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Product Decisions Definition
Let's first examine the definition of product decisions.
Product decisions are decisions to be made about the product or service a company wants to sell. These decisions are vital to creating a successful marketing mix to meet the company's objectives.
Before we discuss the technical aspects of product decisions, let's quickly take a look at some examples of the types of decisions marketers might make. While making product decisions, marketers consider:
1. The core benefit of the product. For example:
Mineral water quenches your thirst.
Buses take you from point A to B.
The supermarket allows you to shop for daily groceries.
Facebook is the platform that keeps you in touch with friends and family.
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While the core benefit stays more or less the same, customers' wants and needs can change over time, and thus the business must be prepared to adapt accordingly.
2. The nature of the product and service.
The nature of Starbucks coffee is its ingredients, type of coffee, and cup size.
The main ingredients are roasted coffee beans, sugar, milk, or cream.
Types of coffee include blonde roast, medium roast, and dark roast.
The cup size can be short, tall, or grande.
The nature of the product is what constitutes the product and should be developed according to the customer's needs and wants.
3. Augmented features.
These extra services come with the product, such as guarantee, installation, customer support, and maintenance. Besides product quality, augmented features play an essential role in turning a new customer into a regular one.
Product Decisions: Product Differentiation and USP
A product's unique selling points are features that differentiate it from its competitors. In other words, it is what the business can offer but others can't. For instance, a product can be cheaper, safer, faster, chicer, more friendly, or visually appealing.
- Apple doesn't just sell iPhones; they sell a lifestyle. Owning an Apple product is like having a friend who gives you hopes, dreams, and aspirations.
- Adidas is a renowned manufacturer of shoes, sporting clothes, and goods that appeal to a wide demographic.
- Starbucks sells high-quality roasted coffee and provides a cozy space for friends and family to gather.
Product Attribute Decisions
One of the primary decisions marketers have to make involves decisions about product attributes. Product attributes are the characteristics and defining features of a product. They are individual product decisions and are as follows:
Product quality decisions - The quality of a product is crucial for its marketing. It plays a key role in positioning as products can be positioned based on their high quality (e.g., high-performance luxury cars or high fashion clothing made from the best quality fabrics). Product quality is also essential for providing value to customers - a high-quality product can be a value-adding feature that results in customer satisfaction.
Product feature decisions - Another element of product attributes are the product's features. Product features are crucial for differentiation. Adding additional features makes a product stand out from similar products offered by competitors. So, how do marketers know which product features to add? Through market research. Of course, adding a random product feature will not automatically guarantee success. However, market research can help companies gain insight into what customers actually want and need regarding a product, leading to higher customer satisfaction.
Product design decisions - Similarly to product features, product design can help marketers differentiate their offerings from competitors. For example, a functional design can make it easier for customers to use a product, leading to fewer complaints, returns, etc. On the other hand, product style can capture customers' attention.
For example, Apple is known for its innovative and high-performance MacBooks. However, this product attribute is only part of the company's success, as many other tech companies offer similar products. The MacBook's sleek design and user-friendliness (ease of use) differentiate the product from its competitors.
Individual Product Decisions
Now that we have covered product attribute decisions let's look into other individual product decisions. Individual product decisions refer to decisions marketers must make about one particular product or service. They include decisions about the product's attributes, branding, packaging, and the additional services attached to the product (see Figure 1 below).
Product Decisions: Branding
After product attributes, the following key decision marketers must make involves product branding. Should we use the same logo? Will we use the same brand name? We will cover the answer to these questions in more detail later in the explanation, but for now, let's look at the importance of branding.
The brand name, logo, slogan, etc., are key features that help customers identify a product. Branding can add more customer value by further differentiating a product from the competitors. It also helps strengthen customer relationships as customers attach meaning and develop emotional connections with brands.
Check out our explanations of brand management and brand awareness to find out more about the importance of branding.
Product Decisions: Packaging and Labeling
Another product decision marketers must make includes packaging. What kind of packaging will we use to make our product stand out? Can we use a particular type of packaging to differentiate our product from similar products on the supermarket shelf?
The primary function of packaging is to hold a product and protect it from damage.
However, due to the nature of today's competitive environment - high competition and numerous similar product offerings - packaging plays an essential role in product differentiation. Marketers can differentiate packaging based on:
Functionality - Relates to the convenience of removing the packaging and using the product. Functionality is especially relevant when using online distribution channels. Customers do not want to receive dozens of boxes and plastic wrappers when shopping online.
Design - Some brands might add quirky or colorful designs to their packaging to grab customers' attention. For example, certain chocolate and tea products are packaged in colorful boxes with floral designs.
Branding - A Starbucks cup is recognizable (Starbucks logo on a white paper cup) due to the branding on its packaging.
Safety - Food products are packaged in ways that avoid spillage or contamination.
Another essential product decision element is labeling. Most brands add logos and labels to their products, which adds to their branding. For example, Nike labels its products with its iconic check mark, adjusted to fit each product's size. On the other hand, food and beverages legally have to be labeled with an ingredient list. These regulations are in place to protect customers.
Product Decisions: Additional Services
Finally, additional services also play an essential role in product decisions.
Support services are additional services that customers benefit from when purchasing a product.
Companies often pair support services with products to increase the value they bring to the customer. Support services can be of significant value, like helping a company integrate a new software system into its operations after purchasing a new software. On the other hand, support services can be minor, like offering free returns on products purchased online. Support services like post-sales communications can help a brand strengthen its customer relationships.
Product Line Decisions
The next element marketers must consider when creating a product strategy includes product line decisions.
A product line is a group of related products that function similarly and are sold to the same customer segment.
One key consideration in product line decisions involves product line length. We can quantify the length of a product line by examining the number of products in one particular product line. Marketers must assess product line length from time to time to see whether any adjustments need to be made.
A product line may be too long with certain products that do not bring the company much revenue. This is often due to products being saturated or reaching the end of their life cycle. In this case, the marketer must evaluate which products to remove from the product line. On the other hand, a product line may be too short. Short product lines are those with the potential to bring the company additional profit. Marketers might consider adding new products to increase sales and revenue if a short product line is performing well in the market.
There are two methods for extending a product line (see Figure 2 below):
Product line filling - Filling means adding more products to the current product line or range. For example, offering different beverage flavors or producing the same shirt in a different color.
Product line stretching - Stretching involves adding more products beyond the existing range. For example, if Apple decided to release a budget version of its MacBook Pro, it would be an example of a downward product line stretch. However, if shampoo manufacturer Head & Shoulders decided to sell a luxury version of their shampoo, it would be an upward product line stretch.
Using the product life cycle
Marketers can develop their product decisions by determining which stage a product is in during its life cycle. For example:
In the introduction stage, the price can be set high to create a high-end brand image, then lowered over time to capture more market share for the business.
Promotion can change from raising customer awareness in the introduction stage to emphasizing the product's USP against the competitors.
The distribution of the new product may prove difficult in the beginning but get easier as time goes on.
Marketers can use the extension method to maximize sales during the product life cycle. An extension strategy is a change in marketing activities to avoid decreasing sales.
Some examples of extension methods:
Increase the number of uses for the product.
Upgrade the product.
Reinvent the product image.
Product Mix Decisions Example
Finally, let's take a closer look at product mix decisions. Many companies, particularly larger retailers, have multiple products and product lines. The collection of these product lines is known as a product mix.
A product mix is a company's portfolio of all the different product lines they offer.
We can explore a company's product mix based on four different categories:
- Mix width - refers to the number of product lines a company has. For instance, Coca-Cola has three main product lines: soft drinks, Minute Maid, and mineral water.
- Mix length - refers to the number of products within each product line. For example, Coca-Cola offers various products like Coca-Cola Zero or Diet Coke in its soft drinks product line and Glaceau Smartwater and Dasani within its mineral water product line.
- Product line depth - refers to the number of varieties available in each product line. For example, Coca-Cola offers cherry, vanilla, and lemon flavored Coca-Cola, in addition to its original flavored beverages.
- Product line consistency - refers to how closely each product line is related. We refer to consistency in terms of the actual product line itself, its distribution, production, etc. Following the previous example, Coca-Cola's product line is consistent as all of its brands offer a type of beverage.
As a result, marketers have to make various types of product decisions. Through product decisions, marketers can add value to customers and strengthen customer relationships through their offerings. However, it is also essential to periodically review product decisions to minimize the risks of losses or losing out on potential profit.
Product Decisions - Key takeaways
Product decisions are decisions about a company's product or service to meet customer demand and ensure business success.
Product quality, feature, and design are product attribute decisions.
Product attributes, branding, packaging, labeling, and support services are individual product decisions.
A product line is a group of related products that function similarly and are sold to the same customer segment.
Marketers can use product line filling or stretching to extend a product line.
A product mix is a company's portfolio of all the different product lines they offer.
Marketers examine the product mix's length and width and a product line's depth and consistency.
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Frequently Asked Questions about Product Decisions
What is production decision?
Product decisions are decisions to be made about the product or service a company wants to sell. These decisions are vital to creating a successful marketing mix to meet the company's objectives.
Who makes the final decision on ordering the product backlog?
The product owner makes the final decision on ordering the product backlog.
What is the objective of the product decision?
The objective of product decisions is to ensure that the 'product' element of the marketing mix is effective. Marketers make individual product decisions (attributes, branding, etc.), product line decisions, and product mix decisions.
Which action can be considered a product decision?
Various actions can be considered product decisions. For instance, individual product decisions like product quality or design decisions (i.e., product attributes), product line decisions (e.g., line filling), and product mix decisions can all be considered product decisions.
How does pricing affect product decisions?
Pricing and product decisions go hand in hand in marketing as both elements are crucial to the marketing mix. For example, if a product line is too short, marketers might consider adding a new product to it to increase revenues. Additionally, they might use price skimming or penetration pricing to price the new product development, showing the relationship between product and pricing strategies.
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