Chapter 1: Marketing Principles and Strategies

Lesson IV: What Do Organizations market

A. Marketing of Products

Products or goods are physically tangible items. It is perceivable by the human senses and can, therefore, be inspected
prior to purchase.

Products have the following levels:

1. Core or Generic Product – it housesits generic or core function. It can be defined as the purpose for which the
product was created. For example, the core or generic function of a wristwatch is to tell time, automobiles are
for transport. It would be very difficult to market a product solely on its core or generic function because similar
products have the same core or generic function. Product differentiation would not be possible.
2. Formal Product – this level includes factors that could effectively differentiates products manufactured by one
company with the other company. At this level, products can be differentiated as follows:
1. Features 4. Color
2. Styles 5. Shape
3. Price
3. Augmented Product – at this level, products/goods particularly those that are very expensive and have long
service lives are required to augment features for customers to purchase these types of products.
The following are some augmented features of a Product:
1. Credit terms 4. Warranty
2. Installment terms 5. Service
3. Installation 6. Repairs and Maintenance

Classification of Products/goods

Products that are marketed are classified as follows:

1. According to Use
a. Consumer goods – goods that are purchased for consumption (soft drinks, candies, hamburgers etc.)
b. Industrial goods – goods that are purchased to make other goods, to serve as a raw material or input in the
production of other goods (aluminum for kitchen equipment and cans, electric wires and cables serve as
electrical conduits for home appliances)
2. According to Differentiation
a. Undifferentiated goods – products whose physical characteristics are so identical, that it would be difficult, if
not impossible, to distinguish one purchased from one vendor or another. Most differentiated products are
products that are sourced from nature. Example: rock salt
b. Differentiated goods – products that vary in their characteristics and features that they are readily
distinguishable from one another. Example: When one were to park a white-colored vehicles of each model
from all car manufacturers side-by-side, a Toyota Fortuner would still be distinguishable from that of the
Mazda 3, the Nissan Sentra, the Honda Civic, and from the other white-colored vehicles in the parking lot.

 Branding – the ability of manufacturers to successfully distinguish their products from other
competitors. It provides a product or service a unique distinguishing name, logo, symbol or image which
is used to differentiate it from other similar products or services.

The reason why some manufacturers do not brand their products is because of COST. Once a
manufacturer brand its products, it must be recognize that there are two responsibilities that
accompany branding as follows:
 1. All products carrying a brand must have quality consistency.
2. The brand must be advertised and promoted.
 Brand Equity – defined as the appreciation in a brand’s value from the point of view of the customers.
3. According to Durability
 Durability – refers to the length of time a consumer can derive benefit from the product or goods
purchased.
a. Consumables goods – a product whose benefits can be used by a consumer for only a short period of
time, sometimes a few minutes. (food, drinks, other edible items, detergents, toiletries, soap)
b. Semi-consumables goods – products that provide benefits to the consumer for a longer period of time,
usually spanning several months. They are manufactured for longer-term use by consumers. (shoes,
clothes, belts, jackets etc)
c. Durable goods – are products that are manufactured to last a long time. They are capable of providing
consumers with years of beneficial use and are usually expensive that required an augmented feature to
market them effectively. (automobiles, houses, major household appliances)
4. According to Type
a. Convenience goods – products that are purchased frequently, are usually inexpensive, and do not
require much purchase effort and evaluation (newspapers, gum, candy). The key to marketing
successfully is its availability in as many stores as possible.
b. Shopping goods – are purchased less frequently than convenience goods, are relatively expensive, and
require some amount of information search and evaluation. (shoes, clothes, handbags)
c. Specialty goods – are goods that require unusually large effort on the part of consumers to acquire.
Consumers are more than willing to travel great distances to purchase this goods. (branded luxury
merchandise, works of arts, automobiles, and homes. Successful marketing of specialty goods require
promotion of strong brand image and identities.
d. Unsought goods – are goods that consumer seldom actively look for, and are usually purchased for
extraordinary reasons, such as fear or adversity, rather than desire. (investment, memorial plans, life
insurance). These goods require advertising and aggressive selling efforts and are usually marketed using
highly-trained and persuasive salespersons.

B. Marketing of Services

Services are generally considered more difficult to market than goods because of four attributes as follows:

1. Intangibility
2. Variability
3. Inseparability
4. Perishability
 Capacity management – a marketing strategy use by marketers to maximize revenues and avoid lost
service perishability. It is to achieved a proper balance between service demands (customer needs) and
service supply (service availability).