A product is...
A bundle of customer benefits that are:
1. Tangible and intangible
- tangible - quality, looks, design, packaging, ease of use and reliability.
- intangible - style, service, brand reputation and image.
2. Actual and perceived
(what people think about the product as well as actually see).
3. Linked to the product producer’s business definition
For example, Disney is in the entertainment business, so its products must entertain customers.
A product may also be called a brand that is closely associated with certain
“brand values” e.g. Disney means family entertainment.
A company’s product mix (or product portfolio) is the different products it sells to its
The world’s top 10 brands in 2013 were...
6. GE (General
7. McDonald's (pictured
(Source: Interbrand, the brand management firm)
How to have the best products
1. Think customer
A product must provide better customer benefits than competitors (called product
Think about Theodore Levitt’s total product
concept that splits a product into four parts:
a) generic product – the basic product (e.g. the water, sugar and distinctive flavouring
b) expected product – the least a customer expects from the product (e.g. flavour, fizz
and thirst quenching).
c) augmented product – gives customers what they think they need and the extras they
expect (e.g. cool image and sex appeal).
d) potential product – anything that might possibly give a product customer appeal.
A company must also consider how new and existing products can be sold to different customers (or markets), as
shown by Ansoff’s matrix (see also corporate
This matrix shows four possibilities:
- Market penetration – existing products, existing markets.
- Market development – existing products, new markets.
- Product development – new products, existing markets.
- Diversification – new products, new markets.
2. Think about the product life cycle (PLC)
This shows a product’s sales revenue (and profits) at four different stages of its lifetime:
- costs high (because of research and development and marketing of product launch) and
Highest sales growth but marketing costs still high.
Profits are usually highest because the product is established with high sales and lower marketing costs.
A business should keep products in growth and maturity and axe/sell the ones in decline.
3. Use the BCG matrix (also called the Boston box)
Named after its creator, the American management consultants, the Boston Consulting Group, it evaluates products
in terms of market growth and market share.
It says that companies should have a balance between cash cows and stars.
This will become clear when we look at each product category:
a) cash cows (high market share, low growth)
- in the maturity stage of the product life cycle (PLC) with high sales and low costs.
- earn a great deal of money which should be used to invest in stars
Stars are vital because they are tomorrow's cash cows -see below.
b) stars (high market share, high growth)
- in the growth stage of the PLC
- become cash cows, as they move into the maturity stage and sales growth falls.
c) question marks, or problem childs (low market share, high growth)
These should be either
- turned into stars by increasing their market share.
d) dogs (low market share, low growth)
4. Use the General Electric (or McKinsey) matrix
This examines products in terms of industry attractiveness and business
The best products (in top left quadrant) are where the product seller or maker:
5. Use your brand effectively
Like a product, a brand is a bundle of actual and perceived customer benefits that are
tangible (e.g. quality) or intangible (e.g. image).
The aim is to create brand loyalty i.e. people keep on buying because of its great
benefits (and so reputation).
A product’s packaging can help to promote the brand with the packaging design, brand name
Brand extension is selling a new product under the same brand name (e.g. Apple).
Key quotes explained
“You can have any product so long as it’s black”
Ford (talking about his Model T car,
This is called product orientation i.e. selling what you can make.
Henry Ford could do this, because his prices and costs were much lower than competitors (due to his
revolutionary mass production factory).
But in today’s highly competitive world organizations must always make products that customers want
In the 1920's General Motors became more customer oriented and took over from Henry Ford as number one.
“We’re not in the
coffee business serving people, we’re in the people business serving coffee”
Schultz (founder and boss of Starbucks,
You have to be creative and imaginative with products.
For example, Starbucks doesn’t just sell coffee, it sells an experience for people to enjoy.
So a product should be thought of as a bundle of customer benefits and solutions.
“People don’t buy things they buy solutions to problems”, the American marketing professor,
Theodore Levitt, said.
“The product is the most important thing”
- James Dyson (English inventor of the bagless vacuum cleaner, pictured
The best advertisement for a company is its product.
“Our belief was that, if we kept putting great products in front of customers, they would continue to
open their wallets”, said Apple’s co-founder, Steve
(pictured right), The Marketing Imagination
Business success depends upon the “marketing imagination” – finding creative and
imaginative solutions to customers’ problems.
So vital considerations are:
- the “total product concept” (see above)
- product differentiation (making a product unique e.g. by innovation and product
(For more detail see The Marketing
Imagination in the Business Books section)
Alvin Toffler (pictured right) , Future Shock (1970)
People want quality, style and brand image.
So organizations must become “experience makers” and sell an experience to enjoy (e.g.
shops should be fun).
(For more detail see Future Shock in
the Business Books section)