1. Section 30.1 Product Planning, Mix, and Development
Marketing Essentials
n Chapter 30 Product Planning
Section Product Planning, Mix, and Development

2. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
What You'll Learn
The nature and scope of product planning
The concept of product mix
The different product mix strategies
The steps in new product development

3. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Why It's Important
Product planning allows a business to make or sell products that are wanted by customers. Product planning is also used to design appropriate marketing programs that help create increased sales and profit opportunities.

4. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Key Terms
product planning
product mix
product line
product item
product width
product depth
product modification

5. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Product Planning
A product is anything a person receives in an exchange—a tangible item (car), a service (haircut), an idea (a good education), or a combination of all of these concepts. Product planning involves making decisions about features needed to sell a business's products, services, or ideas.

6. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Product Mix
Product mix includes all the different products that a company makes or sells.
A large manufacturer may have hundreds of products in its product mix.
Retail stores must plan their product mix carefully because they cannot offer all of the products that customers may want.

7. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Product Items and Lines
A product line is a group of closely related products manufactured and/or sold by a business.
A product item is a specific model, brand, or size of a product within a product line.

8. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Product Width and Product Depth
Product width refers to the number of different product lines a business manufactures or sells.
Product depth refers to the number of product items offered within each product line.

9. Width of the Product Mix
SECTION 30.1
Product Planning, Mix, and Development
The Concept of Product Mix
Width of the Product Mix
Blades and
Razors
Writing Instruments
Toiletries
Lighters
MACH 3
Sensor
Trac II
Atra
Swivel
Double-Edge
Lady Gillette
Super Speed
Twin Injector
Techmatic
Series
Adorn
Toni
Right Guard
Silkience
Soft and Dri
Foamy
Dry Look
Dry Idea
Brush Plus
Paper mate
Flair
Cricket
S.T. Dupont
The width and depth of product lines define product mix. What does product depth tell you about the importance of a given product line? Why do you think a company would choose to produce so many different razors?

10. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Product Mix Strategies
A product mix strategy is the plan for how the business determines which products it will make or stock. Businesses will either develop a new product or expand an existing product to add to their mix.

11. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing New Products
New products can add substantially to a company’s overall sales and boost its market share. New products can:
make a company look innovative
increase profits because they are generally priced 10 to 15 percent above older items
become a major part of a product line
Slide 1 of 2

12. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing New Products
New product development generally involves seven key steps:
1. Generating ideas
2. Screening ideas
3. Developing a business proposal
4. Developing the product
5. Testing the product
6. Introducing the product (commercialization)
7. Evaluating customer acceptance
Slide 2 of 2

13. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Generating Ideas
New product ideas come from a variety of sources:
customers
competitors
channel members
company employees
research and development departments

14. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Screening Ideas
Ideas for new products are screened and evaluated, and matched against the company's overall objectives to see if they fit. Some ideas are eliminated. The best ideas are put through further evaluation. Finally, one or two ideas are selected for development.

15. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing a Business Proposal
A product idea must be considered in regard to its potential for profit. A business proposal is developed to evaluate the size of the market, potential sales, production requirements, costs, profit potential, technological trends, and risk.

16. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing the Product
During product development, a prototype (a model of the product) is made, and marketers develop a marketing strategy. The prototype is tested, and adjustments are made to improve the final product.

17. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Testing the Product
Newly developed products are usually tested to obtain customers' responses. Common strategies are:
test marketing in a certain geographic area
evaluation by a focus group

18. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Introducing the Product
If customer response is favorable, the product is introduced into the marketplace. This stage is called commercialization. The costs of introducing a new product often are quite high. At this stage, the company will need to:
advertise the product
create or revise a distribution network
train its sales force

19. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Evaluating Customer Acceptance
After the product has been introduced, marketers track new product performance to evaluate customer acceptance of the product and the marketing strategies used to introduce the product.

20. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing Existing Products
In order to build on an established image, appeal to new markets, and increase sales and profits, companies can either:
expand an existing product line or
modify an existing product
Slide 1 of 3

21. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing Existing Products
Line Extensions Companies can expand product offerings by adding new product lines, items, or services.
Example: Tylenol expanded to Tylenol Flu, Tylenol Cold, and Tylenol Allergy/Sinus
Extensions can also be new lines of products.
Example: Bic pens and Bic lighters
Slide 2 of 3

22. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Developing Existing Products
Product modification is an alteration in a company's existing product. Product modifications are a relatively quick and easy way to add new products to a company's product line.
Slide 3 of 3

23. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line
Sometimes companies decide that they will no longer produce or sell a particular product or perhaps even a whole product line. Some of the reasons for this are:
obsolescence
loss of appeal
conflict with current company objectives
replacement with new products
lack of profit
conflict with other products in the line
Slide 1 of 4

24. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line
Obsolescence Changing interests and technology make many products obsolete. They are dropped in favor of newer technologies.
Loss of Appeal As consumer tastes change, companies drop products that no longer appeal to popular tastes.
Slide 2 of 4

25. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line
Conflict with Current Company Objectives Sometimes a product does not match a company's current objectives.
Example: Sears sold unrelated businesses to concentrate on retail.
Replacement with New Products A store decides it can make more money selling a different brand, or replaces one brand for another because another manufacturer offers better terms.
Slide 3 of 4

26. Product Planning, Mix, and Development
SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line
Lack of Profit To increase profits, retailers will handle only fast-moving and profitable items. Product developers may drop products when sales drop below company objectives.
Conflict with Other Products in the Line Sometimes increased sales of one product can cause decreased sales of another product.
Slide 4 of 4

27. Reviewing Key Terms and Concepts
ASSESSMENT
30.1
Reviewing Key Terms and Concepts
1. What is product planning?
2. What is product mix?
3. Name four product mix strategies.
4. Identify the steps for new product development.
5. Name one advantage and one disadvantage to expanding a product line.

28. ASSESSMENT Thinking Critically 30.1
Suppose a company is developing a new product, when a competitor introduces a new product that is similar. What are some things the company should consider in deciding whether to proceed with the development of its new product?

29. Developing New Products
30.1
Graphic Organizer
Developing New Products
Evaluate Customer
Acceptance
Introduce the
Product
Test the
Product
Develop a
the
Product
Develop a
Business
Proposal
Screen
Ideas
Generate Ideas

30. Marketing Essentials
End of Section 30.1