The document discusses key concepts related to products and services. It begins by defining a product as anything that can satisfy a need and outlines 5 levels of products from core benefits to potential products. It then discusses different ways of classifying products based on durability, tangibility, consumer vs industrial usage. Key frameworks for services are also introduced like the 7 Ps of services marketing and determinants of service quality. Challenges specific to marketing services are highlighted like defining quality, communicating intangible offerings and coordinating different business functions.

1. Lecture 13
The First P of marketing : The Product

2. Product
• Product – Basics
• Product Lifecycle
• New Product Development

4. 3M – Producing more than 55000
Products
• The 3M Company : Minnesota Mining and Manufacturing
Company
• an American multinational conglomerate corporation
– operating in the fields of industry,
– health care,
– and consumer goods.[2]
– produces a variety of products, including
• adhesives, abrasives, laminates, passive fire protection, personal
protective equipment, dental and orthodontic products, electronic
materials, medical products, car-care products,[3] electronic circuits,
healthcare software and optical films.[4]
• In 2017, 3M made $31.7 billion in total sales.[2]
• The company has 91,000 employees[6] and has operations in
more than 70 countries.

5. Chapter Questions
• What are the characteristics of products and how do
marketers classify products?
• How can companies differentiate products?
• How can a company build and manage its product mix and
product lines?
• How can companies combine products to create strong co-
brands or ingredient brands?
• How can companies use packaging, labeling, warranties, and
guarantees as marketing tools?

6. Ashok
Leyland is
known for
its
products

7. What is a Product?
A Product is anything that can be offered in a market
for attention, acquisition, use, or consumption that
might satisfy a need or want
A product can include physical goods, services,
experiences, events, persons, places, properties,
organizations, information, and ideas.

8. Components of the
Market Offering
Attractiveness
of the market
offering
Value-based prices
Product
features
and quality
Services
mix and
quality

11. Five Product Levels

12. Chapter 8 - slide 12
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Levels of Product and Services

13. The Product Hierarchy
• The product hierarchy moves from basic need to
particular items that satisfy those needs.
– Need family (security)
– Product family (savings and income)
– Product class (financial instruments)
– Product line (insurance)
– Product type (term insurance)
– Item/ product variant. (term insurance offered by ICICI)

14. Each level adds more customer value, and the five constitute a customer value hierarchy.
The core benefit: the service or benefit the customer is really buying. A hotel guest is buying
"rest and sleep." The purchaser of a drill is buying "holes." Marketers must see themselves
as benefit providers.
Basic product: At the second level, the marketer has to turn the core benefit into a basic
product. Thus a hotel room includes a bed, bathroom, towels, desk, dresser, and closet.
At the third level, the marketer prepares an expected product, a set of attributes and
conditions buyers normally expect when they purchase this product. Hotel guests expect a
clean bed, fresh towels, working lamps, and a relative degree of quiet. Because most hotels
can meet this minimum expectation, the traveler normally will settle for whichever hotel is
most convenient or least expensive.
At the fourth level, the marketer prepares an augmented product that exceeds customer
expectations. In developed countries, brand positioning and competition take place at this
level. In developing countries and emerging markets such as China and India, however,
competition takes place mostly at the expected product level
At the fifth level stands the potential product, which encompasses all the possible
augmentations and transformations the product or offering might undergo in the future

15. Product Classification Schemes
Durability
Use
Tangibility

16. •Nondurable goods are tangible goods normally consumed in one or a few uses,
like beer and soap. These goods are consumed quickly and purchased frequently,
Marketing strategy
•Make them available in many locations
•Charge only a small markup
•Advertise heavily to induce trial and build preference
•Durable goods are tangible goods that normally survive many uses: refrigerators,
machine tools, and clothing.
Marketing strategy
•Durable products normally require more personal selling and service,
•command a higher margin,
•and require more seller guarantees.
•Services are intangible, inseparable, variable, and perishable products.
Marketing strategy
•Require more quality control,
•supplier credibility, and adaptability.
•Examples include haircuts, legal advice, and appliance repairs.

17. Durability and Tangibility
Nondurable
goods
Services
Durable
goods

18. Consumer Goods Classification
Convenience
Unsought
Shopping
Specialty

19. CONSUMER-GOODS CLASSIFICATION
The vast array of goods consumers buy can be classified on the basis of shopping habits. We
can distinguish among
Convenience : These goods are purchased frequently, immediately, and with a minimum
of effort. Examples include tobacco products, soaps, and newspapers
Staples are goods consumers purchase on a regular basis. A buyer might routinely
purchase Heinz ketchup, Crest toothpaste, and Ritz crackers.
Impulse goods are purchased without any planning or search effort. Candy bars and
magazines are impulse goods.
Emergency goods are purchased when a need is urgent— umbrellas during a
rainstorm, boots and shovels during the first winter snowstorm
Shopping: Goods that the consumer, in the process of selection and purchase,
characteristically compares on such bases as suitability, quality, price,color and style. Examples
include furniture, clothing, used cars, and major appliances.
Homogeneous shopping goods are similar in quality but different enough in price to
justify shopping comparisons.
Heterogeneous shopping goods differ in product features and services that may be
more important than price
Specialty: These have unique characteristics or brand identification for which a sufficient
number of buyers are willing to make a special purchasing effort. Examples include cars, stereo
components, photographic equipment, and men's suits
Unsought goods. These are those goods which the consumer does not know about or
does not normally think of buying, like smoke detectors , Insurance etc.

20. Industrial Goods Classification
Materials and parts
Supplies/
business services
Capital items
-Raw materials
-Manufactured materials and parts
-Installations
-Equipment
- Supplies
- Business Services

21. INDUSTRIAL-GOODS CLASSIFICATION
Industrial goods can be classified in terms of how they enter the production process and their
relative costliness. These are categorized as materials and parts, capital items, and supplies and
business services
1) Materials and parts are goods that enter the manufacturer's product completely. They fall
into two classes: raw materials and manufactured materials and parts.
Raw materials fall into two major groups: farm products (e.g., wheat, cotton,
livestock, fruits, and vegetables) and natural products (e.g., fish, lumber, crude petroleum, iron
ore).
Farm products are supplied by many producers, who turn them over to marketing
intermediaries, who provide assembly, grading, storage, transportation, and selling services.
Natural products are limited in supply. They usually have great bulk and low unit
value and must be moved from producer to user. Fewer and larger producers often market them
directly to industrial users
Manufactured materials and parts fall into two categories: component materials
(iron, yarn, cement, wires) and component parts (small motors, tires, castings).
Component materials are usually fabricated further—pig iron is made into steel, and
yarn is woven into cloth
Component parts enter the finished product with no further change in form, as when
small motors are put into vacuum cleaners, and tires are put on automobiles

22. INDUSTRIAL-GOODS CLASSIFICATION
2)Capital items are long-lasting goods that facilitate developing or managing the finished
product. They include two groups: installations and equipment.
Installations consist of buildings (factories, offices) and heavy equipment (generators,
drill presses, mainframe computers, elevators). Installations are major purchases. They are
usually bought directly from the producer, with the typical sale preceded by a long negotiation
period.
Equipment comprises portable factory equipment and tools (hand tools, lift trucks)
and office equipment (personal computers, desks). These types of equipment do not become
part of a finished product. They have a shorter life than installations but a longer life than
operating supplies.
3) Supplies and business services are short-term goods and services that facilitate
developing or managing the finished product.
Supplies are of two kinds: maintenance and repair items (paint, nails, brooms), and
operating supplies (lubricants, coal, writing paper, pencils).Supplies are the equivalent of
convenience goods; they are usually purchased with minimum effort on a straight rebuy basis.
Business services include maintenance and repair services (window cleaning, copier
repair) and business advisory services (legal, management consulting, advertising).

23. Product Systems and Mixes
Product System Consistency

24. Proctor & Gamble Product Mix
Detergents Toothpaste Bar Soap
Disposable
Diapers
Paper
Products
Ivory Snow Gleem Ivory Pampers Charmin
Dreft Crest Camay Luvs Puffs
Tide Zest Bounty
Cheer Safeguard
Dash Oil of Olay
Bold
Gain
Era
Product Mix Width
Product
Line
Length

25. Product Mix
A product mix (also called a product assortment) is the set of all products and items a particular
seller offers for sale. A product mix consists of various product lines.
A company's product mix has a certain width, length, depth, and consistency. These four
product-mix dimensions permit the company to expand its business in four ways.
The width of a product mix refers to how many different product lines the company carries.
Table 12.1 shows a product-mix width of five lines. (In fact, P&G produces many additional
lines.)
The depth of a product mix refers to the total number of items in the mix. In Table 12.1, it is 20.
We can also talk about the average length of a line. This is obtained by dividing the total length
(here 20) by the number of lines (here 5), or an average product length of 4.
The width of a product mix refers to how many variants are offered of each product in the line.
If Tide comes in two scents (Mountain Spring and Regular), two formulations (liquid and
powder), and two additives (with or without bleach), Tide has a depth of eight as there are
eight distinct variants. The average depth of P&G's product mix can be calculated by averaging
the number of variants within the brand groups.
The consistency of the product mix refers to how closely related the various product lines are in
end use, production requirements, distribution channels, or some other way. P&G's product
lines are consistent insofar as they are consumer goods that go through the same distribution
channels. The lines are less consistent insofar as they perform different functions for the buyers.

26. Chapter 8 - slide 26
Copyright © 2010 Pearson Education, Inc.
Publishing as Prentice Hall
Product and Service Decisions
randomly

27. Product Line Analysis
Sales and Profit
Market Profile

28. Product-Item Contributions

29. Product Map

30. Product Line Length
Line stretching
Up-market stretch
Down-market stretch
Two-way
stretch
Line modernization,
featuring, and pruning
Line filling

31. What is the Fifth P?
Packaging, sometimes called the fifth P, is all the
activities of designing and producing the
container for a product.
Three kinds of Packaging
1)Primary Package: The main container (e.g. Glass bottle)
2)Secondary Package : Container that wraps main container (The Paper box)
3)Territory package : Shipping package (The corrugated box)

32. Factors Contributing to the
Emphasis on Packaging
Self-service
Consumer affluence
Company/brand image
Innovation opportunity

33. Innovations in Packaging

34. Packaging Objectives
• Identify the brand
• Convey descriptive and persuasive
information
• Facilitate product transportation and
protection
• Assist at-home storage
• Aid product consumption

35. Label
The label may be a simple tag attached to the product or an elaborately
designed graphic that is part of the package.
Identifies
Grades
Describes
Promotes
Functions of Labels

36. Warranties and Guarantees

37. Services: The Intangible Product

38. Services: The Intangible Product
A service is any act of performance that one
party can offer another to satisfy their needs and
wants.
•It is essentially intangible and does not result in
the ownership of anything
•Its production may or may not be tied to a
physical product.

39. Examples of Service Industries
• Health Care
– hospital, medical practice, dentistry, eye care
• Professional Services
– accounting, legal, architectural
• Financial Services
– banking, investment advising, insurance
• Hospitality
– restaurant, hotel/motel, bed & breakfast,
– ski resort, rafting
• Travel
– airlines, travel agencies, theme park
• Others:
– hair styling, pest control, plumbing, lawn maintenance, counseling
services, health club

40. Categories of Service Mix
Pure tangible good
Good w/ accompanying services
Hybrid
Service w/ accompanying goods
Pure service

41. Tangibility Spectrum
Tangible
Dominant
Intangible
Dominant
Salt
Soft Drinks
Detergents
Automobiles
Cosmetics
Advertising
Agencies
Airlines
Investment
Management
Consulting
Teaching
Fast-food
Outlets
Fast-food
Outlets













42. Nature and Characteristics of a Service

43. Services are Different
Goods Services Resulting Implications
Tangible Intangible Services cannot be inventoried.
Services cannot be patented.
Services cannot be readily displayed or communicated.
Pricing is difficult.
Standardized Heterogeneous
(Variable)
Service delivery and customer satisfaction depend on
employee actions.
Service quality depends on many uncontrollable factors.
There is no sure knowledge that the service delivered
matches what was planned and promoted.
Production
separate from
consumption
Simultaneous
production and
consumption
(Inseperable)
Customers participate in and affect the transaction.
Customers affect each other.
Employees affect the service outcome.
Decentralization may be essential.
Mass production is difficult.
Nonperishable Perishable It is difficult to synchronize supply and demand with
services.
Services cannot be returned or resold.
Source: Adapted from Valarie A. Zeithaml, A. Parasuraman, and Leonard L. Berry, “Problems and Strategies in Services Marketing,”
Journal of Marketing 49 (Spring 1985): 33-46.

44. 7Ps of Service Marketing
• Product/Service
• Price
• Place
• Promotion
• Physical Evidence
• Process
• People

45. Table 13.4 Top Customer
Service Providers
• USAA
• Four Seasons Hotels
• Cadillac
• Nordstrom
• Wegman Food Markets
• Edward Jones
• Lexus
• UPS
• Enterprise Rent-A-Car
• Starbucks
• Ritz-Carlton
• Amica Insurance
• Southwest Airlines

46. Marketing Strategies for Service Firms
In addition to traditional marketing strategies,
service firms often require additional strategies
• Service-profit chain : It links service firm profits with employee
and customer satisfaction
• Internal marketing: the service firm must orient and motivate its
customer contact employees and supporting service people to work
as a team to provide customer satisfaction
• Interactive marketing : Service quality depends heavily on the
quality of the buyer–seller interaction during the service encounter
– Service differentiation : It creates a competitive advantage from the
offer (distinctive features), delivery(more able and reliable
customer contact people, environment, or process), and image
of the service (symbols and branding )
– Service quality
– Service productivity

47. Services- Profit Chain

48. The Services Marketing Triangle
Internal
Marketing
Interactive Marketing
External
Marketing
Company
(Management)
Customers
Employees
“enabling the
promise”
“delivering the promise”
“setting the
promise”
Source: Adapted from Mary Jo Bitner, Christian Gronroos, and Philip Kotler

49. Determinants of Service Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles

50. Challenges for Services
• Defining and improving quality
• Communicating and testing new services
• Communicating and maintaining a consistent
image
• Motivating and sustaining employee commitment
• Coordinating marketing, operations and human
resource efforts
• Setting prices
• Standardization versus personalization