3.3 The Marketing Mix – Product
Learning Objective
Understand and be able to explain the difference between goods and services, and apply the full scope of the product element of the marketing mix as set out in the Cambridge 9609 syllabus.
1 The Role of Marketing (3.1)
- Marketing is the process of identifying, creating and delivering value to satisfy customers’ needs while achieving the organisation’s objectives (profit, growth, market share, sustainability).
- It links directly to other business functions:
- Finance: revenue generation, pricing decisions, budgeting for promotion.
- Operations/Production: product design, quality control, inventory management.
- Human Resources: training staff for service delivery, sales force effectiveness.
- Corporate Social Responsibility (CSR): ethical sourcing, environmental impact, community engagement – the “triple‑bottom‑line” of people, planet and profit.
2 Demand, Supply & Market Context (3.1.2‑3.1.3)
2.1 Demand‑Supply Influences on Product Decisions
- Demand factors: consumer income, tastes & preferences, price elasticity, demographic trends, cultural influences.
- Supply factors: availability of raw materials, technology, competitor output, capacity constraints.
- Marketing analyses these forces to decide:
- Which product features to emphasise.
- What price point is realistic.
- How to position the offering in the market.
2.2 Market Types
| Market |
Key Characteristics |
Example (Product) |
| Consumer (B2C) |
Individual or household buyers; decisions driven by personal need, emotion and price sensitivity. |
Smartphone, fast‑food meal. |
| Industrial (B2B) |
Organisations buying for production, resale or operational use; decisions are rational, based on specifications, total cost of ownership. |
Industrial robot, bulk packaging material. |
| Geographic scope |
Local – single city/region; National – whole country; International – multiple countries, often with adaptation to local cultures. |
Local bakery vs. national coffee chain vs. global airline. |
2.3 Mass Marketing vs. Niche Marketing (3.1.5)
| Strategy |
Advantages |
Disadvantages |
Typical Product Example |
| Mass Marketing |
Economies of scale, wide brand awareness, lower unit cost. |
High competition, limited differentiation, vulnerable to market shifts. |
Standardised soft drinks. |
| Niche Marketing |
Strong customer loyalty, less direct competition, ability to charge premium. |
Smaller market size, higher per‑unit cost, risk of over‑specialisation. |
Hand‑crafted vegan leather bags. |
2.4 Market Segmentation (3.1.6)
- Dividing a broad market into distinct groups of consumers with similar needs or characteristics.
- Common bases: demographic (age, gender), geographic (region, climate), psychographic (lifestyle, values), behavioural (usage rate, loyalty).
- Effective segmentation enables targeted product features, pricing, distribution and promotion.
3 Key Definitions
- Goods: Tangible items that can be seen, touched, stored and transported.
- Services: Intangible activities, benefits or performances that are produced and consumed simultaneously.
4 Goods vs. Services – Core Differences
| Aspect |
Goods |
Services |
| Tangibility |
Physical and tangible |
Intangible – cannot be touched |
| Production & Consumption |
Produced before consumption; can be stored |
Produced and consumed at the same time |
| Standardisation |
Mass‑produced to a uniform standard |
Often varies with each delivery (person‑dependent) |
| Perishability |
Usually non‑perishable; can be inventoried |
Highly perishable – cannot be stored for later use |
| Ownership Transfer |
Ownership passes from seller to buyer |
No ownership; buyer gains access or benefit |
| Quality Assessment |
Objective measurement (size, weight, colour, etc.) |
Subjective – judged by experience and perception |
5 Implications for the Marketing Mix (4 Ps)
5.1 Product
- Goods: Emphasis on physical specifications, design, branding, packaging, warranty.
- Services: Emphasis on process design, customer interaction, service environment (e.g., décor, ambience), reliability and after‑sale support.
5.2 Price
- Goods: Cost‑plus, competitive pricing, price‑skimming, penetration, psychological pricing.
- Services: Value‑based, time‑based (e.g., hourly rates), price discrimination (segment‑based), dynamic pricing (peak‑off‑peak).
5.3 Place (Distribution)
- Goods: Logistics, warehousing, retail or online channels, intermediaries.
- Services: Location of delivery, accessibility, often “channel‑less” (direct to consumer), service‑level agreements.
5.4 Promotion
- Goods: Ability to showcase tangible features, demonstrations, free samples, visual advertising.
- Services: Need to emphasise benefits, trust and reliability; use testimonials, guarantees, case studies, and “service‑branding” cues.
6 Product Development & Differentiation
6.1 The Product‑Development Process
- Idea generation – internal R&D, market research, competitors, customers, trends.
- Idea screening – discard unfeasible concepts.
- Concept development & testing – create detailed description; test with target market.
- Business analysis – estimate costs, sales, profit, break‑even.
- Product development – design prototype, technical specifications.
- Test‑marketing – trial in a limited area, gather feedback.
- Commercialisation – full‑scale launch, implementation of the marketing mix.
6.2 Differentiation & Unique Selling Point (USP)
- Differentiation: Creating a product perceived as distinct from competitors (e.g., superior quality, innovative features, exceptional service level).
- USP: The single most compelling benefit that convinces the target market to choose the product (e.g., “world’s thinnest smartphone” or “24‑hour emergency dental service”).
6.3 Branding & Packaging (product element)
- Branding: Name, logo, slogan, and brand equity that add value and aid recognition.
- Packaging (goods): Protects product, provides information, influences perception.
- Service “packaging”: Physical environment, staff appearance, digital interface – all shape the customer’s experience.
7 Product Portfolio Analysis
7.1 Product Life‑Cycle (PLC)
| Stage |
Key Characteristics |
Typical Marketing Focus |
| Introduction |
Low sales, high costs, no profit, limited competition. |
Build awareness, encourage trial, selective distribution. |
| Growth |
Rapid sales increase, economies of scale, emerging competitors. |
Differentiate, expand distribution, improve product. |
| Maturity |
Peak sales, market saturation, intense price competition. |
Defend market share, product modifications, promotional intensity. |
| Decline |
Falling sales, excess capacity, possible obsolescence. |
Harvest, divest, or rejuvenate (product‑line extension). |
7.2 Extension Strategies (to prolong the PLC)
- Product modification – add features, improve quality, redesign.
- Market modification – target new segments or geographic areas.
- Re‑positioning – change the way the product is perceived.
- Pricing changes – introduce a new price tier, discount scheme or premium version.
7.3 Boston Consulting Group (BCG) Matrix
| Quadrant |
Market Growth |
Relative Market Share |
Typical Strategy |
| Stars |
High |
High |
Invest to maintain leadership. |
| Cash Cows |
Low |
High |
Milk for profit; limited investment. |
| Question Marks (Problem Children) |
High |
Low |
Decide whether to invest or divest. |
| Dogs |
Low |
Low |
Consider harvesting or discontinuation. |
Example: A smartphone range may have a flagship model (Star), a mid‑range model (Cash Cow), an experimental foldable device (Question Mark) and an outdated basic phone (Dog).
8 Pricing – Objectives & Methods
8.1 Pricing Objectives (what a firm wants to achieve)
- Maximise profit
- Maximise market share
- Survive (cover costs)
- Stabilise the market
- Establish price leadership
8.2 Pricing Methods (how the price is set)
- Cost‑based: cost‑plus, markup.
- Competition‑based: going‑rate, price‑leadership, price‑matching.
- Demand‑based: price‑skimming, penetration, value‑based, psychological pricing.
- Dynamic & discriminatory: time‑based, segment‑based, geographic, promotional discounts.
9 Quick Revision Checklist
- Is the offering tangible? (Goods = yes, Services = no)
- Is it produced before consumption? (Goods = yes, Services = no)
- Can it be stored? (Goods = usually, Services = rarely)
- Does ownership transfer? (Goods = yes, Services = no)
- Is quality measurable objectively? (Goods = more likely, Services = less likely)
- Which market type does it belong to (consumer/industrial, local‑national‑international)?
- Is the product being marketed to a mass or niche segment?
- What stage of the PLC is the product in?
- Which BCG quadrant does the product occupy?
- What is the product’s USP and how does it support differentiation?
- Which pricing objective is being pursued and which method best supports it?
10 Practice Question
Explain how the intangibility of services influences the promotional strategies a company might use compared with a company that sells a tangible product. In your answer, refer to at least two elements of the marketing mix.
11 Suggested Diagram
Venn diagram showing overlapping characteristics of goods and services (both are branded, require marketing, can be part of a product portfolio) with the distinctive attributes of tangibility, perishability, ownership transfer, and quality assessment highlighted in the separate circles.