Product/Service Management MARKETING 3.03 Product/Service Management
Product/Service Management A marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.
Product/Service Management Factors affecting Product/Service Management: 1. Customer Needs and Wants 2. Company Goals and Strategies 3. Cost and Available Resources 4. Competition 5. Product Itself 6. Government Regulation 7. Stages in Life Cycle 8. Business and Economic Trends
Product/Service Management 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
Product/Service Management Who is responsible for managing product/service management? -Several employees of a company, certain departments, 1 employee or just the boss. Normally depends on size of company. 3 Main Phases of Product/Service MGMT: 1. Developing New Products 2. Monitoring Existing Products - Sales, Profit, Market Share 3. Eliminate Weak Products
3.01--- Review Types of Goods Sold Staple Convenience Shopping Specialty Fashion Seasonal Unsought Industrial Product Life Cycle Introduction Growth Maturity Decline
Product Life Cycles
Product Life Cycle Product Life Cycle represents the stages that a product goes through during its life. There are 4 Stages of Life Cycle: 1. Introduction 2. Growth 3. Maturity 4. Decline
Introduction Phase The iPad Air is in the introduction phase Launched November 1, 2013 $499.99 Focus will be on production & promotion
Growth Stage 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
Maturity Stage 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
Decline Stage 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
DECLINE - Only three options left with the company 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.
How can you extend a product’s lifecycle? 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.
Extending a Product’s Lifecycle 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
Class Activities Flash Cards - After 10 minutes into a lecture or concept presentation, have students create a flash card that contains the key concept or idea. Toward the end of the class, have students work in pairs to exchange ideas and review the material. Product Life Cycle of Mobile Phone http://www.youtube.com/watch?v=A-y0Q9uE0MM http://www.youtube.com/watch?v=d-ZOOhsfZ-I
4 IMPORTANT P/S MGMT TERMS Product Mix Product Line Product Width Product Depth
Product / Service Management Anything a person receives in an exchange Tangible items (Stapler) A service (Haircut) Idea (Marketing Strategy) An abstract good (Education) Product Planning: Decisions about features that are needed to sell a business’s products, services or ideas Examples: Packaging, labeling, Branding, Services, Warranties, etc..
Product / Service Management Product MIX: All the different products that a company makes or sells. KRAFT Company Example: ….Kraft ….Maxwell House ….Kool-Aid ….Oscar Mayer ….Post Cereal products
Product / Service Management Product Line Group of closely related products manufactured &/or sold by a business Example: Kellogg’s makes all the cereals listed All product lines are apart of the product mix
Product / Service Management A product line can be determined by the following: They function similarly All of Chevrolets Cars are a Product Line They are sold to the same groups of people All of Staples Supplies sold to schools Are marketed the same way Are priced similarly
Product / Service Management Product Item A specific model, brand, or size of a product within a product line.
Product / Service Management Product Mix Example All classes AK offers Product Line All marketing courses offered Product Item Marketing Sports Marketing International Marketing
Product / Service Management Product Mix: The width and depth of a company’s product offerings. Width: number of different product lines a business manufactures or sells Small businesses have fewer product lines; less width Depth: number of product items within a product line Company sells three different sizes & three different flavors they would have a product depth of 9. Example: Chocolate = small, medium, large
Product Mix Assignment Working in groups of 1-3; you will be assigned a Company Define Product Mix At least 5 brands they sell 2 Examples of Product Lines 3 Product Items Specific items sold by company
Companies General Motors Mars Nestle Sony Proctor & Gamble Kraft General Mills Johnson & Johnson Unilever Kellogg’s Coca-Cola Pepsico Dr. Pepper/Snapple
Examples of Product Mixes
Nike Example Nike owns Nike Golf Nike Pro Nike+ Nike Skateboarding Air Jordan Converse Hurley International NikeTown Retail Stores
Nike Product Mix Example 4 Product Lines Examples Converse Basketball Soccer Clothing Could’ve broken it down by: Others Sports Hurley, Golf, Jordan
Product Items Converse All Star Ox Nike Club Swoosh Full Zip Hoodie $49.99 Nike Club Swoosh Full Zip Hoodie $39.99 Nike Air Max 2013 $179.99
Product Mix
Product Mix Example
Product Mix Product Width is either narrow or broad Narrow Product mix occurs when a company offers a limited number of product lines Also known as Contracting Why would a company want to narrow its product mix? Easier on management Cost effective Simplicity Consistency
Product Width: Narrowing In 2009; General Motors (GM) filed for bankruptcy protection They were told they needed to cut back GMC Cadillac Buick Chevy Pontiac Saturn Saab Hummer
Product Width: Broadening Companies seek to expanding their product width by making it broader Expanding allows you Reach more markets Gain a competitive edge Example of product width is Red Lobster Specialize in seafood Sell pasta, chicken, & steak to broaden product mix
Product Depth: Expanding Product Depth expands when more products are added to a product line Why would you expand on a product line? Wider Variety Greater Quantity Dillards choosing to sell more colors, sizes, styles of Levi Jeans
Product Depth: Shallow A shallow product depth occurs when there are less products offered in a product line Why would you contract your product depth? Cost Effective Example would be Red Lobster selling chicken on its menu Usually only 2-4 menu options Not cost effective to offer a wider variety
Product Mix Strategies Companies devise strategies for their products so that they are profitable Existing product strategies Alteration Trading Up Trading Down
Product Mix Strategy: Alteration Alteration occurs when an existing product is altered Improve an established product with new design, new package, &/ or new uses Example: Jeep Company
Jeep Changes Over Time
Product Mix Strategies Trading Up Occurs when a company adds a higher-priced product to a line Trying to attract a higher-income market Want to improve the sales of existing lower- priced products. Prestige of high-priced item makes brand look better
Product Mix Strategies 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.
Quiz
Product Positioning Positioning In Relation to a Competitor In Relation to a Product Class or Attribute In Relation to a Target Market By Price and Quality Difficult to change