PRINCIPLES OF

MARKETING
QUARTER 4-WEEK 1
 What are the things that you
see inside our classroom and
inside your bag?
DEVELOPING THE
PRODUCT
QUARTER 4-WEEK 1
Learning Objectives
 Define product.
 Differentiate products as goods,
services, or experiences.
 Identify the types of consumer
products.
 Learn the new-product
development process.
PRODUCTS
GOODS, SERVICES, OR EXPERIENCES
PRODUCT
 A product is “a merchandise offered to a marketplace
for attention, acquisition, use, or consumption to satisfy
a want or a need” (Kotler and Armstrong, 2014).
 The product is the object of the exchange process,
which a company is willing to provide for its customers
in exchange for something of equivalent or greater
value.
 Kinds of Products Examples
Tangible goods Car, shampoo, pen, laptop
Intangible goods Media Content, Digital apps
• Services Watch repair, massage, hotel, packed tour
• Events Concert, fun run, seminar
• Persons Celebrities, politicians
• Places Tourist destinations, mall
• Organizations Non-profit organizations, associations
• Ideas Campaign for a brand
 PRODUCT
The key element in the overall market offering, which
may include both tangible and intangible goods.

PURE TANGIBLE PURE SERVICES GOODS-AND SERVICES

GOODS COMBINATIONS
• Products which are • Products that do • Goods are
not accompanied by not involve accompanied by
services tangible goods. services in buying the
• Examples: • Example: product.
Salt, sugar, or Legal services, • Example:
shampoo airlines, plumbing Restaurant
repair companies,
banks,
 SERVICES
 Services are intangible products and concerned
activities that do not end in ownership provided by
one entity or person.
 They are transactions without physical goods
transferred from the seller to the buyer.
 They occur through the use of resources, skill,
ingenuity, and experiences of service providers to
benefit consumers (Baquillas, 2017).
FOUR CHARACTERISTICS OF
SERVICES
INTANGIBILITY Intangibility of services, means that they
cannot be seen, heard, smelled,
touched, or tasted, and the buyer cannot
be claim ownership once it has been
availed of.
PERISHABILITY Services cannot be stored for future use
unlike goods that can be inventoried.
Tangible goods which are not sold on
certain day can be sold on the next day,
such as remaining stocks of noodles,
rugs, or drinks. However, services that are
not availed of on a certain timeline are
gone forever.
VARIABILITY • Service variability may be defined as the
changes in the quality of the same service
provided by different producers.
• Changes vary because of the nature of the
service, the person who provides, the time the
service is consumed and the method of delivery
of the service.
For example, in a class where the teacher is the
service provider, each student will listen to the
same lecture but will have varying levels of
understanding of the discussion. Some students
may understand the lecture right away, while others
may need to supplement their knowledge to
understand the lesson better.
INSEPERABILITY • The consumer has to be present when the
service is being rendered. When availing a
massage from a spa, the customer has to
be in the spa in order to receive the
service. This is also referred to a
simultaneous consumption and production.
• Another example: Availing a haircut
 EXPERIENCE
 Experience is a part of company’s offerings.
 Customer experience can be a point for differentiation.
 Example, A popular coffee shop, does not only sell
coffee; it gives its customers a cozy ambiance for a
hearty conversation with friends or a casual yet
professional venue for business meetings or negotiations.
The presence of couches and soothing music make up its
market offerings that give a pleasurable experience to
customers.
LEVELS OF A PRODUCT
LEVELS OF A PRODUCT (KOTLER)
 According to Philip Kotler, an economist and a marketing guru, a
product is more than just its tangible value; it has abstract value and
customers will choose a product based on its perceived value. Based
on this, he explained that there are five levels of a product:

1. Core benefit is the very reason a customer buys a product.

Example, a person buys a bar soap to clean his or her body.
2. Generic product is the no frills version of the product.
Example, a soap is simply a hard bar that produces bubbles
when wet. A company that sells protein powder.
3. Expected product Is a set of attributes that a buyer normally
expects to get when buying the product. Customers expect
soap to have a packaging and standard scent.

4. Augmented Product includes attributes and characteristics

that set the product apart from its competitors. These attributes
can be its competitive advantage or unique selling proposition
(USP). Soaps, for example can have whitening or moisturizing
benefits.
5. Potential product includes all the possible improvements or
transformations that the product may potentially undergo in
the future.
 CLASSIFICATIONS OF CONSUMER
PRODUCTS
CLASSIFICATION CLASSIFICATION CLASSIFICATION
BASED ON DURABILITY BASED ON BASED ON INDUSTRIAL
AND TANGIBILITY CONSUMERS’ USE
SHOPPING HABITS
• Nondurable goods • Convenience • Materials and Parts
• Durable goods Products • Capital Items
• Services ➢ Staple goods • Supplies and
➢ Impulse goods Business Services
➢ Emergency goods
• Shopping Products
• Specialty Products
• Unsought Products
 CLASSIFICATION BASED ON DURABILITY
AND TANGIBILITY
 Nondurable goods are tangible goods that are bought frequently
because they are consumed after one or few uses. Examples of
these goods are soft drinks, coffee, and soap.
 Durable goods are tangible goods that are not bought frequently
because they can be used for a long time. Examples of these
goods are furniture, clothes, and appliances.
 Services are intangible products that are offered to consumers
such as a haircut, car repair, and medical consultation.
 CLASSIFICATION BASED ON
CONSUMERS’ SHOPPING HABITS
 Convenience Products are products that are purchased frequently,
immediately, and with minimal effort. These are items that you normally
get from the supermarket during your grocery shopping.
 Staple goods are convenience goods that are bought on a regular basis,
such as toothpaste, rice, and milk.
 Impulse goods are items that consumers purchase without planning, such
as magazines, especially when the one on the cover is their favorite
celebrity.
 Emergency goods are items that consumers buy based on an urgent
need, such as umbrellas, candles, and flashlights.
 Shopping Products are products that consumers based on suitability,
quality, price, and style. When you shop for clothes, you would
normally go around the department store or go to several shops to
find the clothes that you want. You look for clothes that fit perfectly,
have good quality and style, and fit your budget.
 Specialty Products are products that have unique characteristics or
brand identification which buyers consider important when they make
a purchase. For example, car enthusiasts want to get from everyone
else when a new model of their favorite car comes out.
 Unsought Products are products that consumers do not normally think
about. College students do not normally think of getting a life
insurance plan, more so a memorial plan.
 CLASSIFICATION BASED ON INDUSTRIAL
USE
Products that are bought for further processing or for use in conducting a
business are called INDUSTRIAL GOODS. They are classified according to use:

 Materials and Parts make up the raw materials and the manufactured
materials and parts that are sold directly to industrial users. For example,
potato, salt, and seasonings are the raw materials for potato chips.
 Capital Items are long-term goods that aid in the buyer’s production or
operations. Equipment and machinery used in processing products in a
factory are examples of capital items.
 Supplies and Business Services are short-term goods and services supplied to
businesses to facilitate business operations, such as office supplies (e.g., bond
paper) and business services (e.g., repair and maintenance of air
conditioners.
 PRODUCT DECISIONS
1. INDIVIDUAL PRODUCT DECISIONS
• PRODUCT ATTRIBUTES
 Product Quality – In its most basic definition, quality means
the absence of defects.
 Product Features – A company can create product
differentiation through the features that are available in its
product. It can start with a basic, no-frills model, then new
benefits or features are added to the product to make it
better.
 Product Style and Design – Style defines the appearance of a
product, while design contributes to the product’s usefulness
and look.
BRANDING
 Branding or identity of the product is part of the product’s
differentiation. The brand is a name, term, sigh, symbol,
design, or a combination of these that identifies the
maker or seller of a product or service. It can add value
to a consumer’s purchase and can dictate a more
premium price. Customers attach meaning and emotions
to brands, which can the lead to developing brand
relationships.
PACKAGING
➢ The packaging is the first thing a consumer sees in a
product. Traditionally, the main purpose of packaging is
to hold and protect the product. Packaging has become
an important marketing tool in communicating the
brand, features, and quality of the product. It also acts as
a tool to ensure easy recognition of a product when it is
in the marketplace.
LABELING
 Labels are a means to identify the product and to
communicate the name and pertinent information about
the product. The label may include information such as
name, volume/weight, product description, nutritional
information, ingredients, and contact information of the
manufacturer/ distributor.
PRODUCT SUPPORT SERVICES
 PRODUCT SUPPORT SERVICES contributes to a customer’s
overall brand experience and satisfaction. Some
companies perform after-sales service to determine how
satisfied their customers are with the company’s product.
2. PRODUCT LINE DECISION
 A PRODUCT LINE is a group of products that are closely related
due to the following reasons: they have similar functions, they
are sold to the same customer groups an in the same types of
outlets, and they fall within a given price range.
3. PRODUCT MIX DECISIONS
 Product mix decision refers to the decisions regarding adding a
new or eliminating any existing product from the product mix,
adding a new product line, lengthening any existing line, or
bringing new variants of a brand to expand the business and to
increase the profitability.
NEW – PRODUCT DEVELOPMENT PROCESS
1. Idea Generation the first step toward new-product
development. Companies generate a lot of
ideas, which may come from internal or
external sources. Internal sources include the
company’s research and development
department, or its employees. External sources
include customers, competitors, suppliers, and
the like.
2. Idea Screening Reduces the number of ideas generated in the
first step by eliminating poor ideas and pursuing
good ones.
 3. Concept Occurs when a good idea has been found to
Development and be viable. A product concept is a detailed
Testing version of the idea. The marketer develops
several product concepts based on an idea
and determines how attractive each concept
is to the market. During concept testing, the
product concepts are presented to consumers.
Consumers will evaluate each concept and will
be asked about their intention to buy the
product. Based on consumers’ feedback, the
company may decide to pursue the concept
that appeals the most to consumers
4. Marketing Strategy An initial marketing strategy is designed to
Development introduce the product to the market. The
marketing strategy is composed of three parts.
1. The target market; the sales; market share,
and profit goals for the first few years.
2. Discusses in detailed the product’s planned
price, distribution, and marketing budget.
The third part
3. Outlines the planned long-term sales, profit
goals, and marketing mix strategy.
5. Business Analysis Evaluates the attractiveness of the proposal
based on cost, sales, and profit projections.
 6. Product • A process wherein the physical form of the
Development product is developed from the product
concept.
• A prototype is a working, fully functioning
version of the product concept.
• The product’s effectiveness and safety are
also validated in this stage.
7. Test Marketing It is done after the verification of the concept
and product testing have been successful. The
product and its proposed marketing program
are tested by introducing them to a realistic
marketing setting. Test marketing can be done
through:
• controlled test markets where a new product
along with its marketing strategies are tested
in controlled stores.
• simulated test markets where the new
product and its marketing strategies are
bought in laboratory stores or simulated
online shopping environments and the
consumers’ behavioral responses to the
product are measured.
8. Commercialization Involves the introduction of the new product to
the market and implementation of the
proposed marketing strategies. In this stage,
decisions to be made include timing, where
considerations include economic state,
competitor activities, and seasonality of the
product; and expanse of distribution, whether to
launch nationwide the right away or start in key
cities first then slowly roll out to the other parts of
the country.
PRODUCT LIFE CYCLE
 During PRODUCT DEVELOPMENT, the company
finds a new idea and develops it into a
product.
 In the Introduction Stage, the product is
released in the market, but its sales are low. In
this stage, the objective of the company is to
increase the product’s visibility by making
consumers aware of its existence and purpose.
 TheGrowth Stage is where the product starts picking
up sales. The sales increase as the product becomes
known in the market. The market shares grow along
with the increase in sales.
 The Maturity Stage is where the product has reached
its maximum potential, so the sales level off and slow
down. Companies need to improve their products in
order to sustain the interest of the consumers and to
protect the brand against competitors.
 Inthe last stage, Decline, sales and profits go
down. The product losses its popularity and the
company may choose to maintain, harvest, or
drop the product from its portfolio.
STYLE, FASHION AND FAD
A style is a basic and distinctive mode of
expression, such as casual, formal or smart casual
styles in clothing.
A fashion is a popular style in a given field. For a
time, flip phones are the coolest gadget to have.
A fad is a temporary period of unusually high sales.
These products become popular overnight, but
the market eventually loses its interest just as fast.
Creating loom band designs was a popular
pastime a few years ago, but few people grew
tired of it a year later.
A PRODUCT’S quality and
service is an important
determinant
of CUSTOMER LOYALTY.
ACTIVITY:

Give the Five Product Level of

Coca-Cola and a Hotel.