Product Classification and Lifecycle: A Comprehensive Guide
Product Fundamentals
What is a Product?
In the narrowest sense, a product is a set of identifiable attributes. In a broader sense, a product is a package of benefits that helps meet customer needs. This includes tangible goods and intangible services, along with elements like packaging, color, price, quality, brand reputation, and associated services.
Classifying Products
Consumer Goods
- Convenience Goods: Tangible products consumers are familiar with and purchase frequently with minimal effort.
- Comparison Goods: Tangible products consumers compare based on quality, price, and style before purchasing.
- Specialty Goods: Tangible products with strong brand preference, where consumers are willing to invest time and effort to find a specific brand.
- Unsought Goods: New products consumers are unaware of or products that fulfill a need they don’t currently recognize.
Industrial Goods
- Raw Materials: Unprocessed goods that become part of another tangible product.
- Manufactured Materials and Parts: Processed goods that become part of finished products.
- Plant: Major equipment, typically expensive and durable, used in company operations.
- Accessory Equipment: Tangible products with significant value, used in company operations.
- Operating Supplies: Low-cost, short-life goods that facilitate operations.
New Product Classifications
- Truly Innovative Products: Completely original products.
- Significantly Different Versions: Products with substantial differences in form, function, and benefits compared to existing products.
- Imitations: Products new to a specific company but already existing in the market.
New Product Development Process
- Idea Generation: Generating new product ideas.
- Idea Screening: Evaluating new product ideas.
- Business Analysis: Developing a concrete business proposal from a selected idea.
- Prototype Development: Creating physical prototypes of the product.
- Test Marketing: Gathering feedback from real users.
- Commercialization: Implementing production and marketing plans on a large scale.
Considerations for New Products
- Sufficient market demand.
- Meeting financial criteria.
- Compliance with environmental standards.
- Compatibility with the company’s marketing structure.
Product Adoption and Diffusion
Product Adoption: The series of decisions a person makes before accepting a new product.
Diffusion Process: The long-term spread of a new product within a social system.
Product Mix Strategies
Product Line and Product Mix
Product Line: A group of products with similar uses and characteristics.
Product Mix: The complete set of products a company offers.
Product Mix Dimensions
Width: The number of product lines offered.
Depth: The variety of sizes, colors, and models within each product line.
Key Strategies
- Product Positioning: Creating a distinct image for a product in relation to competitors, attributes, or price.
- Product Mix Expansion: Increasing the width and/or depth of the product mix through line extensions or new product lines.
- Product Modification: Improving existing products.
- Product Mix Contraction: Eliminating an entire product line or simplifying its contents.
- Price-Based Line Extension: Adding higher-priced or lower-priced products to a line.
Product Lifecycle Stages
- Introduction: Launching a new product with a comprehensive marketing program.
- Growth: Rapid increase in sales and profits.
- Maturity: Sales continue to increase but at a slower rate.
- Decline: Significant decrease in sales.