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CHAPTER 11
Product Concepts
TEACHING RESOURCES QUICK REFERENCE GUIDE
Resource
Location
Purpose and Perspective
IRM, p. 227
Lecture Outline
IRM, p. 228
Discussion Starters
IRM, p. 235
Class Exercises
IRM, p. 236
Chapter Quiz
IRM, p. 238
Semester Project
IRM, p. 239
Answers to Discussion and Review Questions
IRM, p. 240
PURPOSE AND PERSPECTIVE
This chapter covers fundamental concepts relating to (1) defining the concept of a product, (2) consumer
and business product classification schemes, (3) product mix and product line concepts, (4) product life
cycles, (5) product adoption processes, and (6) the reasons some products fail. The chapter starts by
seeking to help students understand what constitutes a product. We then go on to classify products and to
Answers to Application Questions
IRM, p. 243
Answers to Internet Exercise
IRM, p. 245
Answers to Developing Your Marketing Plan
IRM, p. 246
Comments on the Cases
IRM, p. 247
Case 11.1
IRM, p. 247
Case 11.2
IRM, p. 248
Examination Questions: Essay
Testing CD
Examination Questions: Multiple-Choice
Testing CD
Examination Questions: True-False
Testing CD
PowerPoint Slides
228 Chapter 11: Product Concepts
LECTURE OUTLINE
I. What is a Product?
A. A product is a good, a service, or an idea received in an exchange.
1. It can be either tangible or intangible and includes functional, social, and psychological
B. A product can be an idea, a service, a good, or any combination of the three.
1. A good is a tangible physical entity.
C. It is helpful to think of a total product offering as having a combination of three interdependent
elements:
1. The core product consists of its fundamental utility or main benefit.
2. A product’s supplemental features provide added value or attributes in addition to its core
utility or benefit.
3. Customers also receive benefits based on their experiences with the product.
a. Many products have symbolic meaning for buyers; some stores capitalize on this value
by striving to create a special experience for customers.
II. Classifying Products
A. Products fall into two general categories—consumer products and business products.
B. Consumer Products
1. Consumer products are purchased to satisfy personal and family needs; they are categorized
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b. The buyer spends little time planning the purchase of a convenience item or comparing
available brands or sellers.
3. Shopping Products
a. Shopping products are items for which buyers are willing to expend considerable effort
in planning and making the purchase.
(1) Buyers allocate considerable time comparing stores and brands on prices, product
b. Key marketing issues for shopping products:
(1) They require fewer retail outlets than convenience products.
4. Specialty Products
a. Specialty products have one or more unique characteristics, and buyers are willing to
expend considerable effort to obtain them.
5. Unsought Products
a. Unsought products are products purchased to solve a sudden problem, products of which
customers are unaware, and products people do not necessarily think about buying.
C. Business Products
230 Chapter 11: Product Concepts
1. Business products are purchased to use in a firm’s operations, to resell, or to use in the
manufacture of other products; they are classified according to their characteristics and
intended uses in an organization.
2. Installations
a. Installations include facilities, such as office buildings, factories, and warehouses, and
3. Accessory Equipment
a. Accessory equipment does not become a part of the final physical product but is used in
production or office activities.
4. Raw Materials
a. Raw materials are basic materials that become part of a physical product.
5. Component Parts
a. Component parts become a part of the physical product and are either finished items
ready for assembly or products which need little processing before assembly.
6. Process Materials
a. Process materials are used directly in the production of other products.
7. MRO Supplies
a. MRO supplies are maintenance, repair, and operating items which facilitate an
8. Business Services
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a. Business services are the intangible products many organizations use in their operations
and include financial, legal, marketing research, information technology, and janitorial
services.
III. Product Line and Product Mix
A. A product item is a specific version of a product which can be designated as a distinct offering
among an organization’s products.
B. A product line is a group of closely related product items considered a unit because of
marketing, technical, or end-use considerations.
C. A product mix is the composite group of products an organization makes available to customers.
IV. Product Life Cycles and Marketing Strategies
A. Product life cycle is the progression of a product through four stages: introduction, growth,
maturity, and decline.
B. Introduction
1. The introduction stage of the product life cycle begins at a product’s first appearance in the
marketplace, when sales start at zero and profits are negative.
2. Most new product sales begin slowly and seldom generate enough sales to bring immediate
profits.
a. As buyers learn about the new product, marketers should be alert for product weaknesses
C. Growth
1. During the growth stage, sales rise rapidly and profits reach a peak and start to decline.
232 Chapter 11: Product Concepts
4. As sales increase, management must support the momentum by adjusting the marketing
strategy.
a. The goal is to establish and fortify the product’s market position by encouraging brand
loyalty.
D. Maturity
1. During the maturity stage, the sales curve peaks and starts to decline and profits continue to
fall.
2. This stage is characterized by intense competition as many brands are now in the market.
3. Because many products are in the maturity stage of their life cycles, marketers must know
how to deal with these products and be prepared to adjust their marketing strategies.
4. Three general objectives can be pursued during the maturity stage:
5. During the maturity stage, marketers must actively encourage dealers, sometimes though
promotions, to support their product.
E. Decline
1. During the decline stage, sales fall rapidly.
a. When this happens, the marketer considers pruning items from the product line to
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2. In this stage, marketers must determine whether to eliminate the product or try to reposition it
to extend its life.
3. Many firms lack the resources to renew a product’s demand and are forced to consider
“harvesting,” or divesting, the product or the strategic business unit (SBU).
4. Because most businesses have a product mix consisting of multiple products, a firm’s destiny
is rarely tied to one product.
V. The Product Adoption Process
A. The product adoption process includes the stages the buyers go through in accepting a product.
1. The five stages of the adoption process are awareness, interest, evaluation, trial, and adoption.
a. First stage: Awareness is when a buyer becomes aware of the product’s existence.
b. Second stage: Interest is when the buyer seeks information and is receptive to learning
2. Entering the adoption process does not mean the person will eventually adopt the product—
rejection can occur at any stage.
B. When an organization introduces a new product, people do not begin the adoption process at the
same time, nor do they move through it at the same speed.
1. Innovators are the first adopters of new products. They enjoy trying new things and tend to
be venturesome.
VI. Why Some Products Fail and Others Succeed
A. In general, consumer products fail more often than business products.
234 Chapter 11: Product Concepts
B. Products fail for a variety of reasons.
1. One of the most common reasons a product fails is failure to match product offerings to
C. When examining the problem of product failure, it is important to distinguish the degree of
failure.
1. Absolute failure occurs when an organization loses money on a new product because it is
unable to recover development, production, and marketing costs; therefore, the product is
D. For a new product to be successful, it must provide a significant and perceivable benefit to a
sizable number of customers.
E. Effective planning and management are also critical to successfully launch a new product.
Chapter 11: Product Concepts 235
DISCUSSION STARTERS
Discussion Starter 1: Pepsi’s Changing Brand Image
Few companies have evolved as much as Pepsi has over the last 50 years. The YouTube clip below
portrays the changing brand image of Pepsi during this time. Prominently highlighted is the change in
packaging and logo.
Discussion Starter 2: Blendtec
ASK: Have you ever watched a product demonstration on infomercial? Do you think they are an effective
way to demonstrate product benefits?
For the makers of the Blendtec blender, demonstration videos help to drive their success. A series of
Discussion Starter 3: What Is A Product?
ASK: Do you think people buy products or the ideas of the product? In essence, are products ideas?
This may sound like a strange question, but according to some sources, consumers often buy or don’t buy
ASK: Is Rapaille correct? Do people buy products because of some unconscious trigger? Are consumers
irrational?
Discussion Starter 4: Identifying the Innovators
ASK: How do organizations find innovators in the marketplace?
Organizations often identify innovators by conducting observational research. Organizations that
236 Chapter 11: Product Concepts
CLASS EXERCISES
Class Exercise 1: The Product Life Cycle
The goal of this exercise is for students to apply the product life cycle to existing products.
In what stages of the product life cycle are the following products?
Question
Answer
1.
Landline telephones
decline
2.
Digital display watches
decline
3.
Blue jeans
maturity
5.
DVD players
maturity
6.
Wine coolers
decline
7.
Streaming videos
growth
8.
Tablet computers
growth
9.
Compact discs
decline
10.
Palm handhelds
growth
11.
Skateboards
maturity
12.
Mobile homes
maturity
13.
Bottled water
maturity
14.
Fur coats
decline
Class Exercise 2: Product Classification
Step 1: Fill in the following table with examples for each product classification category.
Product Classification
Example
Convenience Product
Shopping Product
Specialty Product
Unsought Product
Chapter 11: Product Concepts 237
Class Exercise 3: Similarities between Products
Recommended as a group activity
Often organizations deliver a wide variety of products and services with the same brand name. These
product lines generally have something in common which unifies the offerings. In this exercise, examine
the underlying similarities across diverse product and service lines.
Step 1: Think about Disney. Then brainstorm the product lines which carry the Disney name.