1 11.Product & Service Strategies

2 Products Product: tangible goods vs. services Levels of product –Class & form –Core, actual, augmented Product line –Product line length –Add new products to existing lines through Product line stretching Product line filling Product mix –Width– Depth –Length– Consistency

3 Product Classifications Consumer products (B2C) –Convenience products (impulse, staple, & emergency) –Shopping products –Specialty products –Unsought products Industrial products (B2B) –Process consumables Raw materials and component parts –Capital items Factory installations & accessory equipment − Support consumables Supplies/MRO items & business services

4 Product Life-Cycle Product life-cycle –Can describe product class, product form, or brand –Can be applied to styles, fashions, and fads Five distinct stages –New product develop. stage– Maturity stage –Introduction stage– Decline stage –Growth stage Framework for describing how products & markets work –Drawbacks indicate need for careful application

5 Product Life-Cycle Stages Introduction –Profits negative or low –Prices high –Few competitors Growth –Sales climb quickly –New competitors may enter Profit growth eventually slows, then levels off –Prices fall only slightly –Product modification may begin –Goal of promotion shifts –Trade-off: high market share vs. high current profit

6 Product Life-Cycle Stages (Cont.) Maturity stage –Sales growth slows, then levels off –Management practices include: Market modification Further product modification Marketing mix modification Decline stage –Sales and profits decline –Required decisions: harvest or delete/drop

7 Classification of Services Service provider –Government, private nonprofits, businesses Goods-services continuum Service characteristics –Intangibility –Inseparability –Inconsistency –Perishability

8 Service Quality Strategies –Service-profit chain (relates to quality of service encounter) Internal service quality  Satisfied employees  Greater service value  Satisfied customers  Profits & growth Assessing quality: Gap analysis –Expectations vs. experience

9 Service Quality (Cont.) Internal marketing Interactive marketing Major marketing tasks for service firms: –Increase competitive differentiation Through branding/addition of supplementary services to core service product –Integrate capacity management with efforts to build demand E.g., through off-peak pricing