Product Planning, Mix, and Development What You'll Learn The nature and scope of product planning The concept of product mix The different product mix strategies The steps in new product development

Product Planning, Mix, and Development Why It's Important Product planning allows a business to make or sell products that are wanted by customers. Product planning is also used to design appropriate marketing programs that help create increased sales and profit opportunities.

product planning product mix product line product item product width Product Planning, Mix, and Development product planning product mix product line product item product width product depth product modification

Product Planning, Mix, and Development A product is anything a person receives in an exchange—a tangible item (car), a service (haircut), an idea (a good education), or a combination of all of these concepts. Product planning involves making decisions about features needed to sell a business's products, services, or ideas.

Product Mix Product mix includes all the different products that a company makes or sells. A large manufacturer may have hundreds of products in its product mix. Retail stores must plan their product mix carefully because they cannot offer all of the products that customers may want.

Product Items and Lines A product line is a group of closely related products manufactured and/or sold by a business. A product item is a specific model, brand, or size of a product within a product line.

Product Width and Product Depth Product width refers to the number of different product lines a business manufactures or sells. Product depth refers to the number of product items offered within each product line.

Product Mix Strategies A product mix strategy is the plan for how the business determines which products it will make or stock. Businesses will either develop a new product or expand an existing product to add to their mix.

Developing New Products New product development generally involves seven key steps: 1. Generating ideas 2. Screening ideas 3. Developing a business proposal 4. Developing the product 5. Testing the product 6. Introducing the product (commercialization) 7. Evaluating customer acceptance

Generating Ideas New product ideas come from a variety of sources: customers competitors channel members company employees research and development departments

Developing the Product During product development, a prototype (a model of the product) is made, and marketers develop a marketing strategy. The prototype is tested, and adjustments are made to improve the final product.

Developing Existing Products Line Extensions Companies can expand product offerings by adding new product lines, items, or services. Example: Tylenol expanded to Tylenol Flu, Tylenol Cold, and Tylenol Allergy/Sinus Extensions can also be new lines of products. Example: Bic pens and Bic lighters

Developing Existing Products Product modification is an alteration in a company's existing product. Product modifications are a relatively quick and easy way to add new products to a company's product line.

Deleting a Product or Product Line Sometimes companies decide that they will no longer produce or sell a particular product or perhaps even a whole product line. Some of the reasons for this are: obsolescence loss of appeal conflict with current company objectives replacement with new products lack of profit conflict with other products in the line

Deleting a Product or Product Line Obsolescence Changing interests and technology make many products obsolete. They are dropped in favor of newer technologies. Loss of Appeal As consumer tastes change, companies drop products that no longer appeal to popular tastes.

Deleting a Product or Product Line Conflict with Current Company Objectives Sometimes a product does not match a company's current objectives. Example: Sears sold unrelated businesses to concentrate on retail. Replacement with New Products A store decides it can make more money selling a different brand, or replaces one brand for another because another manufacturer offers better terms.

Lack of Profit To increase profits, retailers will handle only fast-moving and profitable items. Product developers may drop products when sales drop below company objectives. Conflict with Other Products in the Line Sometimes increased sales of one product can cause decreased sales of another product.

Assessment 1. What is product planning? 2. What is product mix? 3. Name four product mix strategies. 4. Identify the steps for new product development. Name one advantage and one disadvantage to expanding a product line. Suppose a company is developing a new product, when a competitor introduces a new product that is similar. What are some things the company should consider in deciding whether to proceed with the development of its new product?