Product Planning, Mix, and Development Section 30.1

Objectives Describe the steps in product planning Explain how to develop, maintain, and improve a product mix

What is a product? Anything received in an exchange Tangible (laptop) Service (auto repair) Idea (marketing campaign)

Includes Product public perception Physical features Seller’s reputation Seller’s services

Product Planning Decisions used in selling a business’s products, services, or ideas Relate to product features Products: Packaging, labeling and branding Services: product warranties and customer support

Product Planning Allows coordination of products Addition of products Deletion of products Requires creativity Ability to interpret customer needs and forecast new trends

Product Mix Group of closely related products manufactured or sold by a business. Ex. Kellogg’s cereals Retailers sell multiple product lines.

Product Item Specific model, brand, or size of a product Retailers carry several product items for each product line Ex. Mercedes Convertible: SL, CLK, SLK

Product Width Number of different product lines a business manufactures or sells Ex. Retailer selling True Religion, Antik and Citizens of Humanity jeans

Product Depth Number of items offered within a product line Ex. Different sizes, price ranges, colors, fabric types, and styles

Business Needs Identify target market, competitors, and image Determine product lines and items to manufacture or sell Review whether product lines need to be expanded, modified, decreased or eliminated

Product Mix Strategy Plan for determining which products a business will make or stock Can use to develop, modify, or delete products Must look at current events and sales

Developing New Products Can add to company’s overall sales and boost market share Slight variation of original or existi8ng product

Developing New Products Proctor & gamble devotes 15% of research to new products Ex. Febreze odor removers, Swiffer dry-mop system and Dryel home dry- cleaning kit

New Products New products account for 35% of total sales Can build image and reputation Increase markups and profits to sellers, prices 10 to 15 percent higher

7 Steps to Product Planning Generating ideas Screening ideas Developing a marketing plan Developing the product Testing the product with consumers Introducing the product Evaluating customer acceptance

Generating Ideas Customers, competitors, and company employees Creativity is essential

Screening Ideas During screening process, ideas are evaluated Match: overall strategy v. competitive strength New ideas are evaluated for potential conflicts Purpose: find products that deserve further study

Developing a Marketing Plan Evaluate new products Examines size of market, potential sales, costs, profit potential, technological trends Study the making and marketing of new products

Developing the Product New product develops physical shape Develop marketing strategy Plans: production, packaging, labeling, branding, promotion, and distribution Technical evaluation Product testing

Testing the Product with Consumers Tested in certain geographic areas Research and Development departments Focus group evaluation

Introducing the product Also called commercialization Expensive stage New/Revised distribution network

Evaluating Customer Acceptance Study sales information Customized reports Who is buying the product?

Developing Existing Products Used to expand or modify products Build on established image Appeal to new markets and increase sales Add products to increase positive attitude toward brand Disadvantage: Cost factor Line extensions and product modifications

Line Extensions Addition of new product lines, items, or services Ex. Tylenol-Flu, cold, Allergy sinus Product appeals to customers need Easy to market

Product Modifications Alteration of existing products Offered in different colors, styles, and features Quick and easy Old product discontinues Packaging is modified

Reasons to Delete a Product or Product Line Obsolescence Loss of appeal Changes in company objectives Replacement with new products Lack of profit Conflict with other products in the line