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Product, PLC and Services

Chapters 10 - 12

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What is a Product?

Anything that can be offered to a market

to satisfy a want or need. It is usually

judged on (1) product features (2)services mix & quality and (3) price

appropriateness

Core benefit, Basic product, Expectedproduct, Augmented product, Potential

product

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Brand

Name

Quality

Level

Packaging

Design

Features

Delivery

& Credit

Installation

Warranty

After-Sale

Service

Core

Benefitor

Service

Augmented

Product

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Product Classifications

UnsoughtProducts

SpecialtyProducts

ShoppingProducts

ConvenienceProducts

ConsumerProducts

BusinessProducts

PRODUCTS

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Some Product Definitions

Product line a group of closely related

product items.

Product mix all products that a firmsells.

Width refers to how many different

product lines the firm carries Depth refers to how many variants of

each product are offered

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Gillettes Product Lines

&MixBlades and Writingrazors Toiletries instruments Lighters

Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. DupontTrac II ToniAtra Right GuardSwivel SilkienceDouble-Edge Soft and DriLady Gillette FoamySuper Speed Dry LookTwin Injector Dry IdeaTechmatic Brush Plus

Width of the product mix

Depthofthe

productlines

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Product Line Strategies

Extensions: Adding

additional products

to an existingproduct line in order

to compete more

broadly in the

industry.

Contractions:

deleting products

from product lines ifthere are low sales,

cannibalization,

obsolesce or few

resources.

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What is the Product Life

Cycle (PLC)? A concept that provides a way to trace

the stages of a products acceptance,

from its introduction (birth) to its decline(death).

It is based on the product category.

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The Product Life Cycle

Time

Dollars

ProductCategory

Profits

ProductCategory

Sales

IntroductoryStage

GrowthStage

MaturityStage

DeclineStage

0

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Introduction Stage

High failure rates

Little competition

Frequent product modification Limited distribution

High marketing and production costs

Negative profits

Promotion focuses on awareness andinformation

Intensive personal selling to channels

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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

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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

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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

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Marketing Strategies for PLC

INTRODUCTION GROWTH MATURITY DECLINE

ProductStrategy

DistributionStrategy

PromotionStrategy

PricingStrategy

Limited modelsFrequent

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.

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Categories of Product

Adopters

Perc

entageofAdo

pters

Time

Innovators2.5%

EarlyAdopters

13.5%

LateMajority

34%

EarlyMajority

34%

Laggards16%

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Diffusion Process and

PLC Curve

Innovators

Early adopters

Early majorityLate majority

Laggards

Productlife cyclecurve

Diffusioncurve

Introduction Growth Maturity Decline

Sales

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What is a Service?

Any act or performance that one party

can offer to another that is essentially

intangible and does not result in theownership of anything

Medical, utilities, entertainment,

professional (law, medical),transportation, financial

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Characteristics of Services

Intangibility cannot be touched, seen,

tasted, heard or felt in the same manner

as goods.

Inseparabilityservices are produced

and consumed simultaneously

Heterogeneity services are less

standardized and uniform than goods.

Perishability services cannot be

stored, warehoused or inventoried.

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Managing Services

Managing differentiation

Cant live by price alone

Reliability, innovativeness and resilience Managing service quality

Service gaps

Common practices Managing productivity

Seven approaches