Presentation on theme: "PRODUCT SERVICE MGT 3.03 Understands the concepts and processes needed to obtain, develop, maintain, and improve a product or service mix in response to."— Presentation transcript:
1PRODUCT SERVICE MGT 3.03Understands the concepts and processes needed to obtain, develop, maintain, and improve a product or service mix in response to market opportunitiesEmploy product-mix strategies to meet customer expectations.Explain the concept of product mix
2Product PlanningHow are decisions made to introduce new products and delete old ones?
3What is Product Planning? Product Planning: The decisions made about what features should be used in selling of a business’s products.These decisions relate to:guaranteesbrandingproduct mixpackaginglabelingwarranties
4Product PlanningInvolves making decisions about those features that are needed to sell a business’s products, services, or ideas.
5What is Product Planning? (cont.) Product Mix: All the different products that a company makes or sells.Product Line: A group of closely related products manufactured or sold by a business.Product Item: A specific model, brand, or size of a product within a product line.Product Width: The number of different product lines a business manufactures or sells.Product Depth: The number of product items in a product line.
6What is Product Planning? (cont.) A well defined product plan allows a business to:Create sales opportunities.Design appropriate marketing programs.Develop effective advertising campaigns.Coordinate the product mix offered to customers.Add new products.Delete older products that no longer appeal to customers
74 P’s of the PRODUCT MIXPRICEPRODUCTPLACEPROMOTION
8PRODUCT MIX= all the types of products a company makes or sells. The particular assortment of goods and services that a business offers to meet the needs of its market(s) and its company goals.
9Product Mix and Product Line The set of all products offeredfor sale by a companyPRODUCT LINEA broad group ofproducts for similar usesand with similar characteristics
10Product MixIncludes all the different products that a company makes or sells.
11Identify ways in which product lines can be organized. Product Line = group of closely related products manufactured by a businessProduct Item = specific model, brand, or size of a product within a lineEx: P&G has over 250 products within 21 product linesDish care is a product lineCascade, Dawn, Joy,& Ivory areproduct items
12Describe product mix dimensions. Some companies have different brands for different marketsCoca-Cola has different drinks for sparkling beverages, water, juice, performance, coffee, tea, and international flavors.Describe product mix dimensions.
13Product LineA group of closely related products manufactured and/or sold by a business.
14Product ItemA specific model, brand, or size of a product within a product line.
15DIMENSIONS WIDTH = number of product lines carried by a company. NARROW = offering a limited number of product linesBROAD = many different product lines carriedDEPTH = number of products and the assortment of sizes, colors, and models offered in a product lineSHALLOW = limited variety within a product lineDEEP = extensive variety within a product line
16Product Mix DEPTH PRODUCT MIX Varietyofsizes,colors,modelswithinaproductlinePRODUCT MIXBREADTH The number of product lines carried
17Width of the Gillette Product Mix Product WidthThe number of different product lines a business manufactures or sells.Width of the Gillette Product MixOral CareBlades & RazorsPersonal CareBatteriesAppliances
18The number of product items offered within each product line. Product DepthThe number of product items offered within each product line.Oral CareBlades & RazorsPersonal CareBatteriesAppliances
19NARROW PRODUCT MIX= Limited product lines carried, typically very specialized. A description of the width of a business's product mix offering a limited number of product lines.
20Broad Product Mix= Many different product lines carried. A description of the width of a business's product mix offering many product lines.
21Shallow Product Mix= Limited variety within a product line. A description of the depth of a business's product mix offering few items in the product line.
22Deep Product Mix= Extensive variety within a product line. A description of the depth of a business's product mix offering a great many items in the product line.
23Identify reasons that a business would offer a narrow product mix. Product Width – number of different product linesCONTRACTING - Pruning weak brands can strengthen the remaining brands in the line.Ease on managementCost effectiveSimplicityConsistency
24Identify reasons that a business would offer a broad product mix. Product Width – number of different product linesEXPANDINGReach all marketsCompetitive advantageEx: Red Lobster specializes in seafood, but offers chicken and steak to broaden their product mix.
25Identify reasons that a business would offer a deep product mix. Product Depth – number of items offered within each product lineEXPANDINGVarietyQuantityEx: Kohl’s carries various quantities of sizes, colors, & styles of Levi Jeans.
26Identify reasons that a business would offer a shallow product mix. Product Depth – number of items offered within each product lineCONTRACTINGCost effectiveSatisfy small marketsEx: Only 2 chicken items on Red Lobster’s menu.
27REVIEW: What are some key product mix strategies?
28Product-Mix Strategies ExpansionContractionAlteration ofexisting productsTrading Up andTrading Down
29Explain the importance of a business’s product mix. Businesses must plan their product mix carefully because they cannot offer all the products that customers may want.They should be a profitable market for product offered by a company29
30How do businesses determine which products to produce and sell? Businesses will use different product mix strategies to determine what to produce or sell.Product mix strategies depend on:ResourcesObjectivesPast and current salesConsumer trends
31Product Mix Strategies The plan for how the business determines which products it will make or stockMay develop completely new productsMay expand or modify their current product linesMay drop existing products
33Developing New Products Generating IdeasCome from a variety of sourcesCreativity is essentialScreening IdeasIdeas are evaluated and matched against the company’s overall objectives.
34Developing New Products (cont.) Developing a Business ProposalConsider a product’s potential sales, costs, and production requirements.Developing the ProductThe new idea takes physical shapeMarketers develop a marketing strategy.Testing the Product with consumers
35Developing New Products (cont.) Introducing the ProductThe product has been researched successfullyThis stage also is called commercialization.Evaluating Customer AcceptanceMarketers track new product performance.
36ADVANTAGES DISADVANTAGES EXPANSION Extend product lifecycle Adding items to a product line or introducing an entire product line can capture market share and meet customer’s needs and wants.DISADVANTAGESAdding items to a product line or introducing an entire product line can be expensive, be difficult to manage, and not always be successful.
37Deleting a Product or Product Line ObsolescenceLoss of appealConflict with current company objectivesReplacement with new productsLack of profitConflict with other products in the line
38ADVANTAGES DISADVANTAGES CONTRACTION Cut losses Reallocate resources to more profitable productsDeleting products from a product line or the entire product line can be cost effective and easier to manage while creating simplicity and consistencyDISADVANTAGESDeleting products from a product line or the entire product line is conceding market share to your competitors.It may be wiser to improve the existing product or line to recapture market share.
39Describe alteration product-mix strategies. Alteration of Existing Products:Making changes to meet customer needs & wantsImprove an established product with new design, new package, new uses.Ex: Jeep offering 4 doors39
40Developing Existing Products (ALTERATION) Companies constantly review their product mix to see if they can further expand their product lines or modify existing products.Two ways to do this:
41Developing Existing Products (cont.) Line Extensions – new product lines, items, or servicesOriginal ProductNewer Products
42Product Modifications – an alteration in a company’s existing product Developing Existing Products (cont.)Product Modifications – an alteration in a company’s existing product
43ADVANTAGES DISADVANTAGES ALTERATION Improving an established product can capture new customers and meet customer’s unmet wants as trends change. Ex: McDonald’s opening stores in IndiaDISADVANTAGESImproving an established product is expensive and not always a success. Example: New Coke
44Product Mix Strategies Developing New ProductsFollows seven steps:Generate IdeasScreen IdeasDevelop a Business ProposalTest the product with consumersIntroduce the productEvaluate customer acceptance
45Product Mix Strategies (cont) Developing Existing ProductsLine Extensions: Adding new product lines, items or services.Ex: TylonolProduct Modifications: An alteration to an existing product:New and different varietiesFormulationsColorsStylesFeaturesSizes
46Product Mix Strategies (cont) Deleting a Product or Product LineObsolescenceLoss of AppealChanges in Company ObjectivesReplacement with New ProductsLack of ProfitConflict with other products in the line
47Describe trading up / down product-mix strategies. Trading up: Adding a higher-priced product to a line to attract a higher- income market and improve the sales of existing lower-priced products.Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status.47
48ADVANTAGES DISADVANTAGES TRADING UP Adding higher priced items to a product line will attract the higher income market and may help increase the image and sales of the lower priced items.DISADVANTAGESWhile sales may be generated for the new product or line, sales of established products may decline.If the business uses trading up to enhance its image, the business must be careful that present customers are not lost in the process of gaining new ones.Customers may become confused as to what the company’s image is meant to be, or they may refuse to believe that better quality merchandise can be purchased from a business that had formerly sold budget goods.Adding higher priced items to a product line is expensive and may not attract new customers while hurting the image and sales of the lower priced items.
49TRADING DOWN ADVANTAGES DISADVANTAGES Adding lower priced items to a product line of prestige products can capture a lower income market who cannot afford the higher priced items.DISADVANTAGESAdding lower priced items to a product line of prestige products can hurt the image and sales of the higher priced items in the lineConsumers may be confused about the new product or line.Profits from the cheaper product may be eroded by reduced sales in the more expensive line.Dealers may not be willing to add the lower priced product to their offering.Competition may become stronger at the high end of the market.Gaining short-term sales at the expense of long term sales
50How are products/services positioned in the market place?
51POSITIONING is about bringing attention to products and DIFFERENTIATING them from similar ones.
53Product Positioning = the IMAGE a product projects The goal is to set the product apart from the competition.“The way you get into your customer’s mind.”The efforts a business makes to identify, place, and sell its products.
54Describe positioning product-mix strategies. Positioning – is all about perception; actions marketers take to create a certain image of a product in the minds of the customersIn Relation to a CompetitorIn Relation to a Product Class or AttributeIn Relation to a Target MarketBy Price and QualityDifficult to change
55Product PositioningProduct positioning: Efforts a business makes to identify, place and sell its products in the marketplace.Positioning by price and quality:Ex: Ford Motor Company positions its Focus as an economical passenger car while still emphasizing quality.
56Positioning by Price & Quality Offer economy, mid-priced, and luxury lines
57Product Positioning (cont) Positioning by features and benefits:Ex: Oil of Olay was positioned as a premium facial moisturizer and cleanser to keep skin soft and young.Positioning by unique characteristics:Ex: Cell phones that can text message or take pictures and send them.
58Positioned by Features & Benefits Unique characteristics
59Product Positioning (cont) Positioning in relation to the competition:Ex: Warner-Lambert Company introduced Cool Mint Listerine by positioning against the “theraputic” benefits of Original Listerine and the “cosmetic” benefits of Scope.Positioning in relation to other products in a line:Ex: Binney & Smith introduced washable crayons and positioned them as a specialty item in the company’s Crayola crayon line.
61Positioning in Relation to Other Products in a Line
62POSITIONING STRATEGIES ADVANTAGESCreating an identity of a product helps find a place for the product in the marketplace while strongly identifying with a specific target market and possibly creating brand loyalty.DISADVANTAGESImages of a product are difficult to change once they are established and very expensive.
636 Steps to Successful Positioning 1. What position do you currently own?2. What position do you want to own?3. Whom you have to defeat to own the position you want.4. Do you have the resources to do it?5. Can you persist until you get there?6. Are your tactics supporting the positioning objective you set?