Marketing Mix | Product in Four P’s
The marketing mix is a tool that is made up of four unique but interconnected and interdependent variables. These are called the 4P’s and are product, price, promotion, and place. These four components help determine a clear and effective strategy to bring a product to market. Each element is crucial in its own right and needs to be given due focus.
In this article, we look at 1) product, 2) product classification, 3) the product in Four P’s (marketing mix), 4) product decisions, 5) hallmarks of successful products, 6) product development, and 7) Starbucks – a strong product example.
What is a Product?
A product is an item that satisfies a need or a desire. This can be a physical item, a service or a virtual offering. It is produced at a cost and is subsequently made available to the right audience at a price. Whatever the nature of the product, it will follow a lifecycle and through reasonable predictions of this lifecycle, a company can increase its competitive edge. A brand can be revamped or re-launched to remain relevant in a changing market or at the end of its lifecycle.
A successful product has to fulfill a specific need in the market. Functionally, it must be able to perform its function as promised. There also needs to be clear communication to users and potential customers regarding its benefits and features. Branding is another important feature for a product. Developing a product into a brand helps foster customer loyalty and recall and differentiate itself in the market.
Features and Value creation
Every product should have certain characteristics that separate it from its competitors. These characteristics should be foremost inputs to the product’s marketing mix. When a product is envisioned, it is an answer to an identified market need. This need is translated into a product with particular characteristics. These characteristics help determine all subsequent actions such as pricing, communication strategy and additional features or add-ons. For this reason, it is vital to try to create a unique set of characteristics for any product.
Unique Selling Proposition
A factor that is shown to be the basis of why one product is better than its competitors is called a unique selling proposition or a USP. This characteristic or set of characteristics helps solidify a company’s market position and allows them to stand apart from competition. There are very few products that have no clear competition in the market. Most often, there are identical products with almost the same features. In this situation, differentiation becomes of the utmost importance for the success of any product. The company needs not only to identify an USP, but also to clearly communicate this to the potential audience so that it is understood why the product is superior to other similar ones.
All products can be broadly classified into 3 main categories. These are:
Tangible products: These are items with an actual physical presence such as a car, an electronic device, and an item of clothing or a consumer good.
Intangible products: These are items that has no physical presence but can be felt indirectly. An insurance policy is an example of this. Online items such as software, applications or even music and video files are also intangible products.
Services: Services are also intangible products but they are the result of an economic activity that does not result in ownership. It is a process that creates benefits for customers. Services depend highly on who is performing them and remain difficult to reproduce exactly.
Both tangible and intangible goods and services can be further defined and divided into the following groups:
- Consumer Goods – Items that are used directly by the end user such as food, clothing, cars, etc,
- Consumer Services – Services that are for the benefit of end users directly such as education, courier services, grooming services, etc.
- Producer Goods – Items that act as part of another company’s operations such as machinery or parts.
- Producer Services – Services that support another company’s operations such as accounting, human resource, etc.
THE PRODUCT IN FOUR P’S (MARKETING MIX)
An understanding of the elements that make up a product and those necessary to successfully sell is called the product marketing mix. Product has a vital role in developing the strategy for the overall marketing mix which includes place, price and promotion. Through a definition of the product features and benefits, the rest of the marketing mix elements are determined and agreed upon.
Understanding the Product Mix
A company’s portfolio of products makes up its product mix. Within this mix are Product lines which are closely linked groups of products. These may offer the same benefit or have shared characteristics. A product line is made up of product items which are individual units that have unique appearances, functions or price points.
Each product item will have three main elements that need to be focused on. These are the brand, the packaging, and the associated services.
Before these three elements can be defined and used as inputs to the rest of the marketing mix, product benefits and USPs need to be defined.
Understanding and Creating Benefits
Given the importance of product in the marketing mix, it is good practice to understand who is the target group, what are the benefits of an offer, how is this product to be positioned in the market, and what will the USP be?
Philip Kotler proposed one way of understanding product benefits in his popular academic work “Principles of Marketing.” He says that a product can be looked at three different levels.
- Core – This is the first level to be defined and explored. What is the main or core benefit that a product offers to its consumers? In the case of a camera, they are able to capture memories forever through the purchase of a product
- Actual – Here, any additional benefits are added on to differentiate the product and highlight its USP. In our example, all cameras offer the same core benefit. But any additional features or strong branding can offer a better product.
- Augmented – Finally, there needs to be an assessment of what further benefits can be offered to the customer to ensure a loyal purchasing customer. In our example, these can be after sales service, extended warranties or product support blogs or helplines.
With an understanding of the basic product mix and benefits, a company can now begin to make important product decisions. These include:
Design Decisions: The basic decision here to identify how strong the design will be in the entire product mix. Will it be a supplement to the features or will the features be designed around a unique design.
Quality Decisions: The quality of the proud needs is kept with the other elements of the marketing mix. A high price can be charged if the product has superior quality.
Features Decisions: What will be the final features of the product? Will they add to the perceived and actual benefits of the product? Here also, the company can charge a premium price for additional desirable benefits from features.
Branding Decisions: Branding decision remain some of the most important as it turns a product into something beyond just a good. A brand can have the power to generate instant sales as well cement confidence in the product’s quality and reliability.
Product development is the creation of a new or different product that offers innovative new benefits to the end user. This includes both the creation of an entirely new product and modifications to an existing product. These changes or new introductions may be targeting a newly defined customer requirement or a niche category in the market.
Product development traditionally includes the following steps:
- Generate Ideas
- Screen Ideas
- Develop and Test Ideas
- Analyze for Profitability Potential
- Conduct market or Beta Tests
- Finalize Technical Aspects
- Finalize Commercial Aspects
- Conduct Post Launch Review
For more information on Product Development, consult this post.
Product Development Considerations for New Businesses
The step wise process for product development may not be an option for entrepreneurs who have limited resources at their disposal. Often, they may need to manage several steps simultaneously to ensure a quick product development process at a lower cost. They may also need to go through a comprehensive product planning phase where they can understand the market potential of an idea before actually committing to development. This plan can include a thorough analysis of the market, competing products, pricing strategies and potential, and manufacturing costs and logistics. These analyses, if positive can help set a strong stage for the product development plan. If they are not encouraging, then the product idea may have to be reevaluated.
Product Life Cycle
An important consideration for any product is the logical stages of its lifecycle. A typical product goes through the following stages:
- Introduction – Slow growth period following product launch
- Growth – Fast growth phase once the product is established
- Maturity – A period of slowdown in sales as the product becomes ubiquitous in the market
- Decline – A downward sales as the product is no longer fulfilling a need or there are better options.
A keen eye needs to be kept on the product’s journey through the lifecycle. A close to reality prediction of this path may help the company relaunch or redesign an existing product or work on introducing a new one to the market. A detailed look at the product life cycle can be found here.
HALLMARKS OF SUCCESSFUL PRODUCTS
For a product of any nature to be successful, it needs to:
- Satisfy identified customer needs or wants
- Be of the right quality to allow higher price points
- Be low cost in production and delivering to a customer to ensure better profit margins
- Be durable and attractive in its appearance to match the price and the brand image
- Able to stimulate new needs or unidentified desires
Key Questions in Developing Successful Products
In order to develop products that meet the criteria specified above, a product development team can ask the following questions during the brainstorming and design process.
- What does the customer want from the product?
- What hidden need does it address?
- What features does it need to have to meet these wants and needs?
- Are there any overlooked features that can add value?
- Are there any added features that add no value?
- How will the product be used by the consumer?
- Where will the product be used?
- What does the product look like? How big or small? Colors and materials?
- What should the product be named?
- What will the branding strategy be?
- What will be the product’s USP?
- How will it be communicated to the audience?
- What will the cost of production be? Can the features, benefits and branding bring in a logical price to offset the cost and make a profit?
These questions will help any organization critically evaluate a product plan or an existing product due for a revamp.
STARBUCKS – A STRONG PRODUCT
Starbucks has managed to create an extremely strong brand over the years. A constant focus on marketing, brand development and the product has enabled the company to become the largest coffee shop chain in the world. The company takes customer feedback very seriously and makes it a point to meet and exceed customer demands in keeping with core brand values.
The USP and the core business for Starbucks is the extremely good coffee. The company has refined their business model to keep a focus on this product and ensure that the customer always gets the best possible cup of coffee through the Starbucks experience. The company allows customers to build their own recipe online and then have a barista in a store make it for them.
There is also a policy in place to provide a free cup of coffee if a customer is not satisfied with what they have gotten. This shows a strong focus on the customer.
A few years ago, the company made the decision to eliminate the breakfast sandwich business to focus on the core product: Coffee. This was determined to lead to a significant reduction in cost. One reason for this was also that the breakfast sandwich smell clashed with the traditional signature coffee smell, thus taking away from the experience. This shows a focus on the core product and the adaptability to change product lines when needed.
This focus on core product and customer needs have enabled the giant brand to stay ahead in its industry and become the benchmark for competitors.
Product: A Tool of Marketing Mix