Products I would like to start speaking about this topic with defining what the product is. Marketing theorists tend to give the word product a very broad meaning, using it to refer to anything capable of satisfying a need or want. Thus services, activities, people (politicians, athletes, film stars), places (holyday resorts), organizations (hospitals, colleges, political parties) & ideas as well as physical objects offered for sale by retailers, can be considered as products.
But actually there is more simple definition of a product – something that is produced or manufactured & sold, often in large numbers. Physical products can usually be augmented by benefits such as customer advice, delivery, credit facilities, a warranty or guarantee, maintenance, after-sales service, & so on. Products are sometimes referred to as goods, for example in the expression fast-moving consumer goods (FMCG). Product (or business) generating a lot of profit is a money spinner.
A product may be seen as expensive or cheap, but “expensive” may imply “too expensive” & “cheap” is often used to show disapproval of poor quality. A way of getting round this is to say that product is high-priced or low-priced. Similarly, products may be mid-priced. & according to this, markets can be distinguished for up mid & down-markets. Products that are expensive compared to others of the same type are described
as up-market. Mid-priced products are described as mid-market. Low-priced products may be referred to as down-market, but this term usually shows disapproval. Talking about goods we can define white & brown goods, cash cow & loss leader. White goods are things such as washing machines & refrigerators. Brown goods are things such as televisions & hi-fi equipment.
Cash cow, technically, is a profitable product (or business) with high market share in a low-growth market, but it is also used to mean any profitable product (or business) generating a steady flow of sales revenues. Also here we should talk about the services, because it seems to be connected with our topic. So services are activities such as banking, tourism, or entertainment that contribute to the economy but which may not directly involve manufacturing.
Services may be referred to informally as products. In a market containing several similar competing products, producers can augment their basic product with additional services & benefits such as customer advice, delivery, credit facilities, a warranty or guarantee, maintenance, after-sales service, & so on, in order to distinguish it from competitors’ offers. Most producers also differentiate their products by branding them.
Some manufactures use their name (the “family name”) for all their products, e. g. Philips, Colgate, Yamaha. Others, including Unilever & Procter & Gamble, market various products under individuals names, with the result that many customers & unfamiliar with the name of the manufacturing company. The major producers of soap powders, for example, are famous for their multi-brand strategy which allows
them to compete in various market segments, & to fill their space in shops, thereby leaving less room for competitors. It also gives them a greater chance of getting some of the custom of brand-switchers. In addition to famous manufactures’ brands, there are also wholesalers’ & retailers’ brands. For example, most large supermarkets chains now offer their “own-label” brands, many of which are made by one of the better-known manufactures. Brand names should be easy to recognize & remember.
They should also be easy to pronounce &, especially for international brands, should not mean something embarrassing in a foreign language. As well as a name & a logo, many brands also have easily recognizable packaging. Of course packaging should also be functional: in other words, the container or wrapper should protect the product inside, be informative, convenient to open, inexpensive to produce, & ecological (preferably biodegradable). The sales of most products change over a period of time, in a recognizable
pattern which contains distinct periods of stages. The standard life cycle includes following stages: 1. introduction 2. growth 3. maturity 4. decline 1. The introduction stage, following a product’s launch, generally involves slow growth. Only a few innovative people will buy it. There are probably no profits at this stage because of the heavy advertising, distribution & sales promotions expenses involved in introducing a product onto
the market. Consumers must be made aware of the product’s existence & persuaded to buy it. Some producers will apply a market-skimming strategy, setting a high price in order to recover development costs. Others will employ a market penetration strategy, setting the product at as low a price as possible, in order to attain a large market share. There is always a trade-off between high current profit & high market share. 2. During the growth period, “early adopters” join the “innovators” who were responsible
for the first sales, so that sales rise quickly, producing profits. This generally enables the producer to benefit from economies of scale. Competitors will probably enter the market, usually making it necessary to reduce prices, but the competitors will increase the market’s awareness & spend up the adoption process. 3. When the majority of potential buyers have tried or accepted a product, the market share is saturated,
& the product reaches its maturity stage. Sales will stabilize at the replacement purchase rate, or will only increase if the population increases. The marketing manager has to turn consumers’ brand preferences into brand loyalty. Most products available at any given time are in the maturity stage of the life cycle. This stage may last many years, & contain many ups & downs due to use of a succession of marketing
strategies & tactics. Product managers can attempt to convert non-users, search for new markets & market segments to enter, or try to stimulate increased usage by existing users. Alternatively they can attempt to improve product quality & to add new features, sizes or models, or simply to introduce periodic stylistic modification. They can also modify the over elements of the marketing mix, & cut prices, increase advertising,
undertake aggressive sales promotion, seek new distribution channels, & so on, although here additional sales generally come at the cost of reduced profits. 4. A product enters the decline period when it begins to be replaced by new ones, due to advances in technology, or to changes in fashions & tastes. When a period has clearly entered its decline stage, some manufactures will abandon it in order to
invest their resources in more profitable or innovative products. When some competitors choose to withdraw from a market, those who remain will obviously gain a temporary increase in sales as customers switch to their product. Not all products have this typical life cycle. Some have an immediate rapid growth rather than a slow introductory stage. Others never achieve the desired sales, & go straight from introduction to maturity,
although of course this should have been discovered during test marketing before a full-scale launch. Fads & gimmicks – for example, toys people buy once & once only to stick on car windows – have distinct life cycles, both rising & declining very quickly. & now let’s look to the process of creating a product from the other point. Let’s follow the process of designing a product since the idea till the launching the product. There is a standard design & development sequence.
1. Idea generation – search for consumer needs, consider alternatives, select best idea. 2. Product selection – carry out a market analysis, & a technical feasibility study. 3. Preliminary design – evaluate alternative designs in terms of reliability, maintainability, & so on, & their producibility. 4. Final design – develop & test preliminary designs, & make final specifications. 5. Facilities exist, new facilities required – select production facility.
6. Process selection – evaluate alternative technologies & methods, & decide whether to develop them or license them from other companies, select specific equipment & process flow. 7. Capacity planning, production planning – determine production capacity & production schedule. Most manufactures produce a large number of products, often divided into products lines. Most products lines consist of several products, often distinguished by brand names, e. g. a range
of soap powders, or of toothpastes. Several different items (different sizes or models) may share the same brand name. Together, a company’s items, brands & products constitute its products mix. Since different products are always at different stages of their life cycles, with growing, stable or declining sales & profitability, & because markets, opportunities & resources are in constant evolution, companies are always looking to the future, & re-evaluating their product mix.
Companies whose objectives include high market share & market growth generally have long product lines, i. e. large number of items. Companies whose objective is high profitability will have shorter lines, including only profitable items. Yet most product lines have a tendency to lengthen over time, as companies produce variations on existing items, or add additional items to cover further market segments. Additions to product lines can be the result of either line-stretching or line-filling.
Line-stretching means lengthening a product line by moving either up-market or down-market, i. e. making items of higher or lower quality. This can be carried out in order to reach new customers, to enter growing or more profitable market segments, to react to competitors’ initiatives, & so on. Yet such moves may cause image problems: moving to the lower end of a market dilutes a company’s image fro quality, while a company at the bottom of a range may not convince dealers & customers that
it can produce quality products for the high end. Line-filling – adding further items in that part of a product range which a line already covers – might be done in order to compete in competitors’ niches, or simply to utilize excess production capacity.