After reading this article you will learn about:- 1. Concept of Product 2. Meaning of Product 3. Product Planning and Development 4. Product Innovation 5. Positioning the Product in the Market.
Contents:
- Concept of Product
- Meaning of Product
- Product Planning and Development
- Product Innovation
- Positioning the Product in the Market
1. Concept of Product:
The product is the most tangible and important single component of the marketing programme. The product policy and strategy is the cornerstone of a marketing mix. If the product fails to satisfy consumer demand, no additional cost on any of the other ingredients of the marketing mix will improve the product performance in the market Place.
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To the marketer products are the building blocks of a marketing plan. Good products are key to market success. Product decisions are taken first by the marketers and these decisions are central to all other marketing decisions such as price, promotion and distribution. \
It is the engine that pulls the rest of the marketing programme. Products fill in the needs of society. They represent a bundle of expectations to consumers and society.
The product concept has three dimensions:
i. Managerial Dimension:
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It covers the core specifications or physical attributes, related service, brand, package, product life-cycle, and product planning and development. As a basis to planning, product is second only to market and marketing research.
The product offering must balance with consumer-citizen needs and desires. Product planning and development can assure normal rate of return on investment and continuous growth of the enterprise.
ii. Consumer Dimension:
To the consumer a product is actually a group of symbols or meanings. People buy things not only for what they can do, but also for what they mean. Each symbol communicates a certain information. A product conveys a message indicating a bundle of expectations to a buyer.
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Consumer’s perception of a product is critical to its success or failure. A relevant product is one that is perceived by the consumer as per intentions of the marketer. Once a product is bought by a consumer and his evaluation, i.e., post-purchase experience is favourable, marketers can have repeat orders.
iii. Social Dimension:
To the society salutary products and desirable products are always welcome as they fulfill the expectations of social welfare and social interests. Salutary products yield long-run advantages but may not have immediate appeal.
Desirable products offer both benefits, immediate satisfaction and long-run consumer welfare. Society dislikes the production of merely pleasing products which only give immediate satisfaction but which sacrifice social interests in the long-run.
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Marketers have to fulfill the following social responsibilities while offering the products to consumer:
i. Conservation and best use of resources,
ii. Safety to users,
iii. Long-run satisfaction of consumers,
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iv. Quality of life, concern for better environment,
v. Fulfilment of government regulations relating to composition, packaging and pricing of many products.
2. Meaning of Product:
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The product is a bundle of all kinds of satisfaction of both a material and a non-material kinds, ranging from economic utilities to satisfaction of a social-psychological nature.
A product supplies two kinds of utility:
i. Economic utility.
ii. Supplementary utility in the form of social-psychological benefits.
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The product may be a good, a service or just an idea. A product is all things offered to a market. Those things include physical objects, design, brand, package, label, price services, supportive literature, amenities and satisfaction not only from, physical product and services offered but also from ideas, personalities and organisations.
In short, a product is the sum total of physical, social and psychological benefits. Marketers must define their market in terms of product functions what the customer expects from the product.
Selling Points or Image Building Features of a Product:
i. Product quality and attributes,
ii. Performance and utilities,
iii. Brand, package and label,
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iv. Design, colour, size, shape, style, finish, beauty, etc.,
v. Price,
vi. Services,
vii. Company image,
viii. Product warranty,
ix. Safety to users.
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Buyers are not interested in the composition of a product. They are concerned only with what the product does, what the product means to them and to what extent it satisfies their social and psychological needs. These needs will vary between one customer category and another. The needs and expectations are also changing.
3. Product Planning and Development:
Branding:
The term brand is broadly applied to all identifying marks such as trade names, trademarks, trade symbols, picture, package design, distinctive colouring or lettering with or without attractive slogan.
Trademark is a registered brand under the Trade Names and Trademarks Act and the registered brand is your exclusive property. Others cannot use it and legal action can be taken if they adopt it. Misbranding is punishable by law. It is an unfair trade practice.
Branding is a powerful instrument of sales promotion due to following reasons:
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i. Production Differentiation:
Product differentiation by branding enables manufacturer to establish his own price and eliminate price competition to some extent. A branded product enjoys a separate individuality.
ii. Brand Image:
The seller can build up a bright image of his product around the brand.
iii. Creation of Market:
Ever increasing competition leads to branding of product by a manufacturer to face competition and create exclusive market for his product.
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iv. Advertisement and Publicity:
Branding helps advertising, display and sales promotion. Branding and packaging go hand in hand. Package itself can act as a medium of advertisement.
v. Brand Recognition:
Branding not only gives separate identity and easy recognition to the product but it also creates special brand preference and brand recognition. Branding is a powerful instrument of demand creation and demand retention. Popular brands such as Lux, Vim, Colgate, Sunlight, have very great pulling power in our market.
vi. Brand Loyalty:
Development of loyal customers, acting as talking advertisements and repeat buyers is the greatest reason in favour of branding.
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Packaging:
Packaging is a marketing necessity. The customer does not want just the product. He wants explanation, assurance, encouragement, confidence, and praise, i.e., pat-on-the-back, all integrated with a pleasant and eye-catching getup on the top to gain action.
Under keen competition the customer needs an effective means to recognise a difference and establish preference that will ensure repeat purchase. Packaging does this job effectively in a competitive market.
That is why millions of rupees are spent on packaging, branding and labelling which are integral parts of a product. In a sense your brand, package and label represent your product in the market and offer individuality to it.
Packaging, branding and labelling go together and constitute an integral part of product planning and development. Package itself is a forceful though silent and colorful salesman at the point of purchase. It is an effective sales tool encouraging impulse buying. It is a powerful medium for sales promotion.
From the seller’s point of view:
i. Packaging is a sales tool.
ii. It identifies the maker as well as the product and carries the brand name.
iii. The package label informs the buyer about inner contents and how to use the product.
iv. It is the biggest advertising medium.
v. It moves the product at the point of purchase.
vi. It encourages impulse buying.
vii. It establishes a good product image.
viii. It identifies the product with advertising.
ix. The package design itself may act as a brand of the product.
Labelling:
Labels on a package are expected to provide accurate information and guidance to customers.
They give adequate information on the following:
i. Brand Name.
ii. Name and address of producer/distributor.
iii. Weight, measure, count.
iv. Directions for proper use of the product.
v. Precautions regarding safety and special care to avoid dangers.
vi. Recipes on food products.
vii. Nutritional guidelines.
viii. Date of packing and date of expiry.
ix. Retail price including local taxes and
x. Unit pricing, e.g., cost per 100 grams.
In many countries we have special legislation to prevent deceptive and misleading packaging and labelling. This is necessary to protect consumers against unfair trade practices adopted in these branches.
Branding, Packaging and Labelling:
In the product planning and development, manufacturer has to give special attention to these as they have considerable selling power. There are scientific tests for evaluating the effectiveness of a brand, a package and a label. Advertising experts are usually employed to evolve attractive brand, package and label for a new product.
Importance of Sound Product:
There are two essentials of successful marketing:
i. Products and
ii. Markets.
If marketing can bring together products and markets in such a way that products and consumer demand are perfectly correlated, there is no reason why marketing cannot be successful. Both are equally important. In fact product and market are expected to be the two sides of the same blade, viz., marketing. Product is expected to satisfy all the needs and desires of a customer.
If the product is sound and easily acceptable to the market, if it satisfies consumer preferences and is carefully fitted to the needs and desires of the customers, sales success is assured. In essence, the right product is a great stimulus to sales. A right product is bound to reduce considerably the problems of pricing, promotion and distribution.
It need not have aggressive advertising and high pressure salesmanship. It may not. demand extraordinary sales promotion gimmicks, Hence, product superiority in want-satisfaction can carry greatest selling load in our marketing mix; e.g., Polaroid instant camera, and Xerox for instant reproduction.
Importance of Product Analysis and Research:
Product analysis and research is a study of consumer preferences and habits as well as dealer preferences and habits relating to a given product. Such a study can determine the extent to which the product should be altered, modified or adapted to meet exactly the existing demands of the customers and resellers. The study can also enable us to devise a new product exactly needed in the market.
Intelligent market analysis and research can dictate the taste, colour, size, shape, style, performance and such other specific features on the basis of customer whims, fancies and preferences. On the basis of such reliable information about customer demand, a manufacturer can bring out a tailor-made product having all the elements in exact tune with the needs, wants and expectations of customers.
4. Product Innovation:
The innovative attitude of marketer is expressed in the watch word “innovate or die”. Such an attitude must be an integral part of marketing concept. P. Drucker recognised the equal importance of innovative attitude and marketing concept.
He said, Because it is its purpose to create a customer, any business enterprise must have two and the only two basic functions:
Marketing and innovation. All growth in-casting have an important role for innovation in their marketing plans. Innovation alone assures growth and survival while customer orientation assures survival.
The evolution of new products is a practical business function and it is described as a process of product management. The new product programme must be organised and controlled if it is to be effectively managed.
The process of product planning and development is always adopted for product innovation. Product development is a general term covering the search for new products and new innovations as well as the improvement of existing products.
Methods of Obtaining Products:
Internal Development:
Discovering and developing new products by the firm itself. Desirable means.
Licensing:
Securing right to produce the product from a patent holder, contractual arrangement, e.g. Coca Cola.
Acquisition:
Buying the firm that developed or patented the product. Costly means.
Note:
i. Internal product innovation implies no-payment of profits to inventor or developer.
ii. Licensing obviates the possibility of internal discovery and may be inevitable or preferable, e.g., complex products like electronics.
iii. Acquisition is very costly but gives exclusive rights.
5. Positioning the Product in the Market:
Marketers are expected to adopt a product or product line to the various needs of the market. A product can enjoy a strong position in the market when it fills the consumer need so far not satisfied by a rival. Unoccupied niche in the market is the best position for a product. Marketing research can discover such a niche. The product position determines its image in relation to other rival products.
There are two methods to adapt the product exactly to the market:
i. Market Segmentation:
It is a subdivision of the market as based upon the modern marketing concept. It points out that there are several demand schedules. Each demand schedule represents a separate market consisting of a group of buyers with similar needs and characteristics of demand.
The market segmentation is done on the basis of age, sex, family size, income, education, occupation, social class, life styles, etc. Market segmentation as a product policy implies an extensive range of products, each of which is fitted for one segment or for one demand curve. The conscious search is made to separate buyers into a number of segments each varying in size, buying power and buyer behaviour.
ii. Product Differentiation:
Product differentiation is done through branding and packaging. It is an attempt to induce or direct demand to adjust itself to the manner in which supply has been segmented. The seller thinks that demand can be directed to his differentiated market offering.
Product differences are stressed to promote a social psychological segment. Good examples are the markets for detergents, toilet soaps, cosmetics, toothpastes and many other consumer products. The main limiting factors on product differentiation or branding are ever-increasing costs of advertising and promotion.