In this article we will discuss about product in marketing! Learn about:- 1. Meaning of Product 2. Product Classification 3. Levels 4. Types 5. Elements 6. Levels 7. New Product Adoption 8. New Product Diffusion 9. Product Differentiation and Its Basis 10. Product Line Analysis 11. Product Mix Analysis 12. Attributes 13. Policies 14. Adaptation and Strategies and Other Details.
- What is a Product
- Product Classification
- Product Levels
- Types of Product Entities
- Elements of Product
- Levels of Product
- New Product Adoption
- New Product Diffusion
- Product Differentiation and Its Basis
- Product Line Analysis
- Product Mix Analysis
- Product Attributes
- Product Policies
- Product Adaptation and Strategies
- Dimension of Product
- Product Quality
- Stages through which a Consumer goes through while Buying a Product
- Importance of Product
- Causes of Product Failure
1. What is a Product:
Product refers to a good, service or idea consisting of a bundle of tangible and intangible attributes that satisfies consumers and is received and exchanged for money or some other unit of value. In other words, products can be offered to a market that might satisfy a want or need.
The market place is dynamic. The customers’ changing needs and wants, and the rapid technological changes compels the marketer to make frequent changes in their existing product line so as to align themselves with the changing demands of the markets. Therefore, product is a considered to be a key element in marketing and begins with formulating an offering to meet customers’ needs and wants.
It is anything which can be offered to a market to satisfy a need or want.
A product is actually a complex, multidimensional concept. “Products” comprises of tangible, physical products as well as services. It is much more than just a physical object. It is anything which can be offered to a market to satisfy a need or want. It helps to fulfil the need, desire or expectation of the consumer.
It is the sum total of all physical, symbolic, emotional, and service attributes. Products include physical goods, services, experiences, events, persons, places, properties, organisations, information, and ideas. Through products, the customers can avail the complete bundle of benefits or satisfactions.
According to Philip Kotler – ‘A product may be defined as a set of tangible, intangible and associate attributes capable of being exchanged for a value with the ability to satisfy consumer and business needs.’
The marketer needs to address five product levels for adding more customer value:
(i) Core benefit – The most important attribute is the fundamental service or benefit for which a customer is really buying, for example – A hotel guest is buying rest and sleep.
(ii) Basic Product – Adding physical dimensions to the product like bed, bathroom, towels, closet, etc.
(iii) Expected Product – A set of attributes and conditions buyers normally expect when they purchase the product. For example – a hotel guest expects a clean bed, working electrical fittings and a relative degree of quietness.
(iv) Augmented Product – It means to provide something beyond the expectations of the customer. For example – A TV with remote control, fresh flowers, fine dining etc.
(v) Potential Product – It includes all the possible augmentations and transformations the product or offering might undergo in future because of general change in behavioural trends and developments.
Product is everything the purchaser gets in exchange for his money. From a strictly technical point of view, a product consists of a number of raw materials put together so that the end result (i.e., product) serves a useful purpose of consumption. From the economic point of view, it consists of a bundle of utilities involving various product features and accompanying services.
These utilities are created by a set of tangible, physical and chemical attributes assembled in an easily identifiable form. A consumer is buying what is expressed economically as ‘want satisfaction’.
A product is, therefore, not a physical object but consumers perceive it to be. It is a “bundle of physical services and symbolic attributes” expected to yield satisfaction or benefits to the buyers. Thus, the product is defined as the ‘Total Product’.
The total product is more than just a physical product and includes related functional and aesthetic features. From the point of view of the firm, it does not sell a product but sells ‘product benefits’. Thus, “product is a complex bundle of tangible, intangible and external attributes including functional, social and psychological utilities or benefits.”
2. Product Classification:
A product can be classified on the basis of its tangibility, durability, and usage. The classification of a product affects the pricing, place, promotion, and distribution policies of an organization.
Now, let us discuss the various methods to classify a product in brief:
i. Tangibility:
Divides products into two types, which are mentioned as follows:
a. Tangible Products:
It refers to the products that can be touched and felt. For example, bottle, brush, bed, and mug.
b. Intangible Products:
It refers to the products that can only be felt but cannot be touched. For example, insurance and medical treatments are the services that can only be felt but cannot be touched.
ii. Consumer-Based Products:
It refers to the products that are consumed by customers and not resold in the market.
Consumer-based products are divided into three different types of products, which are as follows:
a. Specialty Products:
It attracts the attention of some specific consumers based on their interest, hobbies, profession, or tastes. When a customer has a specific need then he/she is satisfied only with a specific product. In this case, the customer does not compromise and make more efforts to find the specific product.
For example, if an individual wants Canon camera of 15 megapixels with Electro-Optical System (EOS) technology then he/she will not purchase any substitute product.
b. Unsought Products:
It refers to the products that are not well known in the market. The customers are highly skeptical of buying those products. The organizations use various aggressive marketing techniques to sell these products and attract more customers.
For example, earlier, few customers were aware about LED TV in India. Now, the organizations aggressively market this product by appointing various famous Bollywood celebrities as their brand ambassadors.
c. Shopping Products:
It represents the products that are bought by the customers after a precise study of products’ merits and demerits, prices, and packaging. For example, before buying a washing machine, a customer will research through different shops, neighbors, and resources. After research, he/she will buy the best suitable washing machine out of available options.
iii. Industry-Based Products:
It refers to the products that satisfy the requirements of a particular industry. These are the products or materials required by the industry to process and deliver finished products to its customers.
These are further classified as follows:
a. Raw Materials:
It refers to the materials that are used in the manufacturing of a product. For example, timber, iron ore, gold, and tobacco are used to manufacture furniture, building, jewelry, and cigarette, respectively.
b. Capital Products:
It includes the products that facilitate the processing and production of different products. This type of product requires huge infrastructure and after sales services. For example, forklifts are used by organizations to carry raw materials.
c. Maintenance and Repair Supplies:
It refers to the products that are required to process and produce a finished product. For example, lubricants and tools are essential for the maintenance and repair of various industrial equipments.
iv. Durability:
It refers to the life span of a product. The durable products provide benefits for a longer period of time. On the other hand, nondurable products are purchased for immediate consumption. For example, eatables or beverages are nondurable products; whereas, refrigerators, televisions, or clothes are durable products.
3. Product Levels:
A product has many other dimensions besides its physical appearance. In fact, a product is like an onion with several layers and each of the layers contributes to the total product image. Philip Kotler feels that a product has five levels, or dimensions which must be distinguished.
These dimensions are:
(i) Core Benefit,
(ii) Basic Product,
(iii) Expected Product,
(iv) Augmented Product, and
(v) Potential Product.
Each level adds more customer value and the five levels constitute a customer value hierarchy.
(i) Core Benefit:
It is the fundamental dimension of a product as it represents a bundle of benefits to its prospective buyer. The core product answers the question – “What is the buyer really buying”? For instance, a woman buying a washing machine is buying comfort and not a mere collection of drum, heater and nuts and bolts; and a woman buying a lipstick is buying hope and not a set of chemical and physical attributes. The basic job of a marketer is to sell the core benefits.
(ii) Basic Product:
It is the larger packaging of a core product. The basic product is a, what the target market recognises as the offer. For instance, washing machine, is recognized as collection of drum, heater, nuts and bolts; and lipstick as collection of chemical and physical elements, etc. Services have also got features which are generally intangible. Thus, services like auto repair, electricity supply, management consultancy, psychological counselling and medical consultation are all products.
(iii) Expected Product:
The customer expects the basic product, say computer, to be enveloped by certain features (Pentium-120,1.2 G.B., 1.44 FDD), style (Desktop or Tower model), quality and brand (Compaq, Altos), package (Carton providing information on contents, and safety of the product), and a warranty (one-year, two-years, three-years). The most visible part of the product is its features.
Thus, an expected product is that product which is normally taken for granted by the customer. However, the minimum expected features/benefits may differ from product to product and from industry to industry. Therefore, some differentiation can be seen at this stage.
(iv) Augmented Product:
It is a broader conception of the product. It represents the totality of benefits that a person may receive or experience in getting the formal product. The augmented product of a T.V. seller is not only the T.V., but also delivery, free installation, guarantee, and service and maintenance. This dimension of the product is very important for a firm operating in a competitive market. The firm that develops the right augmented product will be able to attract more customers and survive in the competitive market.
Competition in Europe and America starts at this level of product acceptance. It does not start at the basic product level. It starts only when customer expectations are not met equally by all the manufacturers. If they are met, the next stage of differentiation is the augmented product. Here, the competition hot up if all the major brands have almost similar features, quality, style, etc.
However, a company must consider the relative cost of the augmentation and the price accepted for the product by the customer. The resulting trade-off sets the limits for product differentiation strategy to be adopted by the company.
(v) Potential Product:
The last level of the product is its potential part, i.e., all the unexpected changes in technology, attributes, features, styles, colour, grade, quality, etc. that might change the structure and character of industry. For example, today changes in information technology have brought about changes in the processing speed of computer. This has made us to anticipate reduction in the size and weight of computers and introduction of new features.
The product levels indicate the importance of all benefits that are or could be passed on to a consumer. Further, they help indicate the importance of creating differentiation by changes in the product levels which might be required to counter competition.
4. Types of Product Entities:
The various types of products entities are:
a. Goods:
Goods are tangible in nature, have physical existence, and their ownership can be transferred through exchange of values. Eg. Food items, refrigerators, computers, furniture items, etc.
b. Services:
Services are intangible in nature. Even though values are exchanged through services; the latter cannot be owned. Services can be given alone for a price or can be given along with goods. Eg. Hotels, beauty parlours, education, insurance firms, accountants, lawyers, doctors, etc.
c. Events:
Events are time based and are organised by the marketers for participation. Ex- Trade fairs, film-fare awards, pulse polio week, etc.
d. Experiences:
Experience are created and marketed by marketers through combination of various goods and services. Eg. Water parks, rock climbing camps, holiday tours packages, etc.
e. Persons:
Various celebrities are used by the marketers to promote their organisation, products, or services. These celebrities are marketed by their relationship managers. Eg. Amitabh Bachan, Sachin Tendulkar, etc.
f. Places:
Place includes various historical places, natural spots like lakes, gardens visited by the tourists. It also includes SEZs and IT hubs which attracts the businessmen to set up their businesses. Eg. Hinjawadi IT park, Cyber city at Hyderabad, etc.
g. Properties:
Properties include immovable assets such as land and building or movable assets such as stocks and shares. Marketers plan, construct, and sell properties as per the demands in market.
h. Organisations:
Organisations are marketed in order to establish their strong image in peoples’ mind; which in turn helps the sales of products of the company. It emphasizes on creating and retaining a brand image in public’s mind. Eg. TATA – Improving the quality of life, etc.
i. Information:
It includes production, packaging and distribution of information. The various media such as print media, audio visual media, electronic media, are some of the sources for information dissemination. In addition to these CDs, books are also used in information markets for spreading the information.
j. Ideas:
New ideas are generated and marketed by advertisers and visual artists through radios or television advertisements. Also, some other ideas are converted into real products and sold into the market. Eg. Calorie free biscuits, etc.
Goods and Services Continuum:
Goods-service continuum is a tool that helps marketers to visualize the differences and similarities between goods and services. According to this idea, products contain elements of both goods and services in varying degrees. It states that the dichotomy between physical goods and intangible services is an oversimplification and there are no discrete categories.
According to the continuum theory, pure services lie on one terminal point, pure commodity goods on the other terminal point, and most of the products lay in-between these two points. Eg. Some utilities provide pure services like education; other utilities provide pure products such as grocery; whereas a car showroom not only provides physical goods to the customers, but it also provides services in form of buying assistance, financial assistance, after sales services and maintenance, etc.
According to this continuum there are variables which differentiate goods from services. Eg. Goods can be transferred instantly while services are intangible and delivered over a period of time. Goods can be returned after purchase while a service once delivered cannot be returned. Goods are not always tangible and may be virtual e.g. a book may be paper or electronic.
Characteristics that distinguish services from goods:
i. Intangibility:
Services are more intangible than goods. Pure goods are tangible, pure services are intangible, and a mix has tangible as well as intangible components.
ii. Inseparability:
Marketers must try to even out demand. Services are more impacted by the interaction between the service provider and the customer than goods.
iii. Perishability:
Services are more perishable than goods. Services are produced and consumed at the same time.
iv. Difficulty of Standardization:
Services cannot be standardized. Delivery of services differs as per the nature of the customer and prevailing environmental condition.
v. Frequent Requirement of Interaction between Buyer and Seller:
Since most of the services are intangible, the marketers need to convey the quality of service to the customers through marketing actions.
vi. Variability:
Services are more variable than goods. Self-service and equipment’s can decrease variability.
5. Elements of Product
:
A product is not just a bundle of physical attributes, but also includes various services – before and after the sale, symbolic particulars, all of which satisfy the customers and bring maximum consumer satisfaction.
The product is the sum total of three things – the intrinsic characteristics, its material and constructions, its ability to perform – the extrinsic characteristics its packaging, brand or trade mark and the intangibles associated with it (Professor Harry L. Hanson)
This is most fundamental level of any product. It is the perceived benefit which the consumer is actually buying. It answers the question “what is the buyer really buying”. It is also known as benefits and is in general intangible. So when we buy a camera, the core product is not the camera but sweet memories in the form of photographs. A person buying a TV set buys the entertainment through audio and visual impact and not simply a collection of wires.
It is a larger packaging of a core product. The basic product is what the market recognized as the product. It is the product that the consumers buys, as this product has certain features design, style etc. A TV set is recognized as the collection of picture tube and wire etc.
Expected layer refers to the expectations a customer has from the product in his mind regarding quality, features, service, maintenance etc.
4. Augmented Product:
It refers to the sum total of benefits that the consumer user/obtain from the product after purchasing it. It usually consists of lots of added value like warranty, after-sales services, repairs, brand value etc. which enhances the value of the product and provides a competitive edge to it. Augmentation enhances the value of the product.
Potential product comprise of all future changes in technology, features, style, colours etc. that might change the current product. Innovations are frequently done by companies to maintain these competitive positions and distinguish their product.
6. Levels of Product
:
The product consists of different levels. The grouping of these levels creates the image of the product.
Philip Kotler has made it clear about the product that consumers prefer those products which have good image.
The product has three under-mentioned levels:
1. Core Product:
Core product is usually in the form of durable and non-durable goods. This is the basis of total output. Core product satisfies the main wants of the consumers. Some imperceptible elements are also received by the consumers along with the core product e.g., social prestige is gained by the consumer when he buys a car. This is called core product.
2. Actual Product:
Actual product is that physical commodity which we use. Car is an example of actual product which is manufactured by using different products such as steel body, nuts, bolts, glass etc. The core product turns into actual product with the help of car brand, style, facilities etc.
3. Augmented Product:
This is taken to be broad concept of product. Some services and benefits are obtained by the consumers when they buy some products. These services and benefits are in the forms of payments in instalments, home delivery and after sale services etc. The marketer faces the competition in the market by providing such services and benefits to the buyers. This adds to the goodwill of the company too.
7. New Product Adoption:
Adoption is a process through which a customer finally decides to use a new product. A customer passes through a mental process before adopting a product. The organizations use two approaches to launch a new product into the market. Mass market approach targets all the segments of the market.
It is comparatively older in approach and has two major drawbacks-heavy marketing expenditure and the wastage of advertising exposures. Heavy-user approach targets the bulk or innovative buyers. This approach is useful when users are identifiable and can easily adopt the product. The new product adoption process passes through various stages.
The explanation of the five stages of new product adoption is as follows:
1. Awareness:
It refers to the stage in which prospective customers get to know about a new product.
2. Interest:
It refers to the stage in which customers become personally interested and consequently desire more information about the new product.
3. Evaluation:
It refers to the mental comparison of all possible advantages and disadvantages of the new product.
4. Trial:
It means the usage of a product by customers on a small scale to know its suitability for a particular need.
5. Adoption:
It replaces the old product by the new one.
8. New Product Diffusion:
Diffusion is a process through which a new product is accepted by the customers of a particular market. The diffusion process of a new product in the market follows the five stages until it covers all potential customers.
Now, let us describe the types of adopters in diffusion process of a new product in brief:
1. Innovators:
They buy the product right at the beginning of product life cycle. They are not concerned about the risk associated to the new product and pay premium prices. They focus more on their lifestyle and opt for anything new that can add to their social status of being the first mover.
2. Early Adopters:
They wait till the time innovators find the product suitable for particular needs. They are opinion leaders and adopt the product after some time. They play a very crucial role in the success of any new product as they it induces product purchasing.
3. Early Majority:
They wait till the time a new product becomes acceptable in the market. They are influenced by early adopters and have some status in the society.
4. Late Majority:
They purchase a product after early majority. They are risk aversive and purchase the product after considering its benefits, cost, and usage.
5. Laggards:
They buy a new product when it is available at the cheapest price. They are also called bargain hunters.
9. Product Differentiation and Its Basis:
There are varieties of products available in the market to cater to the needs of customers. The organizations try to differentiate their products from the competitors to gain edge in the market. For example, there are many varieties of cell phones in the Indian market. The organizations manufacture cell phones with different features to attract customers and avoid stagnation in the market.
Product differentiation can be done on the basis of following features:
i. Design:
It helps to differentiate a product from other products. An organization spends a large amount of money in research and development for the innovation and better design of a product. Generally, the organizations face a problem of counterfeiting and piracy.
ii. Features:
It includes the functionality of a product and its characteristics. An organization can distinguish its products by adding or deleting particular features. For example, Spice Mobiles and Micromax added various new features, such as dual SIM.
On the other hand, some organizations remove unwanted features to make the product valuable for the customers. For example, Microsoft has removed several features, such as InkBall and Windows Mail from its earlier version of Windows Vista and has added several modern and advanced features in Windows 7.
iii. Quality:
It refers to providing consistent performance of a product according to set standards over a period of time. The customers always have some set of standards and specifications for a particular product. The customers can be ready to pay premium for high quality products. For example, Tata Steel has always maintained a high quality in delivery and performance. It is the first Indian organization to be certified with Six Sigma Black Belt.
iv. Durability:
It refers to the quality of a product to provide same level of satisfaction during the period of product usage. For example, Asian Paints spends a large amount of money in research and development of quality products, such as ACE Exterior Emulsion.
10. Product Line Analysis:
Product line includes the list of some specific products with similar attributes and functions. An organization classifies its different product offerings on the basis of specific preferences of customers. Product line analysis helps an organization to produce and strategically position similar products. Generally, an organization offers different product lines and conducts market research for its each product line.
The four major decisions that are included in the product line analysis are as follows:
i. Build:
It refers to creating a product line. It requires huge investment from the organization to introduce a product line.
ii. Maintain:
It refers to balancing and managing the product line in the competitive market.
iii. Harvest:
It refers to reaping the benefits derived from the product line.
iv. Divest:
It refers to a situation when an organization disposes off its non-profitable product line before profit turns into loss.
It is very important for an organization to find out the return on investment from different product lines. This can be done with the help of sales and profit analysis of different product lines of an organization.
Following are the four categories of a product:
i. Core Products:
It refers to products that are promoted on a large scale and have high sales volume and low profit. For example, low cost mobile phones have high sales volume and low profit.
ii. Staples:
It refers to those products that are not promoted on a large scale. These products have low sales volume and high profit margins. For example, IBM servers have low sales volume but yields high profit.
iii. Specialties:
It includes those products that require less promotion and have low sales volume and low profit. For example, high-resolution digital Single-Lens Reflex (SLR) camera has low sales volume and profit.
iv. Convenience Items:
It includes those products that require less promotion but have high sales volume and profit.
For example – Software and Sound cards.
11. Product Mix Analysis:
The combination of product lines of an organization is called product mix or product assortment. Product mix is a set of similar or non-similar products produced by an organization. There can be one or more product lines in a product mix.
The product mix of an organization has four elements – width, length, depth, and consistency.
Following are the elements of a product mix:
i. Width:
It refers to the total number of product lines in an organization. Food, home care, personal care, water, nutrition, and beauty products are the six product lines that are collectively called width of product mix.
ii. Length:
It refers to the total number of items available in a product mix. The length of the product mix of Hindustan Unilever Limited is 34.
iii. Depth:
It refers to the total number of items in a product line. The product line of personal care has the depth of 13 items.
iv. Consistency:
It measures the extent to which product lines of an organization are related with each other. For example, if an organization produces shampoos, oil, conditioners, and other hair care products then it maintains consistency in its product lines.
12. Product Attributes:
As the product moves away from its core or generic form, a number of attributes or features are added in order to differentiate it from those of its competitors. These attributes include a variety of additional features, quality finishing, design, branding, packaging, customer service etc. In each case attributes should be developed to meet the needs of the target market and provide a competitive advantage for the product.
Product attribute decisions involve deciding the quality, features and design of the product as discussed below:
(i) Product Quality:
It refers to the ability of the particular product item to perform its intended functions, and as such, it summarises factors such as durability, reliability, precision, performance and ease of operation. The selection of a quality level depends on the nature of the market or market segment being targeted and also on the position selected for the product.
(ii) Product Features:
Product features also qualify as an important source of product differentiation. In addition to the core product, the firm must offer a range of necessary features, that is, the features that a customer would expect to see in the product. Unique features help in product differentiation with respect to those of competitors.
(iii) Product Design:
The product design should indicate its usefulness and makes it attractive. Decisions have to be taken in this regard too. A product can also be distinguished because of its unique style or design which helps to create a distinct “personality” of the product. A distinctive design is difficult to create, relatively rare and usually expensive. In consequence, most mass market goods are not characterised by distinctive designs and if anything, there is a tendency for business firms to use fairly standard styles for their products.
13. Product Policies:
Product policies are the general rules set up by the management itself in making product decisions. Products of a firm are the backbone with which profits are earned, enabling the firm to exist. Therefore, the product is the fundamental feature which determines the firm’s success or failure. Good product policies are the basis on which the right products are produced and marketed successfully.
The fundamental function of a product policy is that it guides the activities of a firm as regards product planning and development. The policy of the firm must be to manufacture right products for the consumers. Product policy is concerned with defining the type, volume and timing of the products a company offers for sale.
A product policy, generally, covers decisions in the following areas:
(i) Product planning and development.
(ii) Product line.
(iii) Product mix.
(iv) Product branding (Identification)
(v) Product style.
(vi) Product positioning.
(vii) Product packaging.
14. Product Adaptation and Strategies
:
Product Adaptation:
It is not necessary that a product which is good and perfect for market ‘A’ will be equally successful in market ‘B’. There could be various reasons for their anomaly. Every market has different physical conditions and functional or practical requirements. For example, Russians are taller than Indians, therefore, they have longer legs and arms.
The clothes that fit an Indian may not fit the Russians even if the waist size is the same. Moreover the buyers’ tastes may differ. The saleability of a product in another market depends a lot on the adaptability of the product so that it suits the market.
Usually, the exporters want to disregard the differences in markets. They want to sell the same product everywhere. But an important factor in a product’s success in the international market is its adaptability. The product must match with the cultural and the economic characteristics of a market. The product sold in China should suit the Chinese, not the Indians. Some products cannot be sold without necessary adaptation,’ e.g., electronic goods and automobiles.
The electrical systems in different countries are different. In case of automobiles the drivers tend to differ. Some countries have left hand driving while some have right hand driving. Size, material functions, styles, designs are some factors to which adaptability is related. Sometimes, the cost of adaptability could be less and it could be easy. But many times it could be expensive and difficult. It is very important for an exporter to keep in mind the cost factor before starting adaptability process.
Factors Necessitating Design Changes:
Following environment and design elements have been identified by Robinson:
Environment Elements:
(i) Technical skills level
(ii) Labour cost level
(iii) Literacy level
(iv) Income level
(v) Interest rate level
(vi) Maintenance level
(vii) Climatic difference
(viii) Standard difference
(ix) Availability of power
(x) Other special conditions, and
(xi) Availability of raw materials.
Design Elements:
(i) Simplification of product
(ii) Automation and manualisation
(iii) Simplification of product and remarking
(iv) Quality and cost changes
(v) Change of tolerance
(vi) Product adaptation
(vii) Product simplification and durability improvement
(viii) Product resizing
(ix) Product mix
(x) Change in product structure, and
(xi) Product redesign and invention.
All of these elements are relevant in the marketing of durable consumer goods and machinery items. These items are not relevant for other consumer goods such as food, clothes etc.
Product Adaptation Strategy:
In this competitive age it is necessary to devise an adaptation strategy for a product to make it suitable for the international market. A product may be found wanting on various fronts in various markets. A product may have a better chance of selling if it is slightly modified instead of a product which is identical to the original product. In this regard Warren Keegan has given a few strategies.
They are as follows:
1. One Product One Message-Worldwide:
Under this strategy one product is sold worldwide using the same advertising and promotional themes. The famous Coca-Cola Co. used it successfully. This is a cost effective strategy. This strategy does not work when there are clear differences in the likes and dislikes of the buyers.
2. Same Product, Modified Communication:
Under this strategy the company sells the same product everywhere but uses different advertising and promotional themes. These changes are based on local requirements, e.g. Americans drive bicycles for fun and pleasure. Therefore Indian companies advertise their bicycles in U.S.A as a means to have fun not as a transportation medium. This strategy is also inexpensive as the product is the same, therefore, the expenses incurred on research etc. are saved.
3. Product Adaptation-Communication Extension:
In this strategy the product is slightly modified to suit local requirements. This strategy is usually used in case of detergent products. The local water and climatic conditions are taken into consideration while modifying the product. The communication process remains the same. This is also a cost effective strategy because the promotion strategy does not change. Some extra expenditure does take place in product adaptation.
4. Double Adaptation:
In this strategy double adaptation is done. Both the product and promotion are adapted. This is a combination of second and third strategies. An example of this strategy is the garment business where both the product and promotion are altered to suit the local markets. This is an expensive strategy but it is suitable for the big international markets. The expensive factor is not given much of importance.
5. Product Innovation:
When the cost factor plays an important role in the international market, there arises a need to develop a low cost product. In this case the industry needs to adopt a strategy which can reduce the cost. Detailed research is very important in this strategy. This is the most expensive product adaptation strategy. However, it is also the most beneficial strategy as the benefits arising from an international market outnumber the costs.
Choosing the Correct Strategy:
The following points have to be kept in mind while choosing the product adaptation strategy:
1. Product Market Analysis:
A company should do product market analysis to choose the right product adaptation strategy. WHO uses the product? WHEN is it used? WHAT is it used for? HOW is it used? All these factors are important in product market analysis.
2. Firm’s Objectives:
A firm’s objective is the second important factor in choosing the right strategy. If the profit factor is important then the product extension strategy is the best. Same product is sold worldwide with the same promotion. There are no extra costs.
3. Financial Position of the Firm:
The financial position of the firm is to be kept in mind while choosing the product adaptation strategy. This is necessary because cost is involved in adaptation.
4. Packaging:
A factor that is very important in product adaptation for the international market is packaging. Size, design, colour and the language of packaging should be according to the local market.
In short we can say that the product adaptation strategy should be chosen keeping in mind all the relevant factors.
15. Dimension of Product:
In business and marketing products marketed by a company may be classified broadly as goods and services. The quality of goods is generally defined in terms of the physical characteristics of the product or the goods marketed.
However, it is not possible to define quality of services in terms of physical characteristics alone. Quality of service is judged by the customers on many different dimensions in addition to the physical characteristics associated with the service.
There are five aspects or dimensions of service which are found to be very important in determining customer perception of service quality.
These are:
(i) Reliability:
The extent to which the service performed matches implicit or explicit promises made by the service provider regarding the nature of service. For example- the basic quality of room decor, food and facilities provided in a hotel.
(ii) Responsiveness:
The willingness to help the customer promptly in case of special and unforeseen requirements. For example- helping a customer who falls sick when staying in the hotel.
(iii) Assurance:
The extent to which the service provider and the staff is able to inspire trust and confidence. For example- the customer dining in a restaurant may not be able to directly judge the level of hygiene maintained by the restaurants. Here it is not only important to actually provide hygienic food but also to inspire confidence that the food is hygienic.
The assurance is regarding giving the customer peace of mind that everything will be taken care of as required, rather than just actually taking care when the need arises. For example – a doctor with MD degree may inspire more assurance than a doctor with just an MBBS degree, although the basic treatment provided by them may be of same quality.
(iv) Empathy:
This is being able to understand the needs of the customer as an individual and meet the special requirements of the customer. This is more about customizing the service and the general service provider behavior for each customer, rather than providing a uniform high quality treatment to all.
Many companies try to create this sense of empathy by employing tactics like addressing each customer by name. However, true empathy means understanding the special characterizes and needs of individual customer and modifying service to them accordingly.
(v) Tangibles:
This is the parallel of physical characteristics of quality of goods. This refers to the physical characteristics of facilities, equipments, consumable goods and personnel used in or associated with the service provided.
However here also the quality is judged not by some uniform specifications in terms of physical characteristic but by the impact these physical characteristics have on customer assessment of the service quality.
16. Product Quality:
Product quality is one vital issue as it governs the ultimate fate of the entire marketing programme and the fate of the firm in the market place. No firm can really build up sustained bright product image in the market merely through advertising and marketing elegance.
Only through continuous managing for excellent quality (performance quality and market perceived quality), the firm can maintain bright product/brand image in the consumer/user mind in a competitive world. Japan and Germany have emerged as business leaders today only through quality assurance and Total Quality Management.
Total Quality Management (TQM):
TQM is a corporate planning strategy. It concentrates on the total company efforts (a high level of excellence) in all areas of management covering leadership, people management, resource management, manufacturing process with continuous technological improvement, and zero defects that satisfy customer needs, policies, strategies, systems and procedures, people satisfaction and contribution to social and ecological obligations. Thus, we have an acceptable quality in all areas of business.
Focus on quality planning establishes a customer driven standard. Focus on quality control maintains this standard. Focus on continuous quality improvement challenges the standard. Customer satisfaction represents 300 points out of a possible 1000 points for The TQM award.
Marketer must continuously monitor the changing customer needs as well as rival offerings and incorporate adjustments in his market offering since the customer perceives his product relative to rival products. Quality is a necessity for customer acceptance/satisfaction.
The marketer gains rising market share and repeat orders. Unique product features and freedom from deficiencies create numerous opportunities to the firm. If product features click with customer needs and expectations, even normal promotion is enough in a competitive market (product becomes USP).
Freedom from deficiencies reduces customer dissatisfaction. The focus on product features is sales, while focus on freedom from deficiencies is costs. When we concentrate on product features higher quality costs more. When we concentrate on freedom from deficiencies, higher quality costs less.
Product quality has to be assured all the way right up to the final use/consumption by the customer. We may have customer complaints at any stage till the final use or consumption and final satisfaction. No doubt quality assurance involves inevitable costs. But it pays back in the form of long-term goodwill, reliability, and profitability. Consider TQM as an investment capable of giving rich dividends and competitive edge in the global market.
ISO- A Measure of Quality Launched in 1987:
Launched in 1987, the ISO series has now been accepted by national standards bodies of 90 countries, including India and all EU member countries.
Issued by one of the several national standards bodies accredited to the International Organisation for Standardisation (IOS), ISO certificates are increasingly gaining acceptance around the globe as the hallmark of quality.
This specialised international agency was set up to promote development of standardisation to facilitate international exchange of uniform quality goods and services. The IOS comprises 180 technical committees, each responsible for one of the several areas of specialisation.
The word ISO (pronounced as ice-o) has been derived from the Greek word ISOS which means equal. The ISO series consists of six standards: a standard terminology on definition and concepts known as ISO 8402 and five quality standards (ISO 9000-4) popularly called the ISO series.
Each certificate specifies that a company possessing it conforms to and implies quality aspects as specified by the IOS. The company’s name is subsequently registered with the agency awarding the certificate. Over 36,000 companies around the world have been certified under ISO standards so far (1995).
ISO 9000 Certification certifies a manufacturer’s quality system. It indicates the presence of quality control system a company possesses at its place to assure meeting of published quality standards. Please note that ISO 9000 standards do not apply to any particular product. It only certifies the process of production. It cannot guarantee the product quality of any manufacturer.
Even if a company has adopted TQM and the TQM system meets ISO 9000 standards, the company must formally obtain ISO 9000 certificate. Thus, ISO 9000 is gaining commercial importance to enter many global markets, e.g., the EC markets. By 1994-95 exceeding 60 countries have duly adopted ISO 9000 standards as national standards.
Today, quality has become an issue because standards are defined in the contract, whereas previously, they were vague and unmonitored. Naturally, the concern for quality has taken on an institutional and organisational form. It has now become an integral aspect of corporate philosophy. Satisfaction of consumers is the major driving force.
TQM involves designing organisations to please customer’s day in and day out. Over the years customers have become intolerant of low-quality goods and services. This is not only true of the developed economies but also of the developing ones. Unfortunately, in India the movement has not become widespread despite a lot of hype on quality-consciousness.
17. Stages through which a Consumer goes through while Buying a Product:
A consumer passes through various stages before buying a particular product, viz., problem recognition, information search, evaluation of alternatives, purchase decision and post-purchase behaviour.
1. Problem recognition – It all begins when a buyer recognises the need of problem for which he wants to buy a solution.
2. Information search – When a person realizes that he needs something, the next step would be to search for the probable solutions to the prevailing problem. This search gets heightened when the person becomes receptive to the information or it can be an active search when he promptly looks for possible solutions by reading, on-line searching, asking friends etc.
In this step a buyer comes across various sets of information, viz.,
Total set → Awareness set → Consideration set → Choice set → Decision.
Total set is the set of all brands available in the market, whereas a customer would know of only a few brands which will make it awareness set, then few of these brands will meet the initial criteria making the consideration set and out of this shortened list will come choice set and then the final decision.
3. Evaluation of alternatives – There are various attributes prevailing in the cognitive memory of a customer before buying a product like price, brand, quality, warranty, distributor, after-sales service etc. A proper evaluation is done for all the alternatives available.
4. Purchase decision – In executing a purchase decision, a consumer may decide upon the attributes like brand, dealer, quantity, timing and payment method.
5. Post purchase behaviour – Here a consumer often faces product dissonance, by hearing some negative things about the chosen brand and positive things about others. Hence, marketers should make sure that this dissonance should be minimized.
If a consumer wants to buy a laptop, then he will go through most of the above stated stages.
Thereafter evaluation of alternatives will be done in which freebies, softwares, dealer’s discount, processor, weight, battery-backup, looks, colour etc. would be the various attributes to be compared. After this decision post-purchase behaviour would come into play since a laptop is a consumer durable product.
While buying a product it is not necessary that a consumer would go through all the stages of buying decision process. It differs from product to product. According to Howard & Sheth, ‘Decision making varies from product to product’.
Different kinds of behaviours depending on different kinds of products are:
(a) Routine response behaviour, i.e., the products which are of daily usage, for example, buying of biscuits will not require any decision making effort.
(b) Limited decision making – When the purchase is made less frequently, for example, buying a TV. A consumer would look into most of the decision making efforts.
(c) Extensive decision making – When the product is totally new, involves high risk and is bought for a lifetime, say, a new house. A person goes through the complex decision making process.
In case the product is not rightly positioned then the following drawbacks will happen:
(i) The product will lose the attention of the customers too soon.
(ii) The competitors will snatch away the market share.
(iii) The high value benefit which the product was capable of delivering will go undelivered.
(iv) The brand image of the company will be negatively influenced.
(v) The product will not be able to remain in the market for a long time.
18. Importance of Product:
There are two variables in marketing-consumers and product. However, product is the first and most important element in the marketing mix of a firm. Product is the starting point of all marketing activities, because the ultimate objective of every business enterprise is to sell its product at a price which yields a reasonable profit. Therefore, all the marketing efforts of the enterprise begin with the product and end with the product.
Product is the most tangible and important component of the marketing programme. A product is more than just physical object. In other words, a television is more than just television. It means that a product (television) must satisfy the needs and wants of the consumers.
If a product fails to satisfy consumer needs and demands, no other ingredient of marketing mix will be fully successful and nor will it improve the product performance in the market place. Hence, product planning and development assumes great significance in the marketing programme. People do not buy a product. They buy benefits.
A firm marketing goods and services has two basic objectives-consumer satisfaction and profit maximisation. These objectives can only be achieved when a suitable product is developed and marketed. A product is the company’s main link with the consumers. If there is no product, there will be no pricing, no physical distribution and no promotion.
That is why product is considered to be the most tangible and important single component of the marketing programme. Before deciding about pricing, physical distribution and promotion, the firm has to decide what product it should present in the market.
In other words, a product or service will be purchased by a prospective customer if he knows:
(i) That it exists,
(ii) Where it can be purchased,
(iii) What its price is, and
(iv) That it is likely to meet the need for which it is required.
This introduces what in the context of marketing can be referred to as 4 As, namely:
(i) Awareness,
(ii) Affordability;
(iii) Availability, and
(iv) Acceptability.
The marketer has to take care of these aspects in achieving the marketing goals.
The 4 As are determined by 4 Ps, but their order is reversed as follows:
i. Awareness is developed by Promotion
ii. Availability by Place
iii. Affordability is a function of Price
iv. Acceptability is determined by the Product
19. Causes of Product Failure:
When a product does not reach the target of sales and profits, it is said to fail.
Symptoms of product failure include the following:
(i) Declining sales volume;
(ii) Declining profit margins;
(iii) Higher than expected costs; and
(iv) Higher than expected investment costs.
The failure of a product may be traced to the managements neglect or mishandling of the product innovation or the faulty management of the product life-cycle.
The important causes of failure of a product may include the following:
1. Conception of product idea or specification of the product may be faulty.
2. Design of product may not match with the needs of customers.
3. The strength of competition may not be properly studied.
4. Cost of production may be higher than the estimated cost.
5. The product performance may be unsatisfactory.
6. Market changes may not be understood properly.
7. Technical and production problems might have been underestimated.
8. Products may be introduced to the market untimely.
9. Stressing product attributes incorrectly.
10. Inadequate promotion.
11. Poor packaging, inappropriate size, etc.
12. Faulty pricing of the product.
Cundiff and Still have classified the causes of product failure into six categories, as given below:
1. Product Problems:
Neglect of market needs or ignorance of market preferences; defects in product function; poor technical design or external appearance; poor packaging, inappropriate sizes; undependable performance, too high variations in quality, etc.
2. Distribution and Channel Problems:
Inappropriate channels or outlets, unnecessary middlemen, Lack cooperation; faulty distribution; poor system of physical distribution.
3. Promotional Problems:
Inadequate or ineffective promotion; advertising directed towards wrong market segments; use of wrong appeals; failure to coordinate adequately with distribution system; sales force; inadequacies in training, motivation or supervision.
4. Pricing Problems:
Bad forecast of price buyers would pay; price out of line with product quality, poor cost estimates causing “asking price” to be too high; inadequate margins for the middlemen.
5. Timing Problems:
Product introduced too soon or too late, or at inappropriate time.
6. Failure to Estimate Strengths of Competitors:
The competitors may have the capability to launch new products.
To these may also be added, misguided enthusiasm, i.e., an overestimation of one’s own capabilities which can result in optimism that will be shattered by the actual performance of the product. This occurs when executives want to market a particular product because it is tied with their personal ambitions.
In order to check product failure, timely care should be taken of the above factors. Product and marketing strategies must also be modified depending upon the changes in the market. The existing product has to be modified in order to suit the changing conditions.
When a firm makes improvements in the existing product, by changing its quality, size, form or design etc., the process is said to be product modification. When changes are made, the existing product may look almost new. The purpose of this change is to increase the sales or to attract the customers.
Modification may facilitate:
(1) Satisfying the additional needs of the buyers,
(2) Upgrading or downgrading the quality of a product to suit the market-rich or poor,
(3) Changing to attractive design, colour, shape, etc.
(4) Meeting the consumers’ demand.