The 4 Ps – Product (1/2)

The 4 Ps – Product (1/2)

In this lesson, you’re expected to:
– learn about the different product levels and how customers perceive a product
– understand the various stages that a product goes though in its life cycle

The traditional term product is a confusing one in today’s highly competitive global markets. Many people think a product is a single, tangible offering – but it is more than that.

Broadly, a product is anything that can be offered to a market to satisfy a want or need and consists of a set of attributes, including physical goods, services, experiences, events, persons, places and organizations.

In current buyers’ markets, where customers have a wide choice of suppliers, it is usually insufficient to provide tangible goods alone. As most markets are fiercely competitive, firms have to surround their core product with a set of carefully selected additional tangible (e.g. attractive design, packaging) and intangible attributes or benefits (e.g. efficient service). This mix of benefits makes up the desirable customer offering.

One helpful way of thinking about a product as a marketer is to split the product into levels. By analyzing the product at different levels, a marketer can have a better understanding of the product’s competition, how the design meets the needs of the market, and how it can be supported and clearly differentiated in the marketplace.

In planning its customer offering, the marketer needs to address three basic levels. Each level adds more customer-perceived value that results in the appropriate market offering. The three levels are:

– Core Product (need or benefit)
– Actual Product 

– Augmented Product

The most common model in introductory marketing textbooks shows the product as having three levels while more advanced marketing books discuss the model with five levels (including expected product and potential product). 

 

(1)  Core Product

The first level (at the center of the model) is the core need or benefit that the product is trying to meet or deliver. The best way to think about this is from a consumer’s perspective – why is the customer buying this product solution?

Note that products to consumers are simply solutions to problems or needs that they are facing. Marketers must see themselves as benefit providers.

Let’s use a simple example: why does a consumer purchase breakfast cereal? Because they are hungry (have a need) in the morning.

(2) Actual Product

The actual product is the second product level and is quite simple to understand. The actual product is that the overall product design and the product features. If you were to describe a product in detail, then you would be describing its product features – which is the actual product (set of product features).

As an example, let’s consider breakfast cereal again. When describing the cereal you would identify the following product features: shape, taste, texture, size, color, aroma, crunchiness, ingredients, packaging, name, brand and so on.

A key goal of a marketer is to ensure that the product design meets the core need (or required set of benefits) for the consumer. This means that there should be a relationship between the first product level (core need) and the second product level (a set of product features designed to meet that core need).

(3) Augmented Product

Augment means “to add to” or “to make greater”. Thus, the third level in the product level model is increasing the offering and set of benefits to the consumer. We have already designed the product’s features (as part of level two), so product augmentation is adding to the product’s offering OUTSIDE of the product itself.

A good way to look at product augmentation is by using an example. Again we will go back to our breakfast cereal example. We could support (add extra value and benefits) the overall product offering of breakfast cereals by:
– Having recipe ideas on the packaging
– Having a QR code on the packaging (with a link to a site or offer)
– Having a code to access free online games
– Providing a discount coupon for a future purchase

[Optional] For more information about the model with five product levels, visit the link below:
http://www.marketingstudyguide.com/five-product-levels-in-marketing/
[Optional] Watch this 3-minute video for a brief summary of the three levels of a product.
The product life cycle has four clearly defined stages, each with its own characteristics that mean different things for businesses that are trying to manage the life cycle of their particular products.
Enlarged version: http://bit.ly/2nJx97i
(1) Introduction Stage

This stage of the cycle could be the most expensive for a company launching a new product. The size of the market for the product is small, which means sales are low, although they will be increasing.

On the other hand, the cost of things like research and development, consumer testing, and marketing needed to launch the product can be very high, especially if it’s a competitive sector.

(2) Growth Stage

The growth stage is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this stage.

(3) Maturity Stage

During the maturity stage, the product is established and the aim for the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

(4) Decline Stage

Eventually, the market for a product will start to shrink, and this is what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

The key to successful manufacturing is not just understanding this life cycle, but also proactively managing products throughout their lifetime, applying the appropriate resources and sales and marketing strategies, depending on what stage products are at in the cycle.
Jim Rohn Sứ mệnh khởi nghiệp