1. Product Strategy

2. What is a Product?
Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need
Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything
- Kotler

3. Levels of Product & Services

4. The CORE product is NOT the tangible physical product
The CORE product is NOT the tangible physical product. This cannot be touched. Its the BENEFIT of the product that makes it valuable to you. E.g when purchasing a vehicle, the benefit is convenience i.e. the ease at which you can go where you like, when you want, etc. Another core benefit is speed since you can travel around relatively quickly.
The ACTUAL product is the tangible, physical product. This can be touched. And you can get some use out of it. (It is the vehicle that you test drive and buy..
The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. (When purchasing a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacturer and any after-sales service). The augmented product is an important way to tailor the core or actual product to the needs of an individual customer. The features of augmented products can be converted in to benefits for individuals.

5. Product & Service classifications

6. Consumer Products
Consumer products- bought by final consumer for personal consumption
Convenience products- products bought frequently, immediately and with minimum comparison and effort
Shopping products- customer will compare based on suitability, quality, price & style
Specialty products- products with unique characteristics & brand identification for which buyer will make a significant purchase effort
Unsought products- product the consumer does not know about or knows but doesn’t normally think of buying

7. Industrial Products
Products bought by individuals and organizations for further processing of for use in conducting a business

8. Organizations, Persons, Places and Ideas
Organization marketing consists of activities to create, maintain or change the behaviour and attitude of target consumers towards the organization
People marketing consists of activities to create, maintain or change the behaviour and attitude towards people. Used by Doctors, lawyers, architects, etc… (Oprah winfrey)
Social marketing programs include public health campaigns to reduce smoking, drug abuse, alcoholism, etc

9. Individual Product & Service decisions
Product/Service attribute
Branding
Packaging
Labeling
Product support services

10. Product Line decision
A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets or fall within given price ranges.

11. Product Mix decision
The set of all product lines and items that a particular seller offers for sale.

12. Services Marketing

13. Nature and characteristics of Service

14. Service inseparability- a major characteristic of services
Service inseparability- a major characteristic of services. They are produced and consumed at the same time and cannot be separated from their providers
Service variability- their quality may vary greatly depending on who provides them and when, where and how
Service perishability- cannot be stored for later sale or use.

15. Marketing Strategies for Service firms
The service profit chain
Managing service differentiation
Managing service quality
Managing service productivity

16. New Product Development strategy

17. Idea Generation New product development starts with idea generation
The systematic search for new product ideas
Internal sources: executives, manufacturing staff, sales people
Eg :Samsung value innovation program where researcher, designers and engineers co-mingle to come up with new product ideas
External sources: customer feedback, distributors, suppliers, competitors (the use of reverse engineering)
LEGO invited 250 train set enthusiastic to asses new designs

18. Idea Screening
Screening new product ideas to spot good ideas and drop poor ones as soon as possible.
A company would access the product, the target market, competition, a rough estimation of the market size, product price, development time, costs, manufacturing costs
Due to product development costs companies will only go ahead with product ideas that will be profitable.

19. Concept development & testing
A detailed version of the new product idea stated in meaningful terms
E.g: Daimlerchrysler developing their fuel- cell powered F-cell car.
Eg: Concept Board
Concept testing involves testing the new product with a group of target customers to see if the concept has appeal

20. Marketing strategy development
Part 1 :The planned product positioning including sales, market share and profit goals for the year
Eg: DaimlerCrysler, fuel-cell-powered electric car
Target Market : Younger, well educated, moderate to high income individuals, couples or small families seeking practical environmental friendly transportation
Positioning :Fun to drive less polluting than hybrid cars, less restricted than battery powered electric cars
Sales & Profit: Aim to sell 100k at a loss not more than $15M in the first year ,120k and a profit of $25M in year 2.

21. Marketing strategy development Cont
Part 2:An outline of the products' planned price, distribution and marketing budget
Eg: DaimlerCrysler, fuel-cell-powered electric car
Price : In 3 colors at $25,000
Distribution : 15% of the list price to the distributor, additional discount of 5% for more than 10 cars a months
Ad Budget: $50M, spilt 50:50 on local and national advertising
Part 3:Planned and long run sales, profit goals and marketing mix
Long run sales & Profit : 3% share in the total auto market & 15% ROI after tax.
Marketing mix: Improve quality, Increase price in year 2&3, 10% increase in Ad budget YOY.

22. Business analysis
A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives product development stage
To estimate sales the company might look at sales history of similar products and conduct surveys of market opinions

23. Product development
Developing the product concept into a physical product
E.g Gillette- the entire staff get involved in product testing.
Requires a large investment . R&D develops a prototype
A new product must have the required functional features and also convey the psychological characteristics
Eg: DaimlerCrysler, fuel-cell-powered electric car should strike as being well built, comforatble and safe. For some consumer it may mean “solid sounding” doors

24. Test marketing
The product and marketing program are tested in more realistic market settings
The test market tests the entire marketing program- positioning, advertising, distribution, pricing, branding and packaging at budget levels
The amount of test marketing varies depending on the product
A new product that requires a big investment may involve a lot of test marketing
Test marketing doest guarantee success

25. Commercialization The launch of the product into the market
Company must decide where to launch; a single location, region, national market or international market
The company must decide on introduction timing

26. Managing New-product development
Customer centered new-product development: that focus on finding new ways to solve customer-satisfying experience
Team based new product development: a approach in developing new products in which various company departments work closely together, overlapping the steps in the product development process to save and increase effectiveness
Systematic new product development: new product development process should be systematic than haphazard. The company can install a innovation management system

27. Product life-cycle strategies

28. Product life-cycle strategies
Not all products follow the life cycle.
Some products once introduced die quickly while others stay in the mature stage for a long time
Some products are cycled back to the growth stage through strong repositioning and promotion (American Express/Gillette/Coca- cola)

29. Introduction stage Introduction takes time and sales growth is slow.
Profits are negative or low because of the high distribution and promotion cost
Focus is on buyers who are most ready to buy
Much money is needed to attract distributors and build inventories
Promotion spending is high to inform customers of the new product

30. Growth stage
In this stage early adopters will continue to buy and late adopters will start to follow depending on the feedback
New competition will enter the market attracted by profit potential
The market tends to expand as competitors offer new features
New market segments and distribution channels
Face a trade-off between high market share and high profits

31. Maturity stage Lasts longer than the previous stages
There s a slow down in sales as a result of many producers with many products. This leads to over capacity.
Competitors begin price cutting
Need to consider modifying the market, product and marketing mix
Look to increase usage among existing customers

32. Decline stage
Sales decline may be due to technological advances, shifts in consumer tastes, increased competition
Firms may decide to drop the product altogether
Carrying a weak product can be costly; loss making, management time, delay the search for replacements