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Products and Services Study Guide
What is a product?
A good definition of a product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or a need. Products include more than just goods. A product may include one or a combination of the following: people, places, organizations, ideas, or services. A product can be tangible which means it results in the ownership of something or it may be intangible in that only a service was provided.
What is a service?
Services are intangible in that they don’t result in the ownership of anything. A service is a product, but a product cannot be a service. Services consist of activities that include the following or a combination of the following: activities or benefits that are offered for sale. Services cannot be seen, tasted, felt, or heard before they are bought.
What are the three levels of products and services?
When determining the uniqueness of your product or service, you need to look at it on three levels. The first level is straight forward. What is your core product? In other words, what are the buyers really buying and what am I really selling. It stands at the center of the total product. For example, a buyer of a home security device buys the device. That is the core product, but is that person really buying a home security device or home security. When you are looking at a marketing strategy, you must first look at the core benefits a product or service will provide the consumer. Are there features about your core product that make it unique?
The second level is the actual product. You must build the actual product around a core product. You can’t have an actual product without having a core product. Your actual product can have as many as five characteristics. These five characteristics are quality, features, design, a brand name, and packaging. Often, the actual product will play a larger role in the buying decision of the consumer than the core product.
Quality is known as freedom from defects. It is why some people will pay more to have Eddie Bauer clothing as opposed to other well known clothing retailers who sell their products at a lower price. People will pay more for perceived quality.
Features are known as the “bells and whistles” of a product. A new car purchase is a good example. You buy the car, but you get to select options or features that come with the car. Some people want a core product with lots of features and some people want only the core product.
The design of a product can influence peoples buying decisions. A product that is designed for women may have subtle differences than one that is designed for men. A product may have apparent differences such as a vehicle that is a sports car compared to a vehicle that is a family car.
The brand name may be what people buy as opposed to the core product. A good example of this would be cigarettes. People buy a brand because it elicits a certain stigma even though the price of the brand is more than a lesser brand.
Packaging can have an effect on how the consumer perceives the product. Generic packaging of cereal is a good example. Kids want their parents to purchase cereal that is in the most colorful box. Not something in a black and white box.
The third level is the augmented product. This level must be built around your core and actual product. It would consist of providing additional services and benefits to the consumer. This level is as important as the first two levels. A failure at this level has been known to cost sales of a core product. A good example of this is known as “service after the sale”.
What are the two main classifications of products?
When you develop a marketing strategy for your products and/or services, it may be beneficial to classify your products into consumer products or industrial products. This classification will help you develop a marketing strategy that is based on how consumers make a buying decision.
Consumer products are bought by the final consumer. This is sometimes known as the end-user. Marketers break consumer products down further into four classes. This is based on the buying decision that a consumer will make when purchasing a product. The four classes are convenience, shopping, specialty, and unsought. The class that your product falls into may dictate how you market your product.
Convenience products are generally bought with little planning and low shopping effort. They are low priced and have widespread distribution. The type of marketing that is used to sell these items is usually mass advertising and sales promotions by the producer. An example of convenience products would be bread, cereal, and magazines.
Shopping products are bought less frequently and involve more planning and comparison. They are higher in price than convenience products and have distribution in fewer outlets. Shopping product marketers generally distribute their products through fewer outlets but provide deeper sales support to reseller and customer. Advertising is generally done by the producer and resellers. Examples of shopping products are appliances, furniture, and clothing.
Specialty products are items that are bought with strong brand preference and low price sensitivity. These products are purchased because of the brand and not because of the core product. They are generally high priced and distribution is not widespread. Promotion of these products is carefully targeted to an audience by the producer and reseller. Buyers of these products usually spend more time trying to find the specific product than comparing the cost of the product. Luxury cars and fur coats would be classified as specialty products.
Unsought products are products or services that there is little awareness or interest in. Sometimes the interest may be negative and the marketer is trying to improve the image. Also, a product that has been recently invented would fall into this classification. The price of these
References
Armstrong, G. and Kotler, P. (1997) Marketing An Introduction , Prentice Hall
