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In the book "Principle Of Marketing" Philip Kotler et al devised a very interesting
concept of benefit building for products. Kotler suggested that if you view a product
on three levels it will help you extract all the benefits that your product offers. This
strategy has various names including Total Product Concept, Augmented Product and
Three Levels Of a Product.

Level One: Core Product

Level one is the most basic level and simply looks at what people set out to buy and
what benefits the producer would like their product to offer buyers. For example a
camera is expected to take pictures but there may be other benefits that the producer
wants the buyer to enjoy such as a wide lens, face recognition and high definition
videos. So prior to designing any product designers should list the core benefits the
product needs to provide.
Level 2: Actual Product
Level two is about translating the list of core product benefits into a product that
people will buy. There may be competitor products offering the same benefits so the
aim at this stage is to design a product that will persuade people to purchase your
product. Kotler states that this can involve deciding on the quality level, product and
service features, styling, branding and packaging. For example Apple's iPhone design
has enabled it to become a smart phone market leader so that by September 2012 it
was able to launch the iPhone 5, the 5th version of this product. There are other smart
phones on the market but Apple has managed to design a product which people preorder and camp overnight outside Apple's retail stores so that they can be the first
ones to buy the product.
Level 3: Augmented product
Level three involves deciding the additional non tangible benefits that a product can
offer. Competition at this level is based around after sales service, help lines,
warranties, free/cheap delivery and so on. In other words it is things that the product
does not do but customers may find them useful. Non tangible benefits such as
product warranties offer customers peace of mind and demonstrate the manufacturer
has faith in the quality of its product. In fact the ubiqtous use of some augmented

benefits have turn some level three benefits into a customer expectation for example
customers expect cars to have manufacturer warranties.
Levels of Product Attributes
A product exists on three basic levels:
Product planners need to
think about the product on three
The core product -- what is
the buyer really buying? The
core product refers to the use,
benefit, or problem solving
service that the consumer is
really buying when purchasing
the product, i.e. the need that is
automobile offers
being An
actual product
is the
tangible product or intangible
serves product),
as the
include for
a manufacturer's
receiving core
product benefits:discounted
to product
Features include
combinations of product
Styling refers to the design,
aesthetic, or ergonomic aspects.
The Brand name helps
consumers position and identify
the product.
Packaging protects and
The augmented product
consists of the measures taken to
help the consumer put the actual
product to sustained use,
including installation, delivery
& credit, warranties, and
after-sale service.
A product, therefore, is
more than a simple set of
tangible features. Consumers

tend to see products as complex

bundles of benefits that satisfy
their needs.
Product and service decision
Marketers make product and services decisions at three levels: Individual product
decisions, product line decisions, and product mix decisions.
Individual Product Decisions
The following figure shows the important decisions in the development and marketing
of individual products and services. We will focus on decisions about Product
attributes, Branding, Packaging, Labeling, and Product support services.
Product and Service Attributes
Developing a product or service involves defining the benefits that it will offer. These
benefits are communicated and delivered by product attributes such as product
quality, product features, product style and design.
A brand is a name, term, sign, symbol, or design, or a combination of these intended
to identify the goods or services of one seller or group of sellers and to differentiate
them from those of competitors. Branding helps to creating, maintaining, protecting,
and enhancing products and services.
Advantages to buyers:
Product identification
Product quality
Advantages to sellers:
Basis for products quality story
Provides legal protection
Helps to segment markets
It means the activities of designing and purchasing the container or wrapper for a

Developing a good package includes

Packaging concept
Package elements
Product safety
Environmental concerns
Labeling is the printed information appearing on or with the package.
Labeling performs several functions:
Identifies product or brand
Describes several things about the product
Promotes the product through attractive graphics
Product Support Services

Assess the value of current services and obtain ideas for new services.

Assess the cost of providing the services.

Put together a package of services that delights the customers and yields
profits for the company.
Product line decisions
Product line is a group of products that are closely related because they function in a
similar manner, are sold to the same customer groups, are marketed through the
same types of outlets, or fall within given price ranges. For examples, UNILEVER
products (FMCG), NOKIA products.
The major product line decision involves product line length means, the number of
items in the product line. The line is too short if the manager can increase profits by
adding items; the line is too long if the manager increase profits by dropping items.
A company can lengthen its product line in two ways: by line stretching or by line
filling. Product line stretching occurs when a company lengthens its product line
beyond its current ranges. It means, adding products that are higher or lower priced
than the existing line

Product line stretching can be

Both directions
An alternative to product line stretching is product line filling adding more items
within the present range of the line. Ex. SONY filled its Walkman line by adding solarpowered and waterproof Walkmans.

Product Mix Decisions

An organization with several product lines has a product mix. A product mix or product
assortment consists of all the product lines and items that a particular seller offers for
sale. A companys product mix has four important dimensions: width, length,
depth, and consistency.
Product line width: the number of different product lines the company carries.
Product mix length: it refers to the total number of items the company carries within
its product line.
Product line depth: the number of versions offered of each product in the line.
Product line consistency: how closely related the various lines are.

Service marketing triangle

a dynamic model where there are three interlinked groups that work together to
develop, promote, and deliver services. These key players are labeled on the points of
the triangle Company, Customer, Providers. Between these three points on the
triangle, there are three types of marketing that must be successfully carried out for a
service to succeed external marketing, internal marketing, and interactive
marketing. All these activities revolve around making and keeping promises to
customers. For services, all three types of marketing activities are essential for
building and maintaining relationships with customers. Those are described below:

External Marketing-Making Promises

Through these efforts a company makes promises to its customers regarding what
they can expect and how it will be delivered. Traditional marketing activities such as
advertising, sales, special promotions, and pricing facilities this type of marketing, but
for services, other factors also communicate the promises to customers. The service
employees, the design and decor of the facility, and the service process itself also
communicate and help to set customer expectation. Service guarantees and two-way
communication are additional ways of communicating service promises. Unless
consistent and realistic promises are set via all of these external communication
vehicles, a customer relationship will be off to a shaky beginning. Further, if there is
tendency to over promise, the relationship may also be off to weak beginning.
Interactive Marketing-Keeping Promises
External marketing is just the beginning for services marketers promises made just
to keep. Keeping promises is the second type of marketing activities captured by the
triangle and is the most critical from the customers point of view. Services promises
are most often kept or broken by the employees of the firms or by the third party
providers, most often in real time. Sometimes service promises are even delivered
through technology, as discussed a bit later. Interactive marketing occurs in the
moment of truth when the customer interacts with the organization and the service is
produced and consumed. Interestingly, promises are kept or broken and the reliability
of service is tested every time the customer interacts with the organization.
Internal Marketing-Enabling Promises
This is the third phase that takers place through the enabling of promises. In order fro
providers and servicesystems to deliver on the promises made. They must have skills,
abilities, tools, and motivation to deliver. In other words, they must be enabled. These
essential services marketing activity has become known as internal marketing.
Promises area to make, but unless providers are recruited, trained, provided with tools
and appropriate internal systems, and rewarded for good service, the promises may
not be kept. Internal marketing also hinges on the assumption that employee
satisfaction and customer satisfaction are inextricably linked.

8 Step Process Perfects New Product

Posted on May 27, 2013 by Robert F Brands

Every entrepreneur knows that productivity is one of the key

ingredients for successful product development. One of the two key processes in Roberts Rules of
Innovation is the NEW PRODUCT DEVELOPMENT PROCESS. A formalized, NPD process also referred
to and best practice: the Stage Gate Process is a must, from simple to sophisticated.
The New Product Development process is often referred to as The Stage-Gate innovation process,
developed by Dr. Robert G. Cooper as a result of comprehensive research on reasons why products
succeed and why they fail.
When teams collaborate in developing new innovations, having the following eight ingredients mixed into
your teams new product developmental repertoire will ensure that its overall marketability will happen
relatively quick, and accurately making everyone productive across the board.

Step 1: Generating
Utilizing basic internal and external SWOT analyses, as well as current marketing trends, one can distance
themselves from the competition by generating ideologies which take affordability, ROI, and widespread
distribution costs into account.

Lean, mean and scalable are the key points to keep in mind. During the NPD process, keep the system
nimble and use flexible discretion over which activities are executed. You may want to develop multiple
versions of your road map scaled to suit different types and risk levels of projects.

Step 2: Screening The Idea

Wichita, possessing more aviation industry than most other states, is seeing many new innovations stop
with Step 2 screening. Do you go/no go? Set specific criteria for ideas that should be continued or
dropped. Stick to the agreed upon criteria so poor projects can be sent back to the idea-hopper early on.
Because product development costs are being cut in areas like Wichita, prescreening product
ideas, means taking your Top 3 competitors new innovations into account, how much market share theyre
chomping up, what benefits end consumers could expect etc. An interesting industry fact: Aviation
industrialists will often compare growth with metals markets; therefore, when Boeing is idle, never assume
that all airplanes are grounded, per se.

Step 3: Testing The Concept

As Gaurav Akrani has said, Concept testing is done after idea screening. And it is important to note, it is
different from test marketing.
Aside from patent research, design due diligence, and other legalities involved with new product
development; knowing where the marketing messages will work best is often the biggest part of testing the
concept. Does the consumer understand, need, or want the product or service?

Step 4: Business Analytics

During the New Product Development process, build a system of metrics to monitor progress. Include input
metrics, such as average time in each stage, as well as output metrics that measure the value of launched
products, percentage of new product sales and other figures that provide valuable feedback. It is important
for an organization to be in agreement for these criteria and metrics.
Even if an idea doesnt turn into product, keep it in the hopper because it can prove to be a valuable asset
for future products and a basis for learning and growth.

Step 5: Beta / Marketability Tests

Arranging private tests groups, launching beta versions, and then forming test panels after the product or
products have been tested will provide you with valuable information allowing last minute improvements and
tweaks. Not to mention helping to generate a small amount of buzz. WordPress is becoming synonymous
with beta testing, and its effective; Thousands of programmers contribute code, millions test it, and finally
even more download the completed end-product.

Step 6: Technicalities + Product Development

Provided the technical aspects can be perfected without alterations to post-beta products, heading towards
a smooth step 7 is imminent. According to Akrani, in this step, The production department will make plans
to produce the product. The marketing department will make plans to distribute the product. The finance
department will provide the finance for introducing the new product.
As an example; In manufacturing, the process before sending technical specs to machinery involves
printing MSDS sheets, a requirement for retaining an ISO 9001 certification (the organizational structure,
procedures, processes and resources needed to implement quality management.)
In internet jargon, honing the technicalities after beta testing involves final database preparations,
estimation of server resources, and planning automated logistics. Be sure to have your technicalities in line
when moving forward.

Step 7: Commercialize
At this stage, your new product developments have gone mainstream, consumers are purchasing your good
or service, and technical support is consistently monitoring progress. Keeping your distribution pipelines
loaded with products is an integral part of this process too, as one prefers not to give physical (or perpetual)
shelf space to competition. Refreshing advertisements during this stage will keep your products name
firmly supplanted into the minds of those in the contemplation stages of purchase.

Step 8: Post Launch Review and Perfect Pricing

Review the NPD process efficiency and look for continues improvements. Most new products are
introduced with introductory pricing, in which final prices are nailed down after consumers have gotten in.
In this final stage, youll gauge overall value relevant to COGS (cost of goods sold), making sure internal
costs arent overshadowing new product profits. You continuously differentiate consumer needs as your
products age, forecast profits and improve delivery process whether physical, or digital, products are being

Remember: The Process Is Loose

The entire new product development process is an ever evolving testing platform where errors will be made,
designs will get trashed, and loss could be recorded. Having your entire team working in tight synchronicity
will ensure the successful launch of goods or services, even if reinventing your own wheel. Productivity
during product development can be achieved if, and only if, goals are clearly defined along the way and
each process has contingencies clearly outlined on paper.