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What is a Product?

Anything that possesses utility is described as goods. A product is both what a
seller has to sell and what a buyer has to buy. Thus, any enterprise that has something
to sell, as tangible goods or not, is selling a product. A product is one, which satisfies
the needs of customers.
Definition:

According to Philip Kotler, A product is anything that can be offered to a
market for attention, acquisition, use or consumption that might satisfy a want or need.
It includes physical objects, services, persons, places, organization and ideas.
Features of a product

1. Tangibility:
It should be perceptible by the touch. An item to be called a product
should have a tangibility character-touch, seen or feeling. For instance, car, shirt,
book etc.
2. Intangible Attributes:
The product may be intangible. In the form of services, for instance,
banking insurance services, repairing etc. It is an associated feature.
3. Associated Attributes:
Such attributes may be brand, package, warranty etc.
4. Exchange Value:
Whether the product is tangible or intangible, it should have exchange
value and must be capable of being exchanged between seller and buyer for
mutually agreed price.
5. Consumer Satisfaction:
Products should have the ability to offer value satisfaction to the
consumer. The satisfaction may be both real or/and psychological.



Classification of Products or Goods

1.Industrial Goods are those, which are used for further production of goods or
services, and include capital goods, raw materials, component parts etc. These are used
as input in producing other products. For instance, iron ore, machine tools etc.
2. Consumer Goods are meant for final consumption by consumers and not for
sale. They are of three types:
(a) Convenience Goods:
Items, the consumer buys frequently, immediately and with minimum
shopping effort are convenience goods. For instance, food items, newspapers,
drugs, soap, toothpaste, biscuit etc.
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(b) Shopping Goods:
There are goods purchased by the consumers, only after a careful comparison
suitability, quality, price, style etd. For example, clothes, furniture, household
appliances, fans etc.
(c) Specialty Goods:
These are goods with unique characteristics or brand identification and the
purchasers make a special purchasing effort, for instance, fancy goods, special
eating items etc.
According to durability or tangibility, products can be classified into three:
1. Non durable goods, such as soap, salt etc.
2. Durable goods, such as clothing, tools, refri9gerators etc.
3. Services, such as repair, haircut etc.
Product development:

It is a more limited term embraces the technical activities of product research,
engineering and design. The effort of developing products and increasing the scope to
satisfy the needs of the customers, who like a change is called product development. It
is the function of the management through the co-ordinated efforts of specialists to
design the products to satisfy the consumers needs.

Steps in product planning/development:

(1) Idea generation
(2) Screening
(3) Business analysis.
(4) Product development.
(5) Test marketing
(6) Commercialization.















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NEW PRODUCT PLANNING






















(1) Idea Generation:
Product planning starts with the creation of product ideas. The continuous
search for new scientific knowledge provides the clues for meaningful idea formation.
Ideas are originate from consumers, Salesmen, consultants, etc.
Sources of India for New product.
From research department
From associated companies
From customers
From employee suggestions.
From competitors.
(2) Screening:
After collecting the product ideas, the next stage is screening of these ideas. All the
ideas cannot be accepted, because certain product plans need huge amount of investments, for
certain plans raw materials may not be available, etc.
India Generation
Screening
Business analysis
Product Development
Test Marketing
Commercialization
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Many of the ideas are rejected on account of many reasons and thus eliminate unsuitable
ideas. Only promising and profitable ideas are picked up for further investigation.
(3) Business Analysis:
This stage is an evaluation, of product idea in depth to determine its financial,
competitive marketing situations.
Market analysis involves a projection of future demand, financial commitment and
return, etc.
(4) Product Development:
The idea on Paper is converted into product. The product is shaped according to the
needs and desire of the buyers. Product Development is the introduction of new markets in the
present Market
(5) Test Marketing:
It is the trial and error method when a product is introduced. These tests are planned
and conducted in selected geographical areas, by marketing the new products. Here, the
reaction of consumers is watched.
This type of pre-testing is essential for a product before it is mass-produced and
marketed. Sometimes, at this stage, management may take decision to accept or reject the idea.
(6) Commercialization:
This is the final stage of product planning. At this stage, production starts, marketing
programme begins to operate and products flow to the market for sale.
It has to compete with the existing products to secure maximum share in the Market.
After entering the market, it has its own life cycle.
PRODUCT LIFE CYCLE

As every being has life, a product has its life. Industrial goods may have a longer life
than consumer goods. When a product idea is commercialized, the product enters into the
market and completes with the rivals, for making sales and earning profits. Products, like human
beings, have length of life. This has been described as life cycle in human beings and when
applied to products, it is called as product life cycle.
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Sales volume



Profit Margin

Introduction growth maturity saturation Decline

1. Introduction :
This is the first stage in the life of a product. This is an infant stage. The product is a
new one. The initial stage needs greater amount for investment. In this stage product is
introduced into the market and made available to the customers with a slow rise in
sales.
2. Growth :
The product satisfies the market. In this stage, a product gains acceptance from the
part of consumers and businessmen. Sales of the product increase. Profit also increases.
Previous purchase continuous in their purchase and new buyers appear. Firms find it
difficult to met the demand.
3. Maturity :
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At this stage, keen competition increases. Sales continue to increase for a while, but
at a decreasing rate. Competitors go for markdown price by increasing advertising
deals. Market expenses increase, even after markdown prices, which enable to face
competition.
4. Saturation:
In the saturation stage, the sales are at the peak and further increase is not possible.
The demand for the products is stable. The rise and fall of sale depend upon supply and
demand. At this stage, a replacement of product is needed, because the sale of the
existing product cannot be increased.
5. Decline:
When sales start declining, buyers go for newer and better products. This is because
of many reasons-technological advances, consumer shifts in taste, increased competition
etc. At this stage the product cannot stand in market; many firms withdraw from the
market, when sales and profits decrease.
Product Mix

A product mix is a set of all product lines and items that a particular seller offer for sale to
buyers. It is a collection of products manufactured or distributed by a firm. It is the full list of all products
offered by a firm.
Length of product mix refers to the total number of items in its product mix.
Width or breadth of the product mix refers to the number of different product lines offered by
the company.

Factors determining the product mix:

1. Changes in demand:
Change in market demand may arise due to the changes in the population or changes in the
purchasing power of the consumers, or changes in the consumers behaviours, tastes, preferences, etc.
2. Cost of production:
A firm may think of adding new products to its product line which can be produced easily with
the same machinery and production facilities. It certainly being down the cost of production of existing
products. Thus, the cost consideration may be a tempting motive behind such diversification.
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3. Advertising and distribution cost:
A firm may using a wide network of advertising and distribution channels can think of adding
new products to its product line as they can be distributed with the help of the same network. It will
lower down their advertising and distribution cost also.
4. Production influences:
New lines may be added when the production of a product has discontinued by another firm.
Sometimes due to the use of waste and residual also there can be an in the product line.
5. Competitive action and reaction:
The firm may differentiate its product line to meet price competitions and save it from low
profits.

Major product mix strategies

The following strategies are generally employed by the producer or wholesaler of the product:
1. Expansion of product mix:
It is also referred to diversification. A firm may expand its present product mix by increasing the
number of product lines or items within the same line. New lines may be related or unrelated to the
present products. For instance, a provision stores may add drugs, cosmetics, baby foods, dry fruits, etc.
2. Contraction of product mix:
In certain circumstances the management has to drop the production of unprofitable products.
A firm may either eliminate an entire line. This is called as contraction of product mix.
Simplification may be defined as deleting or eliminating those product items, which are
unsatisfactory or unnecessary, from the product line.
3. Alteration of existing products:
Management should take a fresh look at the companys existing products. Often, improving an
established product can be more profitable and less risky than developing a completely new one.
Alterations may be made in the designs size, colour, packaging, quality etc.
4. Product positioning
The products position is the image which that product projects in relation to rival products. A
products features will attract the customers. The positioning of the product is attained by product
differentiation, product segmentation and market aggregation.
5. Trading up and trading down:
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Trading up refers to adding up higher priced and more prestigious products to their existing line,
in the hope of increasing the sales of existing low priced products.
Trading down refers to when a company adds a lower priced items to its line of prestige
products in the hope that people who cannot effort the original products, will want to buy the new one.
6. Product differentiation and market segmentation:
When there is fundamental difference between one product and another, there will be product
differentiation. The purpose of this differentiation is to makes one product different from those of
other competitors.
Buyers differ in their wants, resources, geographical locations, buying attitudes, buying practices
etc.
Buyers can be grouped in terms of sex, education, income level etc. this grouping of buyers is said to be
market segmentation.