Levels, Types, Life Cycle of Product

⭐Levels of Product:

• Core Benefit:
  • Definition: This is the fundamental need or problem-solving capability that the product fulfills for the consumer.
  • Explanation: The core benefit is the primary reason why a consumer purchases a product. It addresses the basic need or desire that the consumer intends to satisfy. For example, a smartphone fulfills the core benefit of communication and access to information, which are essential functions for many consumers.
• Generic Product:
  • Definition: Represents the basic version of the product with essential features necessary for its functioning.
  • Explanation: The generic product includes the minimum attributes required for the product to perform its basic function. It typically lacks any distinguishing features beyond what is necessary. For instance, a generic smartphone includes basic functionalities such as making calls and sending messages, without additional features or enhancements.
• Expected Product:
  • Definition: Refers to the attributes and qualities that consumers expect when they purchase a product.
  • Explanation: Consumers have certain expectations regarding the features, quality, and performance of a product based on their past experiences, marketing messages, and comparisons with competing products. For example, an expected feature of a smartphone would include a touchscreen interface, a decent camera, access to apps, and connectivity options like Wi-Fi and mobile data.
• Augmented Product:
  • Definition: Includes additional features, benefits, or services that exceed the consumer's expectations and enhance the product's value.
  • Explanation: The augmented product goes beyond the basic and expected attributes to provide additional value and satisfaction to consumers. This can include features like extended warranties, technical support, customization options, complementary products or services, or premium packaging. For instance, a smartphone with augmented features might come with a longer warranty period, free technical support, pre-installed apps, and accessories like a protective case or headphones.
• Potential Product:
  • Definition: Encompasses future innovations or developments that could further enhance the product's value and appeal to consumers.
  • Explanation: The potential product level focuses on anticipating and preparing for future consumer needs, technological advancements, or market trends. Companies consider potential improvements or new features that could be added to future versions of the product to maintain competitiveness and meet evolving consumer expectations. For example, potential developments in smartphones could include advancements in battery life, new biometric security features, or integration with emerging technologies like augmented reality.

Benefits of Kotler's Five Product Level Model:

• Comprehensive Product Analysis:
  • Kotler's model encourages businesses to analyze their products across multiple dimensions—from basic functionalities to potential future enhancements. This comprehensive analysis helps in understanding consumer needs and preferences at various levels, guiding strategic decision-making.
• Strategic Product Development:
  • By categorizing products into core, generic, expected, augmented, and potential levels, businesses can strategically plan the development and innovation of their products. This structured approach aids in prioritizing features and improvements that add significant value to consumers, thereby enhancing competitiveness and market positioning.
• Market Differentiation:
  • The model facilitates differentiation strategies by identifying opportunities to add unique features or services at the augmented level. Businesses can create distinct value propositions that set their products apart from competitors, attracting target consumers and fostering brand loyalty.
• Customer Value Proposition:
  • Aligning product features with consumer expectations at each level helps businesses articulate a clear value proposition. By delivering on promised benefits and exceeding customer expectations through augmented features, businesses can enhance customer satisfaction and build stronger relationships with their target audience.
• Enhanced Customer Satisfaction:
  • Meeting both expected and augmented product attributes contributes to higher levels of customer satisfaction. When products not only fulfill basic requirements but also offer additional benefits and services, consumers perceive greater value and are more likely to remain loyal to the brand.
• Future-Proofing Products:
  • Kotler's model encourages businesses to anticipate future trends and consumer needs through the potential product level. By proactively innovating and preparing for future developments, companies can stay ahead of market changes, ensuring long-term relevance and sustainability in a competitive marketplace.

This model provides a structured framework for businesses to evaluate, develop, and enhance their products in ways that resonate with consumer needs, drive customer satisfaction, and support long-term business growth.

⭐Types of Product

Consumer Products:

• Convenience Products:
  • Definition: These are low-cost goods or services that consumers buy frequently with minimal effort. They are widely available and often placed strategically to encourage impulse purchases.
  • Examples: Snacks, beverages, toiletries, newspapers, basic groceries.
  • Marketing Strategy: Marketers focus on wide distribution, easy availability, and attractive packaging to capture impulse buys.
• Shopping Products:
  • Definition: Shopping products are goods that consumers compare based on factors such as quality, price, style, and features before making a purchase decision. Consumers are willing to spend time and effort to compare different options.
  • Examples: Clothing, appliances, furniture, electronics, cars.
  • Marketing Strategy: Marketers emphasize product differentiation, benefits over competitors, and use advertising that highlights unique selling propositions.
• Specialty Products:
  • Definition: These are unique products or services that consumers are willing to make a special effort to obtain due to specific characteristics or brand loyalty. They often have strong brand identification and customer loyalty.
  • Examples: Luxury cars, designer clothing, fine jewelry, high-end electronics.
  • Marketing Strategy: Brand image, exclusivity, and premium pricing are emphasized. Distribution is selective to maintain brand prestige and appeal to target consumers.
• Unsought Products:
  • Definition: Unsought products are goods or services that consumers do not actively seek out until a need arises unexpectedly. These products typically require aggressive marketing strategies to educate consumers about their benefits.
  • Examples: Insurance policies, emergency medical services, burial plots.
  • Marketing Strategy: Marketers focus on creating awareness, highlighting benefits during emergencies, and often use direct marketing or personal selling to reach potential customers.

Industrial Products:

• Materials and Parts:
  • Definition: These are goods that are used in the manufacturing process of other products. They include raw materials, component parts, and assemblies necessary for production.
  • Examples: Steel, plastic components, electronic circuits, chemicals.
  • Marketing Strategy: Suppliers often focus on quality, reliability of supply, and competitive pricing. Relationships with manufacturers are crucial for long-term contracts.
• Capital Items:
  • Definition: Capital items are long-lasting goods that are used by businesses to produce other goods or services. They typically involve high investment and are depreciated over time.
  • Examples: Machinery, equipment, buildings, large computer systems.
  • Marketing Strategy: Sales involve technical specifications, customization options, after-sales service, and financing terms. Long-term relationships and trust are important due to the high value and critical nature of these items.
• Supplies and Business Services:
  • Definition: These include operating supplies and services that are essential for the ongoing operations of a business. They support the production and delivery of goods and services.
  • Examples: Office supplies, maintenance services, legal and consulting services.
  • Marketing Strategy: Suppliers focus on reliability, cost-effectiveness, and service quality. Relationships and contracts often involve service level agreements (SLAs) and ongoing support.

Product by Durability and Tangibility:

• Durable Goods:
  • Definition: Durable goods are products that are used repeatedly over an extended period. They are tangible and typically last for several years.
  • Examples: Cars, furniture, appliances, electronics.
  • Marketing Strategy: Marketing focuses on quality, durability, warranties, and after-sales service. Product demonstrations and customer reviews play a significant role in consumer decisions.
• Non-Durable Goods:
  • Definition: Non-durable goods are consumed or used up quickly, usually within one year or less. They are tangible products that are frequently purchased and replenished.
  • Examples: Food products, toiletries, cleaning supplies, stationery.
  • Marketing Strategy: Marketers emphasize freshness, affordability, convenience, and regular replenishment. Packaging and branding are critical to attract repeat purchases.
• Services:
  • Definition: Services are intangible products that are consumed at the time they are produced and cannot be stored. They involve an activity, benefit, or satisfaction provided without ownership of a tangible product.
  • Examples: Healthcare services, legal services, education, entertainment, transportation.
  • Marketing Strategy: Service quality, customer experience, reputation, and expertise of service providers are key marketing considerations. Word-of-mouth and online reviews heavily influence consumer choice.

Product by Usage:

• Consumer Products:
  • Definition: These are products purchased by individuals and households for personal use, either regularly or occasionally.
  • Examples: All types of consumer products fall into this category, including convenience, shopping, specialty, and unsought products.
  • Marketing Strategy: Strategies vary based on the type of consumer product, focusing on consumer needs, preferences, and buying behaviors.
• Industrial Products:
  • Definition: These are products used by businesses in their operations or production processes to manufacture other goods or services.
  • Examples: Materials and parts, capital items, supplies, and business services.
  • Marketing Strategy: Businesses focus on building relationships, providing value, and offering solutions that improve efficiency, reduce costs, and enhance productivity.
• Institutional Products:
  • Definition: Institutional products are goods and services purchased by organizations and institutions to support their operations rather than for personal consumption.
  • Examples: Office supplies, medical supplies, educational materials.
  • Marketing Strategy: Suppliers tailor their offerings to meet the specific needs, regulations, and operational requirements of institutions.

Product by Branding Strategy:

• Generic Products:
  • Definition: Generic products are unbranded or minimally branded products that compete primarily on price and availability.
  • Examples: Store-brand products, generic medicines.
  • Marketing Strategy: Emphasis is on cost savings and offering comparable quality to branded alternatives. Distribution channels and pricing strategies are critical for market penetration.
• Branded Products:
  • Definition: Branded products have a distinct identity and are associated with a specific brand name. They often command higher prices due to brand equity and customer loyalty.
  • Examples: Nike shoes, Apple iPhones, Coca-Cola beverages.
  • Marketing Strategy: Branding strategies focus on building brand awareness, enhancing brand image, and fostering customer loyalty through consistent messaging, quality assurance, and brand extensions.

Understanding these product types and their respective marketing strategies helps businesses tailor their approach to effectively meet consumer needs, differentiate their offerings, and successfully position their products in competitive markets.

⭐Product Life Cycle (PLC) Stages and Marketing Strategies

1. Introduction Stage

Objective: The introduction stage marks the launch of a new product into the market. At this point, sales are typically low, and the focus is on creating awareness and generating trial among consumers.

Key Characteristics:

• Low Sales: Initial sales are limited as consumers become aware of the new product.
• High Costs: Companies incur high expenses on product development, marketing, and distribution.
• Educational Marketing: Emphasis on educating consumers about the product’s features, benefits, and usage.

Marketing Strategies:

• Product Launch: Develop a strong launch plan emphasizing unique features and benefits.
• Target Audience: Focus on early adopters and innovators who are more likely to try new products.
• Distribution: Selectively choose initial distribution channels to create exclusivity and manage demand.
• Pricing: Use pricing strategies such as penetration pricing (setting a low initial price) or skimming pricing (setting a high initial price).

Example: When electric vehicles (EVs) were first introduced, companies like Tesla focused on educating consumers about the benefits of EVs through extensive marketing campaigns and incentives for early adopters.

2. Growth Stage

Objective: In the growth stage, sales begin to increase rapidly as consumer awareness and demand grow. Competition intensifies as more companies enter the market.

Key Characteristics:

• Rapid Sales Growth: Demand for the product increases significantly.
• Competitive Expansion: More competitors enter the market, leading to increased competition.
• Market Acceptance: Consumers become more familiar with and accepting of the product.

Marketing Strategies:

• Market Expansion: Increase market penetration by targeting a broader audience.
• Product Improvement: Introduce product enhancements or new features to meet evolving consumer needs.
• Distribution Channels: Expand distribution networks to reach more geographical areas or customer segments.
• Competitive Pricing: Adjust pricing strategies to maintain market share while attracting price-sensitive customers.
• Brand Building: Invest in building brand equity through advertising, promotions, and customer experience initiatives.

Example: Smartphones experienced rapid growth during their initial adoption phase, with companies like Apple and Samsung expanding their product lines, improving features, and entering new markets aggressively.

3. Maturity Stage

Objective: The maturity stage is characterized by stable sales and market saturation. Competitors are well-established, and the focus shifts to maintaining market share and profitability.

Key Characteristics:

• Market Saturation: Sales growth levels off as most potential buyers have already purchased the product.
• Intense Competition: Competitors focus on retaining market share through price competition and product differentiation.
• Profit Maximization: Companies optimize operations to maximize profitability despite stable sales.

Marketing Strategies:

• Market Segmentation: Segment the market to identify and target specific customer groups with tailored marketing efforts.
• Product Diversification: Introduce product variations, extensions, or new models to attract different customer segments.
• Pricing Tactics: Use pricing strategies like competitive pricing, bundle pricing, or promotional pricing to maintain market position.
• Customer Retention: Focus on retaining existing customers through loyalty programs, excellent customer service, and relationship marketing.
• Cost Efficiency: Streamline operations and distribution to reduce costs and maintain profitability.

Example: Carbonated soft drinks like Coca-Cola and Pepsi have reached maturity in many markets. Companies invest in marketing efforts focused on brand loyalty, product innovation (e.g., new flavors), and operational efficiency to sustain market share.

4. Decline Stage

Objective: In the decline stage, sales and profits decline due to changing consumer preferences, technological advancements, or the emergence of new products.

Key Characteristics:

• Sales Decline: Demand for the product decreases as consumers shift to alternatives or newer technologies.
• Profit Erosion: Declining sales lead to reduced profitability and possibly losses.
• Market Exit: Companies may choose to discontinue the product or explore niche markets.

Marketing Strategies:

• Cost Reduction: Reduce marketing and operational costs to maintain profitability.
• Harvesting: Gradually reduce investment in the product while maximizing cash flow from remaining sales.
• Market Segmentation: Focus on profitable customer segments and discontinue less profitable variations or product lines.
• Product Innovation: Explore product improvements or adaptations to extend the product’s life cycle.
• Exit Strategy: Consider discontinuing the product or selling it off to minimize losses and focus on more profitable ventures.

Example: Film cameras experienced decline with the rise of digital photography. Companies like Kodak adapted by focusing on digital imaging technologies and eventually exiting the film camera market.

Conclusion

Understanding the Product Life Cycle (PLC) stages and implementing appropriate marketing strategies at each stage is crucial for businesses to effectively manage their product portfolios, maximize profitability, and sustain long-term success in competitive markets. Each stage requires a tailored approach to address evolving market dynamics and consumer behaviors.