6/1/2023

CHAPTER 7: PRODUCT
1. Product and types of product

1.1. Product concept

Principles of Marketing 1.2. 5 levels of product
1.3. Product classification

2. Product life cycle

2.1. Product life cycle (PLC) concept
Lecturer: Pham Thi Minh Chau (Ms.) | MSc. 2.2. Phases in PLC
School of Economics and International Business 2.3. The meaning of PLC

Phone: 0942024060 3. Individual product decisions

Email: [email protected] 3.1. Product attributes
3.2. Branding
3.3. Packaging
3.4. Labeling
3.5. Product support services

1. Product and types of product

Organization marketing consists of activities undertaken to create,
maintain, or change the attitudes and behavior of target consumers
1.1. Product concept: toward an organization. Both profit and not-for-profit organizations
practice organization marketing.
Product: Anything that can be offered to a market for
Person marketing consists of activities undertaken to create, maintain,
attention, acquisition, use, or consumption that might or change attitudes or behavior toward particular people. People ranging
satisfy a want or need. from presidents, entertainers, and sports figures to professionals such as
doctors, lawyers, and architects use person marketing to build their
reputations.

Place marketing involves activities undertaken to create, maintain, or

change attitudes or behavior toward particular places. Cities, states,
regions, and even entire nations compete to attract tourists, new
residents, conventions, and company offices and factories.

Social marketing is the use of traditional business marketing concepts

and tools to encourage behaviors that will create individual and societal
well-being.

1. Product and types of product

1. Product and types of product
1.2. Levels of product:
1.1. Product concept:

The market offer may consist:

• Pure tangible good

Nike: It’s not so much the shoes
but where they take you
• Pure services

• Goods-and-services combination.

To differentiate the offers, beyond simply making products and

delivering services, companies are recasting their traditional goods
and services to create experiences.

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Actual product: Harley-

1. Product and types of product Davidson’s name,
Core value: Harley styling, features,
1.2. Levels of product: experience -freedom, sounds, parts, and other
independence, power, attributes have all been
and authenticity. carefully combined to
deliver the core
customer values of
Core customer value Actual product Augmented product freedom and
independence
Develop product
Ask question: and service Offer additional
What is the features, a design, consumer
buyer really a quality level, a services and
buying? brand name, and benefits
packaging
Augmented product:
• Buyers have warranty, quick repair services when needed, a showroom full of
accessories, and web & mobile sites to use if they have problems or questions.
Product planners need to think about products and services on
three levels. Each level adds more customer value. • The Harley Owners Group (HOG) provides additional benefits such as roadside
assistance, events, and regular issues of magazine, packed with HOG news,
product information, riding stories, and more.

1. Product and types of product 1. Product and types of product

1.2. Levels of product:
1.3. Product classification:
Implications:
• Consumers see products as complex
bundles of benefits that satisfy their
needs. Consumer
• When developing products, marketers products
first must identify the core customer
value, design product and find ways to
create customer value and satisfy
customer experience.

• Provides businesses with a proven Industrial

method for structuring product products
portfolio to target various customer
segments.

1. Product and types of product

1. Product and types of product
1.3. Product classification:
1.3. Product classification:
Consumer products
Consumer products Convenience Shopping goods Specialty goods Unsought goods
goods
Consumers usually Customer compare Unique Consumers do not
 Consumer products are products and services for personal buy frequently, carefully on characteristics or know about or
consumption immediately, and suitability, quality, brand identification know about but do
 Classified by how consumers buy them with a minimum price, and style for which a not normally think
comparison and significant group of of buying
buying effort buyers is willing to
make a special
purchase effort
Convenience Unsought  Newspapers  Furniture  Medical services  Life insurance
Shopping goods Specialty goods
goods goods  Candy  Cars  Designer clothes  Funeral services
 Fast food  Appliances  High-end  Blood donations
electronics

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1. Product and types of product 1. Product and types of product

1.3. Product classification: 1.3. Product classification:

Industrial products Industrial products

Material and parts Capital items Supplies and services
 Industrial products are products purchased for further processing Include raw materials and Industrial products that aid in Include operating supplies,
or for use in conducting a business manufactured materials and the buyer’s production or repair and maintenance
parts usually sold directly to operations items, and business services
 Classified by the purpose for which the product is purchased industrial users
 Farm products (wheat,  Buildings (factories,  Operating supplies
cotton, livestock, fruits, offices) (lubricants, coal, paper,
vegetables)  Fixed equipment pencils)
 Natural products (fish, (generators, drill presses,  Repair and maintenance
Material Supplies and lumber, crude petroleum, large computer systems, items (paint, nails,
Capital items
and parts services iron ore) elevators) brooms).
 Component materials  Accessory equipment  Repair services (window
(iron, yarn, cement, wires) (hand tools, lift trucks) cleaning, computer repair)
 Component parts (small  Office equipment  Advisory services (legal,
motors, tires, castings) (computers, fax machines, management consulting,
desks) advertising).

2. Product life cycle 2. Product life cycle

Product life cycle (PLC) is the course of a product’s sales and

profits over its lifetime.

2. Product life cycle 2. Product life cycle

Some characteristics of the PLC: The PLC concept can describe a product class, a product form, or a brand:

 Not all products follow all five stages of the PLC. Product classes (E.g: Gasoline-powered automobiles)
 Some products are introduced and die quickly  Have the longest life cycles; the sales of many product classes stay in the
mature stage for a long time
 Some stay in the mature stage for a long time
 Some enter the decline stage and are then cycled back into
the growth stage through strong promotion or repositioning Product forms (e.g: SUVs)
 Tend to have the standard PLC shape.
 The PLC concept can describe a product class (gasoline-  Product forms such as “dial telephones” passed through a regular history of
introduction, rapid growth, maturity, and decline.
powered automobiles), a product form(SUVs), or a brand(the
Ford Escape).
Brands (e.g: Ford Escape, Toyota Land Cruiser, etc.)
 The PLC concept also can be applied to what are known as  A specific brand’s life cycle can change quickly because of changing
competitive attacks and responses
styles, fashions, and fads.
 E.g: although laundry soaps (product class) and powdered detergents (product
form) have enjoyed fairly long life cycles, the life cycles of specific brands have
tended to be much shorter

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2. Product life cycle

 Introduction is a period of slow sales growth as the product is

introduced in the market. Profits are nonexistent in this stage
because of the heavy expenses of product introduction.

 Growth is a period of rapid market acceptance and increasing

profits.

 Maturity is a period of slowdown in sales growth because the

product has achieved acceptance by most potential buyers.
Profits level off or decline because of increased marketing
outlays to defend the product against competition.

 Decline is the period when sales fall off and profits drop.

2. Product life cycle 2. Product life cycle

Introduction stage
Growth stage
 Profits: negative or low because of
 Sales start climbing quickly
low sales, high distribution and
 New competitors enter the market
promotion expenses.
 Price stability or decline to increase volume
 Promotion spending: high to inform
 Promotion spending at the same or a slightly higher level
consumers of the new product and
 Profits increase as promotion costs are spread over a large
get them to try it.
volume and as unit manufacturing costs decrease.
 Few competitors.
 New market segments and new distribution channels
 Firms produce basic versions of
 Trade-off between high market share and high current profit
the product.

2. Product life cycle

Maturity stage
 Slowdown in sales growth
 Overcapacity leads to greater competition
 Some of the weaker competitors start dropping out
 Maturity stage modifying strategies:
 Market modifying: finding new users and new market segments
 Product modifying: changing characteristics such as quality,
features, style, or packaging to attract new users and inspire more
usage
 Marketing mix modifying: improving sales by changing one or
more marketing mix elements
Market modifying

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2. Product life cycle

Decline stage
 Sales decline because of: technological advances, shifts in
consumer tastes, increased competition, etc.
 Carrying a weak product can be very costly to a firms (profit,
management’s time, reputation, etc.)
 Management must decide whether to:
 Maintain the product: reposition or reinvigorate it in hopes of
moving it back into the growth stage

 Harvest the product: reduce costs (plant& equipment,

maintenance, R&D, advertising, sales force), hoping that sales hold
up. If successful, it will increase the company’s profits in the short
run
Product modifying
 Drop the product from its line: Sell the product to another firm or
simply liquidate it at salvage value

2. Product life cycle 2. Product life cycle

Why studying PLC?

 Useful framework for describing

how products and markets work.

 Help in developing good marketing

strategies for its different stages.

 The moral of the product life cycle

is that companies must continually
innovate or else they risk extinction.
No matter how successful its
current product lineup, a company
must skillfully manage the life
cycles of existing products for future
success.

2. Product life cycle

3. Individual product decisions
 Using the PLC concept for forecasting
product performance presents some practical
problems (the sales level at each PLC stage,
the length of each stage, and the shape of
the PLC curve are difficult to forecast)

 Using the PLC concept to develop marketing

strategy also can be difficult because strategy
is both a cause and a result of the PLC.

 Marketers should not blindly push products The figure shows the important decisions in the development and
through the traditional PLC stages. Instead, marketing of individual products.
marketers often defy the “rules” of the life
cycle and position or reposition their products
in unexpected ways to rescue mature or
declining products.

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3. Individual product decisions

3.1. Product attributes
Quality Feature Style and design
The characteristics of a  Competitive tool to  Style describes the
product that bear on its differentiate the appearance of the
ability to satisfy stated or company’s product product
implied customer needs.
 Being the first producer  Design contributes to RR: smoother ride, lasts longer, and
02 dimension: to introduce a valued a product’s provides more handcraftsmanship,
 Quality level new feature is one of usefulness as well as custom design, luxury, comforts.
(Performance quality):
the most effective ways to its looks
the ability of a product to
perform its functions.
 Features that A Chevy doesn’t perform at the same level as a Rolls-Royce, but it can just
 Quality consistency customers value highly
as consistently deliver the quality that customers pay for and expect.
(Conformance quality): in relation to costs
the product’s freedom should be added.
from defects and Performance quality: Chevrolet < Rolls-Royce
consistency in delivering
a targeted level of Conformance quality: Chevrolet ~ Rolls-Royce
performance

3. Individual product decisions

3.2.Branding

Brand is the name, term, sign, or design, or a combination of these,

that identifies the maker or seller of a product or service.

• Brands have meaning well beyond a product’s physical

attributes.

• Branding can add value to a product.

Branding can add value to a product

4. Individual product decisions 3. Individual product decisions

Branding 3.3. Packaging

Branding benefit consumers Packaging involves designing and producing the container or
- Product quality wrapper for a product.
- Product consistency—buyers who always buy the same brand
know that they will get the same features, benefits, and quality each
time they buy

Branding gives seller advantages

- Provides legal protection for unique product features that
otherwise might be copied by competitors.
- Helps the seller to segment markets.

Questions: What are the possible function of a package?

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Packaging
innovations

• Hold and protect the product

• Promotional tool:
- Brand’s identity
- Innovative packaging: an advantage over competitors
and boost sales

3. Individual product decisions

3.4.Labeling

Labels and logos range from simple tags attached to

products to complex graphics that are part of the packaging.

 Identifying the product or brand

 Describing describe several things about the product—who

made it, where it was made, when it was made, its contents,
how it is to be used, and how to use it safely.

 Promoting the brand, supporting its positioning, and connecting

with customers

Regulatory issues on labels

• The Federal Trade Commission Act of 1914: false, misleading,

or deceptive labels or packages constitute unfair competition

• The Nutritional Labeling and Educational Act of 1990:

requires sellers to provide detailed nutritional information on food
products
Many brands are adapting their logos to meet the needs of
• Food and Drug Administration (FDA): regulate the use of new digital devices and interactive platforms such as mobile
health-related terms such as low fat, light, high fiber, and organic. apps and social media

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3. Individual product decisions

3.5. Product support services

 Survey customers periodically to assess the value of current

services and obtain ideas for new ones
 Take steps to fix problems and add new services that will both
delight customers and yield profits to the company
 After-sale services
 Technical support
 Warranty