MMPC-06: Marketing Management
Unit 4: Product Decisions
4.1 Introduction
Products are the cornerstone of a marketing strategy. A product is not merely a physical object; it represents a bundle of benefits designed to meet the needs and wants of consumers. Product decisions involve determining which products or services a company should offer, how to design and develop them, and how to position them in the market. These decisions also impact pricing, promotion, and distribution strategies.
4.2 Product Levels
A product can be considered at three levels:
4.2.1 Core Product
The core product is the basic benefit or solution the product provides to the consumer. For example, a car provides transportation, while a smartphone enables communication.
4.2.2 Actual Product
The actual product refers to the tangible aspects, such as the brand, design, features, and quality of the product. It is what the customer perceives as the product itself, such as the packaging, brand name, and specifications.
4.2.3 Augmented Product
The augmented product includes additional services or benefits provided along with the actual product. This can include warranties, customer service, or installation services. It adds value and differentiates the product from competitors.
4.3 Product Classifications
Products can be classified based on the type of consumer they serve or the durability and tangibility of the product.
4.3.1 Consumer Products
These products are bought by individuals for personal use and can be further divided into:
- Convenience Products: Frequently purchased with minimal effort (e.g., toothpaste, snacks).
- Shopping Products: Bought after comparison of alternatives based on price, quality, and features (e.g., furniture, electronics).
- Specialty Products: Products with unique characteristics or brand loyalty that consumers are willing to make a special effort to purchase (e.g., luxury cars, designer clothing).
- Unsought Products: Products that consumers do not actively seek, often requiring aggressive marketing (e.g., insurance, emergency services).
4.3.2 Industrial Products
Industrial products are purchased for business purposes and include:
- Raw Materials: Basic materials used in manufacturing (e.g., steel, cotton).
- Capital Items: Long-term assets like machinery, tools, and equipment.
- Supplies and Services: Items required for day-to-day operations (e.g., office supplies, maintenance services).
4.4 Product Decisions
Product decisions are critical for developing successful marketing strategies. Key product decisions include:
4.4.1 Product Design
Design is a crucial element that impacts the functionality, aesthetics, and usability of the product. It plays a significant role in creating differentiation and customer appeal. Companies like Apple emphasize sleek, modern design to attract tech-savvy consumers.
4.4.2 Product Features
Features refer to the characteristics that define the product and provide additional benefits to the consumer. For instance, a smartphone may have features like a high-resolution camera, extended battery life, or waterproof capabilities.
4.4.3 Product Quality
Quality refers to the degree of excellence or superiority of a product. It is a key factor that influences customer satisfaction and brand loyalty. High-quality products often command premium prices.
4.4.4 Branding
Branding is the process of creating a unique identity for a product through a name, logo, and image. A strong brand enhances recognition, adds value, and fosters customer loyalty. For example, Nike’s brand is associated with athletic excellence and high performance.
4.4.5 Packaging
Packaging serves multiple purposes, including protecting the product, providing information, and promoting the product. It can influence buying decisions by making products more attractive and convenient.
4.4.6 Labeling
Labeling provides information about the product, including ingredients, usage instructions, and legal compliance. It can also be a tool for differentiation, as seen in organic or environmentally friendly products.
4.5 New Product Development
Developing new products is essential for a company’s long-term success. The process of new product development includes several stages:
4.5.1 Idea Generation
Ideas for new products can come from internal sources (e.g., R&D, employees) or external sources (e.g., customers, competitors, market research).
4.5.2 Idea Screening
Once ideas are generated, they need to be screened to identify the most promising ones. This stage involves evaluating the feasibility, market potential, and alignment with the company’s objectives.
4.5.3 Concept Development and Testing
At this stage, the product idea is turned into a detailed concept. This concept is then tested with potential customers to gather feedback and assess market viability.
4.5.4 Business Analysis
The company analyzes the potential profitability of the new product by estimating sales, costs, and profit margins. This analysis helps in deciding whether to move forward with development.
4.5.5 Product Development
The product is developed into a prototype. This stage includes creating a working model of the product, testing its functionality, and refining its design.
4.5.6 Market Testing
The product is introduced to a test market to gather real-world feedback. This stage helps identify any potential problems and fine-tune the product before a full launch.
4.5.7 Commercialization
Once the product passes market testing, it is launched on a full scale. This involves mass production, distribution, and marketing efforts to promote the product.
4.6 Product Life Cycle (PLC)
The product life cycle describes the stages a product goes through from introduction to decline:
4.6.1 Introduction Stage
The product is launched into the market. Sales growth is slow, and marketing efforts focus on creating awareness and stimulating demand. This stage often requires significant investment.
4.6.2 Growth Stage
In the growth stage, the product gains acceptance, and sales increase rapidly. Companies may introduce new features or expand distribution to meet growing demand.
4.6.3 Maturity Stage
Sales growth slows as the market becomes saturated. Companies focus on defending market share by differentiating the product, improving quality, or adjusting pricing.
4.6.4 Decline Stage
Sales decline due to changing consumer preferences or technological advancements. Companies may decide to discontinue the product, reduce marketing efforts, or rebrand it for a new market.
4.7 Case Study: Coca-Cola’s Product Strategy
Coca-Cola has consistently maintained a strong product strategy by focusing on branding, product design, and innovation. With a wide portfolio of beverages, Coca-Cola adapts its product line to meet changing consumer preferences, including launching healthier options like Diet Coke and Coca-Cola Zero Sugar. Its product lifecycle management, especially for legacy products like the original Coca-Cola, demonstrates effective marketing and product decisions that have maintained its market leadership.
Assignments for Unit 4
- Explain the importance of branding in product decisions with examples from the technology industry.
- Analyze the stages of new product development, using an example from the automobile industry.
- Discuss the impact of packaging design on consumer buying behavior.
Self-Study Questions
- What are the three levels of a product? Explain with examples from different industries.
- How does product quality influence customer satisfaction and brand loyalty?
- What strategies can companies use to extend the maturity stage of a product’s life cycle?
Possible Exam Questions
- Discuss the product life cycle and its implications for marketing strategies. Provide examples from consumer electronics.
- What are the key decisions involved in new product development? Illustrate with a real-world example.
- How can packaging serve as a promotional tool? Discuss its role in influencing consumer choices.
This unit provides a comprehensive understanding of the strategic decisions involved in product development and management. It emphasizes the importance of branding, packaging, and the product life cycle while highlighting the critical stages of new product development through real-life examples and assignments.
