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Business

Study Notes

Product - Introduction

Level:
GCSE, AS
Board:
AQA, Edexcel, OCR, IB

Products are at the heart of marketing. The product needs to exist for the other elements of the mix to happen.

What is a product? A product is:

"anything that is capable of satisfying customer needs".

This definition therefore includes both:

Physical products – e.g. trainers, games consoles, DVD players, take-away pizzas

Services – e.g. dental treatment, accountancy, insurance, holidays, music downloads

A product can be said to have three elements:

Core benefits

What the product does - the main functions of the product

  • E.g. washing machine – it cleans clothes
  • Cinema ticket – it shows a film you want to see

Tangible or physical element

What the product is made of; what it looks like; dimensions or duration

E.g. 500g of ice-cream

A flat-screen, plasma television which is HDTV compatible

Augmented benefits

The extra elements which add to the perceived value of the product in the eyes of the consumer

Augmented benefits can be tangible (e.g. materials, weight, extra features) or intangible (e.g. brand name, after-sales service, reputation for reliability)

E.g. free installation, full money-back guarantee

Often the augmented benefits of a product are the key determinant of whether a customer decides to buy. Many successful businesses really understand this. A great example was cosmetics leader Elizabeth Arden. She certainly knew what she was selling. It wasn't pots of cream and cosmetics, it was much more than that, she understood what her customers where really buying from her... she said

"I don't sell cosmetics…I sell hope"

However, a business that focuses too much on the core or physical benefits of its products can soon find itself struggling with marketing.

Products can be split into two broad categories:

Goods – physical products that you can touch and feel, e.g. food and clothing

Services – products that are non-physical – watching a film, having a hair-cut

It is important to appreciate that a service is still a product – even though there is nothing you can touch. The marketing process for services is also often different to marketing goods.

Services, such as banking, are mainly marketed through product differentiation. Similar products are adjusted to the target audience, for instance instant access account and long-term deposit accounts, or accounts for children. Businesses then use heavy promotion to highlight these differences.

It differs from goods marketing, because goods have greater opportunity to use packaging and physical product design.

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