1. Chapter 11 - Product and Service Strategies n Product vs. Service Continuum –Figure 11.1 n TQM: W. Edwards Deming –Malcolm Baldridge Award –ISO 9000 –Benchmarking

2. 3 Classifications of Consumer Products 1. CONVENIENCE PRODUCTS n n purchase frequently, immediately, & w/ minimum effort – –Ex. candy, chewing gum, milk, soft drinks 2. SHOPPING PRODUCTS n n consumer has made comparisons of competing products – –Ex. clothing, jewelry, furniture, appliances & used cars

3. 3. SPECIALTY PRODUCTS n n unique characteristics that cause the buyer to prize these particular brands – –Ex. Porsche, Gucci

4. n n Business Products Classifications 1. INSTALLATIONS - specialty products of the industrial market Ex. factories, computers, heavy machinery, jets for an airline

5. 2. ACCESSORY EQUIPMENT - capital items that are usually less expensive & shorter-lived than installations Ex. Desks, Laptops, & lathes 3. Component Parts and Materials - finished industrial products that actually become part of a final product Ex. Computer chips, tires, motors

6. 4. RAW MATERIALS - used in producing the final industrial product Ex. cattle, wheat, cotton, iron ore, lumber, copper 5. SUPPLIES - regular expense items that are necessary to the firm's daily operation BUT DO NOT become part of the final product Ex. Maintenance items, Repair items: nuts & bolts Operating items: paper, pencils

7. 6. BUSINESS SERVICES - include intangible products firms buy to facilitate their production & operational processes Ex. financial, leasing & rental of equipment & vehicles, and insurance

8. Impact on Classification n See Table 11.1 & 11.2

9. THE PRODUCT LIFE CYCLE 1. INTRODUCTION – –objective is to stimulate demand for the new product entry 2. GROWTH STAGE – –sales volumes rise rapidly – –new customers make initial purchases – –old customers repurchase the product

10. 3. MATURITY – –industry sales continue to grow during the early part – –sales eventually reach a plateau as the number of potential customers dwindles 4. 4. DECLINE 5. DEATH

11. How to Extend the PLC 1. Increase the frequency of use Ex. Dairy Assoc. (Milk) 2. Increasing the number of users Ex. broadening distribution

12. 3. Finding new uses Ex. Baking soda, WD-40 4. Changing package sizes, labels, & product quality Ex. Pepto Bismol introducing new take along tablets for awayfrom home use

13. Product Mix n n Width – –# of product lines – –Ex. PepsiCo. - soft drinks, snack foods, and restaurants n n Length – –# of products n n Depth – –variations of each product – –Ex. Pepsi - regular, diet, cherry, caffeine free