What Is a Product?
The world is full of products, which can take many forms. Everything we use and interact with daily is a product, from food to clothing, soap, and plants.
By extension, this makes product managers one of the most necessary parts of a successful business.
Every business provides 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 are the buyers.
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 offer services or experiences such as mobile apps, education, or software.
This new era of virtual products has brought about changes to the traditional ways of business and increased the value of product managers.
These days, many companies are beginning to utilize technology and offer a hybrid product that includes both physical and virtual elements. More and more, we are seeing hybrid products reach and serve more customers.
A great example of this is a video game, a physical and virtual product hybrid. It requires you to own a computer or gaming console (physical) to access the game’s software (virtual).
In comes the product manager: the person 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, and other factors like environment or design that may influence whether someone decides on one product over another.
What Are the Examples of Product?
Consider a new vehicle. Dozens, if not hundreds, of computer chips control the vehicle’s engine, dashboard screen, and other electronic parts.
The vehicle is the product for the car user. Although most automobile customers will never notice them, these computer chips are valuable to the automaker who developed the car and the technician who maintains and fixes it.
The inkjet printer is another excellent example. Several companies began offering their printers for low prices several years ago. Some even provided them for free.
What’s the point? These printers went out of ink every few hundred pages or months. As a result, the owners had to replace ink cartridges frequently during the year.
We wrongly believed that the printer was the product we were ordering. The printer, however, was more of a promotional tool to the firm that manufactured and supplied it. Ink cartridges were authentic products.
What are the Types of Customers Products Target?
There are several types of products. Some are new to marketing, some are new to the company, and some that are entirely novel and create new markets.
Products can target many different segments, but two umbrella terms generally can cover a wide swath of products: Consumer and Business.
Products For Consumers
Consumer products are the first category under types of products classified by how they meet the need for which they were purchased and on how it is purchased rather than their characteristics. These are also known as Business-to-Consumer products (B2C).
The two major categories of consumer products are consumables and durables.
Consumable goods 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 that service providers are extensively different from durable and consumable goods, and the offerings of the like have expanded thanks to the advent of SaaS dramatically.
Very few ‘products’ are purely service or purely tangible. Especially in the last decade, they generally involve some mix of services within the overall product offering.
Products For Business
Business products are a type of product bought by organizations 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 goals.
These products are also known as Business-to-Business products (B2B).
Economists consider these goods to be intermediate products. It means the demand for this product will depend on the final market served by an organization. This is called derived demand. That’s why industrial markets are subject to more significant fluctuations in demand.
A computer would be an excellent example of an industrial product, especially with remote work becoming necessary 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 companies 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 five 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 an essential 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. They are satisfied only if the measured worth exceeds or matches initial expectations.
Core benefits are the fundamental needs and want consumers to 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.
A generic product is a version of the product containing only those attributes or characteristics necessary to function.
For example, if you need to process digital images, but do not have the time and money, then using free image processing software on a personal computer or a processing laboratory will suffice.
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 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 looking out for them by including that feature in their purchase.
In the future, products will undergo transformations and augmentations just like they do now.
Businesses must aim to surprise customers with new upgrades and features to ensure customer retention in product development.
An example would be updating the OS to include new features that make life better for the consumer.
Why Use the Kotler Model?
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 a beneficial product management 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 to be aligned with each demographic of consumers—or “customer segment.”
The 5 Ps
What are the 5 Ps?
Also known as the Marketing Mix, the 5 P’s of marketing are place, price, product, promotion, and people, the five pillars of a successful marketing strategy.
Initially, it was developed by Edmund Jerome McCarthy, a marketing professor from Notre Dame, and it was initially known as the 4 Ps.
This format classified marketing activities into four dimensions, allowing marketers to improve best practices by incorporating sociology and psychology to enhance their insight into consumer behavior.
Now, understanding the 5 Ps is the key to any successful marketing campaign:
We have already discussed the product definition. Products are a vital component in the success of every business. Companies need to carefully study and understand all aspects of their product, including how it impacts customers emotionally, physically, or mentally.
Different types of products have different needs and desires that you must meet to sell well.
Companies should identify what these facets maybe early on to make more informed decisions when choosing their product strategy: whether it’s a physical or hybrid product.
No matter what type of good you offer, one thing that is always important is understanding your potential buyers.
Businesses must 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. You must consider them when 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 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 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 high depending on what kind of media you want to use for marketing purposes.
It will 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 massive 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.
The place element refers to how you get your product or service into their hands at the right time and place. You need to ensure it is competitively priced with quality that suits their needs.
This leads to why people buy from one store or company over another, even if it has higher prices.
Once an understanding of the product is established, pricing decisions can affect.
Pricing determines profit margins and supply/demand and a marketing strategy for any company or brand that sells products to customers.
It’s essential to understand what your customers value when comparing prices from other brands to avoid being 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 research 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 similar benefits and see what they cost. It may also be worth checking out competitors’ pricing strategies before setting yours!
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 an excellent way to capture market share. For example, if you have competitive goods and services, then lower prices will entice consumers into your store. At the same time, higher price points may be more suitable for luxury brands looking to attract an affluent customer base.
The pricing strategy is vital because customers won’t know how much they should pay without it. It can lead them away from making purchases that would benefit both parties in profit margin and consumer experience.
Lastly: Make sure product pricing drives long-term profit
There is no greater strategy for a company than ensuring 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 company into losses in the medium and even longer terms.
It may seem like common sense, but many 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 that is more than just making enough money from each sale to cover costs and profit.
The costs need to include the cost of employees, marketing, product development, and other things.
The Need for a Product Manager
Product managers play a critical role in developing software and digital products. The product manager’s responsibilities cast a wide net, from setting product vision to developing feature roadmaps that meet company goals and user needs. Though product roadmap software is available for you, product managers know how to make its best use.
The technology industry relies on their guidance for every step of a product’s lifecycle.
You may do product management 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 need to understand the customer needs and what makes for an intuitive product experience. They must be able to balance user-oriented goals with bottom-line objectives while keeping in mind cost efficiency on behalf of their company.
When evaluating a role, aspiring PMs should consider three primary factors: core competencies, emotional intelligence (EQ), and company fit.
The best PMs we’ve seen were the ones who had mastered their core competencies and EQ skills and found work that matched them at an appropriate organization for growth opportunities.
They are responsible not only for shipping new features regularly but also for keeping the peace between engineering team members and design while always aiming to deliver products that 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 definition, product examples, and price, it’s time to tell you about Chisel.
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 great platform so they can craft amazing products! For more information on how we work and what makes us different, click here.