Marketing the New Venture 223Taken narrowly, product and service decisions include all the variables that make up
product quality (see Chapter 1). Because these variables adhere to the object produced
or the service delivered beforeuser-based quality and value are assessed, good product
decisions are necessary but not sufficient to guarantee success. They must be made in the
context of all the other marketing decisions.
Product and service conceptsfall into two broad categories of products and servic-
es: consumer goods and industrial goods. Consumer goods are sold to and used by indi-
viduals. Those individuals are usually the end-users (no resale), and the goods are often
consumed or employed in the condition in which they were purchased. Consumer
goods are categorized into four types: convenience goods, shopping goods, specialty
goods, and avoidance products and services.
- Convenience goods are well-understood products. They resemble commodities in
that there are many substitutes available, there is little price differentiation, and peo-
ple seldom spend much time investigating these products and doing comparison
shopping. Examples are soft drinks and cereals. Final sale margins are typically low.
The primary method of competition is branding, and firms will spend millions of
dollars to generate and protect a brand image. Given the maturity of this type of
product, its general availability, and its well-financed and experienced marketers,
there are not many new entries in this type of product. The few entrepreneurs who
will succeed in this category will find specialized niches that they can protect or that
are too small for larger firms to serve. - Shopping goodsare items that customers actively investigate before purchasing.
They consult consumer guides, comparison shop, ask their neighbors, and are influ-
enced by promotions. These products are often expensive consumer durables whose
characteristics change frequently due to technological improvements. Cars, sporting
goods, houses, and computers fall into this category. Shopping goods can be differ-
entiated in many respects and represent an opportunity for the entrepreneur with a
unique product or a complex service. Because customers look for information, the
ability to communicate the benefits and value of the new product is imperative.
Final sale margins are relatively high, which helps to offset lower volumes. - Specialty goodsare items that most consumers do not even consider buying, items
that appeal to a narrow segment of customers. Luxury products fall into this cate-
gory. Examples are world-class restaurants, expensive furs, and top-notch interna-
tional resorts. The buyer seldom comparison shops, preferring to locate a seller with
an excellent reputation and to rely on this entrepreneur. Inventory is expensive, mar-
gins are very high, and the successful achievement of all of the quality dimensions
is the key to success. - Avoidance productsare essential services that people purchase only when faced
with a crisis or some other negative motivation. Funeral services, life insurance, legal
services, and estate planning are examples. Many of these, such as mortuary servic-
es, are not aggressively marketed; others, like life insurance, are pushed on cus-
tomers incessantly. Creative entrepreneurs may find ways to convert these avoidance
products into shopping goods. For example, the prepaid funeral is now actively
marketed to the growing population of older people.