Unit 3: The Marketing Mix
Chapter 10
What Is a Product?
Learning Goals
 Explain why product is the primary P of the
marketing mix
 Explain the four characteristics of services
that distinguish them from goods
 Describe the good-service continuum
 Describe and give an example of each of the
four product element categories
 Summarize the purpose of product
strategies
 Describe and draw the stages in the product
life cycle
Activity – Fad or Fizzle?
Each of the products below - whether a good, service,
or idea - was conceived as the next "big thing," but
only some succeeded. Can you tell the successful fad
from the fizzles?
 Beanie Babies
 McPizza
 Homeless American Girl doll
 Kardashian Kard
 Furby
What Is a Product?
 The _______________
is
Product
the primary P in the
marketing mix
 It is the first element of
the marketing mix to be
decided
 If you do not have a
product to sell, you do not
need a place, price or
promotion
What Is a Product?
 What does a customer actually buy when he
or she buys a product?
 When you buy an automobile, are you buying
just metal, cloth, plastic, and glass formed into
a machine?
 No
 You are actually buying transportation, the
ability to safely and easily get from one place
to another
 You may also be buying independence and
prestige
What Is a Product?
 When you buy a ticket to a concert, are you
just buying a place to sit for two hours?
 No
 You are actually buying the enjoyment of
the show, the ability to tell your friends
about it, and a break from the stress of
your daily life
What Is a Product?
 In Chapter 1, we learned that a product is
anything that can be bought or sold
 A product can be …
 A good
 A service
 An idea
Types of Products
Products are usually grouped into one of two
categories;
1. Consumer products
 Product sold to customers for personal use
2. Business products
 Products sold to businesses for business
use
Types of Products
 Products can also be described as
______________
or _______________
Tangible
Intangible
 A tangible product is something that exists
physically and can be touched
 Goods are tangible
 E.g. a cellphone
 An Intangible product is something that exists,
but is not physical and cannot be touched
 Services and ideas are intangible
 E.g. a haircut or the idea to “buckle up for safety”
The Service Economy
 Throughout the nineteenth and much of the
twentieth centuries, Canada was an industrial
economy
 The main products of an industrial economy are
___________________
Tangible Goods
 At this time, the majority of people in the country held jobs in
manufacturing, mining, or agriculture creating tangible
goods
 Toward the end of the twentieth century, the basis of
the Canadian economy shifted from industry to
knowledge
 The main products of a knowledge-based economy are
Services
_____________
The Service Economy
 A ______________________
is an economy
Service Economy
in which most of the GDP (Gross Domestic
Product) comes from services and most of
the workers have jobs in the services
industry
 Today, services account for about 78 percent
of GDP in the Canada
 Therefore, Canada is considered to be have
a Service Economy
Characteristics of Services
 Services are different from goods in four
ways
Services are;
1. Intangible
2. Inseparable
3. Variable
4. Perishable
 These characteristics of services can
present special problems for marketers
1. Intangible
 Services are intangible, meaning they cannot be
touched or tried out before purchase
 For example, when you shop for a car, you can kick the
tires, choose a colour, and go for a test drive. However,
when you buy a concert ticket, you cannot try the concert
out beforehand
 Services are tough to represent in marketing as it
can be difficult to show a picture of the service itself
Examples of intangible products are;
 A concert
 Cellphone service
 Insurance
2. Inseparable
 Services are inseparable, meaning the
production of the service cannot be
separated from the ______
Use of the service
 Services also cannot be separated from the
______________
of the service
Producer
 In other words, the service cannot be separated
from the person who performs the service
 For example, suppose you go for a haircut.
The haircut does not exist until the
hairdresser cuts your hair. In addition, the
haircut does not exist without the hairdresser
3. Variable
 Services are variable, meaning that they are _______
Unique
 A service only exists once and is never exactly
repeated in the same way again
 Because services are inseparable, the customer often
thinks of the service and the service provider as one in
the same
 For example, the product of the hair salon is not just the
haircut. The product is also the stylist who cuts the hair
 Have you ever gone to a new salon, had a bad haircut,
and refused to return? Was it the salon that gave you a
bad haircut or the stylist? A friend may have received an
excellent cut from another stylist at the same salon
3. Variable
 This variability can lead to _______________
Quality Control issues
 It is very hard to make sure that each service
provider gives the same quality service
 E.g. different hairdressers may give different quality haircuts
 For this reason, there are certification programs for
doctors and other professional service providers
 However, even with certification, another problem
that occurs is when a service provider leaves a
business, customers often follow the service
provider
 E.g. When a popular hairdresser leaves a salon, many
customers will follow the hairdresser and leave the salon
4. Perishable
 Services are perishable, meaning services
cannot be __________
Stored for later use
 Some goods are perishable, such as milk and
seafood, however most can be stored until
needed, such as jeans which can be stored in a
warehouse until needed by retail stores
 For example, unsold concert tickets cannot
be stored and sold at a later time, because
once the concert is over, the tickets are
worthless
Overcoming Service
Obstacles
 Service providers need to be creative in developing
strategies to overcome these obstacles
 See example below
The Good-Service
Continuum
 Many products are combinations of good and service
 E.g. a restaurant meal is a combination of a good and
a service
 The food itself is a good
 The preparation and serving of the food is a service
 Products can be visualized as being on a good-service
______________
Continuum
 On the left end, the products are purely tangible goods, for
example, soap
 On the right end, the products are purely services, for example,
tutoring
 In between are the products with varying combinations of
goods and services
The Good-Service
Continuum
Pure
Goods
Soap
Books
Pure
Services
Restaurant Meal
Cellphone
Legend
Amount of goods
Amount of services
Tutoring
Concert
Day 1 Assigned Work
Students please complete the following;
 K & U Questions #1 & 5 on page 153
 Thinking Questions #1 & 2 on pages 153 &
154
 Product Characteristics Worksheet
 Hardcopy provided
***Save As Ch 10 Day 1 in your Unit 3 folder***
Day 2 Response Journal
What is the purpose of packaging?
List all the functions packaging performs.
***Save As Nov 27 in your Response
Journal Folder***
Product Elements
 Products have many elements that can be
changed to meet customer’s needs
 The elements of a product can be grouped
into four categories
1. Basic product
2. Usage
3. Protection
4. Name
1. Basic Product
Once you know what product you will sell, you
can then begin to make basic product
decisions about …
A. Quality
B. Features
C. Options
A. Quality
 During product development, the company must
decide on the quality of the product
 While keeping the target market in mind
 ____________
is the level of excellence in something
Quality
 Customers have different ideas of what good quality is
 A product that meets the quality needs of one target
market might not meet the quality needs of a different
target market
 For example, a chocolate bar from a vending machine might
be the right quality level for a quick snack. It might not be the
right quality level for a Valentine's Day gift for your boyfriend or
girlfriend
A. Quality
 The level of quality will affect the cost to
produce the product and therefore its price
There are 3 general quality levels;
i. Premium quality
 Highest quality materials and therefore highest price
ii. Moderate quality
 Good quality materials and therefore moderate price
iii. Value quality
 Usually an adequate level of quality
 Combines the lowest price with the best possible
quality at that price
B. Features
 Both goods and service have features
For a good …
 A physical characteristic
• For example, the physical features of a
cellphone include its size and colour
For a service …
 One of the tasks that will be done as
part of the service
• For example, the service features of a
cellphone include voice mail and call waiting
C. Options
 An __________
Option is a feature
that can be added to a
product at the customer’s
request
 For example, options on an
automobile might include a
sunroof, leather seats, and a
high-end stereo system
 Options enable the
customer to customize the
product to his or her
specific needs and wants
2. Usage
 Many products are designed to be
assembled, installed, or used in some way
 Part of the product decision is how to help
the customer make the best use of the
product
 If customers do not know how to properly
use a product, they are likely to get
frustrated and become dissatisfied
 They may then return the product or just
never buy from you again
2. Usage
Aspects of usage include;
A. Instructions
 Clear instructions are an essential part of many products
 Some companies provide videos, classes, or seminars to help
customers use their products
B. Installation
 Installation is the process of placing a good where it will be used
and making the good ready for use
C. Technical support
 Complex products have a tendency to develop problems from
time to time
 Many companies that sell complex products offer technical
support
 Technical support consists of people who are available to help
customers with problems
3. Protection
 Protection consists of product elements that
protect the product from harm, both before
and after purchase
Protection includes;
A. Grades and standards
B. Packaging
C. Warranties and guarantees
D. Maintenance and repair services
A. Grades and Standards
Measurable
 Grades and standards are _______________
attributes that describe the value and utility of a
product
 For example, when buying certain food products,
such as butter or eggs, consumers may look for the
"Canada Grade A" symbol on the packaging
 Likewise, Transport Canada has mandatory safety
standards that automobile manufacturers must meet
 As a point of customer assurance, marketers will
promote these attributes because they often impact
customer-buying decisions
B. Packaging
Packaging serves many functions;
 Protect a product from damage
 Appropriate packaging is necessary to keep foods
fresh and healthful
 Also, many fragile products such as computers
and lamps are carefully packaged to prevent
damage
 Promotion
 The “face” of the product
 Often is the first thing that attracts a customer
 Part of the product’s identity
B. Packaging
 Make products easier to stack or display
in stores
 Protect the customer
 For example, using plastic bottles instead of glass
for beverages and child safety caps for medicines
 Discourage theft
 Provides product information
 Content labelling, nutritional information, weight,
etc.
 May provide product instructions
B. Packaging - Canadian
Labelling Requirements
 In Canada packaging and labelling must follow
specific requirements as set by the
government
 The purpose of these regulations is to protect
consumers and help them make the best
choices when shopping
B. Packaging - Canadian
Labelling Requirements
Some of these requirements are;
 False or misleading packaging is against the law
 Most packaged foods require an ingredient list
 Labelling must appear in English and French
 Product must be clearly identified
 Quantity of product must be expressed
 In units of volume, weight or quantity
 E.g. 1L, 200 g, 25 pieces
 Product must include the manufacturer and
dealer’s name and address
B. Packaging - Canadian
Labelling Requirements
C. Warranties and
Guarantees
To convince customers of the quality and reliability of
their products, marketers often provide a …
 Warranty
 A written document which states the quality of a
product and promises to correct certain problems,
should they occur
 E.g. most new automobiles have a warranty
 Guarantee
 A promise that the product has a certain quality or will
provide satisfaction
 Usually used in promotions
 E.g. some pizza delivery services guarantee pizza in
half an hour or it is free
D. Maintenance and Repair
Services
 Complex machines often require regular
maintenance
 E.g. cars
 May also need periodic repairs
 Maintenance and repair services should
be planned when the product is
developed
 The availability of these services may
affect the customer’s buying decision
 E.g. when you purchase a car, you have a
choice of dealers. Some consumers might
choose to buy from the dealer with the
most convenient service department
4. Name
The name includes;
 Product name
 Brand name
 Product’s “personality”
 Choosing the right name for a product is a
critical part of the marketing mix
 You will learn more about names and
branding in chapter 11
Product Elements Overview
Product Elements
Basic Product
• Quality
• Features
• Options
Usage
• Instructions
• Installation
• Technical support
Protection
• Grades and standards
• Packaging
• Warranties and guarantees
• Maintenance and repair services
Name
• Product Name
• Brand Name
• Personality
Day 2 Assigned Work
Students please complete the following;
 K & U Questions #7 & 8 on page 153
 Product Elements Worksheet
 Hardcopy provided
***Save As Ch 10 Day 2 in your Unit 3 folder***
Day 3 Response Journal
Like humans, products go through a life cycle
of their own. As a marketer, how might I be
able to tell if a product is reaching the end of
its “life”?
***Save As Dec 1 in your Response Journal
Folder***
Product Strategy
 A __________________
Product Strategy consists of all of
the decisions made about a product
 It starts with the decision about which product to
offer
• It then proceeds to decisions about product
elements, keeping the target market in mind
 A product strategy can help distinguish your
product from the competitors
 Must balance meeting customers’ needs and
beating competition with the costs of
production and marketing
Product Life Cycle
 Products go through a life cycle similar to the human
life cycle
 As humans, we are born, grow, reach maturity, then age and
eventually die
Product Life Cycle
 A _____________________
consists of the stages
that a product or a product category goes through
from beginning to end
The product life cycle has four stages;
1.
2.
3.
4.
Introduction
Growth
Maturity
Decline
Product Life Cycle
 The stage in the life cycle of a product is
based on _______
Sales of that product, including
all brands and generics
 All sales of a product are often referred to as
_________________
Industry Sales
 For example, to determine the life cycle of
cellphones, you would gather industry sales
information for cellphones from the time they
were introduced to the present
Product Life Cycle
 The product life cycle is often shown on a graph
 The graph plots _______
Sales on the y-axis and ______
Time on
the x-axis
 Sales are expressed in dollars
 Time is expressed in months or years
Product Life Cycle
 The curve on the graph shows the rise and
fall of industry sales for a product (in dollars)
over time
 The stages of the product’s life cycle are
based on the shape of the curve, which
represents changes in the number of sales
 __________
can be made at each stage of a
Profit
product’s life cycle, but the marketer has to
know how to market the product at each
stage
Profits over the Product
Life Cycle
Industry profits change over the life cycle of a
product. Notice that during the introductory stage,
no profit is being made.
Product Life Cycle
 The length of each stage
varies, depending on the
product
 E.g. Ivory Soap was first sold in
1879, and it is still a strong
seller, therefore Ivory Soap has
a long life cycle
 E.g. the Pet Rock sold only
during the gift-giving season of
1975, therefore the Pet Rock
had a very short product life
cycle
 A product with a very short
life cycle is called a ______
Fad
Product Life Cycle
 In the same time period, different products
are in different stages of their life cycles
 For example, electric automobiles are in the
introduction stage, cellular phones are in the
growth stage, in-line skates are in the maturity
stage and CD players are in the decline stage
1. Introduction
 _______________
Introduction is the stage during which
a new product is presented to the market
 Typically, profit is not being made at this
stage because money spent on product
development has not yet been earned back
Goals of marketing at this stage include;
 Get publicity
 Explain product benefits
 Persuade customers to buy
1. Introduction
 A good example is in-line skates
 Before 1984, few people knew about in-line
skates
 Then the Rollerblade Company began marketing
in-line skating as a new and cool sport
 To gain customer notice and get customers to try
the new skates, free Rollerblade in-line skates
were given to the rental shops along trendy
Venice Beach in California
 What products do you believe are in the
introduction stage today?
2. Growth
 It takes a while for a new product to "catch on“
 Some products catch on quickly, others take
more time, and some products never get off
the ground
 The __________
Growth stage of a product occurs
when sales and profits rise rapidly
Goals of marketing at this stage include;
 Distinguish their brand from the
competition
 Build brand loyalty
2. Growth
 As the product becomes more successful, competitors
enter the market, and now there are many companies
competing for customers
 At this stage, marketers may add new features and
benefits to make their product stand out from the rest
 In the life cycle of a product category, one producer
usually takes the lead in introducing, marketing, and
selling the new product
 For the in-line skate category, that leader was Rollerblade. Once
Rollerblade made in-line skates popular, competitors started
entering the market, and now there are several competitors
 What products do you believe are in the growth stage
today?
3. Maturity
 A product or product category reaches the
___________
Maturity stage when sales start to level
off
Goals of marketing at this stage include;
 Continue to distinguish their brand
from others and build brand loyalty
 Improve the product
 Find new ways to keep the product
fresh and exciting
 Find new markets for your product
3. Maturity
 An example of a product that
found a new way to keep it
fresh and exciting is …
Old El Paso Tacos
 An example of a product that
found new markets to enter is
…
Arm & Hammer Baking Soda
3. Maturity
Why do sales stop rising at the maturity stage?
 Because the market is ______________
Saturated
 A saturated market is one in which everyone who
needs, wants, and can afford the product has already
bought it
 No more people will buy in a saturated market unless their
current product wears out, or new customers are born and enter
the market
 In the in-line skate category, once all the people who want to
skate have bought their first skates, they do not need new ones
for quite a while
 What products do you believe are in the maturity stage
today?
4. Decline
 A product or product category reaches the
___________
Decline stage when sales begin to fall
 Decline often occurs when a new technology begins
to grow
 E.g. the product category of music CDs started
declining when the MP3 player technology started
growing
Goals of marketing at this stage include;
 Develop new marketing strategies to boost sales
OR
 Discontinue the product to prevent financial
losses
4. Decline
 Deciding whether a product is at the end of its life
cycle can be particularly tricky
Why do products decline?
 New technology makes the product obsolete
 Fashions change
 Trends change
 Non-product related factor
 A decline in sales may not indicate that the product is in the
declining stage of its life cycle
 E.g. if there is a recession in the economy, car sales go down.
However, that does not mean that cars are at the end of their
life cycle
Crocs Article
4. Decline
 When a product category starts declining,
marketers have to decide what to do about it
They can …
 Develop marketing strategies to boost sales
OR
 They can discontinue the product
 Some marketers specialize in selling products
in the decline stage. They …
 Buy large quantities at very low prices
 Sell them at low prices, but still make a profit
• E.g. XS Cargo, KW Surplus, K & K Liquidation, etc.
4. Decline
 Knowing the life cycle stage of the product and
product category helps marketers develop effective
marketing strategies
 Often, different markets are targeted at different
stages of the life cycle
 Different marketing mixes work better at different
stages of a product or product category's life cycle
For example,
High
 During introduction prices are often ________
Lower
 During maturity, the price is _________
 During decline, the price is often ___________
Lowest
Day 3 Assigned Work
Students please complete the following;
 K & U Questions #14, 15, 16 & 17 on page
153
 Application Questions #3 & 5 on page 154
***Save As Ch 10 Day 3 in your Unit 3 folder***