1. Product/Service Management

5.  What are the three phases of Product/Service Management?

6. 3 Main Phases of Product/Service MGMT: 1. Developing New Products 2. Monitoring Existing Products - Sales, Profit, Market Share 3. Eliminate Weak Products

7.  A marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.

8.  What are Benefits to Product/Service Management? -Offer products consumers want and company’s profits increase -When developing the right products, a company can gain new customers -When products are well managed there is less of a chance for failure

9.  Staple Goods ◦ Items that are constantly in demand by customers ◦ Items are used consistently replaced regularly by consumers ◦ Easy to predict sales because of consistency in demand ◦ Examples: Toothpaste, milk, bread, butter, etc..

10.  Convenience Goods ◦ Small, inexpensive items that customers purchase frequently ◦ Requires routine decision making ◦ Commonly sold at convenience stores, grocery stores, or gas stations. ◦ Examples: Snack foods, pain relievers, beverages

11.  Shopping Goods: ◦ Goods that are more expensive & require more research prior to buying ◦ Consumers usually want to be able to compare & contrast this item with others ◦ Limited to extensive decision-making is required ◦ Examples: Automobile, appliances, furniture, & homes

12.  Fashion Goods ◦ Items that constantly change. ◦ Items that are only popular for a certain amount of time ◦ NOT just clothing items. ANY item that goes in and out of style is an example ◦ Examples:  Toms, Class of 2013 Shirts, Chubbies, etc…  What is an example of something not clothing related?

13.  Seasonal Goods ◦ Items that are only popular at a certain time of year ◦ May focus on seasons or holidays ◦ Examples:  Heavy coats in the winter & swimsuits in the summer  Boxed chocolate around Valentine’s Day

14.  Specialty Goods ◦ Goods that are considered unique by buyers ◦ Customers will go to great lengths to buy them ◦ Price is almost never an issue ◦ Purchase is based off of:  Quality, style, scarcity, &/or personal preference ◦ A specialty good can be a shopping good for one person and a specialty for someone else ◦ Examples:  Louis Vuiton Bag from flagship store in Paris, France  Men’s Suits  Expensive Watches

15.  Unsought Goods ◦ Goods that are not actively sought out by customers, but is instead purchased due to fear, precaution or need ◦ Marketers tend to actively and aggressively market such goods in order to arouse interest in them ◦ Examples:  Fire Extinguishers  Encyclopedias

16.  Industrial Goods ◦ Industrial goods usually produce consumer goods ◦ Goods purchased by an individual or organization in order to modify them or simply distribute them to the ultimate consumer in order to make a profit or meet some other objective ◦ Tends to be items directed at organizations, businesses, and other institutions, rather than at the individual end user of a product ◦ Examples:  Lumber  Fixed Equipment

17. Product Life Cycles

18. Product Life Cycle Product Life Cycle represents the stages that a product goes through during its life. There are 4 Stages of Life Cycle: 1. Introduction 2. Growth 3. Maturity 4. Decline

19.  Product is launched. ◦ Can be risky ◦ The length of the introduction stage varies according to the product.  If the product is technological and receives acceptance in the market, it may come out of the introductory phase as soon as it is launched.  Whereas if the product is of a different category altogether and needs market awareness, it may take time to launch.

20.  Higher investment, lesser profits ◦ Least profitable stage  Minimal Competition  Efforts are focused on promotion & production What are the goals of the Introduction Stage? – To increase product awareness – Get the customer’s attention thru promotion – Lots of special promotion

21.  Price: Either high or low  Place: Only a few places carry your product  Product: Branding & Quality are established. Trademarks obtained  Promotion: Aimed at early adopters Ads will be more informative

22. Product Life Cycle: Growth Stage During Growth Stage: – Customers are aware of product, sales increase Product starts showing better returns on investment. – Companies focus on customer satisfaction – Competition starts from other companies

23.  Product is successfully launched  Demand increases  Distribution increases  Competition intensifies  Company might introduce secondary products or support services.  Better revenue generation and Return On Investment

24.  Price: Maintained from previous stage.  Place: More places will carry product. Available online, in store, catalogs, etc  Product: Quality is maintained. Additional Features are added  Promotion: Aimed at broader audience

25.  One of the problems associated with maturity stages in a technologically advanced environment is the problem of duplication.  Not only is the product available in duplicate markets, but also there are several competing products which arise with the same features and capabilities.  As a result, the product becomes less attractive.

26.  Competition is high & money is spent on beating them  Product is established and promotion expenditures are less  Little growth potential for the product  Sales will level off  The major focus is towards extending the life cycle and maintaining market share

27.  Price: Pricing starts to go down  Place: More places carry product. Companies will offer promotions to carry product.  Product: Features are done to offset competition  Promotion: Emphasize how product is different

28.  In this stage the expenditures begin to equal the profits or worse, expenses are more than profits.  Typical scenario for the product to exit the market.  It also becomes advantageous for the company as the company can use resources it was spending on the declining product on an altogether different project.

29.  Market is saturated ◦ 10 companies producing a similar product  Sales and profits decline  Company becomes cost conscious  A lot of resources are blocked in trying to revitalize the dead product.

30. ◦ Repositioning or Rebranding of the product to extend product life cycle ◦ Maintain the product as it is and reduce costs to get maximum profits till the product can produce profits ◦ Take the product off the market.

31.  Price: Huge reductions on products going away  Place: Liquidate product (T J Maxx, Marshalls, etc..)  Product: Product is maintained or repositioned. Reposition = New Features  Promotion: Cut back substantially with elimination Increased with rebrand

32.  Either using a product from Shark Tank or from your knowledge base…  Give the product life cycle of a product  Include the 4 P’s and competition within each stage

35.  The iPad Air is in the introduction phase  Launched November 1, 2013 ◦ $499.99  Focus will be on production & promotion

36.  Customers are aware of iPhone 5S ◦ Focus is on making them happy  Sales and production/distribution are increasing ◦ Released in35 additional countries last Friday ◦ 16 more countries on 11/1/13

37.  Competition is strong ◦ Similar models in stores ◦ Product is mass produced  Product is not as popular but is still popular ◦ WOW factor is gone  Sales have slowed  Price Drop  Money is spent combating competition

38.  Product starts to lose money ◦ Price drops to point it costs more to product ◦ Product may be liquidated  Virtually no competition because no one wants product

39.  All businesses want to maximize their profits by ensuring that the lifespan of their product is as long as possible.  Businesses can adopt several strategies to extend the life of their product.

40.  Make modifications to the product ◦ eg new car model  Change the packaging  Reduce the price  Export to a new market  Introduce new varieties ◦ eg lime-flavored Coke  Increase the advertising

41.  Some businesses may decide not to employ any extension strategies, and simply withdraw the product from the market.  At the decline stage, the business should be prepared and have a second product ready to replace the declining product.

42.  Consider how these products have had their life cycle extended: ◦ Coca-Cola ◦ Kit Kat ◦ Playstation console