Lecture 7 Product Decision
Product policy Product policy has 2 dimensions: A - Product planning & development B- Product strategy These two are applicable to both single product itself and the total product mix (set of products).
Product Policy Questions Should the company keep a commitment to its existing product mix as the products reach maturity? How strongly should the firm follow a strategy of new product acquisition/innovation? What are the organizational requirements for following each of the above approaches?
Definitions: Product (Service): The sum of all the physical & phychological satisfactions that the buyer (or user) receives as a result of the purchase and / or use of a product. Product Line: Groups of products that are similar or have something in common- used together, sold to same customeri, handled through same channels. Product includes everything that the buyer / user perceives as being a part of the product.
Three major components of product The physical product core The product package Auxiliary services. + Price
Product Planning & Development New product development or addition Changes in existing products Finding new uses for existing products Product elimination
New product development Export domestic product Acquire a firm Copying products Internal product development
Changes in existing product: Maturity (Decline stage) to extend its life cycle must do some changes in pyhsical product core / the package / auxiliary services. (right / left hand)
New uses for existing product: To extend life cycle. Home garden tractor marketed in US can be used commercialy in a less developed country where farms smaller. Is there a related application? (insecticide for ants to bees.) Men /women (deodorant) Used with another product? (preshave lotion+shaver) Consumer products to commercial
Product elimination: Keeping weak products can add substantially to overhead costs. Delete weak products.
Product Mix Strategy Breadth X Length Analytical approaches Internal determinants External determinants
Analytical approaches Product portfolio. Risk/return analysis Mathematical programming analysis.
Internal determinants Firm based. What are the objectives in export marketing? Growth/market share/reduction of risks? Capacity + capability
External determinants Customer Influences: Needs/cultural/social/ownership Competition: Competitor range? Sweedish Pharme Co Southeast Asia. Local black market by gov. officials. Italy Product stage in life cycle. Other govermental / climative / pyhsical / economical.
Standardization vs. Adaptation For all dimensions of product. Closely related to product mix strategy. Standartization: Offering one version of the product; essentially same as domestic product; in other terms (globalization) global product strategy. Adaptation: Individualization where by company customizes the products to meet the unique needs of individual buyers in foreign market. (right hand drive). Sony TV Voltage broadcast standard McDonalds Menu- decor Levi Jeans Size mix, fabric, cut Coca-cola Name + package
Packaging Cheapest, quickest, easiest way to adapt a product. Two functions: Protection Promotion View Test V:Visibility (Package must be easily distinguished from comp) I:Information (Must quickly communicate the nature of its content) E:Emotional Impact (Design must create favorable impression in mind) W: Workability (Must function as protection&must also be efficient in home use) Language is important.
Branding Branding: A brand is anything that identifies a seller’s goods or services and distinguishes them from others. Word/letter/group of words/symbols/design/some combination. A brand name: Is spoken form of the brand. A trademark is a brand, or a part of a brand which is protected by law. Brand Protection: National level / regional level / international level. Year is important The use is important (France/Germany) Priority in use (lever not registered Canada, Taiwan, US Branding Decision: 1- Selecting a good brand. 2- Determining how many brands should be in product line?