Page 573 - Business Principles and Management

Unit 6

21.1 Product

Goals Terms
• Explain how products, product • basic product • product line
lines, and product assortments • enhanced product • product assortment
are developed. • extended product • brand
• Discuss how product selection,
packaging, and branding improve
product sales and customer
satisfaction.

ou learned in Chapter 20 that companies develop a marketing mix to satisfy
customers and make a profit. The marketing mix is made up of the product,
Ydistribution, price, and promotion plans. Offering products that meet the
needs of customers would seem to be a company’s most important responsibility.
The product is important, but it must be carefully coordinated with each of the
other mix elements. In this chapter, we will examine how companies plan products
and make distribution decisions.

Product Development

As you learned in Chapter 20, a product consists of all attributes, both tangible
and intangible, that customers receive in exchange for the purchase price. It in-
cludes both physical goods and services. Some products are very simple and easy
for the customer to understand and use, and others are very complex. Because of
the variety of customer needs, the uses for products, and the number of competing
companies producing and selling products, product development decisions must
be made carefully. If companies produce the wrong products in the wrong quanti-
ties without the features and services customers need, they will have invested a
great deal of time and money with no chance to sell the products at a profit. They
will quickly lose out to competitors who make better product decisions.
Businesspeople and consumers usually hold very different perceptions of a
product. Businesspeople think of their products as what they have to offer to
customers. Consumers, on the other hand, are more likely to think of products
as ways to satisfy their needs. The company that manufactures the machine
Alexis needed to purchase at the beginning of the chapter designed a product to
perform a specific production function. The company is expert in the technology
of equipment design, so it builds what it believes to be a good product that cus-
tomers will prefer over the alternatives. Alexis wants a good piece of equipment
but is also very concerned about delivery, installation services, maintenance, and
cost. If the equipment manufacturer does not carefully consider all of Alexis’s
needs, it probably won’t make the sale.
Even the simplest products are made up of several components. An inexpen-
sive handheld calculator consists of the operating unit to make the calculations,
a case, display, and keys. It may be battery operated or use solar power or elec-
tricity. It could have a backlight to illuminate the display in the dark. It could be

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