Product Planning

 Product Planning  Decisions about the features and services of the product  Ideas that will help sell the product  Packaging / Labeling / Branding / Warrenties

Product Planning  Product Mix  All products a company makes or sells  Mores brands = Help companies from depending on just one product  Too many brands = may hurt sales by not being as popular as brands already in stock

Product Planning  Product Line  Closely relates products  Product Item  Specific model, brand, or size of a product within a product line  Product Width  Number of different product lines  Product Depth  Number of items offered within each product line

Product Mix Strategies  Product Mixes  Vary with the type of business  Company objectives / Image / Market  Existing vs New products  Current trends

Product Mix Strategies  New Products  Successful new products can increase sales and the company’s market share  Can improve the company’s image and/or reputation  Seen as a Innovator in the industry  New Product Development 1. Generating ideas 2. Screening Ideas 3. Developing a business proposal 4. Developing the product 5. Testing the product with consumers 6. Introducing the product 7. Evaluating customer acceptance

Product Mix Strategies  Generating Ideas  Creativity is key  Come from customers / competitors / employees  Screening Ideas  Ideas are evaluated  Are ideas in line with company strategy?  Conflicts with existing products  Done before allocating resources…Time and Money!!!

Product Mix Strategies  Developing a Business Proposal  Profit Potential – Size of Market / Potential Sales / Technology Trends / Competitive Environment / Risk  Production requirements – Time to create and introduce  Developing the Product  Prototype – Model of new product  Production / Packaging / Labeling / Branding / Promotion / Distribution  Decision on to produce or to outsource  Tests on product based on normal and not so normal consumer use – wear and tare

Product Mix Strategies  Testing the Product with Consumers  Test marketed in certain geographical areas – Gauge consumer acceptance  Test markets and focus groups costs may be too high for some companies and testing will be skipped  Testing may not take place to keep competitors in the dark  Introducing the Product  Commercialization  Advertising to introduce product benefits to customers  Can be Expensive…But…1 st on the market can build brand loyalty

Product Mix Strategies  Evaluating Customer Acceptance  How often do customers buy the new product?  When did customers last buy the new product?  Where are the best customers for our new product?  What new products are customers buying?

Product Mix Strategies  Developing New Products  Build on established image  Appeal to new markets  Increase sales and profits  Downside = Costs!  Line Extension and Product Modifications

Product Mix Strategies  Line Extension  Adding new product lines / items / services  A different product that appeals to somewhat different needs of customers  Wider range of choices for customers  Product Modifications  Alteration of an existing product  Varieties / Formulations / Colors / Styles / Features / Sizes  Quick and Easy

Product Mix Strategies  Deleting a Product or Product Line  Obsolescence – No longer useful (Technology)  Loss of Appeal – Change in consumer tastes  Changes in Company Objectives  Lack of Profit  Conflict with Other Products in the Line  Replacement with New Products – Have to pay Slotting Fees

The Product Life Cycle  Product Life Cycle  Stages a product goes through during its life  Introduction – Focus on Promotion and production. Draw customer’s attention  Growth – Build brand preference and increase market share. Focus on consumer satisfaction. Increased competition  Maturity – Sales decrease or slow down. Marketing focus is on fighting off competition  Decline – Profits fall below expenses. Company must decide on course of action

The Product Life Cycle  Product Life Cycle  Decline  Sell or License Product – Other company tries to revitalize product  Recommit to the Product Line – Identify new use for the product  Discount the Product – Lower prices  Regionalize the Product – Focus on geographical areas of success  Update or Alter the Product – Redesign / Packaged differently / Reformulated

Product Positioning  Product Positioning  Creating an image of the product that is appealing to consumers  Effort a business makes to identify, place, and sell its products in the market place  Strategies  Price and Quality / Features and Benefits / Relation to Competition / Relation to Other Products in a Line

Product Positioning  Product Positioning Strategies  Price and Quality – High price = Quality, Low Price = Value  Economy / Mid / Luxury  Features and Benefits – Highlight a unique or Perceived Characteristic  Relation to Competition – Head to Head Competition  Relation to Other Products in a Line – If you like X, you’ll love Y