Concept of Product

Product: A good, service, person, place, event or

organization offered to consumers to satisfy his need or
want.
A good is a tangible product, which can be seen and
touched. These tangible items can be produced in bulk
and inventoried.
A service is an intangible product, which requires
simultaneous consumption and production.
A product may be a person also. Here marketer tries to
buy and sell the celebrities or sports persons. For,
example, Board of Cricket Control in India (BCCI) asks its
Indian premier league (IPL) teams to buy iconic players
and foreign players for certain price.

An event is also considered as product. Many event

management companies earn their revenue by selling
tickets and advertisement space at the event. The
following example explains how an event can be
marketed.
An organization is also considered as a product. It can be
bought and sold on the basis of value of the firm.
Many state governments and central governments sell
their places to get the pie in the tourism market. Here
governments provide advertisements of a place like
historical places, wildlife, waterfalls etc to attract
tourists from India and abroad.
 Classification of Products
Consumer Products and Business Products

Consumer products
are purchased by the Products
consumer for personal
consumption. Consumer Business
a. Convenience a. Materials and
Business products are parts.
b. Shopping
purchased by business c. Specialty b. Capital items
concerns for further d. Unsought c. Supplies and
services.
product development
a. Convenience goods: These are the fast moving consumer
goods that are purchased regularly with less amount of effort.
1. These are purchased frequently.
2. Customer involvement is very low.
3. Price of the product is very low.
4. Intensive distribution is used to reach the consumer.
5. The stock turnover is high.
6. Aggressive promotion is required
Example: soaps and detergents, groceries etc.
b. Shopping goods: These goods require high consumer
involvement and before buying such products consumer
processes the information of product suitability, quality
and price.
Compared to convenience goods, shopping goods are
purchased less frequently. Consumer takes lot of time to
search and evaluate the information. These products are
available in selected outlets. The price of the product is
very high. For example, a consumer who wants to
purchase the washing machine will collect the information
on type of washing machine, type of control, loading,
wash method, pre wash, delicate wash, cycle time, after
sales service, sensors, water consumption, etc.
c. Specialty goods: These are the products for which a
consumer shows high brand loyalty and is ready to wait, or
spend time
i. Consumers are having strong brand loyalty.
ii. Usually companies adopt premium pricing strategy.
[Link] distribution and selective communication
strategies are adopted.
To illustrate, a consumer is willing to pay Rs 32000 for
Bosch Digital Home Theater though competitors’ products
are available at Rs 15,000 to Rs 25000.
d. Unsought goods: These products are called unsought
because consumer is usually unaware or ignorant about
the products to purchase it. Marketers need heavy
promotion activities to educate and sell their products.

For example, Insurance is the product which most of the

consumers are aware of but very few are willing to
purchase. Life Insurance Corporation trains its agents to
promote and sell aggressively. These agents provide lot of
inputs regarding insurance to consumers.
Business or Industrial Products
Business products are purchased by the Organizational
consumers who use these products as a material, part,
capital item or service in producing his/her final product.
a. Materials and parts: These products are further
classified as raw materials and manufactured material
and parts.
Materials are classified into raw materials and
manufactured materials and parts.
Raw materials are of two types namely, Natural products
and Farm products.
[Link] products are extracted and used for further
product development. For example, Orex Minerals Private
Limited supplies iron ore to Adani exports limited, Nobel
Resources and Trading Private Limited and Sino Steel India
Private Limited.
[Link] products are also used in further product
development. For example, Parle agro division supplies
required wheat for the production of biscuits.
Manufactured materials are further classified into two
types. They are component parts and component
materials.
[Link] parts. For example, Melco Precisions
Private Limited supplies heat resistant steel to Grasim
and NTPC for further product development.
[Link] materials These are also called original
equipment manufacturer products. These companies’
products are directly fitted in the final product. For
example, MRF tyres are directly fitted in Maruti Udyog
Limited cars.
b. Capital items include developing the building( for
example, L & T and Siemens developing Bangalore
International Airport) Fixed equipments
(for example, Lenovo supplying computers to Manipal
university) Accessory equipments( for example, Hindustan
Everest Tools Limited sells its spanners and pliers to
industrial customers) and office equipments ( HP
supplying fax machine to Shristi Automation Private
Limited)

c. Suppliers and services: Supplies includes operating

supplies( Castrol sells its lubricants to VRL limited)
maintenance and repair services (Eagle Securities Service
to corporate clients)
Levels of Product
1. Core product: This is the fundamental good or service offered to
the consumer. E.g. Hospital services
2. Generic product: This is the basic version of the product. E.g.
Hospital having doctors, nurses, beds and laboratories.
3. Expected product: The minimum attributes that consumer
expects in the product. E.g. Hospital should have qualified doctors,
good service and proper amenities.
4. Augmented product: Inclusion of value added services to the
expected product to distinguish it from competitors. E.g. Online or
tele medicine facilities, expert knowledge sharing, 24 hour
ambulance service etc…
5. Potential product: These are the future products provided by the
company which customer didn’t anticipate. Ultimately consumer
will be delighted by this product. E.g. Medical insurance from the
hospital, after service care etc…
Product Line Strategies
Product line: The group of related products which uses
same marketing efforts to reach the consumer.
The product line identifies profitable and unprofitable
products and helps in allocation of resources according
to that. The product line understanding helps the
marketer to take line extension, line pruning and line
filling strategies of the company.
Pidilite Industries, the adhesives and chemical company,
have the following group of related products (or product
lines) in consumer and business markets.
Consumer market.
1. Adhesives and sealants.
2. Art materials and stationeries.
3. Construction chemicals.
4. Automotive chemicals
5. Fabric care
Business market
1. Industrial adhesives.
2. Textile chemicals.
3. Organic pigment powders.
4. Industrial resins and
5. Leather chemicals.
Product Mix
The number of product lines and items offered by marketer to
the consumers
A company’s product mix has four different dimensions.
Product mix width: The total number of product lines that
company offers to the consumers.

Product mix length: The total number of items that company

carries within its product line.

Product line depth: The number of versions offered of each

product in the line.
Product mix consistency: If company’s product lines usage,
production and marketing are related, then product mix is
consistent, else it is unrelated.
Packaging and Labeling
Packaging: The process of designing and producing the
container or wrapper for a product.
Packaging plays a vital role in marketing a product. Some
rural consumers identify with the design or cover of the
product and then they buy it. Packaging has other benefits
to the consumers also. They are
1. It gives proper protection to the product.
2. It helps in bulk breaking.
3. It entices the customer to buy the product.
Packaging strategies:
1. Adopting the same package for entire product line.
2. Multiple packs for multiple products
3. Changing the packages continuously.
Labeling:
Labeling: it carries the information about the product and the
seller and this information is presented on the package as well
as on the product..
Types of labels:
a. Brand label: Only brand name is mentioned on the
packaging. For example, Raymond's.
b. Grade label: Identifies the products judged quality with a
letter, number or word. For example, fertilizers 19-19-0-19, 17-
19-19-19 etc…
c. A descriptive label: Gives the entire information about the
product, use, and care. For example, Vasemol hair dye packet
contains brochure in which it tells how to use product, what
are the precautions one should take etc…
New Product Development
Stage 1 – New product idea can be generated either from
the internal sources or external sources. The internal
sources include employees of the organization and data
collected from the market. The external source includes
customers, competitors and supply chain members. For
example, Ingersoll Rand welcomes new ideas from the
General public
Stage 2-Idea screening: Organization may have various
ideas but it should find out which of these ideas can be
translated into concepts. In an interview to Times of India,
Mr. Ratan Tata, chairman TATA group discussed how his
idea saw many changes from the basic version. He told
that he wanted to develop car with scooter engine, plastic
doors etc… But when he unveiled the car, there were
many changes in the product. This shows that initial idea
will be changed on the basis of market requirements.
Stage 3 – Concept Development: the main feature or the
specific desire that it caters to or the basic appeal of the
product is created or designed in the concept
development.

Concepts used for Tata Nano car are -

Concept I: Low-end ‘rural car,’ probably without doors or
windows and with plastic curtains that rolled down, a
four-wheel version of the auto-rickshaw
Concept II: A car made by engineering plastics and new
materials, and using new technology like aerospace
adhesives instead of welding.
Concept III: Indigenous, in-house car which meets all the
environment standards
Stage 4 – At this stage concept is tested with the group
of target customers. If any changes are required in the
concept or the message it will be done during this stage.
Also the effectiveness is tested on a minor scale. If the
concept meets the specific requirements, then it will be
accepted.
marketing mix strategy and profit goals.
Stage 5 Marketing strategy development: The marketing
strategy development involves three parts. The first part
focuses on target market, sales, market share. TATA’s initial
business plan consisted sales of 2 lakhs cars per annum.
The second part involves product price, distribution and
marketing budget strategies. TATA’s fixed Rs 1 lakhs as the
car price, and finding self employed persons who work like
agent to distribute the cars. The final part contains
marketing mix strategy and profit goals.
Stage 6 – It is the analysis of sales, costs and profits
estimated for a new product and to find out whether
these align with the company mission and objectives.
Stage 7 – During this stage, product is made to undergo
further improvements, new features or improvised
versions are added to the product. There is also scope for
innovation and using the latest technology into the
product.
Stage 8 – Test marketing: is the most crucial stage for the
testing product’s performance and its future in the
market. There are certain cases where product has failed
in the test marketing and had to be withdrawn.
– The product is introduced into the realistic market
– The 4P’s of marketing are tested.
– The cost of test marketing varies with the type of
product.

Stage 9 – Commercialization: In this stage product is

completely placed in the open market and aggressive
communication program accompanied with promotion
activities is carried out to support it.