Week 7 Product Decision

Outlines Definition & nature of product Product MGT decision Product life cycle New product development

Product Anything that can offer to market for attention, acquisition, use or consumption & that might satisfy a want or need Includes physical objects, services, persons, places, organizations & ideas

Product Levels Core Benefit or Service Augmented Product Installation This CTR corresponds to Figure 9-1 on p. 275 and relates to the material on pp. 274-276. Product Levels Installation Packaging Brand Name Features Delivery & Credit After- Sale Service Core Benefit or Service Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Products can be physical objects, services, persons, places, organizations, and ideas. Product Levels Core Product. This concept refers to the use-benefit, problem-solving service that the consumer is really buying when purchasing a product. Actual Product. The actual product is the tangible product or intangible service that serves as the medium for receiving core product benefits. Five characteristics: Quality Level refers to product performance. Features include combinations of product attributes. Styling consists of design and aesthetic or ergonomic aspects of the product. Brand Name may help consumers position and identify the product. Packaging serves to both protect the product and to promote it to consumers. Augmented Product. The augmented consists of the measures taken to help the consumer put the actual product to sustained use. Measures can include installation, delivery & credit, warranties, and after sale service. Quality Styling Warranty Actual Product Core Product

Product Classifications Consumer Product Classifications This CTR corresponds to Table 9-1 on p. 276 and relates to the material on pp. 276-277. Product Classifications Types of Consumer Products Convenience Specialty Unsought Goods Shopping Consumer Goods Consumer products are those bought by final consumers for personal consumption. Marketers typically classify these products based on how consumer go about buying them. Classifications include: Convenience Products. These products are purchased frequently with a minimum of comparison and buying effort. Convenience products may be further divided: Staples. Staples are products that consumers buy on a regular basis. Impulse Products. Impulse products are purchased n the spur of the moment?and without much, if any, prior consideration. Emergency Products. Emergency products are purchased to fill an urgent and immediate need. These products are prompted by some unexpected external event like a flood or heavy snow fall. Shopping Products. These products are compared on such bases as suitability, quality, price, and style. Shopping products may be further distinguished homogeneous and heterogeneous shopping products. Price negotiation is more common for homogeneous shopping products. Specialty Products. These products have unique characteristics or identification with buyers and are generally specifically sought by the consumer. Unsought Products. These products may be unknown to the buyer or not normally considered for purchase. Unsought goods require special marketing effort.

Product Management Decision Product line decision Product mix decision Product item decision

Product Line & Mix Decision Product Line Decisions This CTR relates to the material on pp. 298-302. Product Line & Mix Decision Product Line Decisions Product Mix Decisions Consistency Length Filling Stretching Featuring Depth Width Product Line Decisions Product Line Length. This refers to the number of products in the line. The line is too short if adding items increases profits; too long if dropping items increases profits. Company objectives of full-line offerings may decrease strict profit criterion on length. Product Line Stretching. This occurs when a company lengths is product line beyond its current range. Downward stretch offers items to lower end of the market. Upward stretch introduces items to high end of market. Two-way stretch extends the line both upward and downward. Product Line Filling. This adds items within the existing product range of the line. Product Line Featuring. This occurs when the line manager selects on or a few items to receive special marketing attention to either increase volume of the featured items or draw customers closer to other products in the line. Product Mix Decisions Mix Width. This refers to how many product lines the company carries. Mix Length. This refers to the total number of products the company carries. Mix Depth. This refers to how many versions are offered of each product in the line. Mix Consistency. This refers to how closely related the various product lines are in end use, production requirements, distribution channels, or other ways.

Product Item Decision Packaging, labelling & branding Brand equity: brand is the most power asset of a co. the value of a brand = the extent that it has high brand loyalty, awareness, perceived quality, strong brand association R & D, skillful adv., excellent trade & service

Product Life Cycle The Product Life-Cycle Time Product Development This CTR corresponds to Figure 10-2 on p. 326 and relates to the material on pp. 326-332. Instructor Note: This CTR can be used to overview the life cycle concept. Strategies appropriate for each stage are discussed on the following CTR. Product Life Cycle Time Product Development Stage Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($) Sales and Profits Over the Product Life From Inception to Demise Product Life Cycle Stages Product Development. Development begins when the company finds and develops a new product idea. During development the product has costs but no sales. Development costs must be strategically weighed against the projected length of the product's PLC. Introduction. During the introduction of new products initial sales growth is slow as the market is just becoming aware of the product. Profits are usually nonexistent at this stage due to heavy promotion spending. Growth. This stage is characterized by rapid market acceptance of the product and increasing profits. Maturity. In maturity there is a slowdown in sales growth as the product has achieved acceptance by most potential customers. Profits may level off or decline as marketing costs increase to defend existing market share. Decline. In this period sales begin to fall off and profits decline dramatically.

New Product Development Process This CTR corresponds to Figure 10-1 on p. 315 and relates to the discussion on pp. 315-325. New Product Development Process Idea Generation Screening Concept Development and Testing Marketing Strategy Business Analysis Product Test Commercialization Stages in New Product Development Idea Generation. This stage is the systematic search for new product ideas. Sources for new product ideas include internal sources, customers, competitor's products, distributors & suppliers, and other sources. Screening. This stage focuses on reducing the number of ideas by dropping poor ideas as soon as possible. This helps reduce costs and focus attention more productively. Concept Development and Testing. This stage involves translating ideas into product concepts or detailed versions of the ideas stated in meaningful consumer terms. Concepts are then tested on target consumers. Marketing Strategy. This stage consists of three parts. The first part describes the target market, the second part outlines the product's projected price, distribution, and budget for the first year, the third part describes long-gun sales, profit goals, and marketing mix strategy. Business Analysis. This stage reviews the sales, costs, and profit projections for the product to find out if the satisfy overall company objectives. Product Development. This stage involves bringing the product concept into existence as a physical product to ensure that the idea is a workable product. Test Marketing. This is the stage at which the product and marketing program are implemented in one or more realistic market settings. Commercialization. This stage involves actually introducing the new product into the competitive marketplace. In this stage, the company must make decisions involving when to introduce, where, to whom, and how.

Questions for Discussion Identify one new product that is on the market. How you classify this product? What is the core product, the actual product & the augmented product? Is it part of a family of product? How is it positioned? What can you infer about the commercialization strategies of the company?

Questions for Discussion Highlight examples of bad brand-names & good brand-names in HK. Justify your opinion. Suggest new names for the bad brand-names you have identified. Choose two products in Hong Kong. One has a long & the other has a short product life cycle, & explain should their life be extended. Why & How?

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