product, plc and services chapters 10 - 12. what is a product? anything that can be offered to a...
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What is a Product?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
BrandName
QualityLevel
Packaging
Design
Features
Delivery& Credit
Installation
Warranty
After-Sale
Service
CoreBenefit
orService
CoreBenefit
orService
AugmentedProduct
AugmentedProduct
Product ClassificationsProduct Classifications
UnsoughtProducts
UnsoughtProducts
SpecialtyProductsSpecialtyProducts
ShoppingProducts
ShoppingProducts
ConvenienceProducts
ConvenienceProducts
ConsumerProducts
ConsumerProducts
BusinessProductsBusinessProducts
PRODUCTSPRODUCTS
Some Product DefinitionsSome 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 LinesGillette’s Product Lines & & MixMix
Blades and Writingrazors Toiletries instruments Lighters
Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus
Width of the product mixWidth of the product mix
De
pth
of
the
pro
du
ct
line
sD
ep
th o
f th
e p
rod
uc
t lin
es
Product Line StrategiesProduct 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
Do
llar
s
ProductCategory Profits
ProductCategory Sales
IntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
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
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited modelsFrequent changes
More modelsFrequent changes.
Large number of models.
Eliminate unprofitable
models
LimitedWholesale/
retail distributors
Expanded dealers. Long-term relations
Extensive.Margins drop.Shelf space
Phase out unprofitable
outlets
Awareness. Stimulate
demand.Sampling
Aggressive ads.Stimulatedemand
Advertise. Promote heavily
Phase outpromotion
Higher/recoupdevelopment
costs
Fall as result ofcompetition &
efficient produc-tion.
Prices fall (usually).
Prices stabilize at low level.
Categories of Product Adopters
Pe
rce
nta
ge
of
Ad
op
ters
Time
Innovators2.5%
EarlyAdopters
13.5%
LateMajority
34%
EarlyMajority
34%Laggards
16%
Diffusion Process and PLC Curve
Innovators
Early adopters
Early majorityLate majority
Laggards
ProductProductlife cyclelife cyclecurvecurve
DiffusionDiffusioncurvecurve
Introduction Growth Maturity Decline
Sal
es
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.