1. Part 4 Product Decisions
MARKETING
17e
Hult • Pride • Ferrell
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

2. 11: Strategic Product Management 12: Services Marketing
10: Product Decisions
11: Strategic Product Management
12: Services Marketing
13: Strategic Management of Branding and Packaging
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

3. Objectives To understand the concept of a product
To explain how to classify products
To examine the concepts of product item, product line, and product mix, and understand how they are connected
To understand the product life cycle and its impact on marketing strategies
To describe the product adoption process
To understand why some products fail and some succeed
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

4. Product A good, a service, or an idea received in an exchange
Includes function, social and psychological utilities, and benefits
Includes supporting services such as installation, guarantees, product information, etc.
Good – A tangible, physical entity
Service – The intangible result of the application of human and mechanical efforts to people or objects
Idea – A concept, philosophy, image, or issue
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

5. The Total Product
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

6. The Core Product Sports Drink Rehydrates The Core Product
The product’s fundamental utility or main benefit
Addresses the basic need of the consumer
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

7. Supplemental Features
Provide the added value or attributes in addition to a product’s core utility or benefit
Installation
Delivery
Training
Financing
Help differentiate the product brand from another
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

8. Symbolic and Experiential Benefits
Buyers purchase the benefits and satisfaction they think the product will provide
Services in particular are purchased on the basis of expectations
The shopping experience can provide benefit
Products often carry symbolic meaning
Often, symbols and cues are used to make intangible products more tangible, or real, to the customer
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

9. Discussion Point
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

10. Classifying Products Consumer Products
Products purchased to satisfy personal and family wants and needs
Business Products
Products bought to use in a firm’s operations to resell or to make other products
Purchased to satisfy the goals of the organization
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

11. Classification of Consumer Products
Convenience Products
Shopping Products
Specialty Products
Unsought Products
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

12. Convenience Products
Relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort
Strategic Considerations:
Require no search
Many retail outlets
Low per-unit gross margins
Heavy brand promotion, limited retailer promotion
Packaging important
Reliance on self-service
Available at many retailers
Usually low price points
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

13. Shopping Products
Items for which buyers are willing to expend considerable effort in planning and making purchases
More extensive search
Available substitutes
Less frequent purchase
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

14. Shopping Products Strategic Considerations: No brand loyalty
Fewer retail outlets than convenience
Lower inventory turnover
Channel members demand higher gross margins
Personal selling
Producer and channel member cooperation
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

15. Discussion Point
How do convenience products and shopping products differ?
What are the distinguishing characteristics of each type of product?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

16. Specialty Products
Items with unique characteristics that buyers are willing to expend considerable effort to obtain
Require extensive search
Are generally higher price points
Have no ready substitutes
Strategic Considerations:
Limited retail outlets
Lower inventory turnover
High gross margins
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

17. Discussion Point A bicycle is usually a shopping product
When might it be a specialty products?
What about denim jeans or t-shirts? Are they ever specialty products?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

18. Unsought Products
Products purchased to solve a sudden problem, products of which customers are unaware, and products that people do not necessarily think of buying
No search
Price not important
Purchase compelled
Strategic Considerations:
Build trust with consumers prior to need
Recognizable brand
Superior performance
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

19. Classification of Business Products
Installations
Accessory Equipment
Raw Materials
Component Parts
Process Materials
MRO Supplies
Business Services
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

20. Business Products
Products bought to use in a firm’s operations, to resell, or to make other products
Installations
Facilities and nonportable equipment
Accessory equipment
Equipment that does not become part of the final physical product but is used in production or office activities
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

21. Business Products Raw materials
Basic natural materials that become part of a physical product
Component parts
Items that become part of the physical product and are either finished items ready for assembly or items that need little processing before assembly
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

22. Business Products Process materials
Materials that are used directly in the production of other products but are not readily identifiable
MRO supplies
Maintenance, repair, and operating items that facilitate production and operations but do not become part of the finished product
Business services
Intangible products that many organizations use in their operations
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

23. Discussion Point Business products vary widely
Pens and paper
Furniture and equipment
Technology solutions and services
Click here to explore the business products and services offered by Cisco.
What kinds of business products does Cisco sell?
Can you identify instances where business and consumer products are the same?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

24. Product Line Product Item
A specific version of a product that can be designated as a distinct offering among a firm’s products
Product Line
A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

25. Product Mix Product Mix
The composite, or total, group of products that an organization makes available to customers
Width of Product Mix – The number of product lines a company offers
Depth of Product Mix – The average number of different products in each product line
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

26. Concepts of Product Mix Width and Depth Applied to U. S
Concepts of Product Mix Width and Depth Applied to U.S. Proctor & Gamble Products
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

27. Discussion Point
Does this advertisement illustrate Burberry’s product mix or a product line?
What is the difference?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

28. The Four Stages of the Product Life Cycle
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

29. Product Life Cycle The progression of a product through four stages:
Introduction
Growth
Maturity
Decline
As a product moves through its life cycle, the strategies that relate to competition, promotion, distribution, pricing, and market information must be periodically evaluated and possibly changed
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

30. Product Life Cycle: Introduction
The initial stage of a product’s life cycle
Its first appearance in the marketplace when sales start at zero and profits are negative
High risk of failure
Less than 10% of new products succeed in the marketplace
90% of successes come from a handful of companies
Because of high risks and costs, few product introductions represent revolutionary inventions
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

31. Product Life Cycle: Introduction
Buyers must be made aware of:
Features
Uses
Advantages
Sellers lack:
Resources
Technological knowledge
Marketing know-how
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

32. Product Life Cycle: Growth
The product life cycle stage when sales rise rapidly, profits reach a peak, and then they start to decline
Promotion costs drop as a percentage of sales
Marketers must:
Stress brand benefits to encourage brand loyalty
Intensify segmentation
Strengthen market share
Analyze production position
Ensure efficient distribution system
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

33. Product Life Cycle: Maturity
The stage of a product’s life cycle when the sales curve peaks and starts to decline, and profits continue to fall
Intense competition
Emphasis on improvements and differences in competitors’ products
Weaker competitors exit the market
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

34. Product Life Cycle: Maturity
Advertising and dealer-oriented promotions predominate
Distribution sometimes expands to the global market
Strategic objectives:
Generate cash flow
Maintain market share
Increase share of customer
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

35. Selected Approaches for Managing Products in the Maturity Stage
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

36. Product Life Cycle: Decline
The stage of a product’s life cycle when sales fall rapidly
Marketers will likely:
Eliminate/reposition items
Cut promotion
Eliminate marginal distributors
Plan to phase out product
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

37. Discussion Point
What stage of the product life cycle do you think the following products are in?
MP3 players
Bottled water
Desktop computers
Tennis shoes
How do industry profits change as a product moves through the four stages of its life cycle?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

38. Products at Different Stages of Life Cycle
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

39. The Product Adoption Process
The five-stage process of buyer acceptance of a product:
Awareness – The buyer becomes aware of the product
Interest – The buyer seeks information and is receptive to learning about the product
Evaluation – The buyer considers the product’s benefits and decides whether to try it, considering its value versus the competition
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

40. The Product Adoption Process
Trial – The buyer examines, tests, or tries the product to determine if it meets his or her needs
Adoption – The buyer purchases the product and can be expected to use it again whenever the need for this product arises
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

41. Most New Ideas Have Their Skeptics
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

42. Adopter Categories Innovators – First adopters of new products
Early Adopters – People who adopt new products early, choose new products carefully, and are viewed as “the people to check with” by later adopters
Early Majority – Individuals who adopt a new product just prior to the average person
Late Majority – Skeptics who adopt new products when they feel it is necessary
Laggards – The last adopters who distrust new products
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

43. Why Some Products Fail Failure to match product to needs
Failure to send right message
Technical/design problems
Poor timing
Overestimate market
Ineffective promotion
Insufficient distribution
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

44. Why Other Products Succeed
Product’s ability to provide a significant and perceivable benefit to a sizable number of customers
Products with an observable advantage over similar available products such as:
More features
Ease of operation
Improved technology
Companies that follow a systematic, customer- focused plan for new-product development are well positioned to launch successful products
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

45. Product Successes and Failures
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.

46. Discussion Point
Some very successful companies have experienced high-profile failures
Have you heard about any of these products?
Why did they fail?
© 2014 Cengage Learning. All Rights Reserved. This edition is intended for use outside of the U.S. only, with content that may be different from the U.S. Edition. May not be scanned, copied, duplicated, or posted to a publicly accessible website, in whole or in part.