Several marketing tactics depend on the nature of the product itself. For this reason it is helpful to have a broad understanding of how to think about products. As you will see, marketing practitioners and academics have put together a variety of "typologies" for thinking about products, and examining these typologies (and their implications for tactics) is the purpose of this tutorial.
THE BASIC VIEW
Products are simply bundles of benefits. We have seen this before when we segmented the market based on these benefits. In the basic view, a product exists on 3 levels. The first level is the core product, or the core benefits the product delivers. It typically represents the problem a customer is trying to solve. It is basic and may consist of only one idea, but it is the key reason why someone buys the product. An example might "transportation" for a car buyer, or as Theodore Levitt pointed out (and he invented this concept), buyers don’t buy quarter-inch drills, they buy "quarter-inch holes". This is a high level view of a product, much like the word "solution" is a high level view of what many firms sell today. Nonetheless, without a core benefit, you have nothing to offer customers.
The actual product is the second level. Features exist at this level, but so do abstract attributes (see the tutorial on attributes and benefits) and some benefits. In any event, these features, abstract attributes and benefits are tightly aligned with the core benefit and represent the physical product we see.
The augmented product consists of all the additional services (warranty, installation, delivery, service, etc.) built around the core and actual product.
This view is useful in focusing our attention on having a core benefit, but also for understanding the augmented product characteristics that most products eventually must possess to stay viable in the market.
THE ECONOMIST VIEW
Economists have classified products as well, and I find this classification to the most useful in understanding some of the issues associated with the tactics of marketing. Consider that with positioning statement in hand, we now want to configure and market a product that delivers on this positioning statement. That will focus our attention on the various attributes associated with the benefits we are promising. Indeed, we will be trying to communicate these attributes (and benefits) to customers. But how easy is this going to be? This depends on the type of attribute.
In the economics view, there are three types of attributes: "search," "experience" and "credence" attributes.
Search attributes can be easily determined before the product is purchased; examples of such attributes are price, color, size, and location. Marketing problems are relatively easy here since customers can readily gather information about the product benefits and costs upon inspection.
Products that must be purchased and used before the attributes can be assessed are experience products; an example is the cleansing power of soap. With these attributes, it’s important to understand the inability of customers to gather decision-making information without usage. Marketing problems increase as a result, especially those related to education and information provision.
For credence products, the consumer may never know if the attribute (and the associated benefit) exists, even after purchase. Think, for example, of a positioning by a juice manufacturer for the long-term health benefits of its product, and the associated anti-oxidant attribute in the product. In this case inspection and trial are insufficient because the benefits and the underlying attributes are not directly observable or experienced. As another example, think of a software company that is positioning its product as providing fast and profitable decision-making. This benefit (and many of the associated attributes) is of the credence type.
In these cases, customers must rely on indirect cues to infer an attribute. These cues take the form of signals (i.e., something that indicates something else – like the softness of bread may signal "freshness" or price may signal "durability"). Thus, when making the pricing decision, we may need to consider that price must act as a cue and thereby price accordingly. The choice of a channel of distribution or the nature of the advertising may also act as a cue.
I might note that reputation is also very important with credence attributes. Again, since customers can’t inspect and experience the attribute, the reputation of a company to credibly provide that attribute becomes an important part of a customer’s overall decision.
QUICK VIEW OF OTHER CLASSIFICATIONS
Marketing people sometimes think in terms of shopping (less frequent purchase, much planning, etc.), convenience (frequent purchase, little comparison) and specialty goods (strong brand preference). They also break products in to consumer versus industrial products. In my experience, little additional insight is gained by thinking in these terms except for broad conclusions (e.g., convenience goods generally have a low price). These conclusions will likely only distract you from the marketing problems at hand.
Nelson, Philip (1970), 'Information and Consumer Behavior', 78 Journal of PoliticalEconomy, 311-329.
