UNIT E PRODUCT/SERVICE MANAGEMENT AND PRICING 8.01 Understand product/service management as a function of marketing.

Product/service management l Concepts and procedures necessary to develop, maintain, distribute, and improve a product or service mix in response to market opportunities. Elements of product/service management New product development Consumer research Product research Product design Product production

Product classifications l Products are marketed to reach specific target markets. l All marketing decisions are affected by the classification into which a product is placed. l Common characteristics of consumer and industrial buying behaviors serve as measures to categorize products into specific classifications. l The same item may not be classified the same way by different consumers.

Product classifications for goods l Consumer goods: Products designed for personal or home use. 1.Convenience goods: Inexpensive items that consumers purchase without much thought. l Consumers are not willing to shop around for these products. l Marketers must make these products accessible in m any stores and convenient for purchase on a daily basis.

Types of convenience goods l Staple items l Impulse items l Emergency items

Consumer goods (cont.) 2.Shopping goods: Less frequently purchased products that are usually higher in price and require more thought on the part of the buyer. Consumers compare brands, features, and prices to receive the best-perceived value. Marketers do not need exposure in as many stores for these products, but the choice of stores and outlets must match the products’ target market.

Consumer goods (cont.) 3.Specialty goods: Very specific products that customers insist upon and are willing to search for. Specialty goods may be more expensive than items in other categories. Customers may be seeking specific brand names. Some customers may insist on certain product features. Customers are usually less concerned with price. These products can be placed in fewer stores. The fact that they are less available may make them even more desirable.

Consumer goods (cont.) 4.Unsought goods: Products that customers will not shop for because they do not know about the product or do not feel a strong need for the product. These products require direct personal selling. It is up to the marketer to inform consumers and convince them of a need in order to make the sale of these products.

Product classifications for goods l Industrial goods: Products designed for use by another business. 1.Raw materials 2.Major equipment/installations 3.Accessory equipment 4.Component parts 5.Processed materials 6.Consumable supplies 7.Business-to-business services

Industrial goods l Raw materials: Unprocessed primary materials that come from nature and are used to make products. l Major equipment/installations: Investment purchases of large tools and machines that will be used to produce products or services.

Industrial goods (cont.) l Accessory equipment: An industrial product that is used in the operation of a business but does not become a component part of any finished product. l Component parts: Items that become part of the finished product completely with little or no additional processing.

Industrial goods (cont.) l Processed materials: Industrial products used in production that do not become an identifiable part of the product. l Consumable supplies: Items that facilitate an organization’s production and operations but do not become part of the finished product.

Industrial goods (cont.) l Business-to-business services: Business assistance and/or advice provided for a fee by one business to another business.