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Product, PLC and Services

Product, PLC and Services. Chapters 10 - 12. 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

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Product, PLC and Services

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  1. Product, PLC and Services Chapters 10 - 12

  2. 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

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

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

  5. 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

  6. Width of the product mix Blades and Writing razors Toiletries instruments Lighters Mach 3 Series Paper Mate Cricket Sensor Adorn Flair S.T. Dupont Trac II Toni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Depth of the product lines Gillette’s Product Lines &Mix

  7. 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. Product Line Strategies

  8. 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.

  9. Introductory Stage Growth Stage Maturity Stage Decline Stage Product Category Sales Dollars Product Category Profits 0 Time The Product Life Cycle

  10. 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

  11. 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

  12. 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

  13. 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

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

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

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

  17. 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

  18. 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.

  19. 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

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