What is Product? Layers, Classification, Product Mix Decisions

What is Product?

A product has different layers like an onion and each of the layers contributes to the make of the product. Every marketer should analyse the product at different levels.

These levels are discussed below:

Core Layer

The core layer of the product explains the reasons for which the customer is making the purchase. This layer explains the reason ‘why’ of buying the product.

Example: The convenience of communicating in less duration and cost.

Basic Product Layer

In the second layer, the consumer looks at the basic utilities, like physical features, and tangible elements of the product.

Example: A mobile phone contains features for incoming, and outgoing calls and also for messaging and FM radio.

Expected Product Layer

The expected layer is a set of attributes and conditions buyers normally expect out of the product. Whereas the basic product is the ‘given thing’ in the product, at the expected level, consumers use their anticipations and utility expectations for defining the product.

Example: A consumer expects a mobile phone to have a camera, design, internet connectivity, instant messaging features, etc.

Augmented Product Layer

The augmented part of the product is the associated services and cues, which help the product to deliver beyond the expectation level of the consumer. Brand positioning and competition start at the farm level when all the products in a market look similar. In developing nations, competition originates at the level of the expected product.

Example: A low-budget mobile phone may also have a feature of front camera and wireless FM for listeners, also the retailer may provide a free Bluetooth device with the purchase of the handset.

Potential Product Layer

The last layer is the potential layer of the product where all the possible augmentations and transformations the offer may undergo in the future. Here the marketer is always on a constant search for new methods and processes to differentiate the offer on the basis of product features and services that will satisfy the customer and create the desired differentiation.

The levels of the products are used to explain the concept of value hierarchy in which the product manager can plan the level at which to propose the basic product and the level at which differentiation is to be made.

Example: If a mobile phone comes along with features that are beyond the imagination of consumers. For say, a mobile have had a screen on both sides or a mobile phone provides a 3D movie experience with its superlative imaging quality.

Classification of Products

The products are classified as follows:

Consumer Products

Consumer goods can be classified on the basis of their shopping habits. They are grouped as convenience goods, shopping goods, specialty goods, and unsought goods. Consumer goods are targeted for consumption by either individuals or family members.

Convenience Goods

These are goods frequently purchased by consumers. They often buy them in frequent consumption situations and they are purchased immediately and with minimum effort. Examples include toiletries, soaps, cigarettes, and newspapers.

These goods can be further classified as follows:

  • Staple Goods: Consumer purchases on regular basis. There is a high level of routinized response behavior for this kind of product. Toothpaste and soaps fall under this category.

  • Impulse Goods: Consumer purchases without any planning or search effort. Purchases of a magazine or a chocolate candy are examples of situations in which customers buy on impulse.

  • Emergency Goods: Consumer purchases on urgent need. There is no previous decision to buy them but the consumer is forced to buy due to the emerging situation. These include the purchase of umbrellas, antiseptic creams like Burnol, or knives to cut down trees during the rainy season.

Shopping Goods

These are goods that the customer purchases by undergoing a comparative process of selection and purchase on such bases as price, psychological fitment, suitability, style, and quality. Examples include furniture, electrical appliances, home furnishings, and clothing.

Shopping goods can be classified as follows:

  • Homogeneous Shopping Goods are goods that are similar in quantity but differ in price levels, justifying a pricing comparison by the buyer.

  • Heterogeneous Shopping Goods are goods, which differ in product features, and services and these differences, are more important than price for a decision.

Specialty Goods

These are goods with unique characteristics or brand identification for which the buyers need to make a special purchasing effort. Examples include music systems, televisions, cars, and men’s clothing. There is hardly any comparison in specialty goods as each brand is unique and different from others. The buyer is ready to spend more time and effort while making a purchase decision for this kind of good.

Unsought Goods

These are goods the consumer does not know about or does not normally think of buying. These goods need advertising and more personal selling efforts for making a sale. These include life insurance products, coffins, and fire alarms.

Business Products

Many of the goods come out of a firm to enter another firm’s production process so that the final goods can be made ready for consumption by individual or family consumers. Many of these products go to the production process as raw materials and spare parts.

Some of them also enter as capital items for augmenting the finished goods and the rest as consumables or supplies. These are ably supported by services targeted toward business-class customers.

Following is the classification of industrial goods applicable for the purpose of product management.

Materials and Parts

These are goods that enter the manufacturer’s product completely. They are of two types namely raw materials and manufactured materials and component parts. Raw materials can be farm products like rice, maize, cotton, and starch or natural products like fish, petroleum, gas, iron, and aluminum ore.

Farm products are renewable as they involve agricultural production. Natural products are very often limited and often available in great bulk and at low unit value. There are a few but large producers and marketers supplying natural products. Long-term supply contracts are a common phenomenon in these categories, as the industry needs an uninterrupted supply of products and services for running its business process.

Manufactured materials can be classified as component materials like iron, steel, and zinc and component parts like motors, and printed integrated circuits. The component materials are further fabricated like alumina to aluminum, pig iron to steel, and cloth from yarn. Components enter the final product without being changed or modified. In this case price, quality, and service are important factors when making a decision.

Capital Items

These are long-lasting goods that facilitate developing or managing the finished product. They include two groups: installations and equipment. Examples of installation include buildings, shades, offices and shop floors, and heavy equipment like earthmovers, trucks, drillers, servers, and mainframe computers.

Installations are major purchases for the organization. Equipment includes hand tools and office equipment like personal computers, and laptops. These equipment are not permanent and they need to be replenished at different periods of time.

Supplies and Business Services

These are short-term goods and services that facilitate managing or developing the finished product supplies. They can be of two kinds namely maintenance and repair items and operating supplies. Maintenance supplies include painting, nailing, and operating supplies including writing papers, consumables for computers, lubricants, and coal.

Business services can be classified as maintenance services like copier repair, and window and glass cleaning and business advisory services include consultancy, advertising, and legal services.

Product Mix Decisions

Most companies, whether large or small, whether in manufacturing or retailing generally handle a multitude of products and product varieties. In course of time, the companies may expand new lines or contract the old lines after the existing product or develop new uses for the existing products.

These activities involve managerial strategies and policy-making with respect to the company’s line of products and services. A product mix is also called product assortment, which is the set of all products and items a particular seller offers for sale.

It consists of various product lines. Godrej has multiple product lines namely soaps, office equipment, edible oil, computers, and other products through different manufacturing processes and targeted towards different markets.

The proliferation of products within the company means that product policy decisions are made at three different levels of product aggregation, viz. product item, product line, and product mix.

  • Product Item: It is a specific version of a product that has a separate designation in the seller’s list.

    Example: Chicken Maggi Noodles is one product of Maggi’s offerings.

  • Product Lines: A group of products that are closely related either because they satisfy a class of need, or used together, or sold to the same customer group, marketed through the same types of outlets, fall within given price ranges, or are considered a unit because of marketing, technical, or end-use considerations.

    In other words, a broad group of products, which are meant for essentially similar uses and possess reasonably similar physical characteristics, constitute a product line.

    Example: The product line of Maggi includes sauces, soups, noodles, cooking aids, and pasta.

  • Product Mix: Products offered for sale by a firm or a business unit. In other words, the product mix is the full list of all products offered for sale by a company.

    Example: Product Mix of all the products offered under all its product lines.
  • Product Length: this concept refers to the number of products in a particular product line.

    In Figure, we can see that Maggi is having longest product line of Maggi noodles out of all the other given product lines.

  • Product Width: It refers to the number of product lines that a company offers.

    We can see that Maggi offers five product lines hence its product width is good.

  • Product Depth: Depth is the different varieties of products in the product line.

    Maggi is offering depth in its Noodles category by offering cuppa noodles, atta noodles and 2 minutes noodles.

Organizational Goals and Product Mix

The efficient fulfillment of the marketer’s goal to supply goods and services to consumers for the satisfaction of their needs can be possible if due attention is given to three issues that govern the product mix, namely sales growth, sales stability, and profits.

Sales Growth can be achieved either by increasing its share in existing markets or by finding new markets. Following are the four ways in which product mix can be adjusted to achieve organizational goals.

  • Market Penetration, under which market share is increased by expanding sales of present products in existing uses;

  • Market Development, under which markets are expanded by creating new uses of present products;

  • Product Development, where market share is increased by developing new products to satisfy existing needs;

  • Diversification, where the market is expanded by developing new products to satisfy new consumer needs.

Sales Stability

Stable sales allow for more efficient planning in all phases of production and distribution. It is also desirable to maintain a proper balance in total sales and product mix so that a market share-losing product can be counteracted by another picking up market share. Sales stability is also possible by making an entry into a new market.

Profits are determined by the components of the product mix. Some items are usually more profitable than others. Low-profit items may be performing a valuable part in helping to sell the company’s more profitable products, and they may also prove to insure against an unforeseen failure in profitable products.

Theoretically speaking, though one should keep highly profitable products only, one needs to understand the cross-linking between products within a product mix.

A product system for a farm is a group of diverse but related items that function in a compatible manner. A product mix constitutes the set of all products and services offered by a marketer. The constituents of a typical product mix include dimensions of width, depth and length, and consistency.

By ‘width of the product mix’ we mean the number of different product lines found within the company. In other words, the number of product lines carried by the company measures breadth. For example, Unilever produces food items, personal care items, and Home care products and all the categories have various products in them. This list of the number of product lines can be called width.

The ‘depth of the product mix’ refers to the average number of items offered by the company within each product line. In other words, the depth is measured by an assortment of sizes, colors, models, prices, and quality offered within each product line. For example, HLL produces ten variants of shampoo in the shampoo line. So depth is ten for the company in the shampoo line.

The length refers to the total number of items produced by the company in all the product lines. This is the sum total of the number of items in each product line.

The ‘consistency of product mix’ refers to how closely related are the various product lines in terms of consumer behavior, production requirements, channels of distribution, or some other way. For example, the products produced by the General Electric Company have an overall consistency in that most products involve electricity in one way or the other.

The four dimensions of width, depth, length, and consistency have strong marketing implications. As the company increases the width of the product mix, the company plans to capitalize on its good reputation and skills in present markets by increasing its presence in other product categories.

As the company increases the depth of its product mix, the company plans to entice the patronage of buyers of widely differing tastes and needs.

As the company increases the consistency of its product mix, the company hopes to acquire an unparalleled reputation in a particular area of endeavor. As the company increases its length in different product lines, it plans to enter deeper into each of the product market segments it serves.

The dimensions of the product mix and the ways in which they relate to each other are important for the marketing manager. Changing the product item involves the issues of whether to modify, add or drop product items.

Changing the width of the product mix involves altering policy at the product-line level, whether to deepen or shorten an existing product line. Changing the product mix involves issues as to what product markets the marketer should enter or leave and how to handle communications for the various product lines or items.

  • Tapan K Panda, Marketing Management, Excel Books.

  • Philip Kotler, Marketing Management, Pearson, 2007.

  • V S Ramaswami and S Namakumari, Marketing Management, Macmillan, 2003.

  • http://www.marketing.org.au/images/cimages/prodbrand.pdf

  • http://mediafiles.pragmaticmarketing.com/strategic-role-of-product-management/strategic_role_product_management.pdf

Leave a Reply