Chapter 2
The product in theory
and practice
-Krishna Unadkat
-MEFGI
Marketing is about the creation and
maintenance of mutually satisfying
exchange relationships.
(Baker, 1973)
The ‘market’ is the place where Adam Smith’s
‘invisible hand’ achieves an
equilibrium
between demand and supply.
The amount of a particular economic good or
service that a consumer or group of consumers
will want to purchase at a given price.
DEMAND

Types of Demand:
 Effective
 Potential
 Latent

Demand Influencers
- Demographics
- Buyer Behavior
- Availability
Melvin Copeland’s (1923) classification
of goods:
• Convenience
• Shopping
• Specialty
Copeland’s classification of goods
Price
Specialty
Differentiated
Convenience
Quantity
Convenience goods are generally inexpensive,
non-durable, frequently purchased and used
goods. They are often non-durable ones.
Shopping Goods:
Shopping is the activity of examination and selection of the goods
or services from retailers with the intent to purchase at that time.
The selection & purchasing is a result of a comparison of products
based upon their suitability, quality, price, style and so on..
Some common features:
•Generally durable
•Generally high price in contrast with convenience goods.
•Comparison is main factor in making purchase decisions.
•Purchase is generally pre planned
•Retailers have very important role to play.
‘Specialty Goods:
The specialty goods incur special purchasing efforts
and the items posses some special features.
The buyers are willing to spend a lot of time & money
to buy them in contrast with the shopping goods. The
rare arts collections, antiques, prestige brands, style
goods, automobiles etc. are the examples
.
Different categories of goods call for different
marketing strategies:
Convenience = Undifferentiated (Cost leadership)
Shopping = Differentiated
Specialty = Concentrated (Focus)
Products and Services
In marketing, a product is anything that can be
offered to a market that might satisfy a want or
need. In retailing, products are called
merchandise.
Services are economic activities offered by one
party to another, most commonly employing timebased performances to bring about desired
results. The action of serving, helping or
benefiting of another for economic exchange
‘Pure’ services are seen as having a number of
characteristics that distinguish them from
physical products, namely:
• Intangibility
• Inseparability
• Variability
• Perishability
• Impossibility of ownership
Marketing for Products and
Services

School 1 : Services and Products are two
sides of the same coin

School 2 : Significant differences for a
different approach

School 3 : Basic principles apply to both
but distinctive nature of services call for
an extended marketing mix
BRANDING

Irrespective of whether we are dealing with a
physical product or an intangible service, for a
customer to be able to discriminate between the
offerings of competing suppliers they must be able
to discriminate between them.
‘A successful brand is a name , symbol, design,
or some combination which identifies the “product”
or a particular organization as having a sustainable
differential advantage’.
[Peter Doyle]
Key points in Doyle’s definition:





Successful brands are positive (and vice versa)
Brands can take many forms – not just names
The ‘product’ may just as easily be a service, an
organization, or an aspiration
Brands are owned by organizations/people
Successful brands confer a sustainable differential
advantage – an advantage that is not easily copied and
so represents a barrier to entry in the market segment in
which the brand competes.
Successful brands have 4 key attributes:
1.
2.
3.
Quality
Superior service
First to market :
◦
◦
◦
◦
◦
4.
new technology
new positioning concept
new distribution channel
new market segment
exploitation of a new gap
Differentiation
Advantages of Branding
•
•
•
•
Brand-based price premiums allow for
higher margins
Strong brands lend immediate credibility
to new product introductions
Strong brands allow for greater
shareholder and stakeholder value
Strong brands embody a clear, valued, and
sustainable point of differentiation
•
Loyalty drives repeat business
•
Strong brands mandate clarity in internal focus
and brand execution
•
The more loyal the customer base and the
stronger the brand, the more likely customers
will be forgiving if a company makes a mistake
•
Brand strength is a lever for attracting the best
employees and keeping satisfied employees 70
per cent of customers use a brand to guide a
purchase
A brand name is:
• A form of identification or badge of origin
• A promise of a certain level of consistency in
performance
• Reassurance as to the authenticity and performance of
the product
• An indicator of the essential properties or attributes of
the product.
As a result buyers can develop attitudes towards a
brand’s performance and quality even when it is
difficult to assess this objectively.
Classifying New Products
( Rogers)
Relative Advantage
 Compatibility
 Complexity
 Divisibility
 Communicability

Booz Allen and Hamilton (1982)
identified six kinds of new products:
New to the world
New product lines
Additions to existing product lines
Improvements and revisions to existing
products
5. Repositionings
6. Cost reductions.
1.
2.
3.
4.
Buygrid Analytic Framework
Buy PHASES
 Buy CLASSES

Classes:
1. New Task
2. Modified Rebuy
3. Straight Rebuy

The Buygrid framework
Buy classes
Buy phases
1.
Anticipation or recognition of a problem
(need) and a general solution
2.
Determination of characteristics and
quantity of needed items
3.
Description of characteristics and quantity
of needed items
4.
Search for and qualification of potential
sources
5.
Acquisition and analysis of proposals
6.
Evaluation of proposals and selection
of supplier(s)
7.
Selection of an order routine
8.
Performance feedback and evaluation
New
task
Modified
rebuy
Straight
rebuy