Chapter Products and Services - Edu @ Thinus
23/05/15
Chapter 6 Products and Services
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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Learning outcomes
? Explain the term `product'. ? Distinguish between different product levels. ? Classify products according to their durability and tangibility. ? Distinguish between the different types of consumer products, business products,
and services. ? Discuss the individual and product mix decisions marketers must consider. ? Explain how products can be differentiated. ? Provide reasons for organising related product items into product lines. ? Indicate why new products are important to organisations. ? Discuss the new product development process. ? Provide reasons why new products fail. ? Discuss the adoption process whereby consumers accept new products. ? Discuss the product life cycle. ? Illustrate how the strategic objective, marketing objectives and characteristics
could change as products move through the product life cycle.
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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23/05/15
What is a product?
? A product can be defined as a good, a service or idea that, through the exchange process, satisfies consumers' needs
? A product can be something tangible (e.g. Milo breakfast cereal), a service (e.g. a haircut), an idea (e.g. preventing Aids) or any combination of the three (e.g. eating at a restaurant where you receive additional services over and above the meal you pay for)
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
3
Services differ from tangible
goods:
? Intangibility: a services cannot be seen, touched, tasted or smelled
? Inseparability: services are consumed as they are produced
? `Perishability': services cannot be stored for future use ? Variability: the quality of services delivered is
sometimes inconsistent due to the human involvement ? Lack of ownership: ownership does not pass from the
service provider to the consumer as what the case would be with tangible goods
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
4
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23/05/15
Product/services continuum
Physical goods (tangible)
Service-dominated products (intangible)
Pure tangible product
Tangible good with service elements
Equal parts tangible good and service
Predominantly service with
supporting tangible goods
Pure service
Bottled water
Personal computer with helpline
Dinning in a restaurant
Air travel
Life insurance
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
5
Product levels
? core benefit ? the actual benefit the consumer seeks by buying the product or service to fulfil a need
? actual product ? the actual product or service consumers buy
? augmented product ? those benefits, attributes or supporting services added to the actual product to exceed consumer expectations
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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Product classification
? Classification based on durability and tangibility
? Durable products ? Non-durable products ? Services
? Classification based on the target market
? Consumer products ? Business products
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
7
Classification of consumer products
Consumer products
Convenience Products
Staple products Impulse products Emergency products
Shopping Products
Homogeneous
Heterogeneous
Specialty Products
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
Unsought Products New unsought Regular unsought
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Consumer products
? Convenience products
? frequently purchased ? low cost ? require very little purchasing effort from the consumer
? Staple products ? Impulse products ? Emergency products
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
9
Consumer products
? Shopping products
? more complex and purchased less frequently than convenience products
? consumers often don't have up-to-date information to make a purchase decision
? Homogeneous shopping products ? Heterogeneous shopping products
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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23/05/15
Consumer products
? Specialty products
? often very expensive with unique characteristics ? these products seldom bought ? consumers prepared to make considerable effort to find them
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
11
Consumer products
? Unsought products
? those products consumers are not aware of, do not want to think about, or do not realise the need for
? New unsought products ? Regular unsought products
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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23/05/15
Consumer behaviour considerations for consumer products
Convenience products
Shopping products
Consumer buying behaviour
Purchase frequency Frequent purchases
Infrequent purchases
Involvement in purchase Time spent planning the purchase
Low Very little
Moderate to high Considerable
Brand loyalty
Price/quality comparison
Aware of brand but will accept substitutes
No
Prefer specific brand but will accept substitutes
Yes
Specialty products
Unsought products
Infrequent to Very infrequent
very infrequent purchases
purchases
Very high
Low to
moderate
As much as
Some
needed to find comparison
preferred brand shopping
Very brand loyal Will accept
? will not accept substitutes
substitutes
No
No
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
13
Marketing considerations for consumer products
Marketing considerations Price
Convenience products
Relatively inexpensive
Shopping products Specialty products Unsought products
Fairly expensive
Usually very expensive
Varies depending on product, but usually inexpensive
Seller's image Length of distribution channel Number of outlets Promotion
Stock turnover Gross margin
Unimportant
Long
Many
Advertising and promotion by producer
High
Low
Very important
Important
Relatively important
Short
Very short
Short
Few
Personal selling and advertising by producer and seller
Very few, often one per area Personal selling and advertising by producer and seller
Usually limited
Advertising and promotion by producer
Low
Low to very low
Low
High
High to very high Low to high,
depending on
product
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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23/05/15
Business products
? Installations ? Accessory equipment ? Raw materials ? Component parts and materials ? MRO supplies
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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Characteristics of business products
Installations
Accessory equipment
Raw materials Component parts MRO supplies and materials
Characteristics Unit price
Very high
Relatively high Very low
Life span
Very long
Long
Very short
Purchase quantities Very little
Little
Very large
Purchase frequency Very infrequent
Planning time Price/quality comparison
Extensive Quality very important
Medium frequency
Less extensive Quality and price important
Frequent delivery but long-term purchase contract Varies Quality important
Negotiation time Long
Medium
Difficult to generalise
Low to high
Low
Depends on final Short
product
Large
Little
Frequent
Frequent
Less extensive Very little Quality important Price important
Medium
Short to none
? Juta and Company Ltd, 2012
Marketing Management 6th Edition
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