Fundamental Product Concepts

This article introduces you to fundamental product concepts, beginning with a broad definition of “product”. After this, we will see how marketers classify the products they deal with and, this is usually a vital step in designing your marketing strategy. The unit also takes you through the elements that make up a product.

THE MEANING OF A PRODUCT

Let us start
by asking you to name any three “products” off-head. You are most
likely to consider things like cola, shoes, cars. . or three other similar
products.

Indeed, you might not think of games
reserves, WEMA Treasure account, or the popular TV comedy – “Papa Ajasco”. This is
because when we are on the buying end of an exchange, we often think of
products as tangible objects, that is, things we can actually touch and possess. Football teams,
transport companies, TV
programmes etc. provide an intangible service for our use or enjoyment, not for our own.

Hence, from the marketing point of
view, a product is defined as anything offered for sale for the purpose of
satisfying a need or want on both sides of the exchange process. In this regard, a product includes a
tangible object that marketers refer to as a good, as well as an intangible
service (such as an ideas, a place, an event, an organization etc), or any
combination o f tangible objects and intangible services.

Quite often, most products consist of a
bundle of attributes that can be heavy on the tangible side, or heavy on the
intangible side, or anywhere in between.

 PRODUCT LEVELS

As illustrated in the Figure below,
products can be viewed under five levels. Each of these levels adds more
customer value, and the five constitute a customer value hierarchy. The most
fundamental level is the core benefit i.e. the fundamental service or benefit that the customer is really
buying. For instance, the core benefit enjoyed by a guest in a hotel is
“rest and sleep”.

Figure 8.1: Levels of a Product

At the second level, the
marketer has to turn the core benefit into a basic product. In the hotel
example, such things as a bed, bathroom, towels, table, chair, dresser and
closet are the basic products enjoyed by a guest in the hotel. In the third
level, the marketer prepares an expected product i.e. a set of attributes and
conditions buyers normally expect when they purchase a product. For instance,
hotel guests expect a clean bed, fresh towels, working lamps, and a relatively
quiet environment.

At the fourth level, the marketer prepares an augmented product that
exceeds customer expectations.

In this wise, a hotel can
include a remote-controlled TV. Set, remote-controlled air conditioner, fresh
flowers, rapid check-in, express checkout, and fine dining and room service.
You need to understand that in the developed countries, however, competition
takes place mostly at the expected product level.

At the fifth level, is the
potential product, which consists of all the possible augmentations and
transformations the product might undergo in the future.

The foregoing description of the
different layers of a product should make it clear that a product is definitely
more than a simple set of tangible features. Consumers actual y want to see
products as a complex bundle of benefits that satisfy their needs. The
facts, as of today are that most competition takes place at the product
augmentation level. This is why successful firms add benefits to their offers. Such benefits not only
satisfy the customers, they are also delighted.

 ELEMENTS OF A PRODUCT

Elements that make up a product include attributes, branding, packaging, labelling, and product support
services. Certain decisions along these lines are often made concerning the
development and marketing of individual products. Each of these elements
applies to all categories of products. However, the way marketers handle them can vary significantly from one
product to another.

Actual y, one of the primary goals of
marketers is to differentiate their products from competing ones by developing
unique strategies for each product element. We shall be taking a closer
look at each of these elements.

 PRODUCT ATTRIBUTES

The development of a product
necessarily involves the consideration of the benefits that the product
will offer. Such benefits are communicated and delivered by product attributes like quality, features and
design. The degree of consideration given to these attributes has far-reaching implications on consumers’ acceptance of the product.

 PRODUCT QUALITY

Quality is one of the marketing
manager’s strategies of placing the product in the mind of the prospect or the
consumer (i.e. positioning). Whenever a product is being developed, the
issue of quality comes under two dimensions: level and consistency. In the first case, the marketing manager
must choose the quality of a product to perform its functions, such as overall durability, reliability, precision, ease of operation, and repairs, as
well as other valued attributes. The second consideration for quality is in
respect of consistently delivering the targeted level of quality to consumers.
Hence, there should be no defects in the products being offered to the market.
In addition, no variations should be spot ed in them.

It is
realization of the need for high levels of quality consistency that firms At up quality control units. General
y, good quality control measures involve preventing defects before they
occur, through better product design and improved manufacturing process.

In recent times, many business enterprises have embraced “Total
Quality Management (TQM) as an important tool to constantly improve product and
process quality in every facet
of their activities. Such companies are gradual y turning quality into a potent strategic weapon for gaining an
edge over competitors by offering products and services that bet er serve customers’ needs and
preferences for quality.

PRODUCT FEATURES

Another important product attributes
are the features of particular production processes. A product can be offered with
varying features. A model without any extras (a “stripped-down”
model) is usual y the starting point. The company can simultaneously create higher-level models by adding more
features. Consider an automobile-manufacturing plant for example. 

A “stripped-down”
model of the vehicles being produced will contain no extra features like
air-conditioners, headrests, alloy rims, car stereo etc. However, the higher models which contain any one or
combinations of these extras features are fast becoming a competitive
tool for differentiating the company’s products from competitors. What is general y needed here is some high
degree of innovativeness backed by a sound and efficient marketing research unit.

  PRODUCT DESIGN

The process of designing a
product’s style and function concerns creating that is attractive, easy, safe, and inexpensive to use and service. It should also
be simple and economical to produce and distribute.

Just like
product features, product design can be one of the most powerful competitive weapons in a company’s marketing
arsenal.

For instance,
good designs can attract attention, improve product performance, cut production
costs, and give the product a
strong, competitive advantage in the target market.

B R A
N D I N G

A forward-looking marketing manager
will usually consider the issue of branding, as part of his strategic plans. But
what is a brand?

A brand is a
name, term, sign, symbol or design, or a combination of these, which is
intended to identify the
products or services of one seller or group of sellers and to differentiate
them from those of competitors. Therefore, a brand identifies the maker or seller of a product. It is a seller’s promise to deliver consistently, a
specific set of features, benefits, and services to buyers.

We must observe that the term branding includes brand names, brand marks
and trademarks.

A brand name is narrower in meaning and is concerned with that part of a
brand that can be vocalized (i.e.
utterable or pronounceable). A brand name is defined as a brand or part of a brand consisting
of a word, let er, group of words or letters, comprising a name, which identifies the goods or
services of a seller or group of sellers and distinguishes them from
competitors. Examples here include Coca Cola, Pepsi Cola, Peugeot, Toyota, Panadol, and Bacchus.

Brandmark is that part of a brand
which can be recognized but is not utter able or pronounceable, such as
symbols, designs or distinctive colouring or lettering. Examples. Lion head (for
Peugeot).

A trademark is a brand or part of a
brand that is given legal protection because it is capable of exclusive
appropriation. A trademark usually protects the seller’s exclusive rights to use the brand
name and/or brand mark.

Branding is
now an important issue in product strategy that can be viewed from two sides. On the one hand,
developing a branded product requires a great deal of long-term marketing
investment, especially for advertisement, promotion and packaging.
Hence, some manufactures usually find it conve­nient and cheaper to make the
product and let others do the brand building. This strategy is common with Taiwanese manufactures who make
substantial proportion of the world’s clothing, consumer electronics,
and computers that are sold
under non-Taiwanese brand names.

On the other
hand, many manufacturers have come to realize that the power lies with the companies that control
the brand names. For example, brand name clothing, electronics, and computer companies can replace
their Taiwanese manufacturing sources with cheaper sources in Malaysia.
It is however regret able that
the Taiwanese producers can do very little to prevent the loss of sales
to less expensive suppliers.

General y, branding adds value to
consumers and society since it leads to higher and more consistent
product quality. It also increases the degree of innovativeness in the business world by giving producers some
incentives to look for new features that cannot be easily copied by
competitors. In this sense,
branding can be said to result in more product variety and choice for consumers.
Final y, branding increases shoppers’ efficiency by providing sufficient
information about products and where to find them.

Apart from the above, branding has
been observed to confer specific advantages on both the buyer and the
seller.

Benefits to the Buyer:

(i) Brand names inform the buyer
about product quality. For instance, a buyer who purchases the same brand knows that he will obtain
the same quality each time he buys.

(ii)   
Brand names also increase the shopping
efficiency of the buyer.

Since different products have their
particular brand names, a buyer will find it easy to pick his choice from the
pack instead of just aimlessly going through nameless products.

(iii) Brand names also assist in calling customers’ attention to new products, especially when backed by aggressive
promotional activities…

Benefits to the Seller:

(i)        
Brand
names make it easier for sellers to receive and process orders, as well as track
down problems. For example, a contract for the supply of vehicles will usually
be specific about the particular model needed.

(ii)       The sellers’ brand name and trademark
instantly give legal protection for unique

product
feature that otherwise might be copied by competitors.

(iii)       Branding allows the seller attract
loyal and profitable sets of customers.

(iv)      
Through branding, the seller is able to segment
his markets and by so doing cater for the needs of the various segments in the market.

PACKAGING

Packaging has
to do with the activities of designing and producing the container or wrapper
for a product. The package may
comprise of the fol owing:

(a)      the
product’s primary container (e.g. the bottle holding bennylin cough a syrup);

(b)      a
secondary package, that is thrown away when the product is about to be used
(i.e. the

card
box containing the bottle of Bennylin cough syrup); and

(c)      the shipping package necessary to
store, identify and ship the product (e.g. a

corrugated
box carrying larger volumes of the product).

In today’s
business, several factors have made packaging an important marketing tool. For instance, the increase in
self-service dictates that the package must necessarily perform many sales tasks
such as attracting attention, describing the products, as well as making the
sale. In actual fact, innovative packaging can offer a company an advantage
over competitors.

Labelling, which consists of printed
information appearing on or with the package, should be seen as part and parcel
of packaging. Labels may range from simple tags attached to products to
complex graphics that are part of the package. They often perform at least two functions. In the first place, the
label identifies the products or brand. Secondly, it may contain some useful
information about the product such as its content, expiry date, direction for use etc.

 PRODUCT–SUPPORT SERVICES

Another important element of product
strategy is customer service. What a firm offers in the marketplace usually
includes some services, which may be a minor or major part of the total offer.
These are known as product-support services since they augment actual products.

Good customer service has its
positive points. For instance, it costs less to keep the goodwill of existing customers than it does to
attract new ones or win back lost customers. Firms that provide high-quality service usually have the opportunity
to charge more, grow faster and make more profits.

It is in this sense that many are now
setting up strong customer service operations to handle complaints and adjustments, credit
service, maintenance service,
technical service, and consumer information. A well-staffed and equipped customer service department
should be able to effectively coordinate all the firm’s services, create
consumer satisfaction and loyalty, and helps the firm to further be ahead of its competitors.