The first P of the Marketing Mix is Product. It is the bases of the marketing mix of a company. It is important for a company to develop the perfect product for the right market. Here we will look at the various types of products and the life cycle of a product. Let us get started!
A product is generally categorized as a tangible good but it can also be an intangible service. Companies take a lot of time and effort to develop quality products that are in demand in the market. A good product is the very basic requirement of an effective marketing mix.
Products are broadly classified into two categories – consumer products and industrial products. Consumer products are products that the ultimate consumer purchases himself for direct use. The consumer purchases these consumer products to satisfy his personal needs and desires. Some examples of consumer products are toothpaste, eatables, textiles, computers etc and various such products.
Now there are many types of consumer products as well. Let us take at the classification of consumer goods based on the shopping effort involved:
- Convenience Products: These are consumer goods that are very convenient to purchase. They are bought frequently and with very little effort. Examples include medicines, toiletries, newspapers etc. Such convenience products have ongoing and continuous demand. Such goods are also bought in small quantities and are also generally lowly priced.
- Shopping Products: To shop for these consumer products, consumers devote considerable time and effort. They compare prices and features and a lot of thought is involved before making the decision to buy. Some such examples are electronics, furniture, jewelry etc. These products generally fall in the higher price range. Such products are pre-planned purchases.
- Specialty Products: For specialty products, consumers make special efforts to buy them. They are not your regular run of the mill consumer products. The buyer is willing to go through a lot of effort to purchase such products. Take for example any artwork, paintings, sculptures etc. The demand for such specialty products is usually pretty limited and the prices are high.
These are products which are used as input for manufacturing other products. Unlike consumer goods, these are not for direct consumption. These are meant for business and non-personal use. Some examples of industrial products are raw materials, machines, tools etc.
Here the demand for industrial products is limited. Since they are not consumer goods the demand for them is not vast. The three broad categories of Industrial goods are as follows
- Machine and Machine Parts: These goods are used entirely in the manufacturing process. These include raw materials like cotton, lumber, petroleum etc. They also include manufactured products like glass, rubber etc.
- Capital items: These are goods/products used to manufacture finished goods. They include installations (lifts, mainframe computers etc) and equipment (hand tools, personal computers etc)
- Business Services and Supplies: These are industrial goods and services that facilitate the manufacturing process. They include services such as painters, technicians, maintenance, and repairs. And products such as lubricants, stationary etc.
Product Life Cycle
Product life cycle is a representation of the cycle through which each product goes through from introduction to decline and eventual demise of the product. The Product Life Cycle helps us recognize which stage the products are in. Accordingly, the company can adjust their marketing strategy to make most of the conditions.
There are four distinct stages in a product’s lifecycle. Right from the introduction of the product in the market to its end. Every stage has its own distinct features. And the company should change its marketing strategy every time the product makes its move from one stage to another. Let us take a look at the four stages.
As the name suggests this is the stage of introduction of the product to the market. At this stage, the demand for the product is only a proved demand and not effective demand. This stage is categorized by the following features
- The product’s sale is at its lowest and is increasing but very slowly
- During the introduction, the promotion expense is very high. Extensive promotions have to be undertaken to create awareness and demand for the product.
- The products are put in limited outlets. The distribution is also kept limited to a few channels. The point is to try out the product before expanding distribution.
2] Growth Stage
This is the second stage of the product lifecycle. Now the sales begin to take off and the product becomes well known. Some other characteristics are
- The promotion expenses still remain high. Now the focus will be on brand recognition and brand image. This helps the product maintain and extend its selective demand.
- With a rise in sales, the profits also rise sharply
- This is the stage where new competitors may enter the market with better research and better products. To keep up with their products, the company may make improvement and modifications to their products
3] Maturity Stage
- This is the stage where the market saturates and sales growth of the firm slow down and finally stabilizes at a stage.
- Competition in the market will intensify in this stage. All competitors will want to maintain a production level to enjoy economies of scale
- This stage may also see a price war in order to keep their market share. Reducing prices may affect the profit margin of the company.
4] Decline Stage
This the terminal stage of the products, they are no longer relevant in the market. So the end of this stage is the eventual demise of the product in the market.
Solved Question for You
Q: What are the characteristics of the Decline stage of the life cycle of products?
Ans: A few characteristics of the decline stage are as follows,
- There is a rapid fall in the sales
- The prices reduce further. The point is to have a large market share to gain maximum benefit at the least profit margin
- There are virtually no promotion or advertising expenses in this stage of the product lifecycle.