Product Planning Decisions about the features and services of the product Ideas that will help sell the product Packaging / Labeling / Branding / Warrenties
Product Planning Product Mix All products a company makes or sells Mores brands = Help companies from depending on just one product Too many brands = may hurt sales by not being as popular as brands already in stock
Product Planning Product Line Closely relates products Product Item Specific model, brand, or size of a product within a product line Product Width Number of different product lines Product Depth Number of items offered within each product line
Product Mix Strategies Product Mixes Vary with the type of business Company objectives / Image / Market Existing vs New products Current trends
Product Mix Strategies New Products Successful new products can increase sales and the company’s market share Can improve the company’s image and/or reputation Seen as a Innovator in the industry New Product Development 1. Generating ideas 2. Screening Ideas 3. Developing a business proposal 4. Developing the product 5. Testing the product with consumers 6. Introducing the product 7. Evaluating customer acceptance
Product Mix Strategies Generating Ideas Creativity is key Come from customers / competitors / employees Screening Ideas Ideas are evaluated Are ideas in line with company strategy? Conflicts with existing products Done before allocating resources…Time and Money!!!
Product Mix Strategies Developing a Business Proposal Profit Potential – Size of Market / Potential Sales / Technology Trends / Competitive Environment / Risk Production requirements – Time to create and introduce Developing the Product Prototype – Model of new product Production / Packaging / Labeling / Branding / Promotion / Distribution Decision on to produce or to outsource Tests on product based on normal and not so normal consumer use – wear and tare
Product Mix Strategies Testing the Product with Consumers Test marketed in certain geographical areas – Gauge consumer acceptance Test markets and focus groups costs may be too high for some companies and testing will be skipped Testing may not take place to keep competitors in the dark Introducing the Product Commercialization Advertising to introduce product benefits to customers Can be Expensive…But…1 st on the market can build brand loyalty
Product Mix Strategies Evaluating Customer Acceptance How often do customers buy the new product? When did customers last buy the new product? Where are the best customers for our new product? What new products are customers buying?
Product Mix Strategies Developing New Products Build on established image Appeal to new markets Increase sales and profits Downside = Costs! Line Extension and Product Modifications
Product Mix Strategies Line Extension Adding new product lines / items / services A different product that appeals to somewhat different needs of customers Wider range of choices for customers Product Modifications Alteration of an existing product Varieties / Formulations / Colors / Styles / Features / Sizes Quick and Easy
Product Mix Strategies Deleting a Product or Product Line Obsolescence – No longer useful (Technology) Loss of Appeal – Change in consumer tastes Changes in Company Objectives Lack of Profit Conflict with Other Products in the Line Replacement with New Products – Have to pay Slotting Fees
The Product Life Cycle Product Life Cycle Stages a product goes through during its life Introduction – Focus on Promotion and production. Draw customer’s attention Growth – Build brand preference and increase market share. Focus on consumer satisfaction. Increased competition Maturity – Sales decrease or slow down. Marketing focus is on fighting off competition Decline – Profits fall below expenses. Company must decide on course of action
The Product Life Cycle Product Life Cycle Decline Sell or License Product – Other company tries to revitalize product Recommit to the Product Line – Identify new use for the product Discount the Product – Lower prices Regionalize the Product – Focus on geographical areas of success Update or Alter the Product – Redesign / Packaged differently / Reformulated
Product Positioning Product Positioning Creating an image of the product that is appealing to consumers Effort a business makes to identify, place, and sell its products in the market place Strategies Price and Quality / Features and Benefits / Relation to Competition / Relation to Other Products in a Line
Product Positioning Product Positioning Strategies Price and Quality – High price = Quality, Low Price = Value Economy / Mid / Luxury Features and Benefits – Highlight a unique or Perceived Characteristic Relation to Competition – Head to Head Competition Relation to Other Products in a Line – If you like X, you’ll love Y