product decisions
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Product Decisions
The Product
“ A product is any thing that can be offered to a market to satisfy a want or need.”
“ Products that are marketed include physical goods, services, events, persons, places, properties, organizations, information and ideas.”
“Everything, both favorable and unfavorable, that
a person receives in an exchange.”
Components of theMarket Offering
Value-based prices
Services mixand quality
Product featuresand quality
Attractiveness ofthe market offering
Five Product Levels
Potential product
Augmented product
Expected product
Basic product
Core benefit
Product Classifications
1. Classification on the basis of Durability and Tangibility
Non durable goods Durable goods Services
Product Classifications
2. Classification on the basis of Usage
BusinessBusinessProductProduct
BusinessBusinessProductProduct
Consumer Consumer ProductProduct
Consumer Consumer ProductProduct
A product used to manufacture other goods or services, to facilitate an
organization’s operations, or to resell to other consumers.
A product used to manufacture other goods or services, to facilitate an
organization’s operations, or to resell to other consumers.
Product bought to satisfy an individual’s personal wants
Product bought to satisfy an individual’s personal wants
Specialty ProductsSpecialty Products Unsought ProductsUnsought Products
Shopping ProductsShopping ProductsBuy less frequently> Gather product information> Fewer purchase locations> Compare for:
• Suitability & Quality • Price & Style
Convenience ProductsConvenience Products
Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations
New innovations> Products consumers don’t want to think about. >Require much advertising & personal selling
Buy frequently & immediately> Low priced> Many purchase locations> Includes:
• Staple goods• Impulse goods• Emergency goods
Consumer-Goods Classification
Industrial Goods
1. Materials and Parts
2. Capital Items
3. Supplies and business services
Industrial Goods
Materials and parts
Raw-materials
Manufactured Materials and parts
Farm Products
Natural Products
ComponentMaterial
ComponentParts
Industrial Goods
Capital Items
Installations
Equipments
Industrial Goods
Supplies
Maintenance & Repair items
Operating supplies
BusinessServices
Maintenance & Repair Services
Business AdvisoryServices
Product Items, Lines, and Mixes
Product ItemProduct Item
Product LineProduct Line
Product MixProduct Mix
A specific version of a product that can be designated as a distinct offering among an organization’s products.
A specific version of a product that can be designated as a distinct offering among an organization’s products.
A group of closely-related product items.
A group of closely-related product items.
All products that an organization sells.
All products that an organization sells.
Product Mix
“ A product mix is the set of all products and items that a particular seller offers for Sale.”
Product Mix
WidthWidth - number of different
product lines
WidthWidth - number of different
product lines
LengthLength - total number of itemswithin the mix
LengthLength - total number of itemswithin the mix
Depth Depth - number of versions of
each product in the line
Depth Depth - number of versions of
each product in the line
Product Mix - Product Mix - all the product
lines offered
Product Mix - Product Mix - all the product
lines offered
Co
nsi
sten
cy
Gillette’s Product Lines and Mix
Blades and Writingrazors Toiletries instruments Lighters
Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus
Width of the product mixWidth of the product mix
De
pth
of
the
pro
du
ct
line
sD
ep
th o
f th
e p
rod
uc
t lin
es
New Product Development
What is New Product?
1. New-to-the-world 2. New product lines3. Additions to existing product lines4. Improvements and revisions of
existing products5. Repositioning6. Cost reductions
Why New Products Fail?
Inadequate market analysis Product deficiencies Higher Cost Poor timing of introduction of a new
product Competition Insufficient Marketing efforts Inadequate Sales force Weakness in Distribution
New Product Development Process
IdeaIdeaGenerationGeneration
ConceptConceptDevelopmentDevelopmentand Testingand Testing
MarketingMarketingStrategyStrategy
DevelopmentDevelopment
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProductDevelopmentDevelopment
MarketMarketTestingTesting
CommercializationCommercialization
Company EmployeesCompany Employees
CustomersCustomers
CompetitorsCompetitors
DistributorsDistributors
SuppliersSuppliers
Idea Generation
Idea Screening
Process to spot good ideas and drop poor ones. Develop system to estimate: market size,
product price, development time and costs, manufacturing costs, and rate of return.
Evaluate these findings against set of company criteria for new products.
Concept Development and Testing
Product Idea: idea for a possible product that the company can see itself offering.
Product Concept: detailed version of the idea stated in meaningful consumer terms.
Product Image: the way consumers perceive an actual or potential product.
Marketing Strategy Development
Part One Describes:The Target Market
Planned Product PositioningSales, Market Share, & Profit Goals
Part One Describes:The Target Market
Planned Product PositioningSales, Market Share, & Profit Goals
Part Two Outlines the First-Year’s:Product’s Planned Price
DistributionMarketing Budget
Part Two Outlines the First-Year’s:Product’s Planned Price
DistributionMarketing Budget
Part Three Describes Long-Run:Sales & Profit Goals
Marketing Mix Strategy
Part Three Describes Long-Run:Sales & Profit Goals
Marketing Mix Strategy
Business Analysis
Involves a review of the sales, costs, Competition, investment and profit projections to assess fit with company objectives.
If yes, move to the product development phase.
Product Development
Develop concept into physical product
Calls for large jump in investment
Prototypes are made Prototype must have
correct physical features and convey psychological characteristics
Test Marketing
Product and program introduced in more realistic market setting.
Not needed for all products. Can be expensive and time consuming, but
better than making major marketing mistake.
Test Marketing
Nokia test-marketed its new cell phone/mobile game player extensively before introducing it worldwide.
Commercialization
Must decide on timing (i.e., when to introduce the product).
Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally).
Must develop a market rollout plan.
Product Line Decisions
“ In offering a product line, companies normally develop basic platform and modules that can be added to meet different customers requirements.
This modular approach enables the company to offer variety of proucts to consumer.
Product Line Decisions
It includes three elements- Product line analysis Product line length decisions Product line Modernization decisions
1. Product Line Analysis
Product – line managers need to know the sales and profits of each item in their line, in order to determine which items to build, maintain, or divest.
In product –line analysis marketer has to analyze-
Sales and profits of product Market profile.
2. Product Line Length Decision
The product line length decision calls for adding new brands to the product line and subsequently eliminating the unprofitable brands from the line.
A company lengthens its product line in two ways
Line stretching Line filling
Line Stretching
Product line stretching occurs when a company lengthens its product line beyond its current range by-
Downward stretch Upward stretch Two way (Combined) Stretch
Two-Way Product-Line Stretch: Hotels
QualityEconomy SuperiorStandard Good
Pri
ceP
rice
High
Aboveaverage
Average
Low Fairfield Inn(Vacationers)
(Salespeople)
(Middlemanagers)
(Topexecutives)
Line Filling
A product line can be lengthened by adding more items with in present range of line.
Some time it may results in cannibalization and creates confusion in the minds of customers.
3. Product line Modernization Decision
In some case product line length is adequate but there is a need of modernizing it.
An important aspect of product line modernization decision is that, it allows competitors see changes and start redesigning their own lines.
Branding
Brand “ A brand is a name, term, sign, symbol or
design or a combination of them which is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors”
Brand Name Brand name is a part of a brand consisting of a
word, letter, group of word, or letters comprising a name which is intended to identify the goods or services of a seller or a group of sellers and to differentiate them from those of competitors”
Branding
Brand Mark “ A brand mark is the part of the brand which
appears in the form of a symbol, design or distinctive colouring or lettering” ”
Trade mark “Part of a brand that is given legal
protection because it is capable of excusive appropriation”
Branding
“ Branding is the management process by which a product is branded
It covers various activities such as- Giving brand name to a product Deciding a brand mark Establishing and popularizing brand
name and brand mark.
An Overview ofBranding Decisions
BrandingDecision
•Brand
•No brand
Brand-SponsorDecision
•Manu-facturerbrand
•Distribu-tor(private)brand
•Licensedbrand
Brand-Name
Decision•Individualbrandnames•Blanketfamilyname•Separatefamilynames•Company-individualnames
Brand-Repositioning
Decision
•Reposi-tioning
•Noreposi-tioning
Brand-StrategyDecision
•Lineextension
•Brandextension
•Multi-brands
•Newbrands
•Cobrands
Brand Strategies
BrandExtension
New
Bra
nd
Nam
e
Product Category
LineExtension
Existing
Existing
MultibrandsNew NewBrands
Good Brand Names:
SuggestProductBenefits
Distinctive
Lack PoorForeign
LanguageMeanings
SuggestProductQualities
Easy to:PronounceRecognizeRemember
Packaging
Packing is wrapping a commodity or bundling it in a way suitable for transporting, storing and handling.
Packaging includes activities of designing and producing the contains for a product.
Packaging involves promoting and protecting the product.
Importance of Packaging
ImportanceImportanceofof
PackagingPackaging
ImportanceImportanceofof
PackagingPackaging
Protection Protection
PromotePromote
Facilitate Storage, Use, and Convenience
Facilitate Storage, Use, and Convenience
Facilitate RecyclingFacilitate Recycling
Labeling
Label is the part of the product that carries information about the product and the seller.
A label indicates the products brand name, the company logo, ingredients, promotional messages, and instruction for use.
Labeling
PersuasivePersuasive
● Focuses on promotional theme
● Information is secondary
InformationalInformational
● Helps make proper selections
● Lowers cognitive dissonance
● Includes use instruction
Classification of labels
Brand labels Grade labels Descriptive labels
Product Life Cycle
Like a human being, all products have certain length of life during which they pass through certain identifiable stages.
Once the product or service reaches the market, it enters the product life cycle.
The PLC is a theoretical concept which serves as a conceptual base for examining product growth and development.
TimeProduct
Develop-ment
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Over the Product’s Lifetime
Product Life Cycle
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
LowLow
High cost per customerHigh cost per customer
NegativeNegative
Create product awareness and trialCreate product awareness and trial
Offer a basic productOffer a basic product
Use cost-plus formulaUse cost-plus formula
DistributionDistribution Build selective distributionBuild selective distribution
PromotionPromotion Heavy to entice product trialHeavy to entice product trial
Summary of Characteristics, Objectives, & Strategies
Introduction Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly risingRapidly rising
Average cost per customerAverage cost per customer
RisingRising
Maximize market shareMaximize market share
Offer extension, service, warrantyOffer extension, service, warranty
Penetration strategyPenetration strategy
DistributionDistribution Build intensive distributionBuild intensive distribution
PromotionPromotion Reduce to take advantage of demandReduce to take advantage of demand
Summary of Characteristics, Objectives, & Strategies
Growth Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
PeakPeak
Low cost per customerLow cost per customer
HighHigh
Maximize profits while defending market share
Maximize profits while defending market share
Diversify brand and models Diversify brand and models
Match or best competitorsMatch or best competitors
DistributionDistribution Build more intensive distributionBuild more intensive distribution
PromotionPromotion Increase to encourage brand switchingIncrease to encourage brand switching
Summary of Characteristics, Objectives, & Strategies
Maturity Stage of the PLC
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
DecliningDeclining
Low cost per customerLow cost per customer
DecliningDeclining
Reduce expenditures and milk the brandReduce expenditures and milk the brand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Selective: phase out unprofitable outletsSelective: phase out unprofitable outlets
PromotionPromotion Reduce to minimum levelReduce to minimum level
Summary of Characteristics, Objectives, & Strategies
Decline Stage of the PLC
Practical Problems of PLC
Hard to identifywhich stage of the
PLC the product is in
Hard to pinpointwhen the product
moves to next stage
Hard to identifyfactors that affect
product’s movementthrough stages
Hard to forecastsales level, length of
each stage, andshape of PLC
Strategy is both acause and result of
the PLC
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