Every company has to make decisions about the products it sells â€“ how many products, of what kind, at what price levels, suitable for which markets. These decisions will have a profound influence on the company's long-term success or failure. They have to be taken in relation to the best use of the company's financial and manpower resources, the kinds of market opportunity that exist, the economic climate, the changing technological situation, and the activities of competitors.
H. I. Ansoffl has defined four main product-market strategies for a company seeking increased business:
1. Market penetration. The company seeks increased sales for its present products in its present markets through more aggressive promotion and distribution;
2. Market development. The company seeks increased sales by taking its present products into new markets;
3. Product development. The company seeks increased sales by developing improved products for its present markets;
4. Diversification. The company seeks increased sales by developing new products for new markets.
What is a Product?
It is not the product as such that customers are interested in, but what it will do for them. What the customer buys is a set of satisfactions, and those satisfactions are the product. Products must be evolved not purely in terms of engineering or techniques, but in terms of design, presentation, packaging, brand-image and all the attributes which, together, give the customer the satisfactions he is paying for. A box of high-quality chocolates, an expensive perfume, or a fashion shirt, cannot be divorced from its packaging, its presentation and the atmosphere created around it by advertising and other forms of display. All these things together make up the product.
The word 'product' is used here as a piece of convenient shorthand. It is not used to mean only tangible 'things', but includes services (the intangibles) as well as things that can be touched and seen and tasted. Thus, a hairdressing, car hire or business consultancy service is just as much a product as a washing machine or fish fingers. Banks and insurance companies, for example, offer a range of products, such as specifically tailored pension schemes or student bank accounts, designed to meet the needs of specific groups of customers. Professor Kotler defines a product as 'A bundle of physical, service, and symbolic particulars expected to yield satisfactions or benefits to the buyer.'
Products are often referred to under the three main categories of durables, consumables, and services.
Tangible goods that are used many times over a long period are durables. Cars, domestic appliances, hi-fi equipment, and cameras would all fall into this category.
B. Consumables (or non-durables)
These are goods normally consumed over a short period. Foodstuffs are typical examples, as are drinks, tobacco and confectionery; but also stationery items, heating oil, sewing cotton and many other goods are consumables.
C. Services (intangible products)
Services comprise intangible 'activities', benefits or satisfactions offered for sale. Insurance, travel, and entertainment are typical examples.
D. Further Classification (industrial purchases)
We also distinguish between consumer products bought for the use of the purchaser and his family, and industrial products bought for use by an organization. Sometimes, the goods can be the same ones used in a different situation (ball-pens, chairs, light bulbs, are random examples of goods with consumer and industrial uses). We can go on further to distinguish between industrial durables (machinery and equipment) and industrial consumables (such as raw materials, stationery, fuel).