PRODUCTS AND SERVICE
What is a product ?
A product is anything that can be offered to a market to satisfy wants and needs. They may be physical goods, services, experience, events, properties, places organisations, informations or ideas.
Product could be tangibles or intangibles.
Tangibles can be classified into :
- Durable goods : Can last or survive for long time e.g cars, refregerators
- Non durables: Consumables like soap, salts, beer, oils etc. Prices are often cheap
- Services: Services are intangibles. Can not see& touch. Services are inseparables from the providers. Services require more quality control, supplier credibility & adaptability. e.g services of CRTV, drivers, internet, insurers, bankers, transporters, advertisers, repair works, communicators etc.
- Consumer goods : e.g soaps, beer, cars, chairs etc (frequent purchases)
PRODUCER GOODS :
- Convenience goods : consumers buy frequently with little efforts. Salts, soaps
- Impulse goods : he buys without planning
- Emergency goods : these are goods bought after some selection & comparaison. In terms of quality, price or style. e.g cars, furniture, clothing.
- Specialty goods : these are goods that have unique characteristics e.g men’s suits, cars, photographic equipment. Buyers may go far to get a particular type. e.g Mercedes Benz Car.
- Unsought goods : these are goods that customers generally do not know about them. They don’t look for them because they often don’t know of their existence. e.g grave stones, cemetery plots, encyclopedia even insurance.
- Industrial goods/Producer goods : goods used in industries, to assist in the production of further goods e.g materials parts e.g raw materials & manufactured materials. Cotton, cocoa, rubber, coffee.
- Capital items : long lasting goods e.g equipment & installations
- Supplies : short lasting e.g pens, papers, coal
Product mix : product widths, product length, product depth, product lines
A product mix can also be known as product assortment it is a set of all products and items that particular sellers may offer for sale. A company’s product mix may include; product width, product length, product depth and consistency.
- Product width: A product width refers to how many product lines that a company offers.
- Product length: the product length of a product mix is the total number of items in the product mix.
- Product depth: the product depth refers to how many product variants that the company offers in each product line.
- The consistency: the consistency of a product mix refers to how closely relate the various product lines are in an end use, production requirements, distribution channels or some other ways.
The above four product mix elements permit the company to expand its business in four ways. The company can add need product lines as it wishes.
Product lines are the number of products that a company has as its offerings. When the profits of the company are small, the company can increase its product lines meanwhile a company can also increase its profitability by cutting on those products that are not very profitable.
Companies that what higher market share and a market growth are very likely to increase their market line length.
Product lines may increase or be lengthened over time. This is because marketing managers who have surplus manufacturing materials may use the excess resources to come up with more product which, when sold, may improve their profitability.
It must be understood that the more items increase; the costs of production too increase.
A product range is a product mix which has been extended by variations in models like different styles, qualities, sizes, and different designs and offered to the markets at different prices.
What is branding? A brand is a name, term, sign symbol or a design; or a combination of these elements intended to identify a product a product or service of one seller or group of sellers and to differentiate them from the products of their competitors.
In marketing, one of the most difficult aspects is the ability to create, maintain and protect a product brand. Marketers say “branding is the art and cornerstone of marketing”. A brand undertakes to identify not only a product, but also the seller or the marketer. Branding could take the form of a brand name, trade mark, logo, signature or many other symbols that may be intended to differentiate a product from its competing products.
A brand is a seller’s promise to deliver a specific set of features, benefits, and services consistently to buyers. A very good brand will convey a guarantee of particular quality. Branding has the following six meanings:
- Attributes: branding bring out certain attributes e.g. Mercedes brings to you a well built and strong car, expensive, durable, prestigious vehicles.
- Value: the brand speaks about the product’s value as well as quality and strength.
- Benefits: people buy particular brands because they want to benefit certain attributes like durability, expensive nature e.g. my Mercedes makes me feel important and admired.
- Culture: a brand may reflect and represent a certain culture. E.g. the Mercedes car reflects and presents the German culture; high quality, strong, solid and efficient.
- Personality: brands actually project a certain personality with what car, you are seen as a no nonsense man.
- User: the brand suggests the kind of customer who buys or uses the product. E.g. we will normally expect to see a 60 years old man in a Mercedes than a boy of 25 years.
Packaging includes designing and producing a package or container for a product. A product containing is what we call package. This package might include three levels of materials;
A primary package, secondary package and shipping package.
Packaging is a very important marketing tool as it does not only safe guard the product but also designed such an attractive method.
The following factors have led to the successful growth of packaging.
- Distinction: A package should be that which distinguishes the product from all other products and brands. The package should not create a doubt as to which product the customer is buying.
- Protection: a package must be structured in a way that it provides a high degree of protection to the main product. There are some products that are delicate by their nature and therefore their packages must serve as protective materials.
- Convenience: a package must be designed in such a way that it provides convenience to the product e.g. a package must be in such a way that it can help transport the product easily; product can be safely used and package reused.
- Transportation: where goods are intended to be transported over long distances, their packages should be made to convenient easy transportation.
A label is a paper tag attached to a product which constitutes part of the package. Labels often carry the brand name, and many other information, directing the consumer on how to handle and use the product. Labels also carry contents and products composition elements.
Labels perform the following functions:
- It identifies the product or brand
- Labels are used to grade the products. Products may be graded as grade A, B, C, D etc.
- The label always describes the products. It tells who made it content, how it is to be used etc.
- Labels are used to promote the products through its attractive packaging and graphics.
6.14 THE TRADITIONAL LIFE CYCLE
STANDARD PRODUCT LIFE CYCLE
The traditional or standard product life cycle is a graph that is almost respected by nearly all types of products on the market. While some products take a very long time to go through this product life cycle, other products like process. In this life cycle, the product passes through the following stages: the introductory stage, the growth stage, maturity stage, saturation and finally the decline stage.
- The introductory stage: at this stage, the product is just being introduced to the market and the sales are actually slow. No profits are realized at this stage because of leave expenses that the company incurs in launching the product and advertising it, so that people know about the product. The cost is very high and any little profits earned are suppressed by much cost.
- The growth stage: the growth stage is a stage where the product experiences a rapid growth in terms of sales and profits grow in response. At this stage, the life cycle of the product progresses with progressing profits. Advertisements are intensified.
- The maturity stage: when the product gains grounds in the market. At this stage, the product is accepted by customers and potential customers and they buy without waiting to be convinced. At this maturity stage, there are constant sales, greater profits and these advantages attract competitors. At this level, there is reduced expenditures in the form of advertisements
- Saturated stage: the saturated stage is one where the product has gained the minds of the customers and the market. The product has attained its saturation and maximum growth levels. The highest profits are realized at this stage and at very low cost. The high profits attract some competitors into the sector as lesser adverts are carried out.
- The decline stage: at the decline stage, the product loses its market strength and sales take a downward slope and profits start falling. This drop in sales and consequent profits may be as a result of competition from competitors.
The competitors may come in with more modified products and reduced prices. This action may call for product innovations to be effected on the products to the products to revamp sales. If the innovations are successful, it may take the product to a new cycle.
THE IMPORTANCE OF PRODUCT LIFE CYCLES
Marketers must study the life cycles of their products and other competing or rival products. The reason is to enable the marketer to know the state in life of his products, know what to do at what stage, monitor the activities of competing products as to be able to better position his product in the minds of the customers.
Critics of the product life cycles however indicate that;
- The different stages of the life cycles of products are ever easy to be determined.
- Not all products follow or respond to the stages as mentioned on the standard life cycle.
- Some or different products respond to different types of product life cycles.
- Competition varies from industry to industry.
Marketers have a very important responsibility on the way they manage their products’ life cycles. To do this, they have to closely monitor not only the life cycles of their competitive products.
To successfully manage this life cycle concept, they need to repeatedly;
- Modify their products as they go through its PLC,
- Modify their markets
- Reposition their products etc.
- Modifying the products: marketers must be able to modify and innovate their products in order to stimulate the sales of the products by improvising on the product features, improvising the style and the design of the products.
Improvement on quality is intended to increase the products’ performances, the products durability, products’ reliability, speed as well as products’ taste. When marketers launch new models with improved qualities they can take great advantage over their competitors. They can also do this by intensifying on their advertisement sometimes by presenting the products as better, bigger or even stringer when compared to other products.
- Modifying market: beside the product, the company can try to expand the market as follows:
- They can expand the market by increasing the number of brand users. To do this, they can convert nonusers into users. This can be achieved through adverts and field salesmen.
- They can expand by entering new market segments. That is, they try to introduce the products to other people who have not been used to the products.
- They can expand the market share by winning their competitors’ customers. E.g. consumers of some other products are convinced to taste and consume their other products.
Volumes can also be increased by convincing their current brand users to increase their usage rates of the brands. They encourage the customers to use the products regularly and frequently. They can also try to interest users to use more of their products on every occasion; and thirdly the company can try to introduce new product uses and convince customers to use the products in those varied ways.
- By repositioning the product: product repositioning is changing the place that the product holds in the minds of the customers. They can reposition the product by influencing some of the marketing mix elements.
Market mix modification: the modification of some marketing mix elements will entail the following;
- Prices: they may reduce or cut down prices to attract many purchases.
- Distribution: they should try to locate and market through new intermediaries. They can introduce the products into new distribution channels.
- Advertising: they can increase advertising expenditure; they may change the advertising message; they may increase the media that they use to advertise and they may add the advertising timing, frequency, and size.
- Sales promotion: they may step up their sales promotional methods, trade deals, coupons, rebates, warranties, gifts and contests.
- Personal selling: the need to increase the number and quality of salespersons, may revise their sales territories, may improve the sales force remunerations etc.
- Services: the company may have to step up delivery of goods and their services; extend more technical assistance to customers and extend credits.
MANAGING A PRODUCT AT A DECLINE STAGE.
The decline stage is a stage in the life of a product when its sales start declining or falling. The declining sales may fall slowly over the years, or they may fall very sharply or very fast in such a way that the fall creates fright. The sales of the product may actually drop or plunge to zero or near zero.
Sales may decline because of several reasons:
- Because of introduction of new technologies e.g. when the android phones came in existence, they caused the previous to completely drop to zero in terms of sales.
- The sales may drop because drop because of a shift in consumer tastes.
- Because of an increase in either home or foreign competition.
The competition may lead to cut throat competition which requires that competitor compete by cutting prices to a level where they may end up working for no profits.
As the sales and profits decline, some firms will withdraw from the business line. The firms remaining may reduce the quantity of products they offer on the market, some will withdraw from some market segments, some will withdraw from weaker trade channels, and some will cut their different advertising methods and advertising budgets, while others will heavily cut down the product prices further.
Harrigan in his study of company strategies in declining industries has identified five decline strategies available to firms:
- Increase the firm’s investments, this is dominating the market and strengthening its competitive position.
- Maintain the firm’s investment level until the uncertainties in the industries are resolved.
- Decrease the firm’s investment level selectively, by dropping unprofitable customer groups, while at the same time strengthening the firm’s investments in lucrative niches.
- Harvesting or milking the firm’s investments to recover cash quickly.
- Diverting the business quickly by selling its assets as advantageously as possible.
MANAGING THE MATURITY STAGE OF A COMPANY’S PRODUCT.
When a product has attained its maturity stage, their marketers need a systematic framework to help identify possible breakthrough ideas. Professor John A Weber of Notre Dame developed the following 15 points framework, which he calls “the gap analysis” to help guide the search for more growth opportunities.
- Natural change in the size of the industrial market potential: They need to find out population changes e.g. will current birthrates and demographics favour their consumption patterns. How will the economic outlook affect their products?
- Seek new users or new segments: here, they should find out whether the product can be made to appeal to teenagers, young people, singles, young adult parents etc.
- Innovate product differentiations: the marketer needs to find out whether the products can be made in other versions?
- Add new product lines: they should find out if the product name can be used to launch other new related products.
- Stimulate non users: they should make it possible for non-users to be convinced to use the product? If possible engage different age groups to use it
- Stimulate light users: get even children to use the product.
- Increase the amount used on each use occasion: they should try to associate the product to other product offers.
- Close existing products and price gaps: they should endeavor to come up with new product sizes.
- Create new product-lines elements: find out if the product can be given new flavours.
- Expand distribution coverage: they should find possibilities distributing the products through different distribution channels. Where possible extend the product to other continents.
- Expand distribution intensity: that they should greatly increase the number and percentage of retail and wholesale stoves handling and marketing the product.
- Expand distribution exposures: can their product offer to trade win more self-space?
- Penetrate substitute positions: they should find out possibilities of convincing consumers that their product is better than other competing products.
- Penetrate direct competitors positions: where possible they should convince consumers of other brands to switch over to their own brand.
- Defend the firm’s present position: marketers should do all to satisfy the present users and consumers more in order that they remain loyal to the product.
What is a brand? A brand is a name, term, sign symbol or a design; or a combination of these elements intended to identify a product a product or service of one seller or group of sellers and to differentiate them from the products of their competitors.
Indeed, a brand is what helps to identify the seller or producer of a particular product or service. This brand can take the form of a name (Toyota Avensis) trade mark, logo or other symbols. In the trademark laws, sellers are given the exclusive rights to the use of the brand name of their products or services.
A brand is essentially a seller’s promise to deliver a specific set of features, benefits, and services regularly to the buyers. A good brand may often carry a warranty or guarantee of quality. In general, a brand conveys the following 06 important elements of a product:
- Brand attributes: a brand brings to your mind, certain attributes e.g. Mercedes tells that its expensive, strong, durable, gives prestige and well-build car.
- Benefits: attributes must be converted into emotional and functional benefits e.g the attribute durable, could mean long lasting benefits, while the attribute expensive means emotional benefits; the car make the owner feels more important in the eyes of the public.
- Values: a product brand will tell you much about the product’s value e.g. a Mercedes car stands out for safety high performance and prestige.
- Cultures: a product brand will represent the culture of the company or a people e.g. Mercedes reflects the strong German culture which is well oraganised, efficient, and highly qualitative.
- Personality: a brand will project a certain personality e.g. a boss coming out of a Mercedes will be looked upon as a no nonsense person.
- User: a brand tells the kind of consumer who buys and who uses that product. If he is running in a Mercedes bens, then he must be a pig and responsible person.