mkt 100 021 - week 10 -product management
TRANSCRIPT
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Assistant Professor, MarketingPlease ensure all electronic devices are in “silent
mode”, “vibrate mode” or “turned off”
Anthony Francescucci
MKT 100-021WEEK 10 – PRODUCT MGMT
Welcome to
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AGENDASummary Feedback from Assignment 1
Product / Service Management
Revisit Segmentation
Mini-Case on Estimating Market Potential
Review Assignment 2 Financial Template & Any Questions
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ASSIGNMENT 1
Summary Feedback
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AREAS THAT YOU DID WELL• Discussing implications for your strengths,
weaknesses, opportunities and threats
• SWOT tables and Prioritization tables– points were under the appropriate headings
• Recommendation sections were well done for the most part – good overview of your SWOT analysis which supported
your decision to offer the internet-based video streaming service or not
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AREAS TO IMPROVE UPON• RESEARCH, RESEARCH, RESEARCH to support your claims (cannot be based on
your personal experience or opinion)
• When discussing your SWOT, some reports lacked clarity in specifics pertaining to the decision at hand (very general statements were made)
– Example: consumer preferences are constantly changing. You need to explain what preferences are changing and why this is relevant to your decision
• Always remember your executive summary should provide the reader a thorough overview of your entire report. In this section there was not enough detail of your SWOT analysis.
• APA Works Cited is ALWAYS double-spaced, with hanging lines indented, in alphabetical order. In-text citations are cited as (author, year). Not using footnotes or numbers.
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PRODUCT DEVELOPMENT
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Profit
Customer
Product
INTRODUCTIONSuperior product innovation leads to features that better fit customer segment benefits and increase shareholder value. The product development process must produce the innovations that drive profit, shareholder value, customer value, brand reputation and equity.
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Idea Generation and Concept Development
Copying and improving competitors’
innovation
New technology from pure research
New ideas from consumers
Copying innovations in foreign markets
New ideas from the channel
Existing specialized industrial product
Design simplification of existing product
New ideas from employees
Incorporation of supplier’s innovation
Lithium batteries in watches
Using baking soda as a deodorizer
Diet Pepsi
DuPont’s invention of nylon
Lite beerTV programs
Doctors recommending aspirin to prevent heart attacks
Soft soap, microwave ovens
IBM Personal computer
Sources of Innovations
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PRODUCT MANAGEMENT
Characteristics & classifications
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PRODUCT
More than tangible offering;anything that can be offered
to a market to satisfy a want or need.
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PRODUCT CLASSIFICATIONS
Classifications
Tangible
Nondurable goods
Durable goods
Intangible
Services
Use
Consumer Industrial
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Classifications
Tangible
Nondurable goods
Durable goods
Intangible
Services
Use
Consumer Industrial
• Non-durable• Goods normally consumed in one or a few uses.
Consumed quickly & purchased frequently• Durable
• Normally survive many uses
Tangible (Durability)
• Services• Are intangible, inseparable, variable & perishable
Intangible
PRODUCT CLASSIFICATIONS
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PRODUCT CLASSIFICATION
Classifications
Use
Consumer-Goods
Classification
ConvenienceGoods
ShoppingGoods
Specialty Goods
UnsoughtGoods
Industrial-Goods
Classification
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Classifications
Use
Consumer-Goods
Classification
ConvenienceGoods
ShoppingGoods
Specialty Goods
UnsoughtGoods
Industrial-Goods
Classification
• Purchase frequently, immediately, and with a minimum of effort
Convenience Goods
• Goods that are compared on suitability, quality, price and style
Shopping Goods
• Have unique characteristics or brand identification which sufficient buyers are willing to make a special purchasing effort and do not require comparison
Specialty Goods
• Those the consumer does not know about or does not normally think of buying
Unsought Goods
PRODUCT CLASSIFICATION
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PRODUCT CLASSIFICATIONS CONT'DClassifications
Use
Consumer-Goods Classification
Industrial-GoodsClassification
Materials& Parts Capital Items
MaintenanceRepairs &Operating
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Classifications
Use
Consumer-GoodsClassification
Industrial-GoodsClassification
Materials& Parts Capital Items
MaintenanceRepairs &Operating
• Goods that enter the manufacturer’s product completely. They could be raw materials or manufactured parts.
Materials & Parts
• Are long-lasting goods that facilitate developing or managing the finished product
Capital Items
• Are short-term goods and services that facilitate developing or managing the finished products
Maintenance, Repair & Operating Supplies
PRODUCT CLASSIFICATIONS CONT'D
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DIFFERENTIATION
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PRODUCT DIFFERENTIATION
• Product form• Features• Customization• Performance• Conformance• Durability• Reliability• Reparability• Style
Product
• Ordering ease• Delivery• Installation• Maintenance• Returns
Service
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PRODUCT-LINE DECISIONS
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Detergents Toothpaste Bar Soap Disposable Diapers
Paper products
Ivory Snow Gleem Ivory Pampers Charmin
Dreft Crest Camay Luvs Puffs
Tide Zest Bounty
Cheer Safeguard
Dash Oil of Olay
Bold
Gain
Era
PRODUCT MIXProduct Mix
Width
Prod
uct M
ix L
engt
h
• Refers to how many different product lines the company carries in their product mix
Product Mix
Width• Refers to the total number of items in the product
mixProduct
Mix Length
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PRODUCT –LINE LENGTH
• when a company lengthens its product line beyond its current range of productsLine Stretching
• when a company lengthens its product line within its present range of products.Line Filling
• when a company focuses on existing products by improving, featuring, or eliminating certain product lines.
Line Modernization,
Featuring & Pruning
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SERVICES
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SERVICE
Any act of performance that oneparty can offer another that is
essentially intangible and does notresult in the ownership of anything;
its production may or may notbe tied to a physical product.
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CONTINUUM OF SERVICE / PRODUCT EVALUATION
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HIGH EXPERIENCE & CREDENCE QUALITIES
Consumer generally
Rely on word of mouth
Rely on price, personnel & physical cues when judging quality
Highly loyal to service providers who satisfy them
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Perishability
Intangibility
Inseparability
Variability
DISTINCTIVE CHARACTERISTICS OF SERVICES
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TANGIBILIZING THE INTANGIBLE
Place
People
Equipment
Communication material
Symbols
Price
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HOW TO REDUCE VARIABILITY
Invest in good hiring and training procedures
Monitor customer satisfaction
Standardize the service-performance process
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HOW TO REDUCE PERISHABILITY
Demand sideDifferential pricing
Nonpeak demand
Complementary services
Reservation systems
Supply sidePart-time employees
Peak-time efficiency
Increased consumer participation
Shared services
Facilities for future expansion
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ANY QUESTIONS
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LET’S REVISIT SEGMENTATION
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WHAT ARE SOME POTENTIAL SEGMENTS FOR IPAD ?
Consumers who have
a need for an entertainment
device
an interest in gaming devices
a need to be more
productive
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LET’S FOCUS IN ON ENTERTAINMENT SEGMENT
Segment Characteristics
GeographicRegion, City or Metro side Density, Climate, province, country
DemographicAge, cohort generation, gender, family size, life-stage, education, income, occupation, nationality, ethnicity, tribal identity, family identity, religion, political party membership, nationality, social class.
PsychographicLife-style, passions, interests, hobbies, personality, sociability, social class, values.
BehavioralProduct usage rate, brand loyalty, product benefits sought, usage occasion characteristics, user status, buyer’s readiness to purchase, buy attitudes.
Entertainment Users
DemographicsYounger (14 – 35 yrs old)
Middle Income $40K+
PsychographicTechnologically savvy
BehavioralCurrent iPhone users
Remember to include sources to support your claims re: characteristics
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SEGMENT POTENTIAL
EcoSpoutCase
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HOW MIGHT WE SEGMENT THE MARKET FOR ECO-SPOUT ?
People who have a need for;
a watering can to water their plants
an all-purpose funnel
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LET’S FOCUS IN ON HOUSEHOLD PLANT SEGMENT
Segment Characteristics
GeographicRegion, City or Metro side Density, Climate, province, country
DemographicAge, cohort generation, gender, family size, life-stage, education, income, occupation, nationality, ethnicity, tribal identity, family identity, religion, political party membership, nationality, social class.
PsychographicLife-style, passions, interests, hobbies, personality, sociability, social class, values.
BehavioralProduct usage rate, brand loyalty, product benefits sought, usage occasion characteristics, user status, buyer’s readiness to purchase, buy attitudes.
Household Plant User
Demographics U.S. Households
PsychographicMaintain Household Plants
BehavioralUse a dedicated watering can
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TARGET PROFIT FEASIBILITY ANALYSIS PROCESS
•Estimate size of target market in annual units or dollars soldStep 1:
•Determine how much revenue or # of units are required to either Break-even, or achieve desired ROMI. Step 2:
•Assess the likelihood of attaining the required sales and share needed to achieve the target break-even (including target profit) or desired ROMI. Step 3:
There are about 100 million private dwellings in the U.S. market and from Industry surveys, 80% have at least one indoor plant. Most have several. They need to be watered.
About 60% use anything at hand to water the plants (our estimate). The rest use some sort of dedicated watering can.
We estimate, on average, a watering can lasts about 16 years
ESTIMATE THE SEGMENT SIZE
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# of Household
s with plants that
use dedicated watering
can
# of Households
% with Plant
s
% use dedica
ted watering can
100 Million Households 80% 40%32 Million
Households
32 Million Households would by 1 watering can every 16 years
2 Million watering cans sold every year
Only reach 50% of households – Available market is 1 Million watering canshttp://www.nationalgardenmonth.org/index.php?page=storyline-houseplants
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LET’S WORK WITH TARGET BREAK-EVEN
Break-Even
Volume
FixedCosts
Contribution
Margin / Unit
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WHAT DO WE KNOW FROM THE CASE?
•$71,000Total Fixed Costs
•$0.60Total Variable Costs/unit
•$1.80Average Retail Selling Price
•50%Retail Margin
•20%Target Profit
Is there a profitable market segment to target for this product?
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WHOLESALE REVENUE PER UNIT
•$1.80Retail Price
•50% ($1.80 X .5 = $0.90)Retail Margin
•$0.90 ($1.80 - $0.90 = $0.90)Retail Costs
•$0.90Wholesale Revenue/Unit
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Target Profit
DollarsFixed Cost (Target
Profit %)20%
TargetBreak-Even
Volume
Fixed Cost
+ Target Profit
Contribution
Margin / Unit
$71,000+
$14,200= $85,200
$14,200 $71,000
$0.90 -
$0.60= $0.30
284,000units
TARGET VOLUME TO ACHIEVE PROFIT
Break-Even
Volume
FixedCosts
Contribution Margin
/ Unit
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LIKELIHOOD OF ATTAINING TARGET VOLUME
•2,000,000 unitsTotal Market•1,000,000 unitsAccessible Market
•284,000 unitsTarget Volume
•14.2% (284K ÷ 2,000K × 100)Share of Total Market
•28.4% (284K ÷ 1,000K × 100)Share of Accessible Market
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% of shoppers who find price acceptable
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$1.00 $1.50 $2.00 $2.50
Price
% o
f S
ho
pp
ers
ESTIMATED LIKELY DEMAND
• 28.4 %Share of Accessible Market
• 50%% of
Shopper’s who find
price acceptable
at $1.80
• YesIs it a
realistic profit
target?
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ASSIGNMENT 2
Financial Template
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FINAN
CIAL ANALYSIS TEM
PLATE
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ANY QUESTIONS ABOUT THE ASSIGNMENT
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BEFORE YOU LEAVE TODAY
name cards
Front of the Class
Hand In:
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SEE YOU NEXT WEEK