Nature of Product/Service Management Rapping Up Products Nature of Product/Service Management Product/Service Management LAP 17

Objectives Describe the product/service management function. Discuss the phases of product/service management.

Describe the product/service management function. Objective Describe the product/service management function.

What was the last product you purchased? Have you ever thought about who’s responsible for it? Managing products and services well—important for any business Products don’t appear overnight: Chick-fil-A sandwich—over six years in development Polio vaccine—over 10 years in development Google search—over three years in development Products must be managed through all stages of their life cycles.

Products and Services Product/Service management: Marketing function Involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities

Products and Services Product—either a good or a service Good—a tangible object that can be manufactured and produced for resale, along with its associated benefits Examples: Desk chair Truck Rose bush

Products and Services Service—an intangible activity performed by other people in exchange for payment, along with its associated benefits Pure service—not attached to any sort of tangible good Product-related service—attached to some sort of tangible good Examples: Manicure Internet connection Employee search Examples: Banks Insurance companies Examples: Instruction Maintenance Delivery Credit Repair

Product/Service Management Activities Every business participates in product/service management! Activities include: Sustaining successful products as long as possible Discovering new-product opportunities Developing marketing plans and strategies for products Coordinating the product mix Reassessing products that are not meeting expectations Eliminating products that have become liabilities

Factors Affecting Product/Service Management Customer needs and wants Remember that customers buy benefits, not products. Manage from their point of view. Market research can be helpful.

Factors Affecting Product/Service Management Company goals and strategies Internal factors Each business has unique objectives—product/service management must align with them.

Factors Affecting Product/Service Management Costs and available resources Especially important during new-product development phase Product may be great on paper but not cost-effective.

Factors Affecting Product/Service Management Competition Product/Service managers must be watchful. May need to introduce a new product or modify an existing one to keep up with the competition The product itself

Factors Affecting Product/Service Management Government regulations Control issues such as: Production Information companies must provide Warranties Construction and safety standards Packaging and labeling

Factors Affecting Product/Service Management Stage in the product life cycle Stages: Introduction Growth Maturity Decline Stages are the basis for product/service management.

Factors Affecting Product/Service Management Business and economic trends Must operate within framework of current economy Must be flexible

Benefits of Successful Product/Service Management Improved sales and profits Improved market share Improved ability to beat the competition New customers gained Less exposure to financial risk

Role of Product/Service Management in Marketing Affects positioning—strategy in which a business creates a certain image or impression of a product in the minds of consumers Improves product success Gives product an image (branding)

Who Handles Product/Service Management? May be an entire department in bigger companies Associated job titles: Product manager Brand manager Project manager Product coordinator Marketing manager Product line manager May be the owner or manager in small businesses

Discuss the phases of product/service management. Objective Discuss the phases of product/service management.

Phases of Product/Service Management: New-Product Development Types of new products: Have never been offered before Have been modified in some way Will be presented or distributed in a new manner

Phases of Product/Service Management: New-Product Development Ways businesses obtain new products: Purchase from another person or company License from another person or company Acquire by purchasing another company Develop internally

Generate ideas—could come from anywhere! Screen ideas Phases of Product/Service Management: New-Product Development: Steps to Internal Development Generate ideas—could come from anywhere! Screen ideas Find any that are unworkable Too expensive? Tried unsuccessfully in the past? Not in line with company goals? May include managers from many different departments

Test the product concept Phases of Product/Service Management: New-Product Development: Steps to Internal Development Test the product concept May involve a simple questionnaire or an actual prototype Get feedback from potential customers Answer the questions: Is our target market interested in this product? Is it the right time to introduce this product? What benefits does our target market expect from this product? Any further steps require much more financial investment from the company

Conduct a business or feasibility analysis Phases of Product/Service Management: New-Product Development: Steps to Internal Development Conduct a business or feasibility analysis In-depth analysis that considers: Demand Costs Competition Required investment Potential profit May involve managers from many different departments May take months to complete

Develop the product Plans made for: Phases of Product/Service Management: New-Product Development: Steps to Internal Development Develop the product Chick-fil-A took six years and over $500,000 to develop their chicken sandwich. Lengthy step that could take months or years Can be very expensive Working model of product is developed, tested, modified, and retested as many times as it takes. Cost of production estimated Plans made for: Packaging Labeling Brand name Promotion Distribution Safety tests conducted

Test market the product Phases of Product/Service Management: New-Product Development: Steps to Internal Development Test market the product White Castle test markets a BBQ pulled pork sandwich. Introduce to a limited market to gauge acceptance Guides marketing strategies

Commercialize the product Phases of Product/Service Management: New-Product Development: Steps to Internal Development Commercialize the product Put it into full-scale production Put marketing plan in place Conduct sales and service training Begin product life cycle!

Phases of Product/Service Management: Monitoring of Existing Products Existing products—goods and services already on the market Monitored in terms of: Sales Profit Market share How well they’re meeting goals and expectations

Phases of Product/Service Management: Monitoring of Existing Products Decisions product/service managers may make: Leave product as is Modify product Reposition product Eliminate product

Phases of Product/Service Management: Elimination of Weak Products Also called product discontinuation Weak products—goods and services with declining sales and profitability Elimination must be planned carefully to maintain customer goodwill. DISCONTINUED

Courses offered by educational institutions are products. At your educational institution: Who is responsible for product/service management? What factors are currently affecting product/service management? How does product/service management influence overall marketing success? What are the current activities as far as new-product development, monitoring of existing products, and elimination of weak products?

Janna and Leah exchange new-product ideas. Leah takes Janna’s idea to her own manager. Is this ethical?

MBAResearch Acknowledgments Original Developers Christopher C. Burke, Sarah Bartlett Borich, MBAResearch Version 1.0 Copyright © 2009 MarkED Resource Center

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