1. Product, PLC and Services Chapters 9-11(sections)

2. What is a Product? Everything, both favorable and unfavorable, that a person receives in an exchange. –Primary characteristics –Auxiliary characteristics

3. Brand Name Quality Level Packaging Design Features Delivery& Credit Installation Warranty After- Sale Service Core Benefit or Service Core Benefit or Service Augmented Product Augmented Product

4. Product Classifications Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products PRODUCTS

5. Some Product Definitions 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. Product mix – all products that a firm sells.

6. Gillette’s Product Lines &Mix Gillette’s Product Lines & Mix Blades andWriting razorsToiletriesinstrumentsLighters Mach 3 Series Paper Mate Cricket SensorAdorn Flair S.T. Dupont Trac IIToni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depth of the product lines

7. Why Product Lines? Advertising Economies Package Uniformity Standardized Components Efficient Sales and Distribution Equivalent Quality

8. Product Line Strategies Extensions: Adding additional products to an existing product line in order to compete more broadly in the industry. Contractions: deleting products from product lines if there are low sales, cannibalization, obsolesce or few resources.

9. What is the Product Life Cycle (PLC)? A concept that provides a way to trace the stages of a product’s acceptance, from its introduction (birth) to its decline (death). It is based on the product category.

10. The Product Life Cycle Time Dollars Product Category Profits Product Category SalesIntroductoryStageGrowthStageMaturityStageDeclineStage 0

11. Introduction Stage High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and information Intensive personal selling to channels

12. Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered

13. Maturity Stage Declining sales growth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge

14. Decline Stage Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Options for Deleting Products: Maintaining Deletion Harvesting Contracting

15. Marketing Strategies for PLC INTRODUCTIONGROWTHMATURITYDECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand.Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion Higher/recoup development costs Fall as result of competition & efficient produc- tion. Prices fall (usually). Prices stabilize at low level.

16. Consider TiVo Where is it in the PLC? 90% TiVo subscribers channel surf less than before 95% say it is easier to work than VCR 40% would rather give up their mobile phones than TiVo 80% shift prime time programming 50% watch up to 2 or more hours of TV daily

17. Categories of Product Adopters Percentage of Adopters Time Innovators 2.5% Early Adopters 13.5% Late Majority 34% Early Majority 34% Laggards 16%

18. Diffusion Process and PLC Curve Innovators Early adopters Early majority Late majority Laggards Product life cycle curve Diffusioncurve Introduction Growth Maturity Decline Sales

19. What is a Service? The result of applying human or mechanical efforts to people or objects. Medical, utilities, entertainment, professional (law, medical), transportation, financial

20. Characteristics of Services Intangibility – cannot be touched, seen, tasted, heard or felt in the same manner as goods. Inseparability –services are produced and consumed simultaneously Heterogeneity – services are less standardized and uniform than goods. Perishability – services cannot be stored, warehoused or inventoried.

22. Marketing Mixes for Services Product –People processing –Possession processing –Information processing Mass Customization Core and Supplementary Services Distribution –Convenience –Number of outlets –Direct v indirect distribution –Location –Scheduling

23. Marketing Mix for Services Promotion –Stress tangible cues –Use personal informational sources –Create a strong firm image –Engage in postpurchase communication Price –Define unit of service consumption –Determine if multiple elements are bundled –Trends have made pricing an active component