Products & services!
Hoorcollege marketing blok 2 lesweek 4
A quick recap!
Core strategy!
Core strategy → marketing mix!
Learning goals!
•  Understand what products & services are and
be aware of the different types of product!
•  Understand the three levels of a product and
why this is an important idea!
•  Understand the key decisions that must be
made when developing a product!
•  Know how to move from idea to product
concept!
•  Be aware of the importance of product
positioning in new product development!
Agenda!
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What is a product/service?!
Three levels of a product!
From idea to concept!
Key product decisions!
Positioning the key product decision?!
Summary!
What is a product/service?!
Definition of a product!
A product is a thing that is offered for use to a
target customer/user with the aim of allowing
them to satisfy needs and wants
-  It helps them achieve goals
-  It helps them solve a “problem”*
* Marketing people use the word problem differently from normal human beings. For them a problems is an
unmet need or want. Some theorize that this is why marketing people are not popular at parties
Q: which of these are products?!
A: they all are…!
The term “product” is used broadly!
Three levels of a product!
A product is more than just its features!
•  When developing products marketers usually
think of products as having three levels!
–  The core (kern) product!
–  The actual (tastbaar / werkelijk) product!
–  The augmented (uitgebreid) product!
Three levels of product - classical!
Core (kern) product!
• The need(s) and/or want(s)
the product satisfies!
• The core benefit required!
• The problem to be solved!
Actual (werkelijk)
product!
• What the buyer purchases!
• The positioning!
• Features (for benefits)!
• Quality!
• Brand!
• Design!
• Packaging!
Augmented (uitgebreid)
product!
• Additional services and
benefits!
• Installation!
• After sales service!
• Support & help!
• Delivery!
• Credit terms!
• Training!
• Manuals!
Why is this important?!
•  Customers buy benefits or solutions to
problems!
–  The Core product focuses on these!
•  A product is more than just its features!
–  The actual product tool helps us define a more
complete product!
•  Actual products today are often quite easy to
copy!
–  The positioning, brand, design and the augmented
product can be used to give us competitive
advantage!
From idea to concept!
The product concept
What’s a product concept? (or fight! fight!
fight!)!
Product concept: from implicit to explicit!
Introduction!
•  This is a suggested (so not the only possible)
format for a product concept!
–  It is based on the three levels of a product!
•  Part 1: The customer / user covers the core
product!
•  Part 2: The product covers the key decisions
to be made for the actual product!
•  Part 3: The extras covers the augmented
product!
The customer / user!
•  Who is the customer and who is the user?!
–  Are the user and the customer the same person?!
–  Create a picture of the customer / user: the market
segmentation and persona help do this!
•  What is the need(s)/want(s) that the product
satisfies!
–  Customers buy things that solve problems and
help them achieve their goals, what are these?!
•  Why your product (differentiation)?!
–  There are possibly many ways to achieve goals,
why would the customer choose your product?!
The product!
•  Product positioning!
–  How is the product
positioned for the
target customer?!
•  Quality!
–  What is the
requirement for
product quality?!
•  Features !
–  Features provide
benefits and benefits
allow users to
achieve their goals!
•  What features
does the product
need to meet the
need(s) that the
product will be
developed to fulfil?!
–  Beware of “feature
bloat”!
•  Brand!
–  What brand will be
used - company or
product?!
•  Design guidelines!
–  Are there any minimum
needs in terms of
design (think about
size, style etc.). Always
leave the designer
room for creativity!
•  Packaging!
–  Does the product need
any special packaging,
or indeed does it need
it at all?!
•  Labelling!
–  What labelling is
required for: legal
requirements, usability,
promotion etc?!
The extras!
•  Installation!
–  Will you offer the
customer installation
help, do you need to?!
•  Service!
–  What level of service
support does the
product need? This will
be affected by your
positioning and the
complexity of the
service!
•  Help!
–  What sort of help do
you offer the
customer? Again this is
more important for
complex products.
Sometimes it might be
just a manual or a
quick start guide, for
other products you
may need online help
or a telephone line.!
•  Manuals!
–  Does the product need
a manual? What type
of manual, user
manual or a full
technical manual?!
•  Training!
–  Could you offer the
customer training?
Does this make sense?
If so, then how do you
do this?!
•  Delivery!
–  Do you deliver the
product?!
•  Credit!
–  Do you offer the
customer credit?!
•  Warranty!
–  How long is the
warranty on the
product?!
Key product decisions!
Positioning: a key product concept
decision!
Not everyone accepts new products at the
same rate!
Source: Rogers, E. M., 1962. Diffusion of Innovation, Free Press
Factors affecting rate of adoption!
•  Relative advantage when compared with
alternatives!
•  Compatibility to consumer’s tastes, needs,
attitudes and existing products!
•  Complexity - the less complex the quicker
adoption!
•  Divisibility (deelbaarheid) - how easy it is to trial
(to reduce purchase risk) e.g. software, FMCG!
•  Communicability - ease of communicating
benefits!
•  Perceived risk - the cost to the consumer (in
money and pride) if they make the wrong
purchase decision!
Source: Gatignon, H. and Robertson, T. S., 1985. ‘A Propositional Inventory for
Diffusion Research’, Journal of Consumer Research, 11 (March), pp. 849-867
Good product positioning helps adoption!
•  Product positioning is an important decision in
the life cycle of a product because it helps
with the product adoption process!
•  Product positioning is about positioning the
products benefits in the mind of the target
customer!
–  Rather like positioning a company, but the focus is
on the benefits of the product!
•  The aim is to overcome some or all of the
factors that affect new product adoption!
Positioning and product positioning!
•  The positioning of a particular product does
not necessarily have to be the same as the
brand or company positioning!
–  It will often be based on the product’s unique
benefits!
•  However, a product positioning must not
conflict with the brand or company positioning!
Levels of positioning!
Positioning new products !
•  Product positioning based on the goals of the
target customer / user and your advantages over
comptitors!
•  The positioning should show how the product
benefits the target customer in ways that are
appropriate to that customer!
•  Ries & Trout’s Number 1 approach is one option!
•  BUT there is another way!
•  The successor approach to product positioning!
–  Your product is the successor (opvolger) to an already
familiar product!
–  This is like Ries & Trout’s 3rd option!
The successor approach to product positioning!
When product positioning goes wrong Or why I
didn’t buy DSoM on MiniDisc!
The trick is to get over problems with adoption!
But is this enough?!
Core strategy!
Core strategy → marketing mix!