product/service management. what are the three phases of product/service management?

Product/Service Management

What are the three phases of Product/Service Management?

3 Main Phases of Product/Service MGMT:

1. Developing New Products

2. Monitoring Existing Products - Sales, Profit, Market Share

3. Eliminate Weak Products

A marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.

What are Benefits to Product/Service Management?-Offer products consumers want and company’s profits increase

-When developing the right products, a company can gain new customers

-When products are well managed there is less of a chance for failure

Staple Goods◦ Items that are constantly in demand by

customers

◦ Items are used consistently replaced regularly by consumers

◦ Easy to predict sales because of consistency in demand

◦ Examples: Toothpaste, milk, bread, butter, etc..

Convenience Goods

◦ Small, inexpensive items that customers purchase frequently

◦ Requires routine decision making

◦ Commonly sold at convenience stores, grocery stores, or gas stations.

◦ Examples: Snack foods, pain relievers, beverages

Shopping Goods:◦ Goods that are more expensive & require more

research prior to buying

◦ Consumers usually want to be able to compare & contrast this item with others

◦ Limited to extensive decision-making is required

◦ Examples: Automobile, appliances, furniture, & homes

Fashion Goods◦ Items that constantly change.◦ Items that are only popular for a certain amount

of time◦ NOT just clothing items. ANY item that goes in

and out of style is an example

◦ Examples: Toms, Class of 2013 Shirts, Chubbies, etc… What is an example of something not

clothing related?

Seasonal Goods◦ Items that are only popular at a certain time of

year

◦ May focus on seasons or holidays

◦Examples: Heavy coats in the winter & swimsuits in the summer Boxed chocolate around Valentine’s Day

Specialty Goods◦ Goods that are considered unique by buyers◦ Customers will go to great lengths to buy them◦ Price is almost never an issue ◦ Purchase is based off of:

Quality, style, scarcity, &/or personal preference

◦ A specialty good can be a shopping good for one person and a specialty for someone else

◦ Examples: Louis Vuiton Bag from flagship store in Paris, France Men’s Suits Expensive Watches

Unsought Goods◦ Goods that are not actively sought out by

customers, but is instead purchased due to fear, precaution or need

◦ Marketers tend to actively and aggressively market such goods in order to arouse interest in them

◦ Examples: Fire Extinguishers Encyclopedias

Industrial Goods◦ Industrial goods usually produce consumer goods

◦ Goods purchased by an individual or organization in order to modify them or simply distribute them to the ultimate consumer in order to make a profit or meet some other objective

◦ Tends to be items directed at organizations, businesses, and other institutions, rather than at the individual end user of a product

◦ Examples: Lumber Fixed Equipment

Product Life Cycles

• Product Life Cycle represents the stages that a product goes through during its life.

• There are 4 Stages of Life Cycle:1. Introduction2. Growth

3. Maturity4. Decline

Product is launched. ◦Can be risky◦The length of the introduction stage varies

according to the product. If the product is technological and receives acceptance in the market, it may come out of the introductory phase as soon as it is launched. Whereas if the product is of a different category altogether and needs market awareness, it may take time to launch.

Higher investment, lesser profits◦ Least profitable stage

Minimal Competition

Efforts are focused on promotion & production

• What are the goals of the Introduction Stage?– To increase product awareness

– Get the customer’s attention thru promotion– Lots of special promotion

Price: Either high or low

Place: Only a few places carry your product

Product: Branding & Quality are established. Trademarks obtained

Promotion: Aimed at early adoptersAds will be more informative

• During Growth Stage:– Customers are aware of product, sales increase

Product starts showing better returns on investment.

– Companies focus on customer satisfaction

– Competition starts from other companies

Product is successfully launched Demand increases Distribution increases Competition intensifies Company might introduce secondary

products or support services. Better revenue generation and Return On

Investment

Price: Maintained from previous stage.

Place: More places will carry product.Available online, in store, catalogs, etc

Product: Quality is maintained.Additional Features are added

Promotion: Aimed at broader audience

One of the problems associated with maturity stages in a technologically advanced environment is the problem of duplication.

Not only is the product available in duplicate markets, but also there are several competing products which arise with the same features and capabilities.

As a result, the product becomes less attractive.

Competition is high & money is spent on beating them

Product is established and promotion expenditures are less

Little growth potential for the product

Sales will level off

The major focus is towards extending the life cycle and maintaining market share

Price: Pricing starts to go down

Place: More places carry product. Companies will offer promotions to carry product.

Product: Features are done to offset competition

Promotion: Emphasize how product is different

In this stage the expenditures begin to equal the profits or worse, expenses are more than profits.

Typical scenario for the product to exit the market.

It also becomes advantageous for the company as the company can use resources it was spending on the declining product on an altogether different project.

Market is saturated◦ 10 companies producing a similar product

Sales and profits decline

Company becomes cost conscious

A lot of resources are blocked in trying to revitalize the dead product.

◦ Repositioning or Rebranding of the product to extend product life cycle

◦ Maintain the product as it is and reduce costs to get maximum profits till the product can produce profits

◦ Take the product off the market.

Price: Huge reductions on products going away

Place: Liquidate product (T J Maxx, Marshalls, etc..)

Product: Product is maintained or repositioned. Reposition = New Features

Promotion: Cut back substantially with elimination Increased with rebrand

Either using a product from Shark Tank or from your knowledge base…

Give the product life cycle of a product

Include the 4 P’s and competition within each stage

The iPad Air is in the introduction phase

Launched November 1, 2013◦ $499.99

Focus will be on production & promotion

Customers are aware of iPhone 5S◦ Focus is on making them happy

Sales and production/distribution are increasing◦ Released in35 additional

countries last Friday◦ 16 more countries on 11/1/13

Competition is strong◦ Similar models in stores◦ Product is mass produced

Product is not as popular but is still popular◦ WOW factor is gone

Sales have slowed

Price Drop

Money is spent combating competition

Product starts to lose money◦ Price drops to point it

costs more to product

◦ Product may be liquidated

Virtually no competition because no one wants product

All businesses want to maximize their profits by ensuring that the lifespan of their product is as long as possible.

Businesses can adopt several strategies to extend the life of their product.

Make modifications to the product ◦ eg new car model

Change the packaging Reduce the price Export to a new market Introduce new varieties

◦ eg lime-flavored Coke Increase the advertising

Some businesses may decide not to employ any extension strategies, and simply withdraw the product from the market.

At the decline stage, the business should be prepared and have a second product ready to replace the declining product.

Consider how these products have had their life cycle extended:

◦ Coca-Cola

◦ Kit Kat

◦ Playstation console