SUMMARY
The ability of the organization to consistently produce new products and effectively manage existing products looms as one of the most important and difficult tasks faced by the company. This chapter provides an overview of the components that constitute a product, and the product planning process.
The process begins with the task of defining the product. In order to provide an accurate por-
trayal of the product, it is important to consider the perspective of the consumer, the manufacturer, and the various publics. All three perspec tives must be understood and satisfied . In addition , the three components of the product are discussed. The core product identifies what the consumer expects when purchasi ng the product. The tangible product is reflected in its quality level,
brand name,
styling , and packaging. The
product is reflected by the services supporting the core/tan-
gible product. The promised product
what the product delivers in the long term.
There are also several classification schemes that are useful in improving our understanding
of the product into three categories: convenience, shopping , and specialty. A convenience good is one th at requires a minimum amount of effOlt on the part of the consumer. In contrast consumers
to be able to compare products categorized as
good s. Specialty goods are so uniqu e, at least
from the perspective of the consumer, that they will go to great lengths to seek ou t and purchase them.
Another relevant classification
has been applied to business goods. Tlu'ee characteris -
tic s of business products are: (1) demand is derived from pLlfchase of another product, (2)
Lends to be price-inelastic. and (3) tendency toward pure competition . Business products are classified as extractive products and manufactured products.
Goods products versus service products is the final categurization. Although there is still con-
troversy about the validity of this separation, we contend that the differences justify adjustments in the marketing strategy for service products. Services are intangible , require simultaneous production and consumption, cannot be easily standardized, and require high consumer invol vement.
This chapter continues
a discussion of the product planning process. Three elements were
delineated: (1) the determination of product objective, (2) the identification and resolution of factors that have an impact on the product,
(3) the development of programs appropriate for that par-
ticular product.
of product objectives, as well as a disc ussion of the importance of prod-
uct objectives, are provided. The third element of program development provides the basis for the two chapters that follow. The continuing development of successful new product looms as the most important fac tor in the survival of the firm. This chapter
the concept of "new" product as
well as the process of actually producing a new product.
It is noted that what consti tutes a new product mu st be appraised from both the consumer's
point of view as well as that of the manufacturer. In the forme r case, newness is measured in respect to : (I) degree of consumption modification and (2) the extent of new
experience. The firm defines
product in terms of: (1) changes in the marketing
(2) modifications, (3) differentiation, and
(4) diversification.
New products can be acquired from several internal and external SOlu ces. The firm can employ
basic research, applied research, and development to develop new products. Or they can use the ex ternal route: mergers and acquisitions, licenses and patents, and joint ventures.
MARKETER' S VOCABULARY
Product
Anything, either tangible or intangible, offered by the firm as a solution to the needs and
wants of the consumer, that is profitable or potentially profitable and meets the requirements of the various publics governing or influencing society.
Consumer goods
Products purchased for personal consumption with no intention of
to
others.
Industrial goods
Products purchased by an individual
organization in order to modify the
product or distribute it for a profit.
CASE APPLICATION
Packaging
Provides protection, containment, communication, and utility for the product.
Product lifecy cle
A product planning tool that parallels the stages of the human lifecycle.
Brand
Identifies thC product and distinguishes it from competitors.
Position A strategic management decision that determines the place a product should occupy in a given market.
DISCUSSION QUESTIONS
1. What overriding objectives should be kept in mind when designing a product strategy?
2. How do the strategies of market extension and market segmentation differ?
3. Identify the steps a product manager should take in deciding how to position a product.
4. In what
of market situation will a strategy of product differentiation be most effective?
5. What are the four product mix strategies disc ussed in the chapter? Name three reasons why a company might decide to alter its product mix.
6. What factors would impact a marketing manager's decision to engage in a temporary or permanent price change for a mature produ ct?
7. How would you define the term "product" ? Differentiate between the points of view of the manufacturer and the customer.
8. Distinguish between convenience goods , shopping goods. and specialty goods. Can you think of examples that belong in
category, other than those discussed in the chapter?
9. Compare and contrast the consumer's view and the firm 's view of a new product.
10. Describe the steps in the new product development process. Are all these steps necessary?
PROJECT
Identify a product that you feel is in the maturity or decline stage. Determine the characteristics of this product in light of the discussion throughout
chapter. Write a 3-5 page analysis.
CASE APPLICATION
HERSHEY CHOCOLATE MILK
Hershey Foods Corp. is making an unusual move in using national TV advertising for its chocolate milk, a product that historically hasn't received much ad support. The national TV commercial, which first aired in June 1983, was shot in 12 weeks in London by Clearwater Productions. Doyle Dane
Bernbach in New York develuped the commercial, which has been shown nationally on a children's
and in the early fringe time period.
"The commercial 's creative, it's aggressive.
breaks one cardinal rule by not mentioning this
new product until 75% into the commercial. But the commercial works. We think its unique," says Bob Jeffery,
VP account supervisor. He admits that the Hershey packaging also has had an
tant consumer impact. "The carton practically screams chocolaie."
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