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Summary Chapter 12
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Chapter 12 of Introduction to business, required course for first year iba
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Chapter 12: Product andPromotion
1: Product: It’s probably more than you thought
1.1: Services
Intangibility: Services cannot be touched, smelled or seen. This creates uncertainty: is the
purchase worthwhile?
Inseparability: You cannot separate the buyer of a service from the person who renders
it. Delivery requires interacton between the buyer and the provider: the customer
contributes to the quality of the service. E.g. doctor: statng symptoms clearly
Variability: e.g. a talented massage therapist will help you relax, a mediocre one might
create tension. A talented one might be beter later in the day than at the beginning, or
decrease in value afer an emotonal event.
Perishability: Marketers cannot store services for delivery at peak periods. E.g. at a
restaurant: they only have a certain amount of seats. You can’t tell your 8 pm customers
to come back tomorrow at 5 pm.
1.2: Goods versus Services
How to determine whether a product is a good or service? A goods or services spectrum
is a good tool for analysing the relatonship between the two.
One extreme: pure goods. E.g. ketchup or socks
At the other extreme: pure services: e.g. piano lesson
Other products like a dinner at a restaurant falls in between: Your dish is served (service),
but the food you eat is a good. E.g. Pizza hut
1.3: Purchasing a product
When purchasing a product: you actually purchase a complete product package. This
includes a core beneft, actual product and product augmentatons.
Core beneft: this is the beneft that satsfes their needs. E.g. purchasing a cell phone:
communicaton. A secondary beneft might include entertainment, since it plays music
too.
Actual product: The product itself that provides the core beneft. This might be tough to
identfy if the product is a service. E.g. going to the doctor. Core beneft: health. Actual
product: a doctor in a white coat poking you.
Augmented product: Most marketers wrap their actual products in additonal goods and
services. This increases competton. .or instance, cell phones come with warrantes or
insurance.
, 1.4: Product classifcation
There exist two types of products: consumer and business products. They are identfed in the
different classifcatons by its reason of purchase.
Consumer products: are purchased for personal consumpton
Business products: purchased to use directly or indirectly in the producton of another product.
1.4.1: Consumer product categories
1. Convenience products: these are inexpensive goods and services that consumers buy
frequently with limited consideraton. Widespread distributon, and producer promoton. E.g.
toothpaste and shampoo
2. Shopping products: more expensive, less frequently bought. Consumers look for best value,
and learn more about features and benefts through shopping processes. Distributon is
widespread but more selectve. Producers and retailers promote. E.g. Cars, computers and
cell phone services.
3. Specialty products Much more expensive: barely purchased. Distributon is highly selectvee
people tend to go out of their ways to fnd the right brand. Producers and retailers promote
these with a highly targeted audience. E.g. sport cars
4. Unsought products Goods and services that hold litle interest. Price and distributon vary
widely. Promoton tends to be aggressive to atract consumers. E.g. Blood donaton
1.4.2: Business product categories
1. Installatons designed for a long productve life. Marketng emphasises personal selling and
customisaton. E.g. airplanes
2. Accessory equipment smaller movable capital purchasese for a shorter productve life than
installatons. Marketng focuses on personal selling. E.g. furniture
3. Maintenance, repair and operatng products are small-tcket items that businesses consume
on an ongoing basis. Marketng emphasises efciency. E.g. copy paper
4. Raw materials farm and natural products used in producing other products. Marketng
emphasises price and service. E.g. coton and wheat
5. Component parts and processed materials include fnished products used in producing
others. Marketng emphasises quality and price and service. E.g. Bateries
6. Business services are services businesses purchase to facilitate operatons. Marketng focuses
on quality and relatonships. E.g. Legal services
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