Product is the first element of the marketing mix, and developing a product strategy requires coordinated decisions on product mixes, product lines, brands and packaging and labelling. In planning its market offering, marketers need to think through various levels of the product: the core benefit, the basic product, the expected product, the augmented product and the potential product, which encompasses all the augmentations and transformations the product might ultimately undergo.
Related: Marketing Mix (4P’s and 7P’s)
A product is a good, service or an idea with both tangible and intangible attributes that collectively create value for a buyer or user.
Tangible attributes can be assessed in physical terms such as weight dimensions, or materials used. It refers to an item’s ability to be touched and whether it can be stored – e.g. soap.
Intangible attributes cannot be touched or stored. These include, for example, the status associated with product ownership, a manufacturer’s service commitment or the brand’s overall reputation, services – e.g. pensions
Some products have intangible components – Computers sold with warranties and cars sold with finance. These intangible aspects often called product intangibles can help with differentiation. (Baines, Fill and Rosengren, 2017)
What is Product Proposition?
“Anything that can be offered for use and consumption, in exchange for money or some form of other value, is referred to as a proposition or offering. We occasionally use the term product as well, although this has goods-centric connotations” (Baines, Fill and Rosengren, 2017).
The term ‘proposition’ refers to the tangible and intangible attributes related not just to physical goods but also services, ideas, people, places, experiences and even a mix of these various elements.
Spectrum of product combinations:
- Education, Entertainment, Hairdressing
- Financial Services, Healthcare, Theme Parks
- Computer Hardware, 3D Televisions, Fast Food retailers
- Toiletries, Frozen Foods, Fruit
Three Levels of a Product
Core Product Benefits: Functional Features, Performance, Image, Perceived Value, Technology.
The core proposition – refers to the real core benefit or service. This may be a functional benefit in terms of what the product will do, or it may be an emotional benefit in terms of how the product or service makes people feel.
Product Attributes: Quality, Brand Name, Labelling, Packaging, Design, Price, Country of Origin, Staff Behaviour, Size and Colour Variations.
The embodied proposition – consists of the physical good or service that provides an expected benefit. It consists of many factors, for example the features and capabilities, its durability, design, packaging and brand name.
Support Services: Delivery, Installation, After sales services, Guarantee, Spare parts.
The augmented proposition – consists of the embodied product plus all those other factors that are necessary to support the purchase and any post-purchase activities. For example, credit and finance, training, delivery, installation, guarantees and the overall perception of customer service.
“Each level adds more customer value” (Kotter and Armstrong, 2018)
“When the three product levels are brought together it is hoped that they will provide customers with a reason to buy and keep buying” (Baines, Fill and Rosengren, 2017).
Types of Products (Consumer, Business)
Types of Consumer Products
Durable goods – reflect a purchaser’s high level of involvement in the purchase decision.
Non-durable goods – reflect low levels of involvement by buyers who are not concerned which particular product they buy. E.g. food and grocery items.
- Convenience Products – non-durable goods or services bought because the consumer does not want to put very much effort.
- Shopping Products – not bought frequently so consumers do not always have sufficient up-to-date information in order to make a buying decision. The purchase of furniture, electrical appliances and mobile phones all require some search for information, if only to find out about the latest features.
- Speciality Products – represent high risk, are very expensive and are bought infrequently, often only once.
- Unsought Products – a group of products which people do not normally anticipate buying or indeed want to buy. e.g. water meters.
Types of Business Products
- Equipment Goods – concern the everyday operations of the organization; capital equipment goods and accessory equipment goods.
- Raw Materials – the basic materials that are used in order to produce finished goods.
- Semi-Finished Goods – raw materials that have been converted into a temporary state.
- Maintenance, Repair and Operating (MRO) – are products, other than raw materials, such as nuts and bolts, light bulbs and cleaning supplies, are used to ensure that the organization is able to continue functioning.
- Component Parts – are finished, complete parts bought from other organizations that are then incorporated directly into the finished product.
- Business Services – intangible services used to enhance the operational aspects of the organizations.
Related: Understanding the Product Life Cycle
A service is any act or performance one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.
Dimensions of a Product Mix
Product refers to the range of products, services, consulting, or the experiences that a company offers to its target market. Also known as the product portfolio, product mix consists of various product lines.
Let’s take a look at the various dimensions of a product mix.
Width: It indicates the number of product lines that a firm has.
For example: Product lines of Kellogg includes Cereals, Cookies, Pastries, other breakfast snacks, organic goods. Product lines of BMW includes Cars, SUVs, Bikes, Buses. Colgate primarily makes toothpastes and toothbrushes.
Length: It indicates the total number of products that a firm has across all product lines (across its product mix).
Depth: It indicates the number of variations that exists for a product (based on distinguishing characteristic such as color, flavor, size, and more).
For example, if Colgate sells three toothpaste flavors in three sizes, the depth of that that particular line will be nine.
Consistency: It indicates how closely the product lines are related, considering production and distribution of the products. If the consistent of the product mix is high, it is likely to have similar requirements for production and can also be sold in similar ways.
A firm can increase business by taking strategic decisions related to these four product mix elements.
It can lengthen or deepen the products to offer more variety and to optimize production within the firm.
A firm can also take advantage of its reputation and offer new product lines.
It can make the product lines more consistent in case it wants to improve upon its reputation within one segment, or it can make it less consistent in case it intends to diversify.
Enhancing the Products & Services
After years of insisting that foreign buyers adapt to the taste of French wine, wine growers in Bordeaux abandoned some of their traditions and started to develop wine that the global consumer preferred- light and fruity. This strategy reversed a five year decline in sales, and wine exports from the region increased significantly in a single year.
Developing New Product Propositions
In order to create a stream of new propositions, organizations have three main options:
- Buy in finished products from other suppliers, perhaps from other parts of the world, or, licence the use of other products for specific periods of time.
- Develop products through collaboration with suppliers or even competitors.
- Develop new products internally, often through Research and Development departments (R&D) or through adapting current products through minor design and engineering changes.
Related: New Product Development
Developing New Service Propositions
- established services within competitive markets,
- incremental service innovation, targeting value-added propositions, and
- radical service innovation, which aims to produce completely novel offerings.
Enhancing Products Through Service Development
- Stage 1 – Services used as after sales product support
- Stage 2 – Aftersales services used to complement the core product
- Stage 3 – Services and Products are used together to differentiate an offering and solve clients’ lifecycle problems
- Stage 4 – Services become a fully integrated element in the overall offering. Referred to as ‘Servitization’
Source: Shelton (2009)
Product Standardization vs Adaptation: Benefits
Products that offer high core product benefits and require less support services are better suited to product standardization
There are some other factors that make prompt a firm to adapt its products to the local market.
Benefits of Product Standardization
- Cost-efficiency: Economies of scale (Lower costs of production & raw materials). Elimination of cost of adaptation (e.g., market research, design, R&D)
- Time-efficiency – Faster global product rollouts
- Stronger global brand image
- Higher accessibility of the same products across markets
Benefits of Product Adaptation
- Access to otherwise closed markets
- Higher performance & greater sales: Adaptation to different climates, infrastructures etc. Better fit for different use conditions & cultural preferences
- Potential to lower product costs: Use of local materials. Elimination of unnecessary product features.
Product Decisions in Global Marketing
Design & Aesthetics: A global product design help businesses and consumers in many ways.
Packaging offers protection and has communicative value that provide consumers with a basis for making purchase decisions.
Packaging can engage the senses, make emotional connection, and enhance a consumer’s brand experience (experiential packaging).
Eco-packing is a key issue today and package designers must address environmental issues such as recycling, biodegradability, and sustainable forestry.
Packaging Standardization & Adaptation
Packaging adaptation can affect the size, shape, material, colour and text (label). The promotional effect is of great importance for consumer goods and has led some companies to attempt to standardize their packaging in colour and layout.
Considerations of the physical storage, distribution and display of the products across the globe could also affect packaging decisions.
- Aside from the texts on the label, Procter & Gamble’s Tide are sold in the same package across most of the markets
- The largely standardized Coca Cola bottles could show some variance across countries. In the US, where people usually have large fridges, Coke introduced a a Fridge Pack.
Labelling for Global Markets
Labels provide consumers with various types of product information (ingredients, calories, serving instructions, country of origin etc.). The content of product labelling often needs to be adapted due to specific country regulations.
- Mandatory health warnings on tobacco products required in most countries
- The EU now requires mandatory labelling for some foods containing genetically modified ingredients.
- Some countries have a “country of origin” labelling law. In the US, the law requires supermarkets to display information that identifies the country that meat came from.
- In 2006 McDonald’s began posting nutrition information on all food packaging and wrappers in approximately 20.000 restaurants in key markets worldwide as a response to pressure groups.
Cloud and Digital Platforms for Designing and Adapting Packaging
Global companies increasingly use collaborative cloud-based platforms to adapt their packaging across markets.
These platforms “integrates copy management and artwork creation and enables the fast creation of new packaging designs by centrally managing the process across organizations and suppliers.
The platforms also integrate regulatory control mechanisms for each region that check packaging, labels, and ingredients to flag potential violations.
Warranties for Global Markets
In global marketing, warranties can be used as a competitive tool of positioning. Local market conditions often dictate a differentiated approach to issuing warranties.
In the US many computer are sold with a 90 day warranty, whereas 12 months are more typical in Europe. With AppleCare +, damages to the product can be repaired for a much lower fee for the duration of the coverage.
Baines, P., Fill, C. and Rosengren, S., 2017. Marketing. Oxford University Press.
Kotter, P. and Armstrong, G., 2010. Principles of marketing: Global edition.
Shelton, R., 2009. Integrating product and service innovation. Research-Technology Management, 52(3), pp.38-44.
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