Product

Although, ‘product’, in marketing terms, can mean goods and services, we are going to concentrate on goods. In a pure marketing sense, products themselves have no value. But their benefits do. Customers buy benefits. Although products are made in factories, what customers buy are the benefits.

Cars are bought not because they are cars but because they deliver a number of benefits including transport, independence, status and image. Different market segments buy for different reasons. Just look at the range of different benefits offered in advertisements.

There is usually a core reason or benefit at the heart of every product purchase which ultimately satisfies an aroused need. This is intangible (you cannot touch it or feel it) and is referred to as the core product. Driving a particular car may make you feel good, powerful, successful, or maybe it just takes you to work.

Beyond the intangible or non-physical core benefit, products have a tangible dimension. These are the physical aspects of the product: its features, quality level, design, packaging and so on. This is the actual tangible product (the part of the product you can touch and feel).

On top of this tangible product are more intangibles which augment, or increase the value of the product. Called the ‘augmented product’, this can include guarantees, and services like credit facilities, delivery, installation, training, advice, servicing, insurance, and more.

Different markets need different amounts of intangibles to support the basic product. The trick is not to waste resources where they are not required or where they do not contribute to competitive advantage.

In some markets, the tangible products are basically the same and the ‘core’ differences are only found in the intangibles. As markets change, the role played by the intangibles also changes. For a radically new product, for example, intangibles such as installation and training may be vital to successful customer adoption.

A more mature market, on the other hand, may require less intangibles. Alternatively, more intangibles might just create a competitive advantage? Watch out for Peter Doyle in the linker talking about product preference and the augmented product.

In addition to the different layers of the product, there are also many different types of products, for example, organisational and consumer products. Take drills. There are domestic DIY drills and industrial drills. Industrial drills are a capital item. Some drills, like large heavy engineering drills are often manufactured specifically to suit a particular customer’s requirement.

Going back to consumer products, these can be categorised by perishability or durability.

Consumer durables like televisions and fridges are very different from non-durables like cans of beans and fresh fruit- called FMCG’s – fast moving consumer goods.

There are many other product categories. They are all useful because each one has different buyer behaviour implications for the marketing mix.

Whichever way they are categorised, remember that all three product elements – core, actual and augmented – with their tangible and intangible dimensions, have to be shaped and reshaped to meet the needs of the market. But in the customers’ eyes they are all just part of the product.

Product Quality

What is quality? What does it mean to you? What does it mean to customers? Excellence? A degree of excellence? What degree of excellence? Do customers really care about the highest level of excellence or do they just want a reasonable product that does the job reasonably well?

Or should quality exceed the customer’s wildest dreams. Would it cost too much? Is it worth it? Does it deliver a significant competitive advantage? Would customer’s pay for it? Would they value it? Can competition copy it?

Should Lada Cars try to build and deliver Rolls Royce’s? Do their customers expect a Rolls Royce? No, but they do expect a car that performs reasonably well. If they get that as a minimum, then they are satisfied and more likely to buy again.

So quality is about customer expectations and perceptions as well as actual performance.

Expectation of quality can be created and controlled by advertising and other marketing activities.

Product quality should match the quality promised by all of the marketing mix.

Match it and you have satisfied customers who are more likely to buy again. Miss it and you have dissatisfied customers who are not only lost forever but who also advise their friends not to buy.

So deliver the promised quality consistently. And if you’re not delivering it – you’ve either got to lower expectations or increase quality levels..

The producers of quality products tend to have an appreciation of the power of excellent design: aesthetics and functionality, performance and ergonomics, ease of assembly and disassembly and more. This means the way a product looks, works and feels can all be improved by design.

A well designed product is not only cheaper to produce but it also has a lot more value than a poorly designed product – provided it meets customer needs.

Good design ensures that manufacturers design ‘quality in’ rather than just ‘inspect faults out’.

There has to be consistency in the manufacture and delivery of that quality. This involves setting quality standards and motivating employees to meet them.

Quality affects customer satisfaction, loyalty and retention, which in turn affect the company’s financial performance. For example, moving from 94customer retention to 98retention can double profit levels. Quality, loyalty and retention figures are key indicators of future performance.

Managers may measure quality by counting product defects, customer complaints, satisfaction surveys and loyalty scores. Customers however, perceive quality from more than just these factors. A quality image is conferred upon companies which not only produce great products but also act as good corporate citizens who act in a socially responsible manner.

A quality oriented organisation instils quality into everything it does.

The quality issue is therefore a long term strategic issue. It is not a short term, ad hoc, occasional item on the agenda. A quality policy affects the long term market position of the company.