Product level: The customer value hierarchy
Is product a tangible offering? No, it’s more than that. “Product” is anything which can satisfy market. People classify products according to customer value. It’s illustrated by this circle system. At the centre is core benefit which the customer really buy. Take Shilla, a hotel of SamSung group, for example, when you get there, what are you pay for? Is it a room, or a bed, or a shower? Not at all. Basically, you want to buy rest and sleep. The former as I told, we call it basic product.
At the higher level, expected product reveals customer’s normally expect such as a clean bed, fresh towel which can be met by majority of hotels. To exceed customer expectations, marketer prepares augmented products such as satellite TV, high-speed wifi, 2-line phone. We must note that augmented products soon be recognized as a expected product. Why? Let me give an example. Around 6 years ago, wifi wasn’t widespread, hence, it was obviously an augmented product. But up to now, even a small motel or coffee shop have wifi as well, so wifi is just called expected product. In the other words, when setting an augmented product, you want to distinguish your company from the others. But ugly truth is that It’s too easy for competitors to follow. That situation requires some new ways to satisfy customers, we call it potential product. Product classification
Products have traditional been classified on the basis of characteristics: durability, tangibility, and use. Each type has an appropriate strategy: Durability and tangibility: products can be classified in 3 groups: - Nondurable goods: are tangible goods normally consumed in one or a few uses, like beer, soap. The appropriate strategy is to make them available in many locations, charge only a small markup, and advertise heavily. - Durable goods: are tangible goods that normally service many uses: refrigerators, washing machine. They need more personal selling and service, and require more guarantees. - Service: are intangible, inseparable, variable, and perishable products. They require more quality control, supplier credibility, and adaptability. On the other side, products can be classified in consumer-goods and industrial-goods: To the customers, depending on their shopping habits, we can distinguish among: convenience, shopping, specialty, and unsought good. - Convinience goods: buying frequently, immediately, and popular. * Staples: regular basis: soap, toothpaste.
* Impulse goods: without any planning or search effort: candy, magazines. * Emergency goods: urgent needs: raincoat.
Sellers should place them in where people can get easily like cashier table, outlet. - Shopping goods: are goods that consumer characteristically compares on such as suitability, quality, price, and style: furniture, clothing, used cars. They can be similar in quality or different in price (homogeneous shopping goods) or differ in features and services that maybe more important than price (hoterogeneous shopping goods). The sales people needs to be well-trained to inform and advise customer. - Specialty goods: have unique features or famous brand that enough for customer to buy. They just need to be known about the selling locations. - Unsought goods: are those people does not know about or does not think of buying, like smoke detectors. They require the personal selling support and advertising. To manufacture, goods can be classified in 3 groups:
Materials and parts fall into 2 groups: raw material such as cottons, fruits (farm products), lumber, iron ore (natural products) or manufactured materials and part such as tires, iron. In this group, price and service are more important than branding, advertising. Capital items are long-lasting goods that facilitate developing or managing the finished product. They fall into 2 groups: first is installation consist of buildings (factories, office) and heavy...