Consumer Products General classification: what types of customers will use them? Businesses B2B or consumers B2C Consumer products: For “final” users Classifying consumer products How consumers shop How consumers think about them Perception usage varies (among food items and what other product categories?)
4 Types of Consumer Products 1. Convenience Little time/effort; frequent purchase Intense distribution Substitutes acceptable Low price (grocery products) 2. Shopping: time comparing alternatives; less frequent purchase, low loyalty Homogeneous: seen as same; want bargain Heterogeneous: seen as different; want quality; salespeople help desired Marketing: fewer outlets, higher markups
4 Types of B2C Products, cont. 3. Specialty: is shopping an end, pleasurable; willingness makes it specialty Planned purchase: strong desire and effort (collectors); alternatives unacceptable Amount of search (Beanie Babies; xmas toys) Limited availability is OK; high markups 4. Unsought (tombstones; towing; dentists) Only want “in a pinch;” infrequent and no effort; lack knowledge or desire Promotion; sales (Dentists for phobic patients) What are your unsought products?What are your unsought products?
B2B Products Businesses (B2B): Agricultural or organizational Use to make other products Bought and resold Used for corporate or organization’s use Less shopping is involved (vs. B2C) Classify via: How buyers think about the product What type of customer will use the product How the product is used
Product Planning Quality (What does it mean?) Product’s ability to satisfy customer’s needs/requirements. Consistency (McDonalds and what other companies?) Relative quality – similar products against each other What do you think are some quality products? Why?
Product Items, Lines, and Mixes Item: version of a product (Diet Coke) Line: group of closely related products Mix: all the products a company offers Modify and reposition (Coke) for variety, diversification, and multi-product lines Line extension – Brand name used to facilitate entry into a new market segment
Branding Identify product via letters, terms, designs Branding strategies: Brand name – letters associated with product Trademark/servicemark – words, symbols for one firm (legally protected) Co-brand (apple ipod and coach) Multibranding – Different brand names assigned to each product (ipad; ipod; iphone) Dual branding – Integration of two or more branded products Family – one brand, many products (Hershey’s, Campbell’s) Generics – no brand (signal of savings) Dealer/private label: by store
Branding Brand equity: financial value of the brand name Value (are we just paying for the name?) Consumer – familiarity Seller- be authentic, true to your people Less promotion (Reese’s) Legal protection (Coke; Olympic rings)
Product Life Cycle (1) Product life cycle (4 stages): for product IDEA, not individual firms. 1.Introduction (phones with net access; plasma TV) High marketing costs (inform) Slow sales increase Low or no profit (Amazon.com) Low competition Price often high (ex. Calculator) What other products can you think of that are in introduction?
Product Life Cycle (2) Product life cycle (cont…) 2.Growth (solar changing lens) High marketing expense (inform and persuade) Many small competitors – market entry (athletic apparel) Little price competition Industry profits rise/peak and sales increasing What other products are in growth? are in growth?
Product Life Cycle (3) 3.Maturity (Beer and Auto) Industry sales level off; profits down Promotions stop rising: moderate marketing expense (persuade) Fewer, stronger competitors: tough competition in general Many consumers view product as homogeneous; price competition What other products can you think of that are in maturity?
Product Life Cycle (4) 4.Decline: being replaced (VCR) Decrease in industry sales/profits Low marketing expense; small groups remain loyal Dropouts: few competitors; most gone What other products can you think of that are in decline?
Product Life Cycle (5) Criticisms: Accuracy pertaining to the longevity of the product in different stages of the cycle can’t be predicted Self fulfilling prophecy (Is beer always going to be a mature product?) All do not follow pattern (fads; fashion; scooters: comeback) Product may be in different stages by the market (B&W T.V.; Coke) What do you see are the advantages of the PLC? Why should m.managers care?
Product Life Cycle (6) Factors that may speed products through PLC: 1.Ease of trial (supermarkets, no risk, test drive) 2.Ease of use (some assembly required; Toys R Us (bike); Gateway store) 3.Easy to communicate advantages (Always low price; cars) 4.Compatible with customer experience (Poland & free samples)