product planning final
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Chapter 30
Product Planning Product anything a person receives during an
exchange—product, service, idea, abstract good (education), or a combination of both.
Product planning—Decisions a business makes about features to be used when marketing a product, service, or idea.
Packaging, labeling, branding, services (warranties and guarantees), and product mix.
Well-developed product plan includes:coordination of products already available to
customersaddition of new productsdeletion of productsallows a business to design appropriate marketing
programs.
Product Mix
Product mix—All the products a company produces or sells. Large manufacturers hundreds of
productsRetailer’s product mix—All the products
and services a retailer sells. Must be planned carefully because they can’t offer
every item consumers want.
Retailer’s Product MixRetailers must choose the type and number
of products.Decisions are based on:
objectives of the business image they want to create target market
However, they must choose these products while adhering to the marketing concept.
Product MixA product mix consists of all product lines
and items offered by a business. Product Category—a group of related products of
varying brands All shoes at Shoe Carnival—Nike, Adidas, Puma, K
Swiss, etc.Product line—a group of closely related products
manufactured or sold by a business All Nike shoes, all Adidas shoes Businesses usually carry more than 1 product line.
Product item—a specific model, brand, or size of a product within a product line
Nike Zoom
Category/Line/ItemProduct Category Product Line Product Item
Product Width/Product DepthProduct width—The number of different product lines
a business/manufacturer sells. Product depth—The number of items offered within
each product line. Some businesses have a large product width but small
product depth Some businesses have small product width but large
product depth Decisions are based on:
company objectivesprojected imagetarget marketcompetition
Product Width/Product Depth, Cont’d.They must review their product lines to see if
they need to be expanded, decreased, or eliminated.
Category Killer: A specialty retailer that typically has a small product width but large product depth, which results in lower prices because of its segmenting capabilities, especially national chains.
Product Mix StrategiesProduct mix strategies—deciding which
products a business will produce/stockDepends on the business’s resources
available and objectivesStrategies:
Developing new productsDeveloping existing productsDeleting a product/product line
Developing New ProductsHelps companies increase sales/increase
market shareNew products =35% of total salesImprove a company’s image by gaining the
reputation of being an innovator and leaderProfits are higher because they’re priced 10-
15% higherhttp://www.youtube.com/watch?
v=DyAPyWZU2oY
6 Steps1) Generating IdeasIdeas can come from
customers, competitors, employees, or channel members by having focus groups or idea sessions.
Some companies provide incentives
2) Screening IdeasIdeas are evaluated to
find which products should be further researched
Evaluation is based on:the company strategysize of the marketprofit potentialrisk levelthe effect on the
company imageproduction
requirementsappeal to the customers
Product Development Process6 Steps:
Generating ideasScreening ideasDeveloping the productTesting the productIntroducing the productEvaluating customer acceptance
“It’s so new we don’t know what itdoes, but nobody else has it so we’re selling it.”
6 Steps Cont’d.3) Developing the ProductNew product idea takes
shapePrototype—model of the
product being developed.Marketing plan is developed
plans related to production tests, packaging, labeling, branding, promotion, distribution
For some products, the government requires testing$$$$$$$$May cause long delays in
the development of the product
4) Testing the ProductSome products are test
marketed in certain geographic areas
Not every product needs to be test-marketed
Products may not be test marketed due to:costsprevious focus groupsnot wanting to give
competitors information that will lead to the competitor developing a product
6 Steps Cont’d.5) Introducing the ProductCan be very expensive due
to: costs related to advertising promoting development of a new
distribution network training for the sales force
Being first-to-market can be extremely beneficial to businesses allows them to beat
competition establishes leadership in
the new product acquires new customers and
builds brand loyalty
6) Evaluating Customer Acceptance
Conducting marketing research and evaluating sales information to determine the level of customer acceptance How often do customers
buy? When did customers last
buy the product? Where are the best
customers for our product? What new products are
customers buying?Also used to answer
questions concerning new product development
Developing Existing Products
Expanding the product lineBuild on the established image and brand Appeals to new marketsIncrease sales and profits
Takes advantage of customer’s positive attitudes towards the brand
Methods of Developing Product LineLine extensions—different product that appeals
to the needs of customer needs (increase depth)Product Modifications—an alteration in a
company’s existing productModified products offered in different varieties,
colors, styles, sizes, etc. Disadvantage: Costly to add a new product
More inventory, promotion, storage, distribution costs, sales rep training; takes sales away from existing products; if unsuccessful, the entire product line and business can suffer.
http://www.youtube.com/user/drpeppervideos?feature=pyv&ad=4550305122&kw=coke%20commercial#p/u/0/2tuS7Yap0KY
Deleting a Product/Product LineReasons to delete:
Obsolescence—changes in customer interests—(desktop computers)
Loss of appeal—Changes in customer’s tastes—(box TV’s)
Changes in company objectives—(Sauder)Replacement with new products—(in retail
stores/department stores)Lack of profit—(adding machines)Conflict with other products in the line—
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