Product & Service Strategies Jeremy Kees, Ph.D.

The Basics… What is a product… –Anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Do we market products and services in the same manner???

Distinguishing Factors Intangibility Inseparability –Requirement of interaction between buyer and seller Perishability Difficulty of standardization / variability in service offering

Types of Consumer Products Convenience Products –Inpluse Items –Staples –Emergency Items Shopping Products –Homogeneous –Heterogeneous Specialty Products Unsought Products

Consumer Product Classification

The Product Mix Using AB as an example… Product Mix (or Assortment) –Product lines (beer, specialty beer, imports, specialty malt beverages…) –Product types (Within “beer”, AB has the “Bud family”, “Michelob family”, “Busch family”…) –Items (Bud Light, Mic Ultra, Bacardi Silver)

The Product Mix –Width, Length, and Depth Width = # of product lines Length = # of products within the line(s) Depth = # of variants of each product

Product Mix Decisions: Product Line Analysis Evaluate sales and profits associated with each item in product line Evaluate line positioning relative to competition Decide whether to build, maintain, harvest, or divest

Product Mix Decisions: Product Line Analysis Depending on success of various lines versus the competition, we can…. –Stretch the Line Up-stretching: AB acquiring Imports and Microbrews Down-stretching: AB developing Natural Light –Prune the Line Goal: volume (market share) objectives If the goal is profitability, then shorter lines might be a more viable strategy

Product Mix Decisions: Product Line Analysis When extending lines, an important consideration is consistency and capitalizing on equity built in the original brand Michelob Light Mic Ultra Mic Ultra Amber

New Product Development

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New Product Development Where do product ideas come from?? –Customers –Organizations –Experts –Government –Private labs –Research institutions –Suppliers –Retailers –Partners –Etc….

New Product Development

Product Adoption Process Awareness Interest Evaluation Adoption Trial

Product Adoption Process

Innovators – venturesome, educated, high socio-economic status Early adopters – social leaders, popular, educated Early majority – deliberate, many informal social contacts Late majority – skeptical, traditional, lower socio-economic status Laggards – neighbors and friends are main info sources, fear of debt

Have you adopted…. Iphone? GPS? Blackberry?

Product Life Cycle: Key Decisions at Each Stage Draw on Board –Sales –Profits –Prices

Product Life Cycle: Key Decisions at Each Stage Introduction –Inform potential customers –Introduce product trial Examples for low and high end products?? –Secure retail distribution

Product Life Cycle: Key Decisions at Each Stage Growth –Improve quality, add new features, and improve styling –Add new models and flanker products –Enter new segments –Increase distribution coverage and enter new channels –Shift from product-awareness to product- preference advertising –Lower prices to attract the next layer of price-sensitive buyers

Product Life Cycle: Key Decisions at Each Stage Maturity –Market modification –Product modification –Marketing program modification

Product Life Cycle: Key Decisions at Each Stage Decline –Harvest –Divest –Liquidate

Product Life Cycle: Key Decisions at Each Stage Strategies for extending the PLC…