© 2000 South-Western College Publishing Slide #1 Marketing Management 2nd Edition Chapter 8: Product and Service Decisions Michael R. Czinkota and Masaaki Kotabe

© 2000 South-Western College Publishing Slide #2 Chapter Outline l Product Package l Product Strategy l Product Life Cycle l Life Cycles and Marketing Strategy l Product Portfolio l Product Mix l Product Standardization or Adaptation l Packaging l Distinctive Features of a Service l Marketing Repercussions of Services

© 2000 South-Western College Publishing Slide #3 Product Package CoreProduct(ring)CoreProduct(ring) TangibleProduct(packaging)TangibleProduct(packaging) AugmentedProduct(psychologicalbenefits)AugmentedProduct(psychologicalbenefits)

© 2000 South-Western College Publishing Slide #4 Product Strategy PRODUCT PresentNew Present New MISSION (MARKET) Market Penetration Product Development Market Development Diversification

© 2000 South-Western College Publishing Slide #5 Product Strategy (cont.) Market Penetration Increase share of existing product in existing market Two strategies: l Persuade users to buy more product OR l Take business from competitors Present product Present market

© 2000 South-Western College Publishing Slide #6 Product Strategy (cont.) Product Development Major modification of the product for the current market New product Present market

© 2000 South-Western College Publishing Slide #7 Product Strategy (cont.) Market Development Find new uses for existing product Two strategies: l Find new markets for product OR l Aim at a broader market Present product New market

© 2000 South-Western College Publishing Slide #8 Product Strategy (cont.) Diversification Launch new product in a new market New product New market

© 2000 South-Western College Publishing Slide #9 Product Life Cycle IntroductionGrowthMaturityDecline Post Mortem Loss/profit Time $ Sales Profit

© 2000 South-Western College Publishing Slide #10 Other Life Cycles l Life cycle extensions l Fashions and fads l Technological life cycles l International product life cycle

© 2000 South-Western College Publishing Slide #11 Life Cycles and Marketing Strategy Introduction Growth Maturity Maximize distribution Build awareness & obtain trial Decline Extend distribution Advertise & promote heavily Advertise product image Persuade customers to switch Milk the product for profits Determine if to terminate product Postmortem Plan for postmortem expenses Develop phase-out plan

© 2000 South-Western College Publishing Slide #12 Product Portfolios: the BCG Matrix MarketGrowth Relative Market Share High Low HighLow Cashcow Star Problemchild Dog

© 2000 South-Western College Publishing Slide #13 Product Portfolio of Two Organizations Company ACompany B

© 2000 South-Western College Publishing Slide #14 Product Mix Product mix Product line Product depth P&G sells: Tide detergent, Pringle’s potato chips, and Ivory shampoo P&G sells: Different brands of laundry detergent including Tide and Cheer. P&G sells: Different forms and package sizes of Tide detergent.

© 2000 South-Western College Publishing Slide #15 Product Standardization or Adaptation Sell product as is Modify product for other country Modify product for other country Design new product for new markets Design new product for new markets Introduce a global product Introduce a global product

© 2000 South-Western College Publishing Slide #16 Packaging FunctionFunction ImageryImagery ProductdescriptionProductdescription ProductamountProductamount CustomerdemandsCustomerdemands This coffee is the best tasting coffee in the world. That’s because it’s made with 100% arabica beans, the finest beans money can buy. 12 oz.

© 2000 South-Western College Publishing Slide #17 Distinctive Features of a Service Intangible Perishable Servicecapacity High customer involvement Requiresconsistency

© 2000 South-Western College Publishing Slide #18 Marketing Repercussions of Services l Nature and aim of the service l Role of personnel l Lack of storage capacity l Pricing and financing l Distribution of services l International aspects of services