What Is a Product?
We define a product as anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include more than just tangible objects, such as cars, clothing, or mobile phones. Broadly defined, products also include services, events, persons, places, organizations, and ideas or a mixture of these. Throughout this text, we use the term product broadly to include any or all of these entities. Thus, an Apple iPhone, a Toyota Camry, and a Caffé Mocha at Starbucks are products. But so are a trip to Las Vegas, Schwab online investment services, your Instagram account, and advice from your family doctor.
Because of their importance in the world economy, we give special attention to services. Services are a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, hotel, airline travel, retail, wireless communication, and home-repair services. We will look at services more closely later in this chapter.
Products, Services, and Experiences
Products are a key element in the overall market offering. Marketing mix planning begins with building an offering that brings value to target customers. This offering becomes the basis on which the company builds profitable customer relationships.
A company’s market offering often includes both tangible goods and services. At one extreme, the market offer may consist of a pure tangible good, such as soap, toothpaste, or salt; no services accompany the product. At the other extreme are pure services, for which the market offer consists primarily of a service. Examples include a doctor’s exam and financial services. Between these two extremes, however, many goods-and-services combinations are possible.
Today, as products and services become more commoditized, many companies are moving to a new level in creating value for their customers. To differentiate their offers, beyond simply making products and delivering services, they are creating and managing customer experiences with their brands or companies.
Experiences have always been an important part of marketing for some companies. Disney has long manufactured dreams and memories through its movies and theme parks—it wants theme park cast members to deliver a thousand “small wows” to every customer. And Nike has long declared, “It’s not so much the shoes but where they take you.” Today, however, all kinds of firms are recasting their traditional goods and services to create experiences.
For example, Apple’s highly successful retail stores don’t just sell the company’s products. They create an engaging Apple brand experience:2
Creating customer experiences: More than just selling products, Apple’s highly successful retail stores create engaging life-feels-good brand experiences.
Area 52 Advertising Inc/Getty Images
Apple’s retail stores are very seductive places, where “life-feels-good” experiences abound. The store design is clean, simple, and just oozing with style—much like an Apple iPad or a featherweight MacBook Air. The bustling stores feel more like community centers than retail outlets, with crowds of customers sampling the goods and buzzing excitedly about all things Apple. The stores encourage a lot of purchasing, to be sure. But they also encourage lingering, with tables full of fully functioning Macs, iPods, iPads, and iPhones sitting out for visitors to try and dozens of laid-back Apple employees close at hand to answer questions and cater to every whim. The stores offer expert technical assistance at the Genius Bar and a full schedule of workshops where customers at all experience levels can learn about their Apple devices and explore their creative sides. You don’t just visit an Apple store—you experience it in a way that no other consumer electronics company can match. As one Apple retail executive explains, “I don’t want to be sold to when I walk into a store. Don’t sell! No! Because that’s a turn-off. Build an amazing brand experience, and then [sales] will just naturally happen.”
Levels of Product and Services
Product planners need to think about products and services on three levels (see
Figure 8.1). Each level adds more customer value. The most basic level is the core customer value, which addresses the question: What is the buyer really buying? When designing products, marketers must first define the core, problem-solving benefits or services that consumers seek. A woman buying lipstick buys more than lip color. Charles Revson of Revlon saw this early: “In the factory, we make cosmetics; in the store, we sell hope.”
And people who buy an Apple iPad are buying much more than just a tablet computer. They are buying entertainment, self-expression, productivity, and connectivity with friends and family—a mobile and personal window to the world.
Figure 8.1
Three Levels of Product
At the second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, a design, a quality level, a brand name, and packaging. For example, the iPad is an actual product. Its name, parts, styling, operating system, features, packaging, and other attributes have all been carefully combined to deliver the core customer value of staying connected.
Core, actual, and augmented product: People who buy an iPad are buying much more than a tablet computer. They are buying entertainment, self-expression, productivity, and connectivity—a mobile and personal window to the world.
Betsie Van der Meer/Getty Images
Finally, product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits. The iPad is more than just a digital device. It provides consumers with a complete connectivity solution. Thus, when consumers buy an iPad, Apple and its resellers also might give buyers a warranty on parts and workmanship, quick repair services when needed, and web and mobile sites to use if they have problems or questions. Apple also provides access to a huge assortment of apps and accessories, along with an iCloud service that integrates buyers’ photos, music, documents, apps, calendars, contacts, and other content across all of their devices from any location.
Consumers see products as complex bundles of benefits that satisfy their needs. When developing products, marketers first must identify the core customer value that consumers seek from the product. They must then design the actual product and find ways to augment it to create customer value and a full and satisfying brand experience.
Product and Service Classifications
Products and services fall into two broad classes based on the types of consumers who use them: consumer products and industrial products. Broadly defined, products also include other marketable entities such as experiences, organizations, persons, places, and ideas.
Consumer Products
Consumer products are products and services bought by final consumers for personal consumption. Marketers usually classify these products and services further based on how consumers go about buying them. Consumer products include convenience products, shopping products, specialty products, and unsought products. These products differ in the ways consumers buy them and, therefore, in how they are marketed (see
Table 8.1).
Table 8.1
Marketing Considerations for Consumer Products
Convenience products are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort. Examples include laundry detergent, candy, magazines, and fast food. Convenience products are usually low priced, and marketers place them in many locations to make them readily available when customers need or want them.
Shopping products are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style. When buying shopping products and services, consumers spend much time and effort in gathering information and making comparisons. Examples include furniture, clothing, major appliances, and hotel services. Shopping product marketers usually distribute their products through fewer outlets but provide deeper sales support to help customers in their comparison efforts.
Specialty products are consumer products and services with unique characteristics or brand identifications for which a significant group of buyers is willing to make a special purchase effort. Examples include specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods, and the services of medical or legal specialists. A Lamborghini automobile, for example, is a specialty product because buyers are usually willing to travel great distances to buy one. Buyers normally do not compare specialty products. They invest only the time needed to reach dealers carrying the wanted brands.
Unsought products are consumer products that a consumer either does not know about or knows about but does not normally consider buying. Most major new innovations are unsought until consumers become aware of them through marketing. Classic examples of known but unsought products and services are life insurance, preplanned funeral services, and blood donations to the Red Cross. By their very nature, unsought products require a lot of promoting, personal selling, and other marketing efforts.
Industrial Products
Industrial products are those products purchased for further processing or for use in conducting a business. Thus, the distinction between a consumer product and an industrial product is based on the purpose for which the product is purchased. If a consumer buys a lawn mower for use around home, the lawn mower is a consumer product. If the same consumer buys the same lawn mower for use in a landscaping business, the lawn mower is an industrial product.
The three groups of industrial products and services are materials and parts, capital items, and supplies and services. Materials and parts include raw materials as well as manufactured materials and parts. Raw materials consist of farm products (wheat, cotton, livestock, fruits, vegetables) and natural products (fish, lumber, crude petroleum, iron ore). Manufactured materials and parts consist of component materials (iron, yarn, cement, wires) and component parts (small motors, tires, castings). Most manufactured materials and parts are sold directly to industrial users. Price and service are the major marketing factors; branding and advertising tend to be less important.
Capital items are industrial products that aid in the buyer’s production or operations, including installations and accessory equipment. Installations consist of major purchases such as buildings (factories, offices) and fixed equipment (generators, drill presses, large computer systems, elevators). Accessory equipment includes portable factory equipment and tools (hand tools, lift trucks) and office equipment (computers, fax machines, desks). These types of equipment have shorter lives than do installations and simply aid in the production process.
The final group of industrial products is supplies and services. Supplies include operating supplies (lubricants, coal, paper, pencils) and repair and maintenance items (paint, nails, brooms). Supplies are the convenience products of the industrial field because they are usually purchased with a minimum of effort or comparison. Business services include maintenance and repair services (window cleaning, computer repair) and business advisory services (legal, management consulting, advertising). Such services are usually supplied under contract.
Organizations, Persons, Places, and Ideas
In addition to tangible products and services, marketers have broadened the concept of a product to include other market offerings: organizations, persons, places, and ideas.
Organizations often carry out activities to “sell” the organization itself. Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Both profit and not-for-profit organizations practice organization marketing.
Business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their images. For example, as noted in Chapter 6, GE’s long-running “Imagination at Work” campaign markets the industrial giant as a company whose imaginative products and technologies are making a difference in the world.
Consider one recent award-winning TV spot, called “Childlike Imagination.” The whimsical ad brings GE’s products—from jet engines and diesel locomotives to giant wind turbines and hospital diagnostics machines—to life through the eyes of a wide-eyed young girl whose mom works at GE. GE is “Building, powering, moving, and curing the world,” says the company. “Not just imagining. Doing. GE works.”3
Organization marketing: GE’s long-running Imagination at Work campaign markets the industrial giant as a company whose imaginative products and technologies are making a difference in the world.
GE
People can also be thought of as products. Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people. People ranging from presidents, entertainers, and sports figures to professionals such as doctors, lawyers, and architects use person marketing to build their reputations. And businesses, charities, and other organizations use well-known personalities to help sell their products or causes. For example, Nike spends almost $1 billion annually on endorsement deals with a stable of stars spanning almost every conceivable sport worldwide, including headliners such as tennis greats Maria Sharapova and Rodger Federer, world soccer superstars Cristiano Ronaldo and Neymar, and current and former NBA all-stars Michael Jordan, Kobe Bryant, LeBron James, and Kevin Durant.4
Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places. Cities, states, regions, and even entire nations compete to attract tourists, new residents, conventions, and company offices and factories. The New Orleans city website shouts “Go NOLA” and markets annual events such as Mardi Gras festivities and the New Orleans Jazz and Heritage Festival. Tourism Australia advertises that “There’s Nothing Like Australia” and provides a website and smartphone app complete with videos, holiday ideas, destination information, and about anything else travelers might need to plan an Australian vacation.5
Ideas can also be marketed. In one sense, all marketing is the marketing of an idea, whether it is the general idea of brushing your teeth or the specific idea that Crest toothpastes create “healthy, beautiful smiles for life.” Here, however, we narrow our focus to the marketing of social ideas. This area has been called social marketing and consists of using traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well-being.
Social marketing programs cover a wide range of issues. The Ad Council of America (www.adcouncil.org), for example, has developed dozens of social advertising campaigns involving issues ranging from health care, education, and environmental sustainability to human rights and personal safety. But social marketing involves much more than just advertising. It involves a broad range of marketing strategies and marketing mix tools designed to bring about beneficial social change.6