the product range, product lines and the overall product portfolio of a typical business.
Product Line
It describes the varieties of a particular product with the same characteristics that serve the same purpose in a particular market. For example, all the different types of computers sold by Apple such as MacBook Air, MacBook Pro, iMac, Mac mini, Mac Studio and Mac Pro.
Product Range
It describes the variety of different product lines that a business produces. Or, all the different types of products that the business mages. For example, Apple sells product lines of different products such as smart phones, laptop computers, tablets, watches, music players, earphones, etc.
Product Mix
Product Portfolio It describes the combination of all the product ranges and items that a particular company offers for sale within each product line. Or, the range of products a company has available for consumers at any time. For example, Apple’s product mix includes Mac, iPad, iPhone, Watch with many portfolios’ models such as iPhone 14, iPhone 14 Pro, iPhone 13, iPhone SE and iPhone 12.
Remember that too much diversification can cause loss of focus. Maybe a subsidiary or affiliate can be used to improve the marketing of another product line.
Why developing a product?
While some markets are changing faster and other markets are changing slower, nevertheless, companies need to develop new products in order to stay competitive.
New Product Development (NPD) is based on trying to satisfy customer needs and wants that had been identified in market research.
The whole marketing department will work with engineers and scientists on researching and building a new product.
Marketing managers will need to ensure that any new idea is developed into a real product that can be profitably sold to customers on the market.
Example 1: The Coca-Cola Company has developed many new flavors of its classic Coke including Coca-Cola Cherry, Coca-Cola Vanilla, Coca-Cola Lime or Coca-Cola with coffee.
Surely, New Product Development (NPD) can be costly and does not guarantee success, but without launching new products, it is not likely that any business can withstand competition.
So, what makes a product successful then?
There are countless numbers of new products around the world being launched every year in both consumer markets and producer markets. However, only few of them succeed to become global successes while most of them fail, unfortunately.
Successful products must add value for customers and their lives, stand out from competitors and be a fit for purpose to satisfy the customer.
What make a product special?
- A product must satisfy existing needs and wants of customers.
- The product design such as performance, reliability and quality should all be consistent with the product’s brand image.
- It should be capable of stimulating new wants from the customer.
- A new product cannot be too expensive to produce (relative to the price that could be charged).
- It can be assumed that the first business to produce the new product or introduce new changes to the original product before its competitors will be successful.
- Finally, a successful product must have something very distinctive that makes it appear different.
Successful products are not sold once or twice but continuously. Customers buy them over and over again over the years or even decades becoming loyal customers to the brand.
Without added value, products will not stand any chance of success in the long-term.
Marketing has a big role in adding value to a product which is necessary for customers to benefit from its consumption. Customers expect to get value for their money – the money spent must justify the benefits received. Marketing activities can add value to a product most commonly through the use of uniqueness, branding and packaging which will be described in the next couple of articles.
