Marketing I: Strand 5. Product/Service Management

Transcription

1 Marketing I: Strand 5 Product/Service Management

2 Product Planning Involves making decisions about those features that are needed to sell a business s products, services or ideas: Product features: packaging, labeling, branding, etc. Product services: warranties, support, etc. Product improvements: existing products New product development Product deletion

3 Product Mix Includes all of the different products that a company makes or sells Ex: Frito Lay Within a Product Mix a company may have the following: Product Line Product Item Product Width Product Depth

4 Product Line and Product Item Product Line: a group of closely related products manufactured or sold by a business Ex: all the cereals produced by Kellogg s Product Item: a specific model, brand, or size of product within a product line Ex: Kellogg s Frosted Flakes

5 Product Width and Product Depth Product Width: the number of different products lines a business sells Ex: Proctor and Gamble: more than 25 product lines (Hair Care, Skin Care, Dish Care, Baby Care, etc.) Product Depth: the number of product items offered with in each product line Ex: Proctor and Gamble- Dish Care: 4 product items (Cascade, Ivory, Joy and Dawn)

6 Product Life Cycle Introduction The major goal at this stage is to draw attention to the product. This stage of the product life cycle is usually the least profitable. Growth Stage Maturity Stage Decline Stage Growth During this stage, advertising is focused on consumer satisfaction rather than new product benefits. Competition is likely to offer new products in order to compete. At this stage, the product is enjoying success as demonstrated by rising sales and profit. Introduction Stage Maturity Advertising costs increase and decisions need to be made to improve the product to gain additional sales. During this phase of the product life cycle, sales level off or slow down. Decline Management needs to make decisions about how long to continue supporting a product in this stage of the product life cycle. Therefore, modernizing or altering a product sometimes occurs at this stage. Discounting the product is typical for products in this stage of the product life cycle.

7 Product Mix Strategies The plan for how a business determines which products it will make or stock, includes: Developing New Products Modifying Existing Products Deleting Old Products

8 Developing New Products Adds to overall sales, market share and increased sales Seven key steps: 1. Generating Ideas: involves tracking cultural trends and observing customer behaviors 2. Screening Ideas: eliminating ideas until one or two items are selected for development 3. Developing a Business Proposal: evaluating the product in terms of profit potential, as well as production requirements

9 Developing New Products Cont. 4. Developing the Product: a prototype is made and tested, then adjustments are made to improve the final product 5. Testing the Product: newly developed products are test marketed to obtain customers responses 6. Introducing the Product: a.k.a. Commercialization 7. Evaluating Customer Acceptance: usually done with sales information

10 Modifying Existing Products Companies constantly review their product mix to see if they can further expand their product lines or modify existing products. Easy and inexpensive way to add new products to a company s product line. Line Extensions: expanding by adding new product lines, items, or services Ex: Tylenol (original product), Tylenol Flu, Tylenol Allergy, etc. Product Modifications: alterations to products Ex: new and different varieties (Cool Ranch Doritos), new formulations (Tide with Bleach), new colors, new styles, features or sizes.

11 Deleting Old Products Reasons to drop a product or product line: Loss of Appeal: products popular with older generations may not be with younger (Ex: Clove Chewing Gum) Replacement with a New Product: when a better version of a product is made and the original is dropped (Ex. Flip Phones) Lack of Profit: when sales reach a low level and returns are below company objectives (Ex: Crystal Pepsi) Conflict with Other Products in the Line: sometimes products take business away from others, so a company will dump one to improve on the other (Ex: P&G s Gleem toothpaste)