Product is the first and the foremost element of marketing mix. If the product itself is defective no other element can improve its performance. A firm expresses itself through its products and services.
Therefore, planning and development of products is a vital issue in business.
A product is an aggregate of various tangible and intangible attributes, symbolic features, and associated services that provide physical and psychological satisfaction to consumers. It is a bundle of utilities, benefits and services designed to satisfy needs and wants of consumers.
Philip Kotler defines a product as “anything that can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organisations and ideas.”
1. Meaning and Definition of Product 2. Characteristics of Product 3. Features 4. Levels 5. Classification 6. Dimensions 7. Key Factors 8. Strategies 9. Importance from Society’s Point of View.
10. Adaptation/Customisation 11. Stages in Adoption Process 12. Methods Used to Differentiate 13. Evaluation 14. Audit 15. Branding 16. Packaging 17. Labelling 18. After-Sales Service.
Product: Meaning, Definition, Characteristics, Classification, Strategies, Importance, Adoption Process and Other Details
Product – Meaning and Definition
A product is often considered in a narrow sense as something tangible that can be described in terms of physical attributes, such as shape, dimension, components, form, colour, and so on. This is misconception that has been extended to international marketing as well, because many people believe that only tangible products can be exported. But in broader sense, the concept of a product (the total product concept) refers both to the tangible goods and intangible goods i.e. services that accompany it.
Philip Kotler defines a product as “anything that can be offered to market for attention, acquisition, use or consumption that might satisfy a want or need. It includes physical objects, services, persons, places, organisations and ideas.”
Product is the first and the foremost element of marketing mix. If the product itself is defective no other element can improve its performance. A firm expresses itself through its products and services. Therefore, planning and development of products is a vital issue in business.
A product is an aggregate of various tangible and intangible attributes, symbolic features, and associated services that provide physical and psychological satisfaction to consumers. It is a bundle of utilities, benefits and services designed to satisfy needs and wants of consumers.
A product is much more than a physical or tangible object. A customer has a generic concept of products. He buys not simply the physical and chemical attributes of a product but a whole set of physical and psychological satisfactions. For instance, to the ultimate consumer a washing machine is not a mere collection of drum, heater and nuts bolts but a comfort that will protect and enhance her self-concept.
Besides the physical attributes, a product includes package design, label, brand name, seller’s name, price and the services offered to the customer. Thus, a product is like an onion having several layers each contributing to the total product image.
Thus, product refers to the total product (i.e. tangible goods, brand, label, package, pre-sale services, and post-sale services) not only the tangible product alone. Product should also be selected in accordance with the potential customers. Since, the customers are interested in the benefits they receive apart from the product alone i.e. stress should be given on both tangible and intangible aspect of the product.
Product is defined as anything that can be offered to a market to satisfy a want. It not only includes physical object and services but also the supporting services like packaging, installation, after sales services etc.
‘Product is the nucleus of all marketing activities’ viz., no marketing activity can be performed without product irrespective of its being productions, marketing, advertisement, sales promotion, pricing or distribution whatsoever. If the business undertaking is deemed as body, its management as heart and the market as its blood; the product no doubt is the breathing of such entire business undertaking.
As the body and its several organs become void and of no use if the breathing has gone, the absence of product in business undertaking, falls dead all other means of the business enterprise because assessment of price, advertisement, policy of sales promotion and distribution is impossible in such state of affairs. In substance, it can be said that product is that nucleus around which the entire commercial world revolves.
An efficient marketing manager should concentrate on the qualities and characteristics of his product in order to achieve success. If the first instruction of business is to know its customers, the second is to know the proposed product properly. If the product is anyway defective, irrespective of having initial success; it definitely suffers severely in long terms.
It is therefore, necessary to bring regular reforms in the qualities and characteristics of the product. It is the social liability of marketing managers that they should maintain proper supply of the products, fix competitive price and maintain proper quality control of the product.
Product – Characteristics Presented by Professor Sturdivant: Explicit and Implicit Characteristics
Anything to be called a ‘Product’ should have certain characteristics – both explicit and implicit. In order to have a clear-cut understanding of the ‘Product’ concept, it is essential to understand these explicit and implicit characteristics of the product. Following is a brief outline of the explicit and implicit characteristics of a product as presented by Professor Sturdivant and his associates in their title “Managerial Analysis in Marketing”.
A. Explicit Characteristics:
Explicit product characteristics are those which are perceived almost uniformly by all observers. In other words there is not much disagreement amongst the buyers and sellers about the existence of these characteristics in the product. There is a common agreement amongst all as to the existence and nature of these characteristics. There are five such attributes.
1. Physical Configuration:
A product is a bundle of some physical material. It is made up of wood, plastic, glass, stone, metal etc. Every product has its own size, shape, colour, density, odour, texture, taste and a host of other such physical attributes. On the basis of its physical characteristics, it has an apparent function or a set of function to perform. For example a toothbrush is used to clean teeth. However an old one may be used to clean combs, jewellery, nooks and cranny’s etc.
2. Associated Services:
Products are sold with the common understanding that the seller will render associated services in case of each product. These are before and after sale services. Before sale services are its demonstration, credit facilities available and the ‘after’ sale services are its delivery, installation, making available spare parts, repair services and warrantees, both, express and implied.
3. Package and Brand Name:
It is useful to consider package as part of the product, for it, is sometimes difficult to separate a product into ‘content’ and ‘package’. For example perfumes, deodorants, lipsticks etc. enjoy a greater demand because of their attractive package. Further the brand name is intrinsic to the product. A brand stands for the product. You do not need to name the product, you just name the brand. For example ‘Colgate’ means toothpaste, ‘Ceat’ means tyres, ‘Lux’ means soap, ‘Savlon’ means after shave lotion and so on.
4. Product Mix:
This points out the relationship of the product to other products sold or made by the firm. That is, a given product is a part of a set of products offered for sale by a particular seller and has an impact on how the seller and the buyers consider it. The consumer does not think of the product in isolation as he knows that the producer makes other products too.
5. Product Life Cycle:
A product like a human being has a life cycle and at any point of time, a product can be located in some stage of its existence. The sales of a given product follows a characteristic pattern of increasing, at first slowly then at an increasing rate, then at a decreasing rate and finally absolute sales begin to decline. The time required for each of these stages varies widely among the products. The product life cycle is made up of four stages and each has its own implications for the producers as well as consumers.
B. Implicit Characteristics:
Explicit characteristics are those on which there is near agreement amongst all about their existence and nature. When there is a disagreement amongst the consumers about the existence and nature of certain characteristics in a product, these disagreements form the intrinsic characteristics of the product.
These disagreements exist because each individual sees the product in a somewhat different and therefore unique way. What is the perception of one person is not the same as that of another person. These different perceptions and disagreement points can be called as the intrinsic characteristics of a product.
There are four such features/characteristics:
1. Product Symbolism:
A product is a cluster of symbols. By virtue of its colour, shape size and function, it is a symbol. A different size of the product gives it a different meaning to different people. Similarly a different colour, or a different function and so on. For example a gentleman wearing a white or a grey shirt get sloted into a traditional man image as compared to a gentleman wearing a red or rust coloured shirt. Thus a product is a sum total of the meaning it communicates when others look at it or use it. It may communicate a symbol of status, style economy, performance, achievement, boldness and so on.
2. Communication Media:
Because a product is a bundle of symbols it is a bundle of communication also. Of course, what this communication is, it is determined by the consumer’s personal interpretation of the symbols, mediated by his culture group, group influences and personality. Every product says something about itself. Every product is a story teller about – What it is, what it is used for, at what rate, by whom, where it is available, and so on. With every product there is information, given or hidden.
3. The Product Perception:
Products are perceived or viewed in different ways by different consumers. Perception is a physiopsychological process. Perception begins with a cue of the environment that is received by a consumer. This cue sends a message to the brain.
The brain compares this message with other stored messages in the brain, and perception occurs. For example when a cup of tea is placed in front of a consumer, the consumer smells the tea. The smell is the cue from the environment, which is received by the consumer.
The brain records this smell and compares it with other stored smells and the consumer comes to the conclusion that the smell is of “Tata Tea” or “Lipton” or “Brook Bond” etc. In the same way instead of the smell, the cue from the environment can come from the taste, colour, texture etc.
The perception of the consumer will help the producer to develop the relevant product. “Relevant Product’ is the product that is perceived by the consumer as the seller intended him to perceive it, because it is relevant to the realized or aspired behavioural pattern of those people who comprise the market of the product.
4. The Product Evaluation:
Truly speaking it is almost impossible to separate the perception of the product from its evaluation, both conceptually and operationally. Though theoretically separable, they occur simultaneously. Along with perception, evaluation implies the setting up of a set of criteria to determine expected satisfaction.
It is comparing the ‘efforts’ involved and ‘rewards’ received by the consumer. Thus efforts may be the necessary search for the product, the price as it affects the consumer’s pocket; the evaluation may be of rewards – functional, psychological that he gets in return. Here evaluation differs from individual to individual and from time to time in case of the same individual.
Thus every product has both implicit and explicit characteristics, and both these together make up the product.
Product – Salient Features
The salient features of product are as follows:
i. It is something which has the capacity to fulfil the needs of people.
ii. A product can be a physical good or service.
iii. It is a collection of tangible and intangible features offered by a seller to a buyer.
iv. It can satisfy both commercial and personal needs.
v. It is the subject and the object of all marketing activities.
Product – Top 5 Levels of a Product
While planning the offering that a marketer wants to make to satisfy a particular need or want of the market, the marketer has to think through the five levels of the product.
These levels are:
i. Core Benefit Level.
ii. Basic Product Level.
iii. Expected Product Level.
iv. Augmented Product Level.
v. Potential Product Level.
Each of these levels add more customer value and the five levels together constitute the Customer Value Hierarchy.
i. Core Benefit Level:
At the most fundamental level is the core benefit level that the customer seeks or the need that the marketer tries to satisfy.
Example – If a customer is going to a restaurant to eat food, the core benefit level is that the product food satisfies the hunger of the customer. Here the benefit that the customer seeks is to satisfy his hunger by means of food.
Marketers need to look upon themselves as benefit providers rather than product sellers.
ii. Basic Product Level:
This is the second level, where the marketer must now turn the core benefit into a basic product.
Example – The food that is the hunger satisfying core product is turned in to a basic product that is an edible tasty dish.
iii. The Expected Product Level:
At the third level the marketer now prepares an expected product, which is a set of attributes and conditions that customers will normally expect.
Example – It is a normal expectation to have the food set in neat clean dishes with good cutlery, served on a properly laid table, having a proper seating arrangement, with sufficient lighting arrangements.
iv. Augmented Product Level:
At the fourth level the marketer will further enhance the product by augmenting it and trying to meet the customer’s desires beyond his expectations.
Example – Fresh flowers laid on the table, a live band playing music, etc. From the marketers’ point of view this level is very important because in today’s world, competition happens at this level only. Up to the expected level all marketers will stand at a more or less same platform. The differentiation will happen at the augmented level.
v. Potential Product Level:
This is the fifth level. At this level the marketer has to take into consideration all possible augmentations and transformations that the product is likely to undergo in the future. The potential product describes the future possible innovation of the product.
Example – The restaurant providing the Guest with a facility to oversee the preparation of the food and having it tailor-made to the requirements of each customer or having a menu card that would suggest menu combinations at the click of a button.
Product – Classification: Consumer Product, Industrial Product and Safety Products
The characteristics of producers affect the marketing programme to a large extent. Hence, the marketing management should first know the characteristics of the product prior to state the programme for its marketing. Marketing manager by virtue of his study on the product classification is known the particular grade of the product manufactured by the undertaking.
It is the product classification that helps the marketing manager while determining the future marketing strategy for the same.
Rustam S. Davar has classified the products in three parts:
1. Consumer Product – Consumer products is meant for the products which are manufactured for the ultimate consumers.
2. Industrial Product – Industrial products are the products basically used for manufacture of consumer products.
3. Safety Products – Safety products are the products, which are used by the safety services. Supply of such products is made by government companies to the Ministry of Defence.
Rustam S. Davar has not included safety products in the product classification and the former two types products have been sub-divided as under:
1. Consumer Products:
As per American Marketing Association:
“Consumer goods are the goods desired for use by ultimate consumer or households and in such form that can be used without commercial acessing.” It is clear from this definition that consumer products are sold without slating any marketing strategy. In brief, the products or goods manufactured for the end use of common public are called consumer products.
Any specific inventory for consumer products cannot be made. Cigarette, match box, shoes, textile, comb, oil, soap, toothpaste, eatables and sports items, fans, radio, cooker, T.V., cycle, scooter and goods of day to day use are included with it.
On the basis of the habits and tendencies of consumers, the products are divided in three parts as under:
i. Convenient Products:
These are the products bought by consumer frequently, immediately and with minimum efforts. For example, sliced bread, cigarette, match box, newspaper, medicines etc. Convenient products oftenly are for immediate consumption. These are bought frequent and the consumer habits play an effective role in buying of convenient products.
The buyer can buy these products from the nearby shops. The consumer very least compare their price and do bargain as they often do while buying the durable items. No special efforts are required for the sale of convenient products. However, sharp competition prevails in their marketing. The producer, who failed introducing their products, cannot increase their sale.
The marketing manager therefore, should focus on the advertisements, and the programmes of sales promotion for these products. The wholesalers and retailers have an important place in the distribution system of these products.
ii. Shopping Products:
Shopping products are meant for the products whose cost, quality, shape, design, utility etc., is compared by the consumers with that of the products manufactured by others while buying. They thus, are aware while buying these products. Furniture, textile, shoes, cosmetic goods, apparels, sarees, ornaments, China wares etc., are included in the list of these products.
The buyers of products gather information of the price, shape, quality, design and utility from several stores or shops before their purchase. This is the reason for calling them bargain products too. Shopping products are bought occasionally by the consumers. These are consumed slowly. The consumers can suspend or defer the time of their buying as per their convenience. It is therefore, clear that the consumers can give enough time for having such purchase.
The marketing problems of the manufacturers of shopping products are different than that of the producer of convenient products. The institutions selling such products usually are of large size and they buy the products in bulk quantity. The manufacturers of such products usually deliver their products directly to the retailers of large size viz., they do not require the wholesalers.
The marketing manager should emphasis on the advertisement and sales promotion programmes of such nature that can reveal their superiority before consumers over other products in the market.
iii. Speciality Products:
Speciality products are of unique characteristics that attract the consumers for purchase. Mostly, such product are costly and durable. The fridge, watches, fans, geysers, radio, T. V., tape recorder, video, other costlier electric gadgets, scooter, costly eatables, stamp and coins etc., are included in the list of speciality products.
The buyer of such products prefer buying the goods of any particular brand viz. They do not compare them with the goods of other brand while buying as they do while buying the shopping products.
Speciality products generally are sold through an exclusive agency or stockiest or distributor. They have a definite brand and it is advertised abundantly. The advertisement so wide gives comfort to the consumer while deciding for a purchase. The sellers have to incur enough expenses for the sale of such products and most often, they have to provide for after sales service too.
On the basis of above description, it can be concluded that the products bought by the consumer from everywhere as per his convenience are called convenient products, the products bought after comparing them with the same products manufactured by others are shopping products and the products bought on the basis of brand preference are called speciality products.
This classification of consumer products is based on consumers buying habits. This statement is therefore, right that this three-tier classification of products i.e., convenient products, shopping products and speciality products is based more on the consumer habits than the products themselves.
According to American Marketing Association:
“Industrial goods are the goods which are destined to be sold primarily for use in producing other goods or rendering service. They include equipments (installed and accessory), component parts, repair and operating supplies, raw materials and fabricating materials”.
This definition clears that industrial products are used for manufacturing the consumer products. Industrial products are not used by the end users and these are used for manufacturing the consumer goods.
Raw material, machines, apparatus, spare parts etc. are included in this list. There are a few buyers of industrial products and these are generally sold on high price and in bulk quantity.
Industrial products can be classified in following four parts:
i. Production Facilities and Equipments:
The facilities and implement that assist in production of goods are included in this list. For example, factory building plant, fixtures, and furniture, small and big implements, machines and spare parts, official goods etc.
The structure, price, utility and efficiency of products in most important large capital investment is required for the purchase of such products. As price per unit of product is high and consumers are in few numbers, the seller requires continuous efforts for the sale of such products.
ii. Production Material:
Three types of products are included in the production materials:
(a) Raw Materials:
Supply of raw materials is made by the natural resources. For example, fields, mines and forest etc. Distinct method of purchase for raw material is adopted. If the cost of raw material is represented by a small part of total cost of production, Supply of such raw material is made by the middle-men but if the cost is represented by the large portion of total production, the sales officer of that undertaking buy raw material directly from the manufacturers.
(b) Semi-Manufactured Goods:
The products such as – iron, steel, lead etc., are included with the semi-manufactured goods which are finished goods for one undertaking but raw material for other undertakings. It is manufactured in large scale and these are sold directly to the industrial users.
(c) Fabricating Parts:
These are in the form of manufactured products and used in finished products without making any change in them. For example, speakers of T.V., cabinet, spark plugs of scooters, tyre, tubes etc. These products are directly bought by the industrial users from the manufacturers. Industrial users give information to the manufacturers of the demands for such products.
iii. Production Supplies:
These products are necessary for the manufacturing process of the industrial user but these are not the portion of the finished products. Coal, electricity, petrol, diesel, components of machines, nut-bolts, lubricants, adhesives etc., are included in production supplies. Supplies are bought through the middle-men. However, these are directly bought from manufacturers by the industrial undertakings where consumption level is very large.
iv. Management Materials:
Office appliances and their supplies are included within such products. For example, data processing machines, type writers, desk calculators, electronic computers, accounts books, stationery items, communication facilities etc. The appliances of high price are either bought on lease or through hire-purchase system while the cheaper items are bought in cash.
Product – Dimensions According to Philip Kotler: Core Product, Augmented Product and Symbolic Product
According to Philip Kotler, the total product has three layers or dimensions.
These three dimensions need to be distinguished from each other:
(i) Core Product:
The core product covers the physical attributes—tangible and intangible— offered for sale. These attributes consist of the materials, quality, weight, design or shape, size, colour, style, smell, package, brand name, label, etc. Services like auto repair, bus travelling, electricity supply, management consultancy, legal advice, etc. are products with intangible features.
(ii) Augmented Product:
It is a broader conception including the various benefits and services that accompany the core product. It is the totality of benefits that a person receives in buying a product. For instance, along with the T. V. set, a customer gets the dealer’s reputation, warranty, home delivery, free installation and maintenance, instructions for use, etc. This is an important dimension because in a competitive market, it provides a plus point to the seller. Neglect of this dimension may result in the failure of the product or loss of sales opportunities.
(iii) Symbolic Product:
It is product as the customer perceives it. It is the psychological feeling or expectations of the customer about the product which influence his decision to buy. To the consumer a product is actually a symbol or a meaning. For instance, a customer buys a T.V. set not as a box of components but as an instrument of entertainment, pleasure and status. Similarly, a woman buys hope and beauty by purchasing a lipstick. Consumer’s perception of a product is critical to its success or failure.
Product – Key Factors that Together Help to Shape the Actual Product
The actual product is designed to provide the core benefits sought by the target market. The marketer offers these benefits through a combination of factors that make up the actual product.
Key factors that together help shape the actual product.
These factors include:
Factor # 1. Specification:
Specification is very important. Some markets will not take produce unless it is within their specification. Specifications are often set by the customer, but agents, standard authorities and trade associations can be useful sources. Quality requirements often vary considerably.
Factor # 2. Culture:
Product packaging, labeling, physical characteristics and marketing have to adapt to the cultural requirements when necessary. Religion, values, aesthetics, language and material culture all affect production decisions.
Factor # 3. Physical Product:
The physical product is made up of a variety of elements. These elements include the physical product and the subjective image of the product. Consumers are looking for benefits and these must be conveyed in the total product package. Physical characteristics include range, shape, size, colour, quality, quantity and compatibility. Subjective attributes are determined by advertising, self-image, labelling and packaging. In manufacturing or selling produce, cognisance has to be taken of cost and country legal requirements.
Factor # 4. Packaging:
Packaging serves many purposes. It protects the product from damage which could be incurred in handling and transportation and also has a promotional aspect. It can be very expensive. Size, unit type, weight and volumes are very important in packaging. For aircraft cargo the package needs to be light but strong, for sea cargo containers are often the best form.
The customer may also decide the best form of packaging. In horticultural produce, the developed countries often demand blister packs for mangetouts, beans, strawberries and so on, whilst for products like pineapples a sea container may suffice. Costs of packaging have always to be weighed against the advantage gained by it.
Final customer packaging is the package, the final customer receives in exchange for their payment. When the final customer makes a purchase he or she is initially exposed to the primary package —the outermost container that is seen and touched by the final customer.
This primary package can be further divided into the following:
a. First-Level package – This is packaging that holds the actual product. In some cases this packaging is minimal since it only serves to protect the product. For instance, certain frozen food products are sold to consumers in a cardboard box with the product itself contained in a plastic bag found inside the box. This plastic bag represents the first-level package. In other cases frozen food products are sold in the plastic bag that contains the product. In these cases the plastic bag is both first-level package and the primary package for convey product information.
b. Second-level package – In some cases the first-level package is surrounded by one or more outer packages. This second-level package may act as the primary package for the product.
c. Package inserts – Marketers use a variety of other methods to communicate with customers after they open the product package. These methods are often inserted within, or sometimes on, the product’s package. Insertions include information such as instruction manuals and warranty cards, promotional incentives such as coupons, and items that add value such as recipes and software.
Factor # 5. Labelling:
Labelling not only serves to express the contents of the product, but may be promotional. India is now putting very, stringent regulations in force on labelling, even to the degree that the pesticides and insecticides used on horticultural produce have to be listed. This could be very demanding for producers, especially small scale, ones where production techniques may not be standardised. Government labelling regulations vary from country to country. Bar codes are not widespread in Africa, but do assist in stock control. Labels may have to be multilingual, especially if the product is a world brand.
Translation could be a problem with many words being translated with difficulty. Again labelling is expensive, and in promotion terms non-standard labels are more expensive than standard ones. Requirements for crate labelling, etc. for international transportation will be dealt with later under documentation.
Factor # 6. Product Naming:
Product naming is the discipline of deciding what a product will be called, and is very similar in concept and approach to the process of deciding on a name for a company or organisation. Product naming is considered a critical part of the branding process, which includes all of the marketing activities that affect the brand image, such as positioning and the design of logo, packaging and the product itself. Product naming involves the application of creative and linguistic strategy and results in a brand name that becomes a product’s shorthand.
The process involved in product naming can take months or years to complete. Some key steps include specifying the objectives of the branding, developing the product name itself, evaluating names through target market testing and focus groups, choosing a final product name, and finally identifying it as a trademark it for protection.
Factor # 7. Trademarks:
A consideration companies find important in developing a product name is its “trade- mark-ability.”
Product name trademarks may be established in a number of ways:
a. In many countries, including the United States, names can be used as trademarks without formal registration through first use or common law — simply to protect an established product’s name and reputation.
b. Product names can be formally registered within a state, with protection limited to that state’s borders.
c. The preeminent system for registering international trademarks in multiple jurisdictions is the Madrid system.
In addition, protecting a trademark is just as important as the initial process of registration. Trademark rights are maintained through actual use of the trademark, and will diminish over time if a trademark is not actively used.
Factor # 8. Branding:
Branding involves decisions that establish an identity for a product with the goal of distinguishing it from competitors’ offerings. In markets where competition is fierce and where customers may select from among many competitive products, creating an identity through branding is essential. It is particularly important in helping position the product in the minds of the product’s target market.
While consumer products companies have long recognised the value of branding, it has only been within the last 10-15 years that organisations selling component products in the business-to-business market have begun to focus on brand building strategies. The most well- known company to brand components is Intel with its now famous “Intel Inside” slogan. Intel’s success has led many other b-to-b companies and even non-profits to incorporate branding within their overall marketing strategy.
Factor # 9. Warranty:
Many large value products like machinery require warranties. Unfortunately not everyone upholds them. It is common practice in India that if the original equipment has not been bought through an authorised dealer in the country, that dealer refuses to honour the warranty. This is unfortunate, because not only may the equipment have been legitimately bought overseas, it also actually builds up consumer resistance to the dealer. When the consumer is eventually offered a choice, the reticent, dealer will suffer.
Product – 3 Important Product Strategies which a Firm May Adopt
In order to achieve the desired rate of profits and growth, a firm has to continuously adjust its products and product mix to the changing needs and targets of the market. This matching of products to the requirements of competition and buyers is known as product strategy.
Some of the important product strategies which a firm may adopt are as follows:
1. Limited Line Strategy:
This refers to the offering of one product or a small number of products to cater to a specific market. The main benefit of this strategy is low cost of operations. But it cannot meet the requirements of different types of customers in different markets. This strategy is adopted by firms which concentrate on the core part of segmented markets by making a thin penetration into each segment of the total market.
2. Full Line Strategy:
Also known as broad line strategy, it implies the offering of a large number of products to meet the requirements of different customers in different markets. This strategy ensures a better product-marketing integration thereby helping to maximize market share. But it involves problems of higher operational costs, distribution bottlenecks and spurious differences.
3. Trading Up and Trading Down:
These are alternate or opposite strategies for expanding the product mix. Trading up implies addition of some higher priced products to the existing product line of lower-priced products for improving the sale of old products. Trading down, on the other hand, refers to the addition of lower-priced products to the existing higher priced products to boost total sales. These strategies tend to lower the prestige and standing of the firm without much increase in sales. They may also create confusion among customers.
Product – Importance of Product from Society’s Point of View
The product on one hand satisfies the needs of consumers and provides on other hand, employment to crores of people in the activities of production, advertisement, sales promotion and distribution of these. Finally, it is all right to say that product is the soul of marketing. Marketing is impossible in the absence of product.
Establishment of consumers’ markets too has increased the importance of products in the life of commercial institutions. Presently, consumer markets in place of sellers’ markets have started growing in the economics of several nations in the world. Consequently, the buyer is becoming more and more a king of economy. Almost all economies are going to be customer oriented.
The traders and industrialist’s preferring the modern concept of marketing are feeling the need of trying their products at the stake of consumer’s satisfaction. The governments too have started keeping a vigilant eye on unfair trade practices by keeping in account the public welfare and continuous growth in the standard of living in society. Efficient provisions have been made so as to check unfair trade practices.
Rapid growth in education has started evolving the multi-purpose personality of the customers and the people have begun comparative valuation to the selection of goods so as to obtain maximum satisfaction. The increasing awareness for the brand and quality of the product has made essential to focus on the products for marketing managers. Increase in per capita income and prosperity besides there, compelled the producers to adopt diversity in manufacture.
Thus, importance of products in the life of business institutions has increased many times more than the past years. W. Addersion has mentioned that “A product is a bundle of utilities consisting of various product features and accompanying services.” Thus, marketing at one hand is the basis of socio-economic events, the goods or product is the soul of marketing on the other.
The company frames its whole programme of marketing in order to sell any product and states the distribution price and the strategies relating to the sales enforcement promotion.
The products of a company are the basis of its whole programme for marketing. Thus, all factors of marketing programme of a company like pricing policies, sources of distribution, arrangement for advertisement and sales promotion etc., get effected by its product policies.
In other words — Products of a company are such fundamental systems in the hands of marketing manager that help him in giving the whole marketing programme a grand success. We can therefore, say that product is the starting point of all planning activities. The marketing manager should first try to be responsible for the product to which he wants to sell in the market.
If he decides properly and wisely, his success is assured but erroneous or inadvertent design will increase his problems and the prospects of successful marketing will lick the dust. It is therefore, stated that the first instruction of marketing is to know the customer, the second is to know the product in hand. A marketing manager should therefore, stress upon the products manufactured, their qualities, utility and proper arrangements for them.
It has been said — “The produced goods only in the field by marketing is the beginning point of all planning activities.” It is really true as pricing, means of distribution and advertisement and other decisions pertaining to marketing and the techniques are the medium to carry the facilities, utility, profit and satisfaction to which a firm wants to give its consumers.
Thus, product is the target in itself and these factors are the means. Usually then it is decided whether focus to be made on target or its means. Until healthy policies for product, its quality, nature, size etc. are rightly decided, the function as of marketing cannot be performed. Although, it is true that the defective and inferior goods too are sold and their producer and seller both earn abundant profits in short term but they cannot stay in the market any long and suffer from losses in long term.
Healthy and strong product policies increase the effectiveness of other devices of marketing too. It is mere folly to trap one’s money in production, distribution and enforcement of defective products. If the product is of good quality or standard, matching the consumer’s necessities, neither more advertisement, nor more discount and lure to consumers will require.
Its marketing will require minimum labour and expenses. The means of distribution for right product are easily explored and consumers too are attracted easily. It is therefore, necessary for a marketing manager and the topmost managers that they should be more attentive to their products.
Product – Adaptation/Customisation: Meaning, Reasons, Strategies and Selection
Product adaptation means to make such modifications in the product so as to ‘ make them suitable for the foreign markets. A product which is suitable for one market may have to be modified considerably for another market. Adaptation may be of design, size, material, function, style, colour, standards and taste.
Reasons for Product Adaptation:
1. Customer orientation – Adaptation is required when tastes and preferences, uses for the customers are different.
2. Government regulations – The product must be modified in such a manner so that it must satisfy the quality standards and specifications laid down by the foreign government.
3. Cultural differences – The consumption pattern, conditions of use and market characteristics are not same in all the countries. They vary from country to country. This leads to the need for product adaptation.
4. Climatic conditions – The adaptation of the product according to foreign markets is greatly influenced by the physical environment and climatic conditions. This requires the adaptation of packaging, packing size and storage requirement of the product.
In short, the cost benefit analysis, competitiveness and nature of product effects the overall adaptation of a product.
Product adaptation strategy refers to the problems relating with the requirement for the modification of the product or same product without modifications that can be marketed in the foreign market as in domestic market.
Warren Keegan has outlined five alternative adaptation strategies which a firm may use for selling the product in different foreign markets.
These are as follows:
1. Straight Extension Strategy:
Under this strategy a firm extends its operations to foreign markets by selling the same product, using the same advertising and promotional methods which they were using in the domestic market. The main theme of this strategy is one product, one message e.g. Pepsi, coke.
2. Communication Adaptation Strategy:
According to this strategy, a firm employee different methods of communication and advertising in different countries for the same product.
3. Product Adaptation Strategy:
Under this strategy same method of communication is used in all the markets but the product is adapted according to the conditions of the foreign markets. It can be said that same communication but modified product. Since it needs a lot of expenditure on research and development it is more expensive strategy but will prove to be beneficial in long run.
4. Dual Adaptation Strategy:
If there exists a difference in the environmental conditions of the use and functions which a product serves, then this strategy is used. A modification of both the product and communication to meet the needs of the foreign markets is involved under this strategy.
5. Product Invention Strategy:
To tap a foreign market, a new product is developed under the product invention strategy. For instance, for under developed countries, low cost products may have to be developed.
A careful analysis of all the above strategies has to be done before selecting the best strategy by a firm.
1. Objective of a firm – Product extension strategy is the best strategy if a firm follows the objective of profit maximisation.
2. Analysis of product and market – Various issues relevant in relation to the product of a firm, such as, who uses the product, when it is used, for what purpose it is used and how it is used etc. must be considered. In addition to this, the purchasing power of its prospective customers and the price of the product must also be considered while selecting the strategy.
3. Resources of the company – A firm must be clear about its own financial as well as non-financial resources while selecting the product strategy.
4. Product packaging – The product is differentiated by the size, colour, design, and language on the package in different markets. Apart from these, other factors like climate of the foreign country, hazards regarding the transportation, requirements related to custom etc. must be borne in mind while selecting the correct strategy.
Product – 5 Stages in Product Adoption Process (With Factors Influencing)
Product adoption is related with the way new consumers learn about a new product and decide to become a regular user. Consumers select a particular product from several products and carries out several observations, exercises and trials before selecting a new product. This process is known as product adoption process. The process by which one comes to a decision to use a certain new product regularly is a psychological one.
The stages in product adoption process are given as below:
1. Product Awareness – The first stage is about creating awareness about company’s product is in the market. In this consumer become aware of a product but lack of information. It is important that company should develop a successful avenue for the consumers to become aware of the product.
2. Product Interest – In this stage consumers are ready to learn more about companies’ product or service. After getting more information, consumers become interested in product. In this stage company must guide the consumers by providing easily accessible information on their product.
3. Product Evaluation – Now, accumulated information is used to evaluate the innovated product. The consumer considers all the significant aspect to judge the worth of innovation. He compares different aspects of product like qualities, features, performance, price, after sales service etc., with the existing products to arrive at the decision whether the innovation should be tried out or not.
4. Product Trial – This is stage where the consumer “Kicks the Trial”. Consumer cannot take decision of purchasing the product without making any trial. There are many ways this is accomplished. For example, company can provide the consumer with a free trial or a proof of concept campaign. In this stage it is very important to set the consumer expectations. In this stage consumer tries the product and gets firsthand experience.
5. Product Adoption – The customer adopts the product and decides to use it regularly. This is the critical stage that business needs to get their customer to. The company should make payment process simple, intensive and pain free. In addition, the company needs to ensure that the consumer can easily obtain the product.
This process helps to turn a prospective buyer into a regular user of the product. It is therefore important for marketers to study rural hierarchies and take help of opinion leaders to help brand adoption and diffusion within rural areas.
Factors Influencing the Adoption Process:
Marketers recognize the following characteristics of the adoption process:
1. People Differ in Readiness to Try New Products:
Rogers define a person’s innovativeness as – “the degree to which an individual is relatively earlier in adopting new ideas than the other members of his social system”. Thus, in each product area, there are consumption pioneers and early adopters. Say some people are the first to adopt new clothing fashions or new appliances- whereas other individuals adopt new products much later.
2. Personal Influence:
Personal influence is the effect one person has on another’s attitude or purchase probability. Although personal influence is an important factor, its significance is greater in some situations than the others. Personal influence is more important in the evaluation stage of the adoption process than in the other stages. It is also important in risky situations.
3. Characteristics of the Innovation Affect Rate of Adoption:
Some products catch on immediately, whereas others take a long time to gain acceptance. Five characteristics influence the rate of adoption of an innovation.
i. Relative Advantage – The degree to which the innovation appears superior to existing products.
ii. Compatibility – The degree to which the innovation matches the values and experiences of the individuals.
iii. Complexity – the degree to which the innovation is relatively difficult to understand or use.
iv. Divisibility – The degree to which the innovation can be tried on a limited basis.
v. Communicability – The degree to which the beneficial results of use are observable or describable to others.
4. Organizations also Vary in Readiness to Adopt Innovations:
Adoption is associated with the variables in the organization’s environment, the organization itself, and the administrators.
Product – Common Methods Used to Differentiate the Products
Product differentiation is the effort of a firm to distinguish its product from competitors’ products in a manner that makes the product more desirable. Some products are differentiated from competing products by their quality.
For example, Starbucks coffee has become popular around the country because of its quality, even though its price is high. Kay-Bee Toys used a marketing strategy of specializing in a small selection of high-quality toys, rather than competing with Wal-Mart for the entire line of toys.
All firms look for some type of competitive advantage that will distinguish their product from the rest.
The following are some of the more common methods used to differentiate the product:
1. Unique product design
2. Unique packaging
3. Unique branding
Some products are differentiated by their design. Consider a homebuilder who builds homes and sells them once they are completed.
The builder can attempt to build homes that will satisfy buyers by considering the following questions:
a. Would consumers in this neighbourhood prefer one- or two-story homes?
b. Is a basement desirable?
c. Is a fireplace desirable?
d. What is a popular size for homes in this neighbourhood?
e. What type of architecture is popular in this neighbourhood?
Once these and other issues are resolved, the builder can build homes with specifications that will attract buyers.
Various characteristics can make one product better than others, including safety, reliability, and ease of use. Firms such as AT&T, Kodak, and Audi have a reputation for reliability, which helps create a demand for their products.
Producers attempt to improve reliability by using high-quality materials, providing service, and offering warranties. However, attempts to improve reliability usually result in higher costs.
Differentiating the Design of a Service:
Just as firms that produce products attempt to create unique designs for their products, service firms attempt to develop unique services. For example, Southwest Airlines designed a differentiated service by focusing on many short routes that previously were not available to customers. Some grocery stores allow customers to purchase groceries online and provide a delivery service so that the customers do not have to shop at the store.
Most services can be differentiated by timing and efficiency. A firm that provides the service desired by customers on time and at a reasonable price has a good chance of being successful. Its method of differentiating itself from competitors is to prove that customers can trust it to provide what it promised and to do so on time.
Firms that offer services commonly use a strategy of promising to provide service of a certain quality and then keeping their promises. A firm that delivers what it promised may not only receive additional business from those customers, but may also obtain other business from referrals.
A packaging strategy can determine the success or failure of a product, especially for products whose quality levels are quite similar. In an attempt to differentiate themselves from the competition, some firms have repackaged various grocery products in unbreakable or easily disposable containers.
Many packaging strategies focus on convenience. Motor oil is now packaged in containers with convenient twist-off caps, and many canned foods have pull-tabs. Tide detergent is packaged in both powder and liquid so that consumers can choose their preferred form.
Packaging can also provide advertising. For example, many food products such as microwave dinners are packaged with the preparation instructions on the outside. These instructions also demonstrate how simple the preparation is.
Packaging also informs consumers about the nutrition of foods or the effectiveness of health-care products. The advertising on the package may be the key factor that encourages consumers to purchase one product instead of others.
Branding is a method of identifying products and differentiating them from competing products. Brands are typically represented by a name and a symbol. A trademark is a brand’s form of identification that is legally protected from use by other firms. Some trademarks have become so common that they represent the product itself.
For example, “Coke” is often used to refer to any cola drink, and “Kleenex” is frequently used to refer to any facial tissue. Some symbols are more recognizable than the brand name. Levi’s jeans, Nike, Pepsi, and Mercedes all have easily recognized symbols.
Family versus Individual Branding:
Companies that produce goods assign either a family or an individual brand to their products. Family branding is the branding of all or most products produced by a company. The Coca-Cola Company sells Coca-Cola, Diet Coke, Cherry Coke, and other soft drinks. Ford, RCA, IBM, and Intel use family branding to distinguish their products from the competition.
Companies that use individual branding assign a unique brand name to different products or groups of products. For example, Procter & Gamble produces Tide, Bold, and Era. General Mills produces numerous brands of cereal. Many clothing manufacturers use different brand names.
One product line may be marketed to prestigious clothing shops. A second line may be marketed to retail stores. To preserve the prestige, the top quality brand may not be sold in retail stores.
Producer versus Store Brands:
Most products can be classified as either a producer brand, a store brand, or a generic brand. Producer brands reflect the manufacturer of the products. Examples of producer brands include Black & Decker, Frito-Lay, and Fisher Price. These brands are usually well known because they are sold to retail stores nationwide. Store brands reflect the retail store where the products are sold.
For example, Sears and J. C. Penney offer some products with their own label. Even if store brands are produced by firms other than the retailer, the names of the producers are not identified. Store brand products do not have as much prestige as popular producer brands; however, they often have a lower price.
Some products are not branded by either the producer or the store. These products have a so-called generic brand. The label on generic products simply describes the product. Generic brands have become increasingly popular over the last decade because their prices are relatively low.
They are most popular for products that are likely to be similar among brands, such as napkins and paper plates. Customers are comfortable purchasing generic brands of these products because there is not much risk in buying a cheaper product.
Product – 3 Types of Evaluation: Product Mix Evaluation, Product Line Evaluation and Line Length Evaluation
1. Product Mix Evaluation:
Marketing mix is means to reaching profit targets. At the aggregate level the total sales and profits of the firm are attributable to product mix. However, aggregate analysis does not provide insights into managing the product mix effectively. Therefore, performance of each of the lines in the product mix must be evaluated against targets that are assigned to them and underperforming product lines must be identified.
One of the tools that can be used to evaluate lines is BCG matrix. The lines can be taken as strategic business units and plotted on a two dimensional matrix with relative market share and growth rate. Depending upon their position, the company can choose the correct strategy from build, hold, harvest, and divest options. In case there is shortfall in target profits, new lines can be added considering future prospects and current available resources.
2. Product Line Evaluation:
A product line consists of a number of products. Each of the products in the line is assigned sales and profit targets. It would be unfair to expect each of the products in the line to contribute equally to sales and profits because they face different market conditions. However, an analysis of the contribution made by each product to the total sales and profit of the line can be revealing.
Doing so, the high performers can be separated from the low performers. Then strategies must be developed to ensure maintenance of the high performers and reversal in performance of the low performers. Marketing is a competitive game; therefore products’ positions must be analysed in relation to competition.
3. Line Length Evaluation:
A company is likely to suffer if its product line length is short or long. However, a judgement cannot be made if the optimal number of items in the line is not known. The criteria to judge whether the length of line as short or long is the marginal profit increase that can be achieved by adding or deleting an item from the line.
In other words, the product line is short if profit could be increased by adding an item and the line is long if profit could be increased by deleting an item. This probably is the reason why Nokia has dropped many models from its line such as Nokia 6630 and Nokia 7610. Samsung on the other hand recently added Galaxy S5 to its smartphone line in anticipation of increased profit.
Such line length evaluation helps in making better line management decisions. This may require line stretching, line modernisation, line featuring, line filling, and line pruning.
i. Line Stretching:
A product line consists of a number of products. For instance, Maruti’s product line is comprised of brands such as Alto, Estilo, DZire, Kizashi, and WagonR. Line stretching means that the company makes an addition to its current line of products. For instance, Maruti’s line has witnessed a stretch with the launch of Celerio.
Recently, Nokia introduced Lumia 1620 and Nokia X to its mobile phone line. Firms are motivated to stretch in order to meet evolving consumer needs and reach out to new segments. For instance, Nokia with its Asha phone attempted to reach out to customers who needed feature phones.
A study of the product lines of different companies would reveal that lines are stretched to cover all possible segments of the market. Three types of stretches can be distinguished, namely upward, downward, and two-way.
a. Upward Stretch:
A company may start with lower-end products and later add products at upper-end of the market spectrum. For instance, Maruti started its operations in India with Maruti 800 that was followed by the introduction of Zen, Esteem, and Kizashi. A variety of reasons may cause upward stretch such as market opportunity and desire to establish its presence as a strong player in the market.
b. Downward Stretch:
Sometimes companies start by entering the top end of the market and later move towards the lower end of the market. Here the line is stretched downwards. For instance, P&G started with Ariel compact detergent at the top end of the market and later moved down with Tide detergent.
Downward stretch is easier because the brand equity established by the top end product creates a positive rub off. Recently both BMW and Mercedes have stretched down their car line by introducing smaller car in the range of Rs.20 lakh. Writing instrument company Parker stretched downward by launching Beta and Vector range of pens.
c. Two-Way Stretch:
When a company enjoys a strong position in the middle tier of the market and moves both down and up to create a strong market position, it characterizes a two-way stretch. Hyundai started with a middle segment Santro. It stretched upwards by adding Verna and Sonata and also reached out to lower entry level with Eon.
ii. Line Filling:
Sometimes companies add items within a particular range of the line. In line filling, more items are added but they belong to a product or price range. For instance, HUL shampoo line is filled with variations such as Sunsilk, Dove, TRESemme, Clear, and Lux that belong to standard shampoo price range.
For instance, Maruti’s compact car line (Rs.3-4 lakh) is filled by models such as Alto, Estilo, and WagonR. Consider another example of Apple. The company offers six items within its iPhone 6 range—iPhone 6 (16GB, 64GB, 128GB), iPhone 6Plus (16GB, 64GB, 128GB). Line filling is different from line stretch.
Line filling is about adding items within a given range, whereas line stretch is about moving up or below the current range.
Marketers’ filling decisions are motivated by desires to earn incremental profits by creating slight modifications in the product, to utilize excess capacity during the downturns, to signal might and presence, to prevent competition from pitching in unfilled positions, etc. It is important to notice that line filling is useful only when each item justifies its existence by developing a dedicated customer base.
Similarity between items can cause the consumer to get confused. For instance, a consumer may see the redundancy in so many items in the toothpaste range of Colgate. The rule to be followed in line filing is that each item must have just above noticeable difference.
iii. Line Modernization:
Products in a line may appear old and obsolete as time passes by. This could give competitors opportunity to take away the customers. Therefore, products in a line should be contemporized to match with evolving tastes and preferences. For instance, the Ambassador car line of Hindustan Motors appeared stuck in old times leading to customer disenchantment and alienation.
Bata, like Ambassador, is a decades old company. Once very popular, the brand began to appear as aged and old fashioned with the passage of time. To counter this perception, the company launched a campaign aimed to change its image as a modern young company.
At the product level, shoes like Ambassador, Windsor, and Hush Puppies have been reinvented with an accent on style. Another example of line modernization is Godrej. The company has been one of the most popular brands in the refrigerator market. With the arrival of Samsung and LG, its refrigerator line appeared old-fashioned and unexciting. The company’s introduction of ‘Eon’ range promoted by Aamir Khan is an attempt in line modernization.
iv. Line Featuring:
A product line consists of a number of items. The strategy to attract customer attention and build traffic is called line featuring. For instance, Citizen at the time of its launch in India featured its ‘EcoDrive’ model to break clutter and pull customers. In the same way, Seiko promoted its ‘Kinetic perpetual’ model to build traffic.
Line featuring is a common strategy in the world of retailing. Amazon’s strategy to build traffic online is in the form of ‘Deal of the day’ in which a select product is offered at a very attractive discount. Retailers often showcase an item packaged in an irresistible deal to pull customers inside the store. Once inside the store, the customer is then pulled up to higher price points and cross-sold other things.
v. Line Pruning:
It is unlikely that all the items in a product line keep performing well all the time. Customer and competitor changes can work against a product and render it a non-performer. For instance, HUL discovered that many products in its different lines are non-performers as per the company’s sales and profit expectations.
This led them to adopt what is known as power brand strategy. The items that failed to meet its standards of performance were considered to be a drag on profits and were consequently eliminated, thus pruning the product line. Examples of such non-performers in HUL’s line include Sunlight Detergent Powder and Ayush Herbal Shampoo.
Product – Audit
For existing goods or services, the starting point is to decide exactly what the firm is offering. This is not as obvious as it might seem at first. For example, before Planet Hollywood filed for bankruptcy protection, CEO Robert Earl stated, “We’re not in the restaurant business, we’re in the lifestyle and trademark business.”
Therefore all the features of the brand need to be reviewed, perhaps even by outsiders, because the brand manager who has become used to seeing the brand perform—in the way it has always performed—may have overlooked its other potential features.
The main task of a product audit is to look at goods or services in terms of what benefits the customer derives from them. What counts is what the customer sees.
An audit might examine some of these factors, such as:
(i) What market segment does this brand address?
(ii) Who are the existing and prospective customers?
(iii) What benefits are these customers and prospective customers seeking?
(iv) How does the product fulfill these customer needs and wants?
(v) How does it compare with competitive products?
These questions can be addressed in the form of a benefit analysis that examines the specific benefits that the products offer in the context of what the customer needs and wants. The list of customer benefits must be very carefully compiled, often by using sophisticated market research, to see it from the customer’s viewpoint. The list also needs to be clearly prioritized to show what the customer considers most important.
Otherwise the temptation is for the supplier to concentrate on those areas where the organization can excel, regardless of the fact that they are relatively unimportant to the customer. Nevertheless, the differentiating benefits that the supplier can offer, when compared to competitive offerings, may be very important. Equally, the benefits offered by the organization itself should not be ignored, because elements such as service, support, and corporate reputation often have a major influence on the customer’s buying decision.
Such a review may be problematic for some organizations in the non-profit sector. Members of such organizations often have a core product that is considered unchangeable because of beliefs, convictions, training, or the law. However, without a product audit, the value of the organization’s activities can be lessened in two ways. First, preoccupation with a core product can blind members of the organization to the overall needs of their customers and obscure ways in which the product can be augmented to increase customer satisfaction.
Second, additions and alternatives sometimes become rigidly associated with the core products even though they are not essential to the achievement of the organization’s prime goal.
Product – Branding: Meaning, Concept and Aspects
Brands have come to acquire centre stage in marketing. Every marketer desires to build a powerful brand. One characteristic that is common to all superlative performing companies is that they own powerful brands. Consider a company like The Coca-Cola Company.
The cola beverage that it makes, bottles, and markets can hardly be set apart from other colas. However, its superlative financial performance is radically different from other cola beverage marketers. Similarly, Apple’s market capitalization and profits can hardly be explained by the products it makes (mobile device).
For example, Apple’s competitor Samsung very closely matches its mobile device’s functional performance. The marketing scenario has entered a stage where differentiation based on a product is difficult to sustain. Most of the product categories are plagued by this ugly reality.
Products do not differ from one company to the other in any significant way. Consider cases such as flat panels, air conditioners, photographic camera, mobile devices, sports shoes, and printers. Product similarity works counter to the interest of marketing firms because it leaves the customers unattached and indifferent leading to buying based on price.
This reality has caused branding to assume a central role in marketing. Branding has emerged as a counter mechanism to reverse these effects of product parity and consumer indifference. Brands bestow firms with power or influence over consumer to make them price insensitive and committed.
Brands are all pervasive and can be found everywhere. People wear Rockport on their feet, Rolex on wrist, Montblanc on eyes, Armani on body, and Brut on face. A brand is defined as a ‘name, term, sign, symbol, or design or a combination of them which intended to identify the good or service of one seller or groups of sellers and to differentiate them from those of competitors’.
The vocalized part of brand is the brand name.
There are two important aspects to this definition, namely:
i. Identification and
By branding, companies provide customers clues about the brand creator. Branding originated in years ago when similarity between cattle posed problems in establishing ownership. This led to the practice of burning some sign on cattle, which established their ownership.
For instance, sign of a bitten apple on a mobile phone mixed in a heap of mobile phones easily allows identification of its creator. This identification allows the product to leverage brand equity of the company and gain customer trust and confidence.
Branding is important to differentiate one product from the others. When it is easier to tell one product from the other on the basis of its physical properties, differentiation is obvious. For instance, if two pot makers use different types of soil, which manifests in the colour of the pots, differentiation is self-evident.
The real challenge arises when products look identical. Product parity, both in physical form and functionality, is what makes differentiation a challenging issue. Branding in this scenario comes to the rescue of marketers. Brands in this context provide an effective route for differentiation by adding an intangible dimension to a physical entity.
Branding is a process of transforming a product into a perceptual entity by adding a dimension that sets it apart from competition. For instance, kitchen salt is undifferentiated commodity. By putting ‘Tata’ name on a pack, the product gets transformed into a differentiated entity that evokes trust and confidence.
Branding cannot be simply reduced to a process of selecting a good brand name, sign, or symbol, or a combination thereof. The definition is prone to be misinterpreted. In this regard, it must be understood that all these elements are signifiers of the brand.
Brand remains invisible to eye like an iceberg. For instance, the brand name Nike and it’s swoosh symbol are not the brand rather they are signifiers of what the brand stands for. Nike brand is not as much about the shoe as it is about an attitude and spirit. It is easier for any other manufacturer to produce the same shoe exactly like Nike.
However, it can never command similar customer response because what customer pays for is not the shoe but the ‘hidden value’. When the Nike name is added to a pair of shoe, nothing changes physically but everything changes mentally. Brands are valued for this mental transformation. Brands are valuable because products are prone to copying but brands being intangible and abstract entities are not amenable to competitive replications.
Product – Packaging: Meaning, Concept, Importance and Life Cycle
Packaging is one of the major developments in the modern competitive system. With an increase in the income levels of consumers and thereby increase in customer sophistication, packaging has also evolved into a sophisticated system. Packaging is one of the important elements of marketing mix.
It is also one of the important parameters in customer decision-making. Packaging in older times was meant for products that required protection for survival or used for high priced products whereas in modern market there are very few products without packaging. There are chances of product failure if the product is not packaged effectively.
Packaging may be defined as a general group of activities in product planning that involves designing and producing the container or wrapper for a product. Package was considered synonymous to the word ‘container’ and was used by marketers to solve the problems of spoilage, leakage, and destruction affecting the products during their movement from the place of production to the place of consumption.
The aim was to make the product available to the consumer in the right condition. It is said that packaging is the art, science and technology of preparing goods for transport and sale.
As competition in the marketplace began to heat up, marketers utilized packaging as a tool to distinguish their products from those of competitors by a specific marking on a part of the package. The role of packaging advanced from ‘product protection’ to ‘product identification’.
Developments in communication made competition fierce and this necessitated the need to further differentiate the product from the competing brands. Product packages transformed from being rough containers to enhanced boxes, tins, jars, and bottles wrapped impeccably. These packages were assigned the functions of a salesman.
The term packing and packaging are different. Packing is used in the narrow sense and refers to that part of the product package that discharges the function of protection whereas packaging is used in the broader sense and covers both tasks of protection and promotion.
The relevance of packaging as a marketing tool has been well practised in the competitive strategy of the firms in modern times. Packaging has not only been accepted as a pertinent marketing element but with the change in market forces, it has assumed greater importance. Packaging is also the 5th ‘P’ of the marketing mix.
The increasing importance of packaging can be attributed to the following factors:
i. Oligopolistic Structure of the Market:
Oligopoly, a market structure that defines the present market, is characterized by competitiveness among sellers where the competitors are unable to recognize each other’s competitive moves. Due to the price repercussions affecting the industry, competition is mostly non-price based.
To sustain in such a marketplace, firms need to differentiate their products and packaging among other non-price tools (advertising, publicity, and sales promotion) helps achieve differentiation.
ii. Impulse Shopping:
Purchase of products by shoppers without any pre-planning is called impulse shopping. This shopping behaviour is a result of a customer’s encounter with some stimuli in the environment that makes them buy products that were not on their shopping list. Such stimuli may be a display, audio message, appeal, and packaging.
Therefore, packaging offers great potential to the marketers to induce product purchase through exquisite, interesting, and informative product packages. These product packages boost customer confidence in the event of confusion while choosing a product brand. Effective packaging can lure customers towards impulse purchases. In a retail environment, packaging is the source of interaction between the seller and the customer.
iii. Self-Service Stores:
Customers in the modern world like to shop in an environment where they can enjoy the freedom of selecting and picking the product from the shelf. Self-service has overtaken traditional shopping methods with the expansion of department stores, discount stores, hypermarkets, etc.
In these stores, where the customer moves independent of the salesman, packaging plays an important role in projecting a positive brand image, assuring quality of the product, and imparting support to customer’s choice for the product. Packaging helps the customers make a decision amidst a plethora of products available in the market.
iv. Customer Convenience:
Increase in customer income levels and thereby convenience affordability has increased the demand for packaged products. Efficient packaging can help reduce customer discomforts (during purchase and consumption) without affecting the basic product. For example, fractional packages are offered to customers for a number of products such as shampoo, toothpaste, and oil to meet the convenience needs of customers.
v. Effective Communication:
The modern marketplace has become highly dynamic and competition is information-oriented with marketers using various new forms of communication tools. Advertising is one of the most commonly used methods to inform customers about the product and its features. In this regard, packaging can prove to be a useful tool in promoting the product image by showcasing product packages in advertisements.
vi. Sales Promotion:
It is one of the tools of the marketing promotion mix that helps firms generate extra revenue from samples, coupons, money refund offers, price-off promotions, trading stamps, sales contests, etc. These promotional activities can be well implemented with the support of effective packaging.
Some of the promotional packages are described here. Money-off packages use extra colours and have a different package design. Utility packages are those that have some re-usable value (e.g., Nescafe’s reusable jars). Pack-in premium packages carry some valuable item inside it (e.g., toothpaste package carrying toothbrush).
vii. Legal Requirement:
Packages are a source of information for the customers and thereby are regulated to ensure that the right communication is transferred to the customers. Important information such as product ingredients, quality, use instructions, and performance characteristics is required to be provided to the customers and such disclosures are warranted through a host of legislations and statutes.
Packaging performs this significant role of keeping the customers informed, which is essential for proper functioning of the marketplace. Rise in consumerism and increase in consumer consciousness has led to the enactment of different legislations to protect consumers against information deception and usage hazards.
Packaging and Product Life Cycle:
Life cycle of every product involves stages of introduction, growth, maturity, decline, and abandonment. Environmental forces such as consumers, competitors, and government affect the life of a product. Regular modification and advancement of the product through integrated marketing efforts is essential to ensure its survival in the market for a long period of time.
The maturity and decline phases of a product’s life cycle are the most challenging to marketers. Marketing strategies are drafted in terms of bringing out effective changes in the elements of marketing mix to sustain through these difficult phases. In addition to the traditional marketing mix, packaging can be utilized to sell the product in these stages in a cost effective manner.
The Marketing Theory below highlights the features of the product life cycle stages along with the managerial emphasis and appropriate packaging strategies for these stages.
With the appropriate strategies adopted at each stage, packaging can thus prove to be a useful instrument to make the products appeal to the customers and induce the desired customer purchase behaviour.
Product – Labelling
Labelling performs the dual functions of promoting the product along with explicitly providing important information related to the product. The main role of labelling is to inform consumers. Labelling regulations are different in different countries with informational requirements being decided by the host governments.
Labelling includes expressions related to description of weight, contents, ingredients, product manufacture and expiry date, manufacturer’s name, and unit price. Such disclosures assist customers in the process of product evaluation in order to arrive at product purchase decisions.
In retail shops, labels catch customers’ attention through popular words. Labelling on the product is a customer’s first encounter with the product even before its consumption. The necessary information given through labelling is essential to guide consumers during the usage of the product.
In certain product categories such as food and pharmaceuticals, labelling has to meet the legal requirements in terms of specifying the constitution of the product, nutritional value, and usage warning information. Not only does labelling benefits customers but it also helps sellers such as retailers in customer checkout and inventory management through Universal Product Codes (UPC) and Radio Frequency Identification (RFID).
In the global market scenario, labelling serves the needs of the international markets, whereby bilingual or multilingual labels cater to the diverse cultural needs. Labelling is expensive; non-standard labels being more expensive than standard labels.
Product – After-Sales Service
The process of marketing begins with the assessment of customer needs and ends with customer satisfaction and happiness. After-sales service includes all those activities that aim at customer satisfaction by ensuring that customers’ expectations are met. After-sales service involves repair, maintenance, return and exchange, warranty, customer service support, customer feedback, customers’ query and complaint management, etc.
With timely and efficient after-sales services, a company is able to contend its customers who tend to become loyal customers and also spread positive word-of-mouth. Therefore, after-sales service helps both in customer retention as well as customer attraction.
They also lay the foundation for healthy and long-term relations between the company and the customers. After-sales service revolves around management of customers’ problems efficiently thereby leading to a gratifying customer experience.