Product Decisions: Concept & Types | UGC NET Commerce Preparation Course PDF Download

Overview of Product Decisions

A product is the final output that an organization manufactures to generate profit by selling it. In today's highly competitive market, it is essential to design and market the product carefully to meet customer satisfaction while also aligning with the organization's financial goals.

What is a Product?

A product can be defined as a combination of physical, service, and symbolic attributes that provide satisfaction or benefits to the user or buyer.

• As W. Alderson puts it, “A product is a set of tangible and intangible attributes, including packaging, color, price, and the services provided by manufacturers and retailers, which the buyer may accept as fulfilling their needs or wants.”
• Philip Kotler defines a product as “anything that can be offered to a market to gain attention, acquisition, or consumption, and that might satisfy a need or want. It includes physical objects, services, people, places, organizations, and ideas.”

Characteristics of a Product

Some key characteristics of a product include:

• A product comprises both tangible and intangible attributes.
• It includes aspects like color, price, packaging, and branding.
• A product is essentially a bundle of utilities.
• It is designed and presented to meet specific consumer needs.

What Are Product Decisions?

The marketing mix involves how businesses utilize the 4Ps (Product, Price, Place, Promotion) to market their offerings. Marketers make various decisions when promoting products, which are referred to as product decisions. These include decisions related to packaging, labeling, and branding, which are essential to the overall marketing strategy.

Types of Product Decisions

Product decisions encompass several key areas, including:

1. Product Design Decisions: These pertain to the design aspects of the product. Effective design that meets customer needs and is easy to use can provide a competitive edge in the market.

2. Production Decisions: These involve choices related to the manufacturing process, such as the type of technology to be used, the quality of the product, and the method of production (e.g., batch production or continuous flow).

3. Product Line Decisions: These refer to decisions about adding or removing products from existing product lines. Key areas include:

   • Product line length: Decisions on whether to add new products or eliminate underperforming ones.
   • Product line stretching: Extending the product line by adding new products.
   • Product line modernization: Updating products in a line to match modern tastes and re-launching them.
   • Product line featuring: Highlighting specific products within the line, often using promotional models to attract customers.

4. Product Mix Decisions: The product mix, or product assortment, is the complete set of products offered by a company. According to the American Marketing Association (AMA), a product mix is the composite of products offered for sale by a firm or business unit.

Types of Product Mix Decisions

• Product mix length: Refers to the total number of items in the product mix.
• Product mix width: Involves the variety of product lines a company offers.
• Product mix depth: Concerns the number of variants available within a product line.

The Concept of the Product Life Cycle

Products have a limited lifespan and pass through distinct stages, each with its challenges, opportunities, and problems. Profits fluctuate at different stages of the product life cycle, requiring different marketing, financial, manufacturing, purchasing, and human resource strategies. The stages include:

• Introduction: A phase of slow sales growth as the product is introduced to the market. Profits are minimal or nonexistent due to the high costs of launching the product.
• Growth: A period of rapid market acceptance and significant profit increases.
• Maturity: A slowdown in sales growth as the product has been accepted by most potential buyers. Profits may stabilize or decline due to rising competition.
• Decline: A stage where sales decrease, and profits diminish.

Conclusion

Product decisions are crucial in the marketing process. Marketers must understand customer needs and preferences to make informed product decisions. Well-considered product decisions can give organizations a competitive advantage in the market.