[MUSIC] Hi, I am Fernando Cortiñas, associate professor of marketed at the IE Business School in Madrid. During today's sessions, we will discuss some concepts about the first P of marketing which is the product. First of all, we will define what product [INAUDIBLE] and we check the different levels of dimensions that make a product. Secondly, we will explore the major decisions that the company has to make regarding products and services. In third place, we will present the noxious of product life cycle and planned obsolescence. After that, we will discuss how to apply the product life cycle concept to construct strategic [INAUDIBLE] and what they are going to be use for. Finally, we will invest some minutes to discuss new product launch and product innovation. Going to the product definition. What is a product? Address in our first question and according to Professor Philip Kotler's definition. Product is anything that can be offer to market to satisfy a need or want. Which consist of a set of attributes. It includes physical goods, services, experiences, events, persons, places, properties, organizations, information and ideas. As we can see in Professor Kotler's definition, this is what we called a descriptive definition. That stresses is the notion that the product can be not only a tangible object but also intangible services and things, especially in the digital age. For instance, a clear example about this is when we buy a movie or a pay-per-view event such as a soccer match over the TV channel. Which are the product levels? Basically, a product has what we could define as three product levels. The first one is what we called the core product. What is the core product or the core benefit? It's the problem solving service or benefit the consumers are really buying when they want to buy something. This is surrounded by a second aspect which is the actual product. The actual product, it is the set of attributes a product has at a time of being sold. It's what the product is at the time of being sold as a product. I will like to give you an example of this. Imagine that we buy a car, what would be the core benefit of the car? Safety, performance, and speed. But do you really buy speed and safety when you buy a Ferrari or when you buy a Rolls Royce? Just to be honest, the second layer, the actual product maybe even more important than the core benefit. For instance, the color and the brand itself maybe more powerful than the real benefits you're paying for. Let's give another example. In the case of a shampoo, what would be the core benefit? The cleaning capability of the shampoo. However, would you buy a shampoo if the consistency Of the shampoo look like water and it have no smell and it produce no foam, perhaps you wouldn't buy it. The actual level of a shampoo, the second layer surrounding the core benefit which is the cleaning capacity. Is provided by the smell, the softness, the creaminess and the ability of the shampoo to produce foam. So in the end, it is very hard to differentiate what is the from the actual product. Both of them make a real entity. Now, Professor Kotler in the last edition of his books has separated the actual product into two different dimensions. One is what we could define as the basic product, which is the minimum set of attributes that we as a company offer to satisfy a need. But from a customer view point, we have to differentiate the basic product from what the customer expects from us as a company. And this is what Professor Kotler defines as protected product which is a set of attributes and conditions that buyers normally expect when they buy the product. But still we have to speak about the third traditional dimension which is the. Augmented product which is the augmented product part of a product, it is the loop of features that go beyond consumer's expectations and differentiate our products from those of our competitors. If we go back to our example of the car, the service level, the after-sales service, the delivery conditions, the credit, and some other added value features. Such as free insurance for the car owner could be part of that dimension. Imagine that you are Volvo and that you are competing on safety. How important is for a Volvo buyer that Volvo comes until [INAUDIBLE] buyer, I am going to give you a free insurance policy for you and your family. Because as we claimed that we are the safest car in the world, because of that, the cost of insurance policy for us is very cheap. And because of that we give it to you for free. This would be a nice feature that the customer was not expecting initially. However, it brings value and it goes beyond what the initial customer expectations were. Right now, we are going to discuss or to define what different type of products we have. Basically products can be split or can be classified in two big categories. One is consumer products and the other is industrial products. Consumer products are products which are bought by final consumers for personal consumption. Where as B2B or industrial products are products bought by individuals and organizations for further processing or for use in conducting a business. The major difference between both is based not necessarily on the nature of the product. But on the final purpose or usage of that product, let's give an example of that. If you buy a car to use as your family car for leisure or for transportation, this would be consider a consumer product. However, if you buy exactly the same car to be used as a taxi, this would be consider as a B2B or an industrial product. In turn, consumer products can be classified in four subcategories. The first one is what we call convenience goods which are products that consumers buy frequently, immediately and with a minimum of comparison and buying effort. Imagine that you want to buy a box of matches or a lighter, these could be fall in the categories of convenience goods. A second type of consumer goods is what we call shopping goods, which are consumer goods that costumers compare in the process of selection of purchase. And this comparison and the selection is characteristically based. On items or features such as quality price and style. But still we don't embrace to much time on that. A third level could be that of what we called specialty goods. Specialty goods are consumer goods with unique characteristics or brand identification for which a significant group of buyers would be willing to make special purchase efforts. They would invest significant amounts of time regarding the selection and the choice of these particular products. The last category will be that of what we call unsought goods. What are unsought goods? Are consumer products that consumers don't know about or even when knowing about them, you don't thunk about buying them. This has been all for our first session. In our next module, we will discuss what are the most important decisions regarding product and service launches and then we will explore some issues about brand and branding. Thank you very much. I look forward to meeting you on our next session. [MUSIC]
