Product Planning & Development Product Planning

Products Can be defined as a good or a service Are obtained through an exchange Are often targeted to a specific group of people May be associated with an image or reputation

Goods Are the physical items available for customers Include a product you can touch, taste or feel Encompass an item’s physical features and related services

Services Cannot be touched or tasted Are performed as an “action” May be categorized as either “pure” or “product-related”

Pure Services Do not include a tangible product Are the primary “product” of a business Include direct services offered by businesses, such as: ◦ banks ◦ insurance agencies ◦ beauty salons

Product-Related Services Include services which correspond to a physical product, such as: ◦ product warranties ◦ delivery services ◦ gift wrapping ◦ cleaning or repair services

Product Planning Refers to the decisions and processes used to create a “product mix” Involves decisions about a product’s features and services Consists of factors, such as: ◦ creating new products ◦ eliminating old products ◦ improving current products

Product Plans Allow businesses to create new marketing opportunities Help to evaluate the success or failure of current products Require extensive research and development Identify new markets and potential sales outlets Follow a product from conception to sales

Product Decisions Include: ◦ brand name ◦ packaging ◦ label ◦ product design ◦ product-related services

Brand Name Is a name, term or symbol used to identify related products Should be distinctive and easy to recognize Is developed to attract customers’ attention Is often a company’s greatest asset Is an essential element of a product’s development

Branding Creates a specific image for a product or company Helps to position a product within a given market Can be used as a powerful marketing tool and resource Allows an easy transition for new products due to familiarity Represents a perceived level of quality Reminds customers to purchase a certain brand

Packaging Should meet the following requirements: ◦ be eye-catching and appealing ◦ protecting the product ◦ creating a positive product image ◦ identifying the brand or manufacturer Can also be designed to reduce shoplifting or shipment costs

Labeling Provides critical product information, such as: ◦ brand name ◦ quality or grade ◦ weight or size ◦ ingredients ◦ product care and instructions ◦ manufacturing origin ◦ possible warnings ◦ artwork, slogans or logos

Product Design Refers to the way a product works or looks Can help to sell a product based on specific features, such as: ◦ creating spill-proof shelves in a refrigerator ◦ adding a camera lens to a cell phone ◦ designing a miniature detergent pen to fit on a keychain ◦ producing vertical ice cube trays to fit inside a water bottle

Design Decisions Include: ◦ color  appeal to the product’s target market  change based on consumer preferences  alter the demand for a product  used to distinguish various brands  relate to the image and packaging of a product  toothpaste should reflect a fun or refreshing color  bottled drinks in a clear container must be appealing

Design Decisions Include: ◦ quality  related to the parts, materials or construction elements of a product  considered in relation to sales price  determined before a product is created or produced  distinguish competing products  for example: a company may choose to print catalogs on a higher quality paper in order to stand out from the competition

Quality Control Is the process of maintaining product standards Is an important aspect of product development Is often associated with a company’s image Quality standards can be set for the following: ◦ appearance ◦ performance ◦ consistency ◦ safety

Quality Control Methods Quality circles ◦ consisting of a small group of employees who identify methods for product improvement in an informal and constructive manner ◦ allowing employees to make decisions about production and design Include: ◦ monitor large defects and errors prior to distribution

Quality Control Methods Include: ◦ formal inspections  should occur at each stage of the production process  are costly, yet effective  are conducted by employees, equipment, auditors and inspectors  consist of specified check-list evaluations

Quality Control Should be included in a product plan Should consider customer needs and protection May occasionally be dictated by government regulations ◦ for example: if a car seat manufacturer initiates a product recall, they must replace the old car seat with a new seat

Product-Related Services Benefit both the customer and company ◦ customers receive valuable services for a bundled price ◦ businesses create additional customer loyalty and brand recognition Could include post-sales services, such as: ◦ providing free jewelry cleaning to customers ◦ providing custom alterations on a men’s suit ◦ offering an extended warranty on a lawn mower

Product Line Is a group of related items or brands sold by the same company Comprises products of similar sizes and types Includes specific product divisions or categories, such as: ◦ Kellogg’s ® cereal line ◦ Kellogg’s ® Pop-tarts line ◦ Kellogg’s ® fruit snack line

Multiple Product Lines Can be similar or unrelated products in a company’s overall product mix ◦ most companies offer more than one product line and offer numerous items within each line  for example: Proctor & Gamble ® manages more than 100 different brands within approximately 25 product lines

Proctor and Gamble Product lines include: ◦ cosmetics ◦ dishwashing ◦ hair care ◦ household cleaners ◦ laundry and fabric care ◦ oral care ◦ paper products ◦ shaving products ◦ snacks and coffee

Proctor and Gamble Specific brands include: ◦ correspond to a specific product line or category ◦ include nearly 100 brand names, such as: Comet™ Ivory™ Jif™ Cover Girl™ Crisco™ Hawaiian Punch™ Sunny Delight™ Vicks™ Mr. Clean™ Pringles™ Iams™ Head&Shoulders™ Pantene™ Tide™ Bounty™ Duracel™ Pampers™ Old Spice™ Cascade™ Tampax™ Folgers™ Cheer™

Product Divisions Within each individual company or brand there may be additional product divisions or product categories, for instance: ◦ Pampers ® may divide products into lines based on sizes (new born, infants, toddlers, preschoolers) ◦ Vicks ® is divided into lines for baby rub, vapor rub, etc. ◦ Duracel ® has divided products into related categories (batteries, rechargeables, flashlights, hearing aids, photo imaging, etc.)

Kraft Product Lines SnackBeverageCheeseGroceryConvenience Meals cookiescoffeecottage cheese salad dressings dinner kits crackersfrozen drinks cream cheese mayonnaisefrozen pizzas snack bars powdered drinks Velveeta ® pie crustshot dogs packaged foods ready-to- drink cheese slices dry dessertspastas and sauces

Product-Line Decisions Consist of offering the right combination of products within a given line Are usually made by product managers responsible for the following decisions: ◦ determining the expansion of a product line ◦ considering which product items should be eliminated from a line ◦ evaluating the impact of product additions and deletions on the profitability of other items in the line ◦ allocating resources to items on the basis of recommended marketing strategies

Product Item Describes a specific brand or individual product within a line Refers to the model, size or design of a given item ◦ Post ® Raisin Bran cereal ◦ Nike ® Men’s Golf Shoe ◦ Samsung ® MiniDV Digital Camcorder As another example, all the courses a college or university offers constitute its product mix; courses in the marketing department constitute a product line; and the basic marketing course would be the product item.

Product Mix Includes ALL the products a company makes or sells Consists of the specific products a business offers Includes the lines, brands and products a business produces May vary based on customer needs or preference Refers to the width and depth of a business’ product offerings

Product Width Refers to the number of different product lines a business produces Consists of the variety of categories or divisions a business offers ◦ for example: an athletic retailer which markets four brands of shoes: Nike ®, Reebok ®, Adidas ® and New Balance ® has a product width of “4” since it sells four distinct shoe lines

Product Depth Refers to the number of available items offered in each product line Refers to the range of items a customer can purchase in each category ◦ for example: Nike ® may produce hundreds of shoe products within their men’s line, each varied by color, size, style, fabric, price, etc. Is geared toward a specific group or marketing segment

Product Mix Decisions Include: ◦ some companies may offer a wide product mix  buffet-style restaurant may offer a wide range of food styles and “types” of cuisines ◦ some companies may offer a deep product mix  Mexican restaurant may offer 40 different dinner combinations but within a narrow (Mexican food) product line

Determining a Product Mix Is a key element of product-service planning Involves the following steps: ◦ identifying an appropriate target market ◦ selecting which lines and items to sell ◦ reviewing or modifying product offerings ◦ creating and developing new products ◦ selecting effective marketing strategies for each product