1. Essentials of Health Care Marketing 2nd Ed. Eric Berkowitz
Chapter 8
Product Strategy

2. Learning Objectives
Objective 1 – Learn the range of product and service variation.
Objective 2 – Understand the issues of product line formation.
Objective 3 – Identify the strategy considerations over the product life cycle.
Objective 4 – Know the strategic implication of alternative branding strategies.

3. Learning Objective 1
The Focus of marketing revolves around the products and services to meet customers need.
Products can be divided into two groups.
Nondurable goods
Durable goods
A wide range of health care activities involve services which are intangible activities or processes offered to customers to solve problems.

4. Learning Objective 1 The 5 I’s of service:
Intangibility – services cannot be felt, touched, or heard before they are encountered.
Inconsistency – health services are delivered by people – nurse practitioner, the physician, or the admitting clerk in the group practice.
Inseparability – services cannot be separated from the individuals who deliver them.

5. Learning Objective 1 The 5 I’s of service continued:
Inventory – is a concept that is common to product business and is often ignored.
Interaction with customers – a service is the quality of the interaction between the customer and the service provider.
Customer contact Audit – is a flow chart of the point of interaction between the customer and the service offering.

6. Learning Objective 1 Products are classified by type of users
Consumer goods – products purchased by the ultimate consumer.
Convenience goods are products that the consumer purchases frequently that require little deliberation of search prior to purchase.
Shopping goods are products in which the consumer engages in significant amount of research to compare competing brand on selected attributes.

7. Learning Objective 1 Products can be classified by type of user
Industrial products – purchased for use in the manufacture of other products which will, at some point, be purchased by the ultimate consumer.
Production goods are those that are used to become part of a final product.
Support goods are items used to assist in the producing of other products.

8. Learning Objective 1
Services can be classified by how they are delivered: by people or equipment.
Equipment based has fewer problems with inconsistency.
Health care industry: for profit or non-profit
In for-profit businesses, some portion of profit often is directed to the shareholders.
In non-profit service organizations, excess revenues are redirected back to the organization to continue the maintenance of the service.

9. Learning Objective 2
All businesses must decide which products are service to offer.
Companies must determine the breadth and depth of the product mix.
Most companies manage multiple product lines and items.

10. Learning Objective 3
Product life cycle – refers to the stages a product goes through as it exists in the market from its first introduction to its final withdrawal.
Four Stages
Introduction, Growth, Maturity, Decline

11. Learning Objective 3
Introduction – occurs when the product is first rolled out into the marketplace.
Growth – sales of the product begin to increase rapidly.
Maturity sales of the product begin to slow.
Decline – the organization must recognize that the service cannot continue to grow.

12. Learning Objective 3 Product Life Cycle Issues
Alternative Product Life Cycles
Length of the Life Cycle
Product Life Cycle Concerns
Modifying the Product Life Cycle
Product Modification
Market Modification
Repositioning the Product

13. Learning Objective 4
Brand – any name, term, color, or symbol that distinguishes one seller’s product from another.
Trademark – a brand name or trade name given legal protection.

14. Learning Objective 4 Branding Strategies
Multiproduct Strategy – the company places one brand name on all of the products in its line.
Ex: A hospital puts its name on an outpatient surgery center or walk-in emergency center.
Multibrand Strategy – the company places a different name on each item.
Ex: Proctor and Gamble: Tide, Cheer, Ivory Snow
Reseller and Mixed Strategy – one company sells its product under the name of another company.
Ex: Sears sells Craftsman tools and Kenmore.

15. Learning Objective 4 Branding Strategies
Reseller and Mixed Strategy – one company sells its product under the name of another company.
Sears sells Craftsman tools and Kenmore.
Co-branding – organization markets its name along side another brand name
Lexus with Coach Luggage leather seats

16. Learning Objective 4 The Diffusion of Innovation
The rate at which a product is adopted by the market
Innovators
Early Adopters
Early and Late Majority
Laggard
See Figure 8-9, page 234

17. Learning Objective 4 Factors affecting adoption Relative advantage
Compatibility
Complexity
Divisibility
Communicability

18. Summary Products and services differ in terms of tangibility.
Consumer goods can be differentiated by the amount of effort and manner of search the consumer uses in purchasing the product.
Industrial goods are classified as either production or support goods.
When establishing the product element of the marketing mix, a company must decide its product mix, line, and its breadth and depth.

19. Summary continued
All products and services have life cycles consisting of four stages: introduction, growth, maturity, and decline.
The length of the product life cycle is affected by uncontrollable forces such as technology and demographics. An organization can impact its sales in each stage relative to competition through its marketing mix strategy.
In the early stages of the product life cycle, a new entrant can price high to skim only the most likely buyers, or penetrate the largest market by pricing low.

20. Summary continued
Organizations can stretch the life cycle in the mature phase through either product or market modification
An organization’s brand name can have value or equity in the marketplace. In deciding on a brand, a firm can pursue a multiproduct, multibrand, reseller, or co-branding strategy.
Acceptance of a product is the result of diffusion through the population. Individuals differ in the rate of adoption of new products.
The rate of adoption of a new product is affected by perception of relative advantage, compatibility, complexity, divisibility, and communicability.