Principles of Marketing

Quarter II – Lesson 1-ABM_PM11-IIa-e-16

CONTENT STANDARD:
The learners demonstrate an understanding of the essence of the new product
development, pricing, placing (distribution), and promoting a product or service.

PERFORMANCE STANDARD:
The learners shall be able to design a new product or service, decide types of pricing
approach, and choose distribution methods and promotion tools that respond to market trends

WHAT WILL YOU LEARN?

At the end of this module, you should be able to:
1. Define a product.
2. Differentiates the product, services and experiences

WHAT DO YOU ALREADY KNOW? PRE-TEST

Directions: From the pool words inside the box, choose the appropriate term for each
description below.

Satisfaction Market share Label

Marketing Products Packaging
Goods Idea Generation Marketing Mix

______________ 1. It is a product’s “silent salesman”

______________ 2. It refers to tangible products that consumers can actually observe with
their senses.
______________ 3. It applies to anything that is offered to satisfy the needs and wants of
consumers
______________ 4. It serves to contain and protect, and sometimes, identify and promote the
product
______________ 5. It is the initial stage of the new product development process

LET US STUDY:
In order to appeal to the customers, organizations must align all of the four elements of
the marketing mix (4P’s: product, price, place, promotion) effectively. All four elements must
focus on the target market. They should create value by satisfying the customers’ needs and
wants.
We will learn more about the four elements of marketing mix. We’ll start by
discussing the first element in the marketing mix which is the Product. After identifying need
in the market, a company may have a product that is capable of satisfying the need”.
Just to be very clear, product in the context of marketing does not refer to tangible
products such as grocery items and automobiles. The word “product” applies to anything that
is being marketed, whether it is a tangible product, an intangible good, a service, a place, or
even a person.
Here are some of the examples of products:
 Amusement parks
  Apps on smartphones
 Banking services
 Coffee shop: the coffee, the food, and the place itself
 Hotel accommodations
 Legal advice
 Musical bands
 Pet care
 Radio stations
 Social media sites
 Telecommunication services
 Television programs
The term “product” applies to anything that is offered to satisfy the needs and wants
of consumers, whether these are tangible goods or intangible services. Nevertheless, we do
need to step back momentarily, in order to discuss the critical differences between goods and
services.
Goods refer to tangible products that consumers can actually observe with their
senses. Goods are objects with physical manifestations and attributes that can be detected by
our senses.
Services, on the other hand, refer to intangible offerings that are abstract in nature and
cannot be observed with our senses. In fact, a key characteristic of services is that the act of
delivery itself is the product. Some of the services as products are banking, investments and
insurance; hotel accommodations, restaurants, bars, and catering; news and entertainment;
transport and freight; education, health care, wholesaling and retailing; and professional
consultations.
The following questions are asked:
1. What need does it satisfy?
2. What value does it offer to its customer?
3. What makes it unique?
4. What is its Unique Selling Proposition (USP)?
All of these must be answered with product’s target market in mind. Any changes in
any of the product’s features or attributes may necessitate a consequent change in one or all
of the other elements of the marketing mix (price, place and promotion).
Physical products have several added components: the packaging and labelling.
Packaging differs from labelling. Packaging serves to contain and protect, and
sometimes, identify and promote the product. A product’s packaging is different from its
label. Product packaging has several purposes:
 It protects the product in route to the customer
 It makes product storage and display more practical and effective
 It preserves the product for further customer use
When deciding on product packaging, four factors must be considered:
 The quantity of the product that should be contained in the package
 Physical attributes of the packaging that facilitate customer use
 The legal requirements that packaging may comply with
 And the most appropriate shape of the package
On the other hand, labelling is a display of information about a product on its
container, packaging or the product itself. The following factors must be considered in
deciding on the labelling of a product:
  Establish the image or personality of the product based on the tastes and
preference of the target market
 Determine the most important feature of the product to the target market
 Determine where the product will be sold and the applicable regulatory
requirements, if any
 Determine the placement of the product in relation to other products,
particularly competitors
Labels are, a product’s “silent salesman” and labelling is not an easy task considering
that there are many other competitive brands and products displayed on the same shelves, all
trying to attract the customer’s attention. Legal requirements must also be considered in a
product’s labelling for food and beverages. All food products must contain the name of the
manufacturer, country of origin, net content and its nutritional value table. It must also
include the product handling and preservation requirements. Some marketers include other
facts on their package label that enhance marketability and even costumer’s trust. Examples
are: The Sangkap Pinoy seal, organizational endorsement such as by the Philippine Dental
Association or the Department of Health, ISO Certification, “free from animal testing” label
or if it conforms to the requirements of Muslim practices, the Halal seal.
One of the most effective ways to get ahead of the competition is through new product
development. Introduction of new products are instances when customers are forced to buy
existing products and services in the market even if these only partially serve their needs.
This is because there are only limited product options available in the market. History is full
of successful new product launches that have changed the shape of entire industries and
created entirely new ones. You may also add the rationale behind new product development
and elaborate the rationale.
The New Product Development Process
Idea Concept Business
Idea Screening Development Analysis
Generation and Testing

Product Marketing Product

Commercialization Testing Development

Step 1: Idea Generation-the initial stage of the new product development process where any or all
of several idea generation techniques (need/problem identification, attribute listing, forced
relationship, morphological analysis, brainstorming, etc.) are used to generate as many new products
as possible.
Step 2: Idea Screening-the stage where the ideas generated in the initial step are screened using
the predetermined criteria to reduce them to a manageable few.
Step 3: Concept development and Testing-where new product ideas are converted to customer-
centered product concepts and tested by a representative sample of customers for acceptability,
believability, and potential intent.
Step 4: Business Analysis-pencil-purchasing stage where, based on concept development and
testing results, probable sales of the new product are calculated together with its costs and potential
probability
Step 5: Product Development-the new product development stage where the product concept is
converted into a tangible working prototype.
Step 6: Marketing Testing-the stage where the new product is marketed in a limited geographical
area to determine whether fine-tuning of attributes, positioning, pricing, advertising and promotions
program are necessary.
Step 7: Product Commercialization-the final stage of the process where a new product is
LET US REMEMBER:
Product and services are created because of human needs and wants. Information about
consumers’ tastes, preferences, perceptions, and priorities has significant contribution to the
design of the product. We cannot create products without any existing need or want in the
market. This enables the company to satisfy the needs and wants of the consumers. Satisfied
consumers mean satisfactory sales and income for the company. This is the very essence of
the product as an element of the marketing mix.

Performance Task # 1

LET US APPLY WHAT YOU HAVE LEARNED

Pretend that your company has been making and selling one product for the past five
years. Plan to make additional three products. These may be in the same category as the first
product or not. Use the following format. (Use separate sheet of paper)

PRODUCTS NEEDS/WANTS GOODS OR REASON FOR

THAT HAS BEEN SERVICES OFFERING THE
SATISFIED PRODUCT
Original Product
New Product 1
New Product 2
New Product 3