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