Product and Brand Strategy
I. Basic Issues in Product management
• Successful marketing depends on understanding the nature of products and basic decision
areas in product management.
A. Product Definition
• The way in which the product variable is defined can have important implications for
the survival, profitability, and long-run growth of the firm.
• The same product can be viewed in at least three different ways:
o First, it can be viewed in terms of the tangible product––the physical entity or
service that is offered to the buyer.
o Second, it can be viewed in terms of the extended product––the tangible product
along with the whole cluster of services that accompany it.
o Third, it can be viewed in terms of the generic product—the essential benefits the
buyer expects to receive from the product.
• From the standpoint of the marketing manager, to define the product solely in terms of
the tangible product is to fall into the error of “marketing myopia.”
• Executives who are guilty of committing this error define their company’s product too
narrowly, since they overemphasize the physical object itself.
• The classic example of this mistake can be found in railroad passenger service.
Although no amount of product improvement could have staved off its decline, if the
industry had defined itself as being in the transportation business, rather than the
railroad business, it might still be profitable today.
• In line with the marketing concept philosophy, a reasonable definition of product is that
it is the sum of the physical, psychological, and sociological satisfactions the buyer
derives from purchase, ownership, and consumption.
• From this standpoint, products are customer-satisfying objects that include such things
as accessories, packaging, and service.
B. Product Classification
• A product classification scheme can be useful to the marketing manager as an analytical
device to assist in planning marketing strategy and programs.
• In general, products are classed according to two basic criteria:
o End use or market
o Degree of processing or physical transformation
• Agricultural products and raw materials
o These are goods grown or extracted from the land or sea, such as iron ore, wheat,
and sand.
o In general, these products are fairly homogeneous, sold in large volume, and have
low value per unit or in bulk weight.
• Organizational Goods
o Such products are purchased by business firms for the purpose of producing other
goods or for running the business.
o This category includes the following:
Raw materials and semifinished goods
Major and minor equipment, such as basic machinery, tools, and other
processing facilities
Parts or components, which become an integral element of some other
finished good
Supplies or items used to operate the business but that do not become part of
the final product
• Consumer Goods
o Consumer goods can be divided into three classes:
Convenience goods, such as food, which are purchased frequently with
minimum effort. Impulse goods would also fall into this category.
Shopping goods, such as appliances, which are purchased after some time
and energy are spent comparing the various offerings.
Specialty goods, which are unique in some way so the consumer will make a
special purchase effort to obtain them.
• In general the buying motive, buying habits, and character of the market are different
for organizational goods vis-à-vis consumer goods.
• Organizational goods are usually purchased as means to an end and not as an end in
themselves. This is another way of saying that the demand for organizational goods is a
