PRODUCT POWERHOUSE

A GUIDE TO PRODUCT DEVELOPMENT

 INTRODUCTION

In the vast landscape of marketing, where strategies evolve and trends come and go, there
remains a steadfast cornerstone upon which every successful campaign is built: the product
itself. Welcome to a journey that delves deep into the heart of marketing, where we unravel
the significance of products as the pivotal component of the famed 7Ps framework.

In the realm of marketing, the 7Ps—Product, Price, Place, Promotion, People, Process, and
Physical Evidence—serve as guiding principles for crafting effective marketing strategies.
Yet, it is the product that stands as the bedrock, the very essence around which all other
elements orbit. It is the tangible or intangible offering that fulfills a need or desire, sparking
the intricate dance of consumer behavior and market dynamics.

This book is not just about products in the traditional sense—widgets on a shelf or services
offered—it's about understanding products as more than mere commodities. Products embody
stories, experiences, and solutions. They speak to the aspirations and challenges of
consumers, offering solutions or enhancements to their lives. In a rapidly evolving
marketplace, where consumer preferences shift like sand dunes in the wind, understanding
the intricacies of product development, positioning, and differentiation becomes paramount.

SOME SCHOLARLY DEFINITIONS OF PRODUCT

Philip Kotler and Gary Armstrong: "A product is anything that can be offered to a market
for attention, acquisition, use, or consumption that might satisfy a want or need. It includes
physical objects, services, persons, places, organizations, and ideas."

Theodore Levitt: "Products are bundles of attributes, which are brought to life by the
imagination of the customer."

.William J. Stanton, Michael J. Etzel, and Bruce J. Walker: "A product is anything that
can be offered to a market to satisfy a want or need. It includes physical objects, services,
persons, places, organizations, and ideas."

Karl T. Ulrich and Steven D. Eppinger: "A product is a bundle of attributes that satisfies a
customer need or demand. It may be a physical artefact, a service, or a combination of both."

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Robert F. Lusch and Stephen L. Vargo (Service-Dominant Logic perspective): "A product
is a platform for value creation, consisting of goods, services, experiences, and other
resources that are integrated and customized to meet the unique needs and preferences of
individual customers."

In summary, these definitions provides an insight of a product not only as physical

goods but also services, experiences and other offerings that customer/consumer
need and desire.

Generally, in marketing a product is considered a bundle of attributes. The attributes are both
tangible and intangible. Tangible attributes are those related to the technical performances of
the product (i.e speed, safety, acceleration, driveability or road-holding of a car). Intangible
attributes are related to symbolic characteristics of the product such as style, design, status
symbol, ability to have a communicative role towards others and themselves. An important
role in this symbolic sphere is played by the brand.

SOME GENERAL FEATURES OF A PRODUCT

What are product features in marketing?

A product feature is a specific function or characteristic of a product that provides value to
customers.
Marketing plays a huge role in product development and features. By building product
features that consumers want and your competitors don’t have, a marketing team must have
time in creating sales messages that portray the value of new features. If your marketing team
can’t convey why a feature will solve a customer’s problem or is desirable, it may be an

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indication that your feature isn’t aligned with your customer needs, wants or desires.The
following are some prorduct features.

1. Function
2. Design
3. Quality
4. Added value
5. Intangible value

I. Function
Functionality usually refers to how a person can use a product or what they can do with it.
The goal is to consider how a product can help a person accomplish a task and remove pain
points. While some products can create new functional features, some functionalities are
standard.
Example- Smartphone: The functions of a smartphone extend far beyond basic
communication. Features such as a high-resolution camera with advanced photography
modes, a robust operating system with access to a multitude of apps, GPS navigation,
biometric security features like fingerprint or facial recognition, and voice assistant
integration (e.g., Siri, Google Assistant) all contribute to the product's functionality and
appeal.

II. Design
Design is another type of product feature based purely on aesthetics. Design or style is one
way to differentiate yourself from competitors making similar products. The way a phone
case looks may win over a potential customer, and it’s important to consider how a product
looks in these situations. An example is Automobile: Car manufacturers prioritize design to
create vehicles that are not only functional but also visually appealing. From the exterior,
aerodynamic shapes, distinctive grilles, sleek headlights, and bold color options contribute to
a car's curb appeal. Inside the cabin, ergonomic layouts, premium materials, intuitive
controls, and customizable ambient lighting enhance comfort and create a luxurious driving
experience.

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III. Quality

Quality can relate to both tangible and intangible attributes. Quality is also a reference point
for the perceived value of a product. For example-Apparel and Footwear: Quality is a
defining feature of premium apparel and footwear brands that prioritize craftsmanship,
materials, and attention to detail. For example, luxury fashion houses like Gucci, Chanel, and
Prada are renowned for their use of high-quality fabrics, meticulous tailoring, and exquisite
finishing touches. Similarly, brands like Nike, Adidas, and New Balance are recognized for
their durable, performance-oriented athletic footwear that undergoes rigorous testing to meet
the demands of athletes and enthusiasts.

IV. Added value

Added value product feature type’s centre on what a product comes with. It can give your
product a higher perceived value when customers think they are gaining more features for the
same price. Some eCommerce stores may accomplish this by adding gifts when people order.
SaaS products could offer free set-up of their product. Retail Products: Retailers may add
value to their products through bundling, where complementary items are sold together at a
discounted price. For example, a laptop retailer may offer a bundle that includes a laptop,
carrying case, antivirus software, and a mouse pad, providing customers with everything they
need in one package at a lower cost than purchasing each item separately.

Now that we know what a product is and what goes into it as in features and characteristics,
we then start with the product development.

PRODUCT DEVELOPMENT PROCESS

Developing a new product can be a very exciting yet overwhelming process. There are many
different elements that need to be considered. In this post, we will explain the seven steps you
need to follow to develop a product, helping product teams to enjoy a smooth and efficient
development process.

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The product development process encompasses all steps needed to take a product from
concept to market availability. It include.

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 Idea Generation

Idea generation, often known as the methodical search for new product ideas, is the first step in
the process of developing new products. During this phase, businesses will conduct extensive
research into their users and what they are looking for, as well as evaluate market trends

There are two ways that you can go about generating new ideas, and these are as follows:

Internal idea generation – Internal ideas come from various areas within your business, for
example, the sales team, customer support, marketing, or the technical department.
External ideas generation – External ideas come from outside sources, for example, getting
feedback from your target audience or studying the competition.

 Idea screening

The production of a significant number of ideas is the objective of the idea-generating process.
Now, we are at the point whereby you need to screen the ideas that you have generated,
ensuring that you only focus on the ideas that have the highest chance of being a success.
When you are screening a product, there are a lot of different elements you need to look at.
For example, you must assess the risks associated with developing the product in question
and you also need to calculate how feasible the product is.

 Concept development and concept testing: Once an idea has passed the screening stage,
it needs to be developed into a concept. This is basically a detailed description of the
product.
What should be included in your concept?

 The target market for the product

 The proposed price for the product
 The benefits of the product
 The features of the product and how they may appeal to the consumer
You may want to consider developing two or more different product concepts. This will help
you to get a better understanding of how each concept attracts different types of customers,
and it can help you to understand what is going to bring the most value.

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 Marketing Strategy Development and Business Analysis

You are also going to need to put together an initial marketing strategy for your product. This
will act as a guide for the promotion, pricing, and positioning of your new product. Once you
have planned the marketing strategy, you will be in a better place in terms of assessing just
how attractive the idea is. When you are building your marketing strategy, you need to
consider your target audience and the sort of mediums they use when searching for new
products today. For example, if your audience is females between the age of 18 and 24-years-
old, you may want to consider marketing on TikTok, as your demographics line up. However,
this may not be suitable for a retired man. Therefore, the target audience you are attempting
to reach is going to play a monumental role in terms of the strategies you decide to adopt. A
business analysis involves reviewing the profit projections, expected costs, and sales
forecasts for the product. If they satisfy your objectives as a business, you can move the
product onto the development phase.

 Product development; you have now reached the product development stage. This
involves developing the product concept and creating a product that is 100 percent
finished and ready to market. At this point, creating a prototype is the next logical step.
You can then test your prototype with potential users to observe how they interact with
the product and to gather valuable feedback. Prototype testing is important because it
means that your product teams can really understand the item in action. They can validate
some of the design decisions they have made. At the same time, if there are any usability
problems or flaws, they can recognize this and make the required changes before the final
design is handed over and made available for public consumption.

 Test marketing: Test marketing is a critical part of the process. This involves releasing
the finished item to a sample market so that you can see how the product performs under
the marketing strategy that you have predetermined. There are two testing methods that
you can employ when it comes to releasing the product to a sample market. These are
alpha testing and beta testing. Beta testing involves actual users getting to try out the
product and give their honest opinion on the product. Alpha testing involves testing that
is carried out by software to identify any issues or bugs before the product is released to
the public.

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 Commercialization: At this time, you need to make sure that everything is in place to
guarantee that your launch is a success, i.e. your customer support, sales, marketing, and
product teams. Continue to monitor the performance of your product, so you can make
adjustments as and when needed.

Levels of Product

A product is more than what you see, touch and feel. A product is actually a multi-layer
concept. Even if they are not always obvious, the three levels of products are nearly always
present: the Core Value, the Actual Product and the Augmented Product. Each level
adds more customer value to the total product.

The diagram illustrated above shows the level of product and how it is arranged. The small inner
circle represent the Core product, the second circle represent the Actual product and the last
circle represent the Augmented product.

Core product: A core product refers to the fundamental or essential benefits and features a
product or service provides its customers. In order to identify the core customer value of a
product, you need to answer a simple question: What is the buyer really buying? In other
words, what is the customer really looking for? In most cases, the core value is the basic

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need that is satisfied by the product. This basic need differs depending on the person and
the specific demand.Example, the core product of a smartphone is communication. At its
essence, a smartphone allows users to connect with others through calls, text messages,
emails, and various messaging apps. This core function addresses the basic human need for
communication and connectivity. Regardless of additional features and capabilities such as
internet browsing, social media, photography, gaming, and productivity tools, the primary
purpose of a smartphone remains to facilitate communication, making it a core product.

The Actual Product: Marketers should turn the core benefit they identified into an actual
product. This involves developing product features, design, a quality level, a brand name
and even a packaging. The actual product offers the best and easiest options for
differentiation. The actual product of a smartphone includes all the physical components and
attributes that consumers interact with. This encompasses the device's design, size, weight,
materials, display quality, branding, packaging, and any accessories that come with the
smartphone.

The Augmented Product: While the actual product offers most differentiation potential,
the augmented product adds further options to differentiate. It is usually built around the
core value and the actual product. It simply offers additional consumer services and
benefits.

Let’s consider an example. If you buy a tablet device, you get more than the core customer
value (e.g., communication), and also more than the actual product (brand, design, features,
etc.). You also get the augmented product, which turns the product into a complete solution
to your connectivity problems as defined by the core customer value. This complete
solution might take the form of a warranty, after-sale service, product support, instructions
on how to use the device and so further.

The levels of a product according to Kotler

The Five Product Levels model was developed by Philip Kotler in the 1960s. Kotler’s
book, Marketing Management (15th Edition), was voted one of the 50 best business books of
all time in the mid-1990s by the Financial Times. The model considers that products are a
means to an end to meet the various needs of customers. The model is based on there being
three ways in which customers attach value to a product:

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  Customer Need: the lack of a basic requirement.

 Customer Want: a specific requirement for a product or service to meet a need.

 Customer Demand: a set of wants plus the desire and ability to pay to have them
satisfied.

Customers will choose a product based on their perceived value of it. The customer is
satisfied if the product’s actual value meets or exceeds their expectations. If the product’s
actual value falls below their expectations they will be dissatisfied.

Core Benefit

The core benefit is the fundamental need or wants that the customer satisfies when they buy
the product. For example, the core benefit of a hotel is to provide somewhere to rest or sleep
when away from home.

Generic Product

The generic product is a basic version of the product made up of only those features
necessary for it to function.

In our hotel example, this could mean a bed, towels, a bathroom, a mirror, and a wardrobe.

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Expected Product

The expected product is the set of features that the customers expect when they buy the
product. In our hotel example, this would include clean sheets, some clean towels, Wi-fi, and
a clean bathroom.

Augmented Product

The augmented product refers to any product variations, extra features, or services that help
differentiate the product from its competitors.

In our hotel example, this could be the inclusion of a concierge service or a free map of the
town in every room.

Potential Product

The potential product includes all augmentations and transformations the product might
undergo in the future. In simple language, this means that to continue to surprise and delight
customers the product must be augmented.
In our hotel, this could mean a different gift placed in the room each time a customer stays.
For example, it could be some chocolates on one occasion, and some luxury water on
another. By continuing to augment its product in this way the hotel will continue to delight
and surprise the customer.

Five Product Levels Advantages

The real advantage of the model is that it enables an organization to identify the needs and
wants of customers. The organization can then:

 match the features they create to what the customer wants.

 match operational processes to what customers want. In our hotel example, this would
mean strict processes around cleaning each room.
 match marketing efforts to appeal to customers wants.

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Summary

The Five Product Levels model provides a way to show the different levels of need that
customers have for a product.

It can be useful in helping organizations understand their customers. From there, they can
structure themselves to best serve those needs and wants. In this way, they can differentiate
themselves from their competitors.

Product classification

Product classification is the process of categorizing products based on certain characteristics.

There are various reasons for doing this, such as understanding consumer buying behaviour.
These classification consist of (Consumer product and Industrial product).

Types of consumer products

Consumer products are goods that people buy for personal or household use. This include
convenience product, shopping product, specialty product, unsought product.

Convenience goods

Convenience goods are products that consumers frequently purchase with little thought or
effort. These items typically are low-cost and widely available, making them easy to buy on
the go. Many businesses rely on convenience products for reliable sales and profits. However,
since they’re so widely available, businesses have difficulty developing a differentiation
strategy for convenience goods.

Examples of convenience goods

 Milk
 Toothpaste
 Soap
 Laundry detergent
 Magazines
 Snack foods
 Water

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Shopping goods

Shopping products are items bought less frequently. They often are more durable and
expensive than convenience goods and are geared toward a specific niche.

For example, when buying a new car, a shopper will look at different models to find the one
with the best combination of price, fuel efficiency, safety features, and so on.

Shoppers compare products on multiple dimensions, so your products must stand out. The
best way to do this is with effective marketing and branding highlighting the product’s most
attractive features. Examples of shopping goods

 Clothing
 Cars
 Appliances
 Furniture
 Phones

Specialty goods

These are product with a specific brand name or characteristics by which a specific group of
people make special purchase. The consumer perceives specialty goods as something
different and unique from other products. Because they offer something no other product can,
they are worth the consumer’s premium price.

Businesses need a strong brand identity to convince consumers that their specialty products
are worth the price. This involves differentiating the product, creating a sense of exclusivity,
and fostering brand loyalty.

Examples of speciality goods

 Designer clothes
 Luxury cars
 Gourmet foods and beverages
 High-end cosmetics
 Custom jewellery

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Unsought goods

Unsought products are goods that the consumer does not know about or does not think to
buy. They are often expensive, risky, or complicated products.

Because unsought goods are not top of mind for consumers, businesses must work harder to
generate interest and awareness. They can do this through creative marketing efforts, personal
selling, and other forms of advertising.

Examples of unsought goods

 Fire extinguishers
 Medical kits
 Home security systems
 Life insurance
 Funeral services

Industrial products

Industrial goods are used to create other products. They are used in manufacturing or in
maintaining and repairing machinery and equipment.

Product Life Cycle

The Product Life Cycle (PLC) defines the stages that a product moves through in
the marketplace as it enters, becomes established, and exits the marketplace. In other words,
the product life cycle describes the stages that a product is likely to experience. It is a useful
tool for managers to help them analyze and develop strategies for their products as they enter
and exit each stage. The concept of product life cycle helps inform business decision-
making, from pricing and promotion to expansion or cost-cutting

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Stages in the Product Life Cycle

The four stages in the product life cycle are:

1. Introduction
2. Growth
3. Maturity
4. Decline

 Introduction Stage

When a product first launches, sales will typically be low and grow slowly. In this stage,
company profit is small (if any) as the product is new and untested. The introduction stage
requires significant marketing efforts, as customers may be unwilling or unlikely to test the
product. There are no benefits from economies of scale, as production capacity is not
maximized.

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  Growth Stage

If the product continues to thrive and meet market needs, the product will enter the growth
stage. In the growth stage, sales revenue usually grows exponentially from the take-off point.
Economies of scale are realized as sales revenues increase faster than costs and production
reaches capacity. Competition in the growth stage is often intense, as competitors introduce
similar products. In the growth stage, the market grows, competition intensifies, sales rise,
and the number of customers increases.

 Maturity Stage

Eventually, the market grows to capacity. In this stage, price undercutting and increased
promotional efforts are common as companies try to capture customers from competitors.
Due to fierce competition, weaker competitors will eventually exit the marketplace – the
shake-out. The strongest players in the market remain to saturate and dominate the stable
market. The biggest challenge in the maturity stage is trying to maintain profitability and
prevent sales from declining. Retaining customer brand loyalty is key in the maturity stage. In
addition, to re-innovate itself, companies typically employ strategies such as market
development, product development, or marketing innovation to ensure that the product
remains successful and stays in the maturity stage.

 Decline Stage

In the decline stage, sales of the product start to fall and profitability decreases. This is
primarily due to the market entry of other innovative or substitute products that satisfy
customer needs better than the current product.

Product Lifecycle Management (PLM)

Product lifecycle management (PLM) refers to the handling of a good as it moves through
the typical stages of its product life: development and introduction, growth,
maturity/stability, and decline.. All products go through a life cycle that describes their
development, but using product lifecycle management allows you to guide this process and
exercise control over its success. Having a product lifecycle management process benefits a
business in all phases of a product's development and distribution and allows employees to

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stay organized and goal-oriented. The purpose of product lifecycle management is to ensure
that each product a company develops has optimal quality, profitability and customer impact.

PRODUCT DISTRIBUTION

It is the process of delivering the products and services along with selling them from a
manufacturer to a customer. With the growth of the company, it becomes more important to
improves the distribution to ensure that all people in product distribution channels are happy.
It makes the product available for purchase by spreading it through the market. The product
distribution system includes packaging, transportation, and delivery process.

Distribution Channel

A distribution channel is a path through which a product or service is transferred from the
manufacturer or producer to the end consumers. This could be a direct pathway from
manufacturer to consumer, or could involve multiple steps and players along the way.

Types of Distribution Channels

Direct

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The first type of distribution channel is the direct channel. Here, the product manufacturer
chooses to sell directly to consumers; for example through its own e-commerce website, or
retail outlets. This type of distribution channel does not involve any middlemen, such as
wholesalers, distributors or retailers.

Indirect

The indirect distribution channel involves middle players between the manufacturer and the
end buyer. These players include wholesalers, distributors and retailers.

The manufacturer here does not try to sell directly to consumers, and instead involves other
middlemen in the process, and each of these players takes a cut of the product’s final price to
consumer.

Hybrid

Some brand owners choose to employ a hybrid distribution channel, which includes both the
direct and in-direct channels.

Nike for example sells through multi-brand retailers, and also sells directly to consumer
through its own retail stores and online channel.

Distribution Channel Levels

Based on how many middle men get involved in the process of distribution of a product, we
can categorize the levels of distribution channels into the following:

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  Zero-Level Channel: This includes the direct to consumer distribution, with no
middlemen
 One-Level Channel: This involves one middle player, for example the retailer only.
 Two-Level Channel: This includes two middle steps, before the product reaches the
consumer. For example, the wholesaler and then the retailer.
 Three-Level Channel: This involves 3 middle players, and these could include an
agent, a wholesaler or distributor and a retailer.

Product mix, line and items

A product line is a group of similar products manufactured and sold by one company. Many
larger and more established companies have multiple product lines because of their financial
capabilities and an understanding of customers' needs. Companies place products into
product lines depending on characteristics such as functionality, price range, target audience
and brand. Therefore, as consumers develop familiarity with the brand, they can branch out
and try new products in the line. As the organization can have a number of different types of
products, it will have similar number of product lines. Thus, in Nestle, there are milk based

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products like milkmaid, Food product line like Maggi, chocolate product line like Kitkat and
other such product lines.

NESTLE PRODUUCT LINE

SOME ESSENTIAL REASONS FOR PRODUCT LINE

1. Market Segmentation: A product line allows companies to cater to different segments of

the market with specific products that meet the unique needs and preferences of each segment.

2. Brand Cohesion: A coherent product line helps build a strong brand identity by
maintaining consistency in product attributes, quality, and customer experience across
different offerings.

3. Customer Loyalty: Offering a range of products within a product line helps build customer
loyalty. Once customers are satisfied with one product from the line, they are more likely to
try and trust other products within the same line.

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4. Cost Efficiency: Developing and marketing products within a product line can be more
cost-effective than creating entirely new products from scratch. Companies can leverage
shared resources, manufacturing processes, and marketing strategies to reduce costs and
improve profitability

Product Mix: Definition and Components

Product mix, also known as a product assortment, refers to the complete range of products or
services that a company offers to its target market. It encompasses all the individual product
lines that a company offers. A product mix includes different variations of products, such as
different sizes, flavors, colors, or features. For example, a cosmetics company may have a
product mix that includes lipsticks, foundations, eyeshadows, and skincare products.

Components of a product mix include:

1. Product Width: This refers to the number of different product lines that a company offers.
For example, a company offering both electronics and home appliances would have a wider
product mix compared to a company that focuses solely on electronics.

2. Product Length: Product length refers to the total number of products within a product
line. For instance, if a company offers five different models of smartphones, the product
length of its smartphone product line would be five.

3. Product Depth: Product depth relates to the number of variations available for each
product within a product line. This could include different sizes, colors, flavors, or
configurations. For example, a clothing brand may offer t-shirts in various sizes, colors, and
styles.

4. Product Consistency: Product consistency refers to how closely related the different
product lines are to each other. Consistency can be based on factors such as target market,
distribution channels, or production processes. For instance, a company that offers both men’s
and women’s clothing would have a less consistent product mix compared to a company that
specializes in men’s clothing

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Strategies for Effective Product Line, Product Mix

To effectively manage product lines and product mix, businesses can consider the following
strategies:

 Market Research: Conduct thorough market research to understand customer needs,

preferences, and market trends. This insight will help identify gaps in the market and
guide decisions related to product line extensions or new product development.

 Regular Evaluation: Continuously evaluate the performance and relevance of existing

product lines and products within the product mix. Regularly monitor sales data,
customer feedback, and market dynamics to identify opportunities for improvement or
adjustments.

 Brand Positioning: Clearly define the positioning of each product line and product
within the market. Differentiate products from competitors by highlighting unique
features, benefits, or value propositions. Develop a strong brand identity that resonates
with the target market and aligns with the overall marketing mix.

 Adaptability and Flexibility: Stay adaptable and responsive to changing market

conditions and customer preferences. Continuously monitor market trends, competitor

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strategies, and customer feedback. Be prepared to make necessary adjustments to the
product line and product mix to stay competitive and meet evolving customer needs.

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