1. Chapter 12 - Product and Service Strategy
Product vs. Service Continuum
Figure 12.1

2. 3 Classifications of Consumer Products
1. CONVENIENCE PRODUCTS
purchase frequently, immediately, & w/ minimum effort
Ex. candy, chewing gum, milk, soft drinks
2. SHOPPING PRODUCTS
consumer has made comparisons of competing products
Ex. clothing, jewelry, furniture, appliances & used cars

3. 3. SPECIALTY PRODUCTS
unique characteristics that cause the buyer to prize these particular brands
Ex. Porsche, Gucci

4. Business Products Classifications
1. INSTALLATIONS
- specialty products of the industrial market
Ex. factories, computers, heavy machinery, jets for an airline

5. Ex. Desks, Laptops, & lathes 3. Component Parts and Materials
2. ACCESSORY EQUIPMENT
- capital items that are usually less expensive & shorter-lived than installations
Ex. Desks, Laptops, & lathes
3. Component Parts and Materials
- finished industrial products that actually become part of a final product
Ex. Computer chips, tires, motors

6. Ex. cattle, wheat, cotton, iron ore, lumber, copper
4. RAW MATERIALS
- used in producing the final industrial product
Ex. cattle, wheat, cotton, iron ore, lumber, copper
5. SUPPLIES
- regular expense items that are necessary to the firm's daily operation BUT DO NOT become part of the final product
Ex. Maintenance items, Repair items: nuts & bolts
Operating items: paper, pencils

7. Ex. financial, leasing & rental of equipment & vehicles, and insurance
6. BUSINESS SERVICES
- include intangible products firms buy to facilitate their production & operational processes
Ex. financial, leasing & rental of equipment & vehicles, and insurance

8. Impact on Classification
See Table 12.1

9. THE PRODUCT LIFE CYCLE 1. INTRODUCTION 2. GROWTH STAGE
objective is to stimulate demand for the new product entry
2. GROWTH STAGE
sales volumes rise rapidly
new customers make initial purchases
old customers repurchase the product

10. 3. MATURITY DECLINE DEATH
industry sales continue to grow during the early part
sales eventually reach a plateau as the number of potential customers dwindles
DECLINE
DEATH

11. How to Extend the PLC
1. Increase the frequency of use Ex. Dairy Assoc. (Milk) 2. Increasing the number of users Ex. broadening distribution

12. 4. Changing package sizes, labels, & product quality
3. Finding new uses
Ex. Baking soda, WD-40
4. Changing package sizes, labels, & product quality
Ex. Pepto Bismol introducing new take along tablets for awayfrom home use

13. Product Mix Width Length Depth # of product lines # of products
Ex. PepsiCo. - soft drinks, snack foods (Frito-Lay and Quaker Foods), and restaurants
Length
# of products
Ex. Pepsi, Mountain Dew, Sierra Mist, etc.
Depth
variations of each product
Ex. Pepsi - regular, diet, cherry, caffeine free, Lime, Vanilla, Twist, Jazz, One

14. Total Quality Management
TQM: W. Edwards Deming
Malcolm Baldridge Award
ISO 9000
Benchmarking