What Is a Product?
The world is full of items that have the power to solve problems and make lives easier. These are called products, which can take many different forms. You could even say that everything we use and interact with daily is a product. From food to clothing, to soap, to plants — everything…. is a product.
By extension then, this makes product managers one of the most necessary parts of a successful business.
Every business is providing some level of product.
Therefore, you need someone to manage those products.
And every Product manager must ask themselves what they’re selling and who it’s being sold to.
This thought begins by first understanding whether your product is physical or virtual.
When we think of a product, what comes to mind are things like furniture, iPhones, or computers that we can call “physical products.”
On the other hand, virtual products are offerings of services or experiences such as mobile apps, education, or software.
In fact, this new era of virtual products has brought about changes to the traditional ways of business and increases the value of product managers.
These days, many companies are beginning to utilize technology and offer a hybrid product that includes both physical as well as virtual elements. More and more we are seeing hybrid products reach and serve more customers.
A great example of this is a video game, which is a physical and virtual product hybrid: requiring you to own a computer or gaming console (physical) in order to access the software of the game (virtual).
In comes the product manager: the person that is responsible for planning and maintaining the product, whether physical or virtual, throughout its lifecycle.
It takes more than just giving your customers what they want to earn their loyalty — it also requires you to think about how all aspects of production affect customer satisfaction; this includes pricing, marketing techniques as well as other factors like environment or design that may influence whether someone decides on one product over another.
Types of Customers Products Target
There are several general categories of products where some are new to marketing, some are new to the company, and some that are completely novel and create totally new markets.
Products can target many different segments, but in general, there are two umbrella terms that can cover a wide swath of products: Consumer and Business.
Products For Consumers
Consumer products are classified by how they meet the need for which they were purchased and on the way in which it is purchased rather than their characteristics. These are also known as Business-to-Consumer products (B2C).
The two prominent categories of consumer products are consumables and durables.
Consumable goods are those that get used up when satisfying your needs- like a thirsty person who buys a bottle of Coca-Cola to quench her thirst but has to drink all its contents before she can enjoy it again.
Durable goods last longer without being consumed or worn out such as clothing; whereas service providers deliver good value with no physical asset at risk.
Keep in mind, service providers are extensively different from durable and consumable goods and the offerings of the like have expanded dramatically thanks to the advent of SaaS.
Very few ‘products’ are purely service or purely tangible products. Especially in the last decade, they generally involve some mix of service within the overall product offering.
Products For Business
Business products are a type of product bought by organizations with the intention to contribute their efforts towards an organizational objective. Unlike household goods, industrial products are not purchased for personal consumption or enjoyment, but rather only as an effort on behalf of business-related objectives.
These types of products are also known as Business-to-Business products (B2B).
Economists consider these types of goods to be intermediate products which means that the demand for this product will ultimately depend on that of a final market being served by an organization. This is called derived demand and it’s why industrial markets are subject to greater fluctuations in demand than consumer-oriented ones.
A computer would be a good example of an industrial product, especially with remote work becoming a necessity for every company.
Kotler’s 5 Product Level Model
Businesses need to tailor their products to satisfy customers’ needs and wants, but that is a difficult task for businesses with limited resources. For many companies, it’s not feasible or cost-effective to customize each product by segmenting the market in alignment with customer preferences like price point, color preference, size requirements, etc.
The more flexibility these types of businesses have when configuring goods (such as scaling production output accordingly), the better off they will be at satisfying all consumer demands while also maximizing profitability.
Philip Kotler, an economist, devised a model that recognizes that customers have 5 levels of need ranging from functional/core needs to emotional needs. He established three drivers of how customers attach value to a product:
- Need: A lack of a basic requirement.
- Want: A specific requirement of products to satisfy a need.
- Demand: A set of wants plus the desire and ability to pay for the product.
Essentially, customers will buy products that best match their perceived value of the product, and they are satisfied only if the measured worth exceeds or matches what was initially expected.
- Core Benefit
Core benefits are the fundamental needs and want that consumers satisfy by consuming your product.
For example, if you’re designing a camera app, one of its core benefits is to provide digital photos so users can process their images anytime they want on any device.
- Generic Product
A generic product is a version of the product containing only those attributes or characteristics absolutely necessary for it to function.
For example, if you need to process digital images, but do not have the time and/or money, then using free image processing software on a personal computer or a processing laboratory will suffice.
- Expected Product
Every product has certain essential features that buyers expect when they purchase it.
For example, the computer is promised to offer fast image processing and high-resolution accurate color screens.
- Augmented Product
Augmented products are a cost-effective way to set your product apart from the competition and maybe even offer more than the competitors do with additional features, benefits, attributes, or other related services.
For example, preloaded image processing software for no extra charge makes people feel like you’re really looking out for them by including that feature in their purchase.
- Potential Product
In the future, products will undergo transformations and augmentations just like they do now.
To ensure customer retention in this ever-changing landscape of product development, businesses must aim to surprise customers with new upgrades and features as time goes on.
An example would be updating the OS to include new features that make life better for the consumer.
Why use the Kotler Model?
The Kotler’s Five Product Level model helps marketers strategize for the best product mix to target various customer segments.
By categorizing products into groups that correspond with specific needs, a company can keep their marketing efforts targeted and focused on meeting those niche demands of customers rather than spreading themselves too thin across more generalized consumer bases.
Kotler’s five-product level strategy is an extremely helpful tool in determining which stock-keeping units (SKUs) are most profitable when catering to different clientele demographics.
This enables companies’ sales processes and operational strategies such as design, production planning, inventory management or engineering, etc. to be aligned with each individual demographic of consumers—or “customer segment.”
The 5 P’s
What are the 5 P’s?
Also known as the Marketing Mix, the 5 P’s of marketing are place, price, product, promotion, and people, which are the five pillars of a successful marketing strategy.
Originally, it was developed by Edmund Jerome McCarthy, a marketing professor from Notre Dame, and it was originally known as the 4 P’s.
This format classified marketing activities into four dimensions, allowing marketers to improve best practices by incorporating sociology and psychology to improve their insight into consumer behavior.
Now, understanding the 5 P’s are the key to any successful marketing campaign:
Products are a key component in the success of every business. Companies need to carefully study and understand all aspects of their product, including how it impacts customers on an emotional, physical, or mental level.
Different types of products have different needs and desires which must be met for them to sell well; companies should identify what these facets may be early on so they can make more informed decisions when choosing their product strategy: whether it’s a physical or hybrid product.
One thing that is always important no matter what type of good you offer: understanding your potential buyers.
It’s crucial that businesses know who will buy their product before investing money into brainstorming ideas or building prototypes.
At the heart of the 5 P’s are the customers who need to be considered when you’re strategizing for success as a marketer.
Marketing is about recognizing the needs of your customer and satisfying them. The engine that makes this happen? People!
Every person in your organization should be able to answer any question a potential or current customer has, which includes from customer service to sales.
Every business needs good people to understand the people they’re working for to create an excellent customer experience.
Promotion is about more than advertising; it’s the culmination of all your activities and methods that are used to promote products or services.
With promotion comes costs, so make sure you’re doing enough research on how well each method will do before investing in any one form.
The cost can be a hefty number depending on what kind of media you want to use for marketing purposes.
It would also help if you know who your target market is as this should affect which forms of promotion will work best when it comes to targeting.
As they say in marketing, “it’s all about location.”
Location is a huge influence because consumers aren’t actively shopping for your product or service.
When consumers want something, they are strongly influenced by what’s currently available to them.
The place element refers to how you get your product or service into their hands at the right time and the right place as well as being competitively priced with quality that suits their needs.
This directly leads to why people buy from one store or one company over another even if it has higher prices.
Once an understanding of the product is established, pricing decisions can come into effect.
Pricing determines profit margins and supply/demand as well as a marketing strategy for any company or brand that sells products to customers.
It’s important to understand what your customers value when comparing prices from other brands in order not to be left out on a limb with your offers.
The art of pricing is coming to life through the lens of your customer.
Understanding what they value and how much it’s worth in their eyes will help you determine a price for a new product, which will lead you to your product-market fit and allow you to carve out your market niche.
How to Price a Product?
First: Find the base price of common pricing strategies in your industry
If you’re not sure how much to charge for your product, it’s best to do some research on what prevailing prices are in the industry.
If there is no information available online or if this doesn’t work, try looking at other products that offer a similar set of benefits and see what they cost. It may also be worth checking out competitors’ pricing strategies before setting yours as well!
The price should reflect both fixed and variable costs incurred by the seller/creator of the product during the production process.
Then: Capture market share through pricing strategies
Pricing strategies are a good way to capture market share. For example, if you have competitive goods and services then lower prices will entice consumers into your store while higher price points may be more suitable for luxury brands looking to attract the affluent customer base.
The pricing strategy is important because without it customers won’t know how much they should pay which can lead them away from making purchases that would benefit both parties in terms of profit margin and consumer experience.
Lastly: Make sure product pricing drives long-term profit
There is no greater strategy for a company than to make sure that its product pricing drives long-term profitability.
The keyword here, however, is “long term.” Too many businesses look at short-term solutions which only serve to drive the business into losses in the medium and even longer terms.
It may seem like common sense, but there are many who don’t think about it before taking action on what appears as an attractive way to generate a quick profit.
Setting your first price
To set your first price, find out what it takes to bring the idea for your product to market.
You need a break-even point which is more than just making enough money from each sale in order to cover costs and make a profit.
The costs need to include the cost of employees, marketing, and product development, amongst other things.
The Need for a Product Manager
Product managers play a critical role in the development of software and digital products. The product manager’s responsibilities cast a wide net from setting product vision to developing feature roadmaps that meet both company goals and user needs.
The technology industry relies on their guidance for every step of a product’s lifecycle
Product management may be done at an enterprise level for all products offered by the company or on a project basis where it focuses on one type of product such as software applications.
Product management is a complicated process that requires technical, business, and design expertise.
Product managers not only need to understand the customer needs but also what makes for an intuitive product experience. They must be able to balance user-oriented goals with bottom-line objectives whilst keeping in mind cost efficiency on behalf of their company.
Aspiring PMs should consider three primary factors when evaluating a role: core competencies, emotional intelligence (EQ), and company fit.
The best PMs we’ve seen were the ones who had mastered their skills in core competencies as well as EQ and found work that matched them at an appropriate organization for growth opportunities.
They are responsible not only to ship new features on a regular basis but also to keep the peace between engineering team members and design while always aiming towards delivering products which will positively impact user adoption rates of your product or simply disrupt an industry altogether!
Now that you know some of the basics about the product, it’s time to tell you about Chisel.
What is Chisel? It’s a product management tool to perfectly balance the three dimensions of product management: product roadmapping, team alignment, and customer connection.
With our intuitive interface and powerful features, we make it possible for anyone to create a roadmap for their product and align their team.
We like to say we use Chisel to build Chisel.
Let us help take your idea from concept into reality—we want every entrepreneur in the world to have access to this awesome platform so they can craft amazing products!
For more information on how we work and what makes us different click here.