Chapter 11 Product Concepts The product is the key variable in the marketing mix 11 1 What is a Product Product a good a service or an idea received in an exchange o Good a tangible physical entity ie iPhones cars computers clothes etc o Service intangible application of human and mechanical efforts to people or objects ie Booking medical care day care piano lessons etc o Idea a concept philosophy image or issue ie Activist groups religious leaders etc Products can have a combination of three components 1 The core product itself a Consists of a product s fundamental utility or main benefit b A restaurant s core product would be the food it serves 2 The product s supplemental features a Provide added value or attributes in addition to a product s core utility b Installation delivery training financing etc are all examples 3 The product s symbolic or experimental value a The simple act of shopping gives symbolic value and improves consumer attitudes b Build A Bear creates a co creator experience for the consumer c The experimental element includes the smells sounds etc of a retail store Products aren t just bought sold for their material but also for their meaning symbolism o A Rolex watch isn t just purchased to tell time but also as a status symbol 11 2 Classifying Products Consumer Products purchased to satisfy personal and family needs Business Products products bought to use in a firm s operations to resell or to make other products The same product can be a consumer product and a business product o When a consumer buys a lightbulb for their house it s a consumer product When a business buys it for lighting in the firm it s a business product 11 2A Consumer Products There are four categories that sort products based on characteristics of consumer buying behavior 1 Convenience Products relatively inexpensive frequently purchased items for which buyers exert only minimal purchasing effort a Bread soft drinks gum gasoline newspapers etc b c Easily and willingly substituted by consumer if their favorite brand is not Little time planning the purchase available d They are retailed through locations such as gas stations and Starbucks e Per unit gross margins are usually low due to high product turn over f Packaging is important for convenience products 2 Shopping Products items for which buyers are willing to expend considerable effort in planning and making the purchase a Consumers compare store brands prices product features qualities etc b Appliances bicycles furniture cameras shoes etc c These products are expected to last fairly long thus are purchased less frequently d Consumers are less loyal towards shopping products more willing to consider alternatives than they are towards convenience products e Shopping products require fewer retail outlets than convenience products f g Higher gross margins per unit are expected product costs more Inventory turn over is lower since they are purchased less frequently 3 Specialty Products possess one or more unique characteristics and generally buyers are willing to expend considerable effort to obtain them a Consumers plan the purchase of a specialty product They will not accept a substitute b Mont Blanc pen a baseball signed by Babe Ruth etc c d Even lower inventory turn over and higher gross margins per unit Specialty products are distributed through a limited number of outlets 4 Unsought Products purchased when a sudden problem must be solved products of which consumers are unaware and products that people do not necessarily think of purchasing a Emergency medical services automobile repairs antivirus software etc b Speed and problem resolution are more important than price Business Products Business products are usually purchased on the basis of an organization s goals and objectives the functional aspects are more important than the psychological rewards Business products can be classified into seven categories 1 Installations include facilities such as office buildings factories and warehouses as well as major pieces of equipment that are nonportable such as production lines and very large machines a Normally used for production purposes b Custom made to perform specific functions for a particular organization c Expensive and sometimes time consuming 2 Accessory Equipment does not become a part of the final physical product but is used in production or office activities a File cabinets calculators tools etc b Usually much cheaper and treated with less negotiation 3 Raw Materials basic natural materials that are used in marketing a physical product a Minerals chemicals agricultural products and materials from forests and b Bought and sold according to grades and specifications and in relatively 4 Component Parts become part of the physical product and are either finished items ready for assembly or products that need little processing before assembly a Spark plugs tires clocks brakes headlights etc b Purchase such items according to a firm s own specifications and quantity oceans large quantities needs c Component parts are readily identifiable 5 Process Materials used directly in the production of other products a Unlike component parts process materials are not readily identifiable b Purchased according to industry s standards and purchaser s specificaitons 6 MRO Supplies maintenance repair and operating items that facilitate the production and operations but do not become part of the finished product a Paper pencils oils cleaning agents paints etc b Sold through numerous outlets and are purchased routinely 7 Business Services the intangible products that many organizations use in their operations a Financial legal research information technology janitorial services etc b Firms must decide whether to provide their own services or obtain them from an outside organization 11 3 Product Line and Product Mix Product Item a specific version of a product that can be designated as a distinct offering among an organization s products ie an Abercrombie Fitch polo shirt Product Line a group of closely related product items that are considered to be a unit because of marketing technical or end use considerations ie offering different flavors of cat food To develop the optimal product line marketers must understand buyer s goals Product Mix the composite or total group of products that an organization makes available to customers Width of Product Mix measured by the number of product lines a company offers Depth of Product Mix the average
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