Product, PLC and Services Chapters

What is a Product? Anything that can be offered to a market to satisfy a want or need. It is usually judged on (1) product features (2) services mix & quality and (3) price appropriateness Core benefit, Basic product, Expected product, Augmented product, Potential product

Brand Name Quality Level Packaging Design Features Delivery& Credit Installation Warranty After- Sale Service Core Benefit or Service Core Benefit or Service Augmented Product Augmented Product

Product Classifications Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products PRODUCTS

Some Product Definitions Product line – a group of closely related product items. Product mix – all products that a firm sells. Width – refers to how many different product lines the firm carries Depth – refers to how many variants of each product are offered

Gillette’s Product Lines &Mix Gillette’s Product Lines & Mix Blades andWriting razorsToiletriesinstrumentsLighters Mach 3 Series Paper Mate Cricket SensorAdorn Flair S.T. Dupont Trac IIToni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depth of the product lines

Product Line Strategies Extensions: Adding additional products to an existing product line in order to compete more broadly in the industry. Contractions: deleting products from product lines if there are low sales, cannibalization, obsolesce or few resources.

What is the Product Life Cycle (PLC)? A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death). It is based on the product category.

The Product Life Cycle Time Dollars Product Category Profits Product Category SalesIntroductoryStageGrowthStageMaturityStageDeclineStage 0

Introduction Stage High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and information Intensive personal selling to channels

Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered

Maturity Stage Declining sales growth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge

Decline Stage Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Options for Deleting Products: Maintaining Deletion Harvesting Contracting

Marketing Strategies for PLC INTRODUCTIONGROWTHMATURITYDECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand.Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion Higher/recoup development costs Fall as result of competition & efficient produc- tion. Prices fall (usually). Prices stabilize at low level.

Categories of Product Adopters Percentage of Adopters Time Innovators 2.5% Early Adopters 13.5% Late Majority 34% Early Majority 34% Laggards 16%

Diffusion Process and PLC Curve Innovators Early adopters Early majority Late majority Laggards Product life cycle curve Diffusioncurve Introduction Growth Maturity Decline Sales

What is a Service? Any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything Medical, utilities, entertainment, professional (law, medical), transportation, financial

Characteristics of Services Intangibility – cannot be touched, seen, tasted, heard or felt in the same manner as goods. Inseparability –services are produced and consumed simultaneously Heterogeneity – services are less standardized and uniform than goods. Perishability – services cannot be stored, warehoused or inventoried.

Managing Services Managing differentiation –Can’t live by price alone –Reliability, innovativeness and resilience Managing service quality –Service gaps –Common practices Managing productivity –Seven approaches