Presentation on theme: "Product and Services Strategy"— Presentation transcript:
1 Product and Services Strategy Chapter 8Product and Services Strategy
2 What is a Product?A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.Includes:Physical ObjectsServicesEventsPersonsPlacesOrganizationsIdeasCombinations of the above
3 What is a Service?A Service is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.Examples include:BankingHotelsTax PreparationHome Repair Services
4 Products, Services, and Experiences Service With Accompanying Minor GoodsTangible Good With Accompanying ServicesPure Tangible GoodHybrid OfferPure ServiceAuto With Accompanying Repair ServicesAirline Trip With Accompanying SnacksSoapRestaurantDoctor’s ExamThe Product-Service Continuum
6 Product Classifications Consumer Products Convenience ProductsBuy frequently & immediatelyLow pricedMass advertisingMany purchase locationsi.e Candy, newspapersShopping ProductsBuy less frequentlyHigher priceFewer purchase locationsComparison shopi.e Clothing, cars, appliancesSpecialty ProductsSpecial purchase effortsHigh priceUnique characteristicsBrand identificationFew purchase locationsi.e Porsche, RolexUnsought ProductsNew innovationsProducts consumers don’twant to think about these productsRequire much advertising &personal sellingi.e Life insurance, blood donation
7 Product Classifications Other Marketable Entities Activities undertaken to create, maintain, or change the attitudes and behavior toward the following:Organizations - Profit (businesses) and nonprofit (schools and churches).Persons – Politicians, entertainers, sports figures, doctors and lawyers.Places - Business sites and tourism.Ideas (social ideas marketing) – public health campaigns, environmental campaigns, and others such as family planning, or human rights.
8 Individual Product Decisions (Fig. 8.2) Product AttributesBrandingLabelingPackagingProduct Support Services
9 Product AttributesDeveloping a Product or Service Involves Defining the Benefits that it Will Offer Such as:Product QualityProduct FeaturesProduct Style& DesignAbility of a Product to Perform Its Functions; Includes Level & ConsistencyHelp to Differentiate the Product from Those of the CompetitionProcess of Designing a Product’s Style & Function
12 Four Brand Strategies (Fig. 8.4) Line ExtensionMultibrandsBrand ExtensionNew BrandsBrand NameExistingNewProduct Category
13 Brand Strategy Line Extension Brand Extension Multibrands New Brands Existing brand names extended to new forms, sizes, and flavors of an existing product category.Brand ExtensionExisting brand names extended to new or modified product categories.MultibrandsNew brand names introduced in the same product category.New BrandsNew brand names in new product categories.
14 PackagingActivity of designing and producing the container or wrapper for a product.Packaging used to just contain and protect the product.Packing now has promotional value and marketers should:Establish a packaging concept,Develop specific elements of the package,Tie together elements to support the positioning and marketing strategy.
15 Labeling Printed information appearing on or with the package. Performs several functions:Identifies product or brandDescribes several things about the productPromotes the product through attractive graphics.
16 Product - Support Services Companies should design its support services to profitably meet the needs of target customers and gain competitive advantage.How?Step 1. Survey customers to assess the value of current services and to obtain ideas for new services.Step 2. Assess costs of providing desired services.Step 3. Develop a package of services to delight customers and yield profits to the company.
17 Product Mix Decisions Consistency Width - number of different product linesConsistencyLength - total number of itemsin product linesProduct Mix -all the productlines & itemsofferedDepth - number of versions of each product
18 Discussion Connections Using P&G’s Web site ( , its annual report, or other sources, develop a list of all the company’s product lines and individual products. What surprises you about this list of products?Is P&G’s product mix consistent?What overall strategy or logic appears to have guided the development of this product mix?
19 Nature and Characteristic of a Service IntangibilityInseparabilityCan’t be seen, tasted, felt, heard, or smelled before purchase.Can’t be separated from serviceproviders.Quality depends on who provides them and when, where and how.Can’t be stored for later sale or use.VariabilityPerishability
20 Marketing Strategies for Service Firms Managing Service DifferentiationDevelop differentiated offer, delivery and image.Managing Service QualityEmpower front-line employees,Become “Customer obsessed”,Develop high service quality standards,Watch service performance closely.Managing Service ProductivityTrain current or new employees better,Work on quality as well as quantity,Utilize technology.
21 International Product and Services Marketing Decide Which Products & Services to IntroduceDecide How Much to Standardize or AdaptPackaging Presents New ChallengesInternational Product and Services MarketingService Marketers Face Special ChallengesTrend Toward Global Service Companies Will Continue
22 Review of Concept Connections Define product and the major classifications of products and services.Describe the roles of product and service branding, packaging, labeling, and product support services.Explain the decisions companies make when developing product lines and mixes.Identify the four characteristics that affect the marketing of a service.Discuss the additional marketing considerations for services.
23 New-Product Development and Product Life-Cycle Strategies Chapter 9New-Product Development and Product Life-Cycle Strategies
24 New-Product Development Strategies Strategies for Obtaining New Product IdeasAcquiredCompaniesOriginalProductsAcquiredPatentsProductImprovementsAcquiredLicensesProductModificationsNewBrands
25 Causes of New Product Failures One study estimated that as many as 80% of new consumer packaged products failed.Only about 40% of new consumer products are around 5 years after introduction.Why?Overestimation of market size,Product design problems,Product incorrectly positioned, priced or advertised,Product may have been pushed despite poor marketing research findings,Costs of product development, orCompetitive actions
26 Improving New-Product Success New product success depends on having a:Unique superior product (one with higher quality, features, and value in use), &Well-defined product concept (a defined target market, product requirements, and benefits).To create successful new products, the company must:understand its customers, markets and competitors, &develop products that deliver superior value to customers.
27 New Product Development Process Sources of New product Ideas Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From:CustomersCompetitorsDistributorsSuppliers
28 Product Life Cycle (Fig. 9.2) TimeProductDevelop-mentIntroductionProfitsSalesGrowthMaturityDeclineLosses/Investments ($)Sales andProfits ($)Sales and Profits Over the Product’s Life From Inception to Demise
29 Applications of the Product Life Cycle The PLC concept can describe a:Product class which has the longest life cycles (i.e. gas-powered cars),Product form which tend to have the standard PLC shape (i.e. minivans),Brand which can change quickly because of changing competitive attaches and responses (i.e. Ford Taurus),Style which is a basic and distinctive mode of expression,Fashion which is a popular style in a given field,Fad which is a fashion that enters quickly, is adopted quickly and declines fast.
30 Problems Using the PLCThe PLC Concept Can Help in Developing Good Marketing Strategies for Different Stages of the Product Life-Cycle, However Some Problems Can Arise:Trouble identifying Which Stage of the PLC the Product Is InDifficult to Forecast the Sales Level, the Length of Each Stage, and Shape of the PLCStrategy is Both a Cause and a Result of the Product’s Life Cycle
31 Introduction Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceLow salesHigh cost per customerNegative or lowCreate product awareness and trialOffer a basic productUsually is high; use cost-plus formulaDistributionHigh distribution expensesAdvertisingBuild product awareness among early adopters and dealers
32 Growth Stage of the PLCSummary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceRapidly rising salesAverage cost per customerRising profitsMaximize market shareOffer new product features, extensions, service, and warrantyPrice to penetrate marketDistributionIncrease number of distribution outletsAdvertisingBuild awareness and interest in the mass market
33 Maturity Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesPeak salesCostsLow cost per customerProfitsHigh profits, then lower profitsMarketing ObjectivesMaximize profits while defending market shareProductDiversify brand and modelsPricePrice to match or best competitorsDistributionBuild more intensive distributionAdvertisingStress brand differences and benefits
34 Maturity Stage of the PLC Modifiying the MarketCompany tries to increase consumption of the current product.Modifying the ProductChanging characteristics such as quality, features, or styles to attract new users.Modifying the Marketing MixCompany tries to improve sales by changing one or more marketing mix elements.
35 Decline Stage of the PLC Summary of Characteristics, Objectives, & StrategiesSalesCostsProfitsMarketing ObjectivesProductPriceDeclining salesLow cost per customerDeclining profitsReduce expenditure and maintain, reposition, harvest or drop the productPhase out weak itemsCut priceDistributionGo selective: phase out unprofitable outletsAdvertisingReduce to level needed to retainhard-core loyal customers
36 Review of Concept Connections Explain how companies find and develop new-product ideas.Describe the stages of the product life-cycle.Describe how marketing strategies change during the product’s life-cycle.