Product Decisions

Prepared by;
Aakriti Panta(57)
Abhaya Rana(59)
Aditee Khanal(97)
Anita Magar(67)
Bhawana Dahal(86)
Concept of Product

• A product can be defined as anything that we can offer to a market for attention,
acquisition, use or consumption that could satisfy a need or want.
• However, the definition of product does not only involve tangible goods such as a
car, a fridge or a phone. The definition of product must be extended to include
intangible objects as well, because they can be offered to a market as well.
Therefore, the broad definition of product includes services, events, persons,
places, organizations or even ideas. Thus, the definition of product can be:
goods ,services,ideas,experiences,events,person,informations etc which can be
bought and sold in the market.
• For a manufacturer,a product may be the physical object or service being provided.
• For a customer ,a product may be bundle of satisfaction or hope.
• For the marketer , the most important meaning of product is what it means to
the customer.
• For example, toothpaste may be a physical object or service to the manufacturer
but to the customer it means the hope of whiter teeth or fewer cavities . That
hope is for what the consumer buys, not toothpaste as offered by the
manufacturer. Because what the manufactures sees as the consumer benefits
may be differ from what the consumer sees.
• According to Philips Kotler
" A product is anything that can be offered to a market for
attention,acquisition,use or consumption;it include physical
objects,services,personalities,places,ogarnization and ideas."
A product can be define as

• As a tangible product
a product is defined as "a set of tangible physical attributes assembled in
identifiable form. Similarly, in a narrow sense, a product is defined as the basic
physical entity, which has precise specifications and is offered under a given
description or model number. Name, colour, style, taste, size, weight, durability,etc
• As an extended product
A product includes not only the physic attributes, but also the accompanying
cluster of image and service features. For example, computer includes not only its
physical entity, but also includes software package instructions for user,
maintenance, and promptness of service.
• As a service product
Service product is an intangible item. Sellers and buyers cannot see and touch
it; they can just feel it. For example, insurance service, banking service,
transportation service, tourism service, etc. A service product may be supported by
documents.
• As a total product
Total product concept is a product. It focuses on what a product means to the
customer, not the sellers. It is the broadest definition and consistent with the
marketing concept. Actually, it is a modern concept of the product, which should
be, accepted by all the marketing organizations.
Level of product

A product level are classified into three group;

1.Core product
2.Actual or Formal product
3.Augemented
1. Core Product
The first level is the core need or benefit that the product is trying to meet or deliver.
The best way to think about this is from a consumer’s perspective – why is the
customer buying this product solution.From the product the customer want
benefits,taste or use.
for eg , a women buy a lipstick for looking beautiful or attractive
2. Actual or formal Product
The formal product is the outer part of the core product including physical and chemi
attributes such as package, brand-name, quality, style, etc., through which the product
formally recognized as a tangible item. For example, a lipstick may have physical a
chemical attributes such as brand name, beautiful package, style, quality, etc. These are
called as formal product.
3.Augmented Product
The augmented product is the totality of benefits or a hope that a person
receives or experience and/or prestige in obtaining the formal product. In other
words, an augmented product hi totality of core and formal product. For example, a
woman buys lipstick and along with it she gets package, quality, style, etc.
Product classifications and Marketing considerations
Product classifications is a marketing and business term that categorizes products
on how and why consumers purchase them. It is done to set up marketing
strategies.
Marketing consideration is the stage when marketers bring their company to the
forefront of the customers mind before they make a final choice.
Product is generally classified into two categories:
1. On the basis of product characteristics
2. On the basis of type of buyers and the product use
a. Consumer products
b. Industrial or business products
a. Consumer products
Consumer product is a good or service purchased by an individual for personal or
household use. Such products are used without further processing.

Characteristics of consumer products

• Time and effort developed by consumer to shopping
• Knowledge prior to purchase
• Willingness to accept substitute
• Frequency of purchase
• Information search
• Price
• Comparison of price and quality
• Want satisfaction period
Types of consumer products
i. Convenience goods
ii. Shopping goods
iii. Specialty goods
iv. Unsought goods
i. Convenience goods
Convenience goods are those goods which are inexpensive, purchased on a regular
basis with a minimum of time and effort as the buyer has knowledge of product
characteristics prior to shopping. For examples: salt, rice, candy, chips, candles,
umbrella , etc.
Marketing consideration for convenience goods
• make available of these products at the most convenient stores
• In-store displays, well designed layouts
• Charge relatively low price
• Carry many brands
• Mass advertising
• More efforts from producers
ii. Shopping goods
Shopping goods are those goods for which the consumers lack sufficient
information about product alternatives and their attributes and therefore, must
acquire further knowledge in order to make a purchase decision. Examples:
automobiles, television sets, fridge , etc.
Marketing considerations for shopping products
• Varied options
• Emphasis on personal selling
• Well known brands
• Adequate customer warranties and follow-up services
• Small number of retailers
• Competing items
iii. Specialty products

Specialty products are those products for which consumers are too much brand
loyal. Examples: expensive and unique items such as private jet, jewellary , etc.
Marketing considerations for specialty products
• Maintain the product features
• Make the items unique
• Few or one retail outlets
• Particular brand
• More emphasis on customer contacts
iv. Unsought products
They are normally grouped under unusual type of product because such product’s
characteristics use and image mean little to the customers. For example: life
insurance, fire extinguishers , etc.
Characteristics Convenience Shopping product Specialty product Unsought product
product
Buying efforts Low  High  Very high None 
Time spent planning Very little Considerable  considerable Very little
the purchase
How soon want is Immediately  Relatively long time Relatively long Low desire
satisfied
Are price and quality No  Yes  No  No 
compared?
Price Usually low High High Generally high
Frequency of Usually frequent Infrequent   Infrequent  Infrequent 
purchase
Information search Low  High  Low  Low 
Knowledge prior to High  Low  High  Low 
purchase
Willingness to accept High Moderate None None 
substitute
Importance  Unimportant  Ofen, very important Can't generalize Unimportant 
Brand loyalty Low  Low  High  None 
Marketing Convenient product Shopping product Specialty product Unsought product
considerations
Length of channel Long  Short Very short Direct 
Importance of retailer Any single store is Important  Very important Very important
unimportant

Number of outlets As many as possible Few Few, often only one  Only one
Stock turnover High  Lower  Lower  Often lower
Gross margin Low  High  High  Often high
Importance of point of Very important Less important Less important Less important
purchase display

Responsibility of Producer's  Retailer's Joint responsibility Producer's 

advertising
Brand and store name Brand name Store name Both Not both
important
packaging Attractive  Useful protective Not important Appropriate 

Promotion mix National advertising National advertising Direct advertising Direct advertising
preferred and local advertising and personal selling  and personal selling
Importance of No  Yes  Yes  Yes 
customer warranties
b. Industrial products
Industrial products are those products that are bought by industries to be used in
producing other goods or services. These products are purchased either for use in
other products or it’s own operation.
Types of industrial products
i. Foundation goods
ii. Entering goods
iii. Facilitating goods
i. Foundation goods
They are the manufacturing machines that make production possible. They’re used
in the production process rather that becoming part of the product. They’re further
divided into two types which are installations and accessory equipment.
Installations: They are manufactured industrial products. These are the expensive,
long lived and major equipment of an industrial user. For examples: printing
machines, diesel engines, boilers, milling machines, etc.

Marketing considerations for installations

• No middlemen are involved
• More preference to brand of installations and less importance to price
• More emphasis on peroneal selling
Accessory equipment: They’re used in the production operations of a firm but are
not used in the actual manufacturing process. Examples: typewriters, delivery
trucks, word processors, etc.

Marketing considerations for accessory equipment

• For high quantities, direct personal selling and for low quantities, middlemen is used
• Many promotional activities
• More brand preference

ii. Entering goods

They are used as the ingredients or component of a product. They’re also divided
into two types which are raw materials and fabricating materials.
Raw materials : They’re very close to their natural state as they’re unprocessed
primary materials. For examples: minerals, land , forests, etc.
Marketing considerations of raw materials
• Few larger producers are involved
• Carefully graded and standardized
• Transportation
• Short channel of distribution
• Advertising
• Branding is not preferred

Fabricating materials: They undergo some degree of initial processing before the
enter the product manufacturing process. Examples: changing wheat into flour
Marketing considerations of fabricating products
• Highly standardized
• Competitive brands

iii. Facilitating goods

They’re also called operating supplies that are used up in the operation of the firm
but do not become the part of the product. The main purpose of such goods is to
keep the foundation goods functioning properly and to help in the handling and
supply of the entering goods. Examples: lubricating oils, stationeries, repair and
maintenance, services, etc.

Marketing considerations of facilitating goods(operating supplies)

• Many middlemen are used
• Competitive price
 • Personal selling may be the major means of promotions
• Catalogues
Characteristics 
Characteristics  Raw
Raw materials
materials Fabricating
Fabricating parts
parts installations
installations Accessory
Accessory Operating
Operating
equipment
equipment supplies
supplies
Unit
Unit price
price Very
Very low
low Low 
Low  Very
Very high
high Medium 
Medium  Low 
Low 
Length
Length of
of life
life Very
Very short
short Depends
Depends on
on final
final Very
Very long 
long  Long 
Long  Short 
Short 
product
product
Quantities
Quantities Large 
Large  Large  
Large   Very
Very small
small Small 
Small  Small 
Small 
purchased
purchased
Frequency
Frequency of
of Frequent 
Frequent  Infrequent 
Infrequent  Very
Very infrequent
infrequent Medium
Medium Frequent 
Frequent 
purchase
purchase frequency
frequency
Standardization
Standardization Very
Very much
much Very
Very much
much Very
Very little
little Very
Very much 
much  Much 
Much 
of
of competitive
competitive
product
product
Quantity
Quantity of
of Limited 
Limited  Usually
Usually no
no No
No problem
problem Usually
Usually no
no Usually
Usually no
no
supply
supply problem
problem problem
problem problem
problem
Purchase
Purchase contract
contract Long
Long term
term Long
Long term
term One
One time 
time  One
One time
time None 
None 
price
price
Negotiated 
Negotiated  Negotiated 
Negotiated  Negotiated 
Negotiated  Fixed  
Fixed   Fixed 
Fixed 
Marketing Raw materials Fabricating Installations  Accessory Operating
considerations parts equipment supplies
Nature of Short  Short  Short  Middlemen used Middlemen used
channel
Negotiation Hard to Medium  Long  Medium  Short 
period  generalize
Price Important  Important  Not important Not main factor Important 
competition
Pre sale/post Not important Important  Very important Important  Not important
sale services
Promotional Very little  Moderate  Sales people Important  Not too
activities very important important
Brand None  Generally low High  High  Low 
preference
Advance buying Long term Not usually used Not usually used Not usually used Not usually used
contract contract used 
Product Life Cycle(PLC)

The term product life cycle refers to the length of time a product is introduced to
consumers into the market until it's removed. It is a marketing theory in which a
product or brand follows a sequence of stages. This concept is used by
management and by marketing professionals as a factor in deciding when it is
appropriate to increase advertising, reduce prices, expand to new markets, or
redesign packaging. The process of determining ways to continuously support and
maintain a product is called product life cycle management.
PLC Stages (Features of different stages)

Introduction stage Growth stage Maturity stage  Decline stage

Slow pace of sales growth Sales increased rapidly Slowdown in sales growth Declining sales
Innovators customers Starts generating profit Peak sales Declining profit

No competitors Number of customer High profit Customer switch to other

increases products
Small production level Growing competition Tough competition Declining competition

Heavy expenses Stable or slightly lower Profit Stabilized or starts Increased price
price declining
High price Promotional level Heavy promotion Withdrawal  of promotion
maintained
Profit are non-existence
 Product Life Cycle Strategies
Introduction stage  Growth stage Maturity stage Decline stage
Rapid skimming strategy Improve quality of Improve Quality of Contraction of product
product products line 
Slow skimming strategy Add new features and Convert non users into Withdrawal of all
models users promotions
Rapid penetration Changing styles Increase usage among the Adopt a single distribution
strategy present customers by channel
adding new and different
utilities
Slow penetration strategy Entering new segment of Change product features Abandon the product
market
Use new distribution Devising effective
channel promotion and advertising
programs

Reduction in price Price, Channels, Sales

promotion, Service, Public
relation
Maintained promotion
Concept of New Product
New product development process is nothing but a process of bringing new
product to market places.
By the term “new product ”,general people think it should be an innovative product
which is developed and introduced in the market for the first time. But in marketing
a new product may be ;
1. Innovative Product
2. Modified Product
3. Imitating Product
• Innovative Product:Innovative product are those products which are developed
and introduced in the market for the first time.Not any competitor has invented
that product.It’s the first product that you have invented.
• Modified products:Modified products are those in which a particular product
feature is changed to capture the existing market.These are not imitating
products,it requires minor innovations to replace the product features.These
products can be categorized as ”new and improved products”.
• Imitating products:Imitating products are those products,which may be new to
particular firm but they are not new to the market,because they are already been
offered to the market by other firm.
New Product Development Process
New Product Development process
1. Idea Generation:
•New product development process begins with generating of some innovative ideas to bring
new product in the market. There are two sources for idea generation:
•Internal Sources:
R and D Department.
Employees.
•External Sources:
Customers :needs ,wants ,actual expectations of customers should be consider.
Competitors: knowing what your competitors is doing in the market and generating better
ideas.
Suppliers,Distributors: They are the one who know what is happening in the market./two
people who are most aware about the market.
2. Idea Screening i.e., Selecting the Best Idea among the Alternatives:
•After generalizing various ideas ,identifying good ideas and dropping the poor ideas.T his is
possible only through the evaluation of collected ideas. A good idea is one which involves
relatively less expenditure but ensures long term return and at the same time fulfils the
corporate goals and objectives.
New product development process continue...
3. Concept Testing:
• Concept testing means taking a group of customers and asking them to use the product and taking feedback
from them. If the customers like the product then go for it. If they don’t like the product then they will give
any suggestions consider those points reframe it and make changes as per their needs and wants.
4. Marketing Strategy and development:
• The marketer must develop the marketing strategy to compete in the market which includes understanding
the customers, analyze the market, analyze the competitors, analyze R and D channel, marketing mix,
financial analysis, and review. And then go to the development process.
5. Business Analysis:
• After analyzing the customers, markets and the competitors business analysis should be done. The company
needs to find that whether the product is profitable or not and the desired objectives of a company can be
achieved or not.
6. Product Development:
• At this stage the product concept is developed into physical product. This stage involves product positioning,
branding, packaging and labeling of the product.
New product development process continue...

7. Test Marketing:
• After a technically and commercially feasible product is developed, but before it is
commercialized ,the marketer should test the product to find out whether the
consumers accept the new product or whether the product is market friendly and
whether the product is viable for sales product in long run.
8. Commercialization:
• After test marketing when the marketer is assured about the viability and
profitability of the product, it is finally introduced in the market. The marketer
decides the timing of introduction, where to launch – whether it will be launched
in single or multiple location, and undertake extensive advertising and promotion
campaign.(when ,where ,whom and how decision should be taken in this final
stage)
Branding 

• A brand differentiates one sellers products or services from those of customers. Branding
is the process of giving a meaning to specific organization, company, products or services
by creating and shaping a brand in consumers’ minds. It is a strategy designed by
organizations to help people to quickly identify and experience their brand, and give
them a reason to choose their products over the competition.
• The objective is to attract and retain loyal customers and other stakeholders by delivering
a product that is always aligned with what the brand promises.
• “A brand is a name, term, design, symbol, or any other feature that identifies one seller’s
good or service as distinct from those of other sellers” (American Marketing Association).
• A brand name consists of words, letters and or numbers that can be vocalized.-Staton
• Brand mark is that part of brand which can be recognized but is not utterable such as
symbol, design or distinctive coloring or lettering.      -Kotler
Branding Objectives
• Product identification
• Product differentiation
• To assist in promotion
• To increase prestige and status of customers
• Quality assurance
• Price stability
• Product positioning
• Brand loyalty
• Image enhancement
• Product mix expansion
• Legal protection
• Consumer welfare
• Environmental protection
• Event promotion
Types of Brand

A .Ownership classification:
• Manufacturer's brand- e.g. Sony, Liril, Bajaj
• Distributor or Private brand- e.g. Woolmart, Sears, Rebuck, Bata
• Licensed brand- e.g. Goldstar TV and Panasonic Radio by Chaudhary group

B. Product line branding classification:

• Individual brand- e.g. Surya, Shikhar, Naulo, Khukuri, Chautari and Bijuli(Surya
Nepal) and Lux, Liril,  Lifebouy (Nepal Unilever Ltd.)
• Family brand- e.g. Amul, Ponds, Samsung
• Umbrella brand- e.g. Tata, Godrej, Hulas
Brand Equity

• Brand equity is a marketing term that describes a brand’s value. That value is
determined by consumer perception of and experiences with the brand. If people
think highly of a brand, it has positive brand equity. When a brand consistently
under-delivers and disappoints to the point where people recommend that
others avoid it, it has negative brand equity.
• Positive brand equity has value:
• Value to customers-helps customer information processing, enhance
confidence in customer purchase decision
• Value to the marketer-customer loyalty, revenue, efficient marketing, premium
price, add new product, distribtion channel easily available
Thank You