Description
is to Classify products, Product mix decisions and line management, Length, width and depth of a line, line analysis,New Product development, stages of product development, kinds of consumers depending on stage of adoption, Adoption process & Brand management, Marketing of services.
1.Classification of products, Product mix decisions and line management, Length, width and depth of a line, line analysis,
2.New Product development, stages of product development, kinds of consumers depending on stage of adoption. 3.Adoption process & Brand management
4.Marketing of services
PRODUCT MANAGEMENT
• Product is a bundle of satisfaction or a solution to a customer’s problem that a customer buys. • Marketing is 4 P’s Technology is becoming almost standardized. Possible differentiation tools are Price & Promotion. • Product = Tangible Benefit + Intangible Benefits • Levitt believes that future competition will be in the “AUGMENTED PRODUCT CATEGORY”.
What are Goods and Services?
• Service: intangible task that satisfies consumer or business user needs • Goods-services continuum: device that helps marketers to visualize the differences and similarities between goods and services
Core Product
Guarantees & warranties After sales services Delivery points & systems
Replacement Attributes Styling or returns Colour policy Instructions Core Manual Product Payment options (for high priced prodcts)
Formal Product
Quality
Brand Name Packaging
Installation (for bulky products)
Customer complaint management
Augmented Product
The total product concept
Future Product
5 Level of PRODUCT
(Customer Values)
Core Benefit
Basic Product Expected Product Augmented product (Consumption System) Potential Product
LEVITT’s CLASSIFICATION
• Characteristics that distinguish services from goods:
– – – – – Intangibility Inseparability Perishability Difficulty of standardization Frequent requirement of interaction between buyer and Seller – Variability
Classifying Goods and Services for Consumer and Business Markets • Consumer products: products destined for use by ultimate consumers • Business (or B2B) products: those that contribute directly or indirectly to the output of other products for resale also called industrial or organizational products
Types of Consumer Products
• Convenience product: good or service that consumers want to purchase frequently, immediately, and with minimal effort – Impulse goods and services are purchased on the spur of the moment. – Staples are convenience goods and services that consumers constantly replenish to maintain a ready inventory. – Emergency goods and services are bought in response to unexpected and urgent needs.
• Shopping product: good or service purchased only after the customer compares competing offerings from competing vendors on such characteristics as price, quality, style, and color – Typically cost more than convenience purchases. – Include tangible items. – Shopper lacks complete information and gathers information during the buying process. • Specialty product: good or service with unique characteristics that cause the buyer to value it and make a special effort to obtain it. • Unsought product: good or service marketed to consumers who may not yet recognized in the need for it
Business Products
• Installation: major capital investment by a business buyer that typically involves expensive and relatively long-lived products, such as a new factory or piece of heavy machinery. • Accessory equipment: capital product, usually less expensive and shorter-lived that insulation, such as a laptop computer. • Component parts and materials: finished business products that become parts of buying firms’ final products, such as spark plugs for new cars. • Raw materials: business product, such as a farm product (wheat, cotton, soybeans) or natural product (coal, lumber, iron ore) that become part of a final product. • Supplies: products that represent regular expenses necessary to carry out a firm’s daily operations but are not part of the final product. Supplies are sometimes called MRO items.
Development of Product Lines Product Line: a series of related products. The following situations suggest a sub optimal product mix: a) Excess capacity in a firm’s manufacturing, warehousing or transportation facilities b) High proportion of profits from a small percentage of product items c) Insufficient use of sales force contacts and skills d) Steadily declining sales or profits Product mix decisions are dictated by the changes occurring in the market place.
The Product Mix
• A company’s assortment of all products and items that a company sells in a market. – Product Width—How many number of different product lines offered. – Product Length--the number of items in the mix, a firm sells. – Product Depth--variations in each product that a firm markets in its mix. PRODUCT LENGTH Product Product Product Line1 Line2 Line3 Detergents Soaps Shampoos Surf, Surf Lux, Dove Sunsilk, Dove Excel, Wheel Liril, Rexona PRODUCT WIDTH
• Product Mix Decisions – A firm may lengthen or widen its product mix. (Line Stretching) – A Company may decide to add variations that will attract new users. (Line Filling) – A product may be pruned or altered, and new product may extend the product life cycle – Line extension: introduction of a new product that is closely related to other products in the firm’s existing line
Model(lengt h) Vaio z Vaio e Vaio x
depth
user
Basic config. atom i7/i5 atom
O.S.
price
2 diff version 5 colors colors
businessma n Status seeker Mobility n style seeker student executive
Window7 Window7 Window7
109-159k 37-60k 54-90k
Vaio m Vaio w
styles colors
atom atom
Window7 Window7
23k 35k
Vaio s
Vaio f
versions
Colors & versions
High end user
gamers
i5/i3
i7
Window7
Window7
59-79k
129k
The Product Life Cycle
• Introduction Stage
– Firm works to stimulate demand for the new market entry – Promotional campaigns stress features – Additional promotions to intermediaries attempt to induce them to carry the product – Although prices are typically high, financial losses are common due to heavy promotional and research-and-development costs
Windows Media Play er.lnk
• Growth Stage
– – – – – Sales volume rises rapidly Firm usually begins to realize substantial profits Success attracts competitors Firm may need to make improvements to the product Additional spending on promotion and distribution may be necessary
• Maturity Stage
– Industry sales continue to grow, but eventually reach a plateau – Many competitors have entered the market, and profits began to decline – Differences between competing products diminish – Available supplies exceed industry demand for the first time – Competition intensifies and heavy promotional outlays are common
• Decline Stage
– Innovations or shifts in consumer preferences cause an absolute decline in industry sales – Industry profits fall -- sometimes become losses – Firms cut prices in a bid for the dwindling market – Manufacturers gradually drop the declining items from their product lines
Extending the PLC
• Marketers usually try to expand each stage of the life cycle for their products as long as possible • Product life cycles can stretch indefinitely as a result of decisions designed to: – Increase the frequency of use by current customers – Increase the number of users for the product – Find new uses – Change package sizes, labels, or product quality
Locating Products or Brands in their Life Cycle
a) Analysis of historical sales and growth trends in the brand and industry. b) Analysis of recent trends in the market place. c) Analysis of development of short term tactics of competitors. d) Analysis of historical information regarding life cycles of similar and related products. e) Based on the above analysis, project brand or product sales. f) Estimate probable years remaining for the brand or product. g) Fix brand or product’s position in the life cycle.
New Product Planning
Price-Promotion matrix
H P R I C E
Rapid Penetration Slow Penetration Rapid Skimming Slow Skimming
L
H L Promotion
Product Development Strategies
– Product positioning: consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brand. – Cannibalization: a loss of sales of the current product due to competition from a new product in the same line
The Consumer Adoption Process
• Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again. – Awareness – Interest – Evaluation – Trial – Adoption or rejection • Consumer innovator: People who purchase new products almost as soon as the products reach the market • Diffusion process: Process by which new goods or services are accepted in the marketplace
• Rate of Adoption Determinants – Characteristics of a product innovation that influence its adoption rate include: • Relative advantage • Compatibility • Complexity • Possibility of trial use • Observability
Six Reasons for New product
1. New to the world products
2. New product lines
3. Adding to the existing product lines.
4. Improvements & revision of existing products
5. Repositioning
6. Cost reductions
SONY CNG Auto DELL COMPUTERS NOKIA MICRA
Defining New Products
New to Organization(30%)
10% new to the world 20% new product lines
26% addition to existing product lines
Changes within existing product line 70%
26% revisions or improvements
11% repositioning
7% cost reductions
11.3
CHALLENGES Shortage of important ideas in certain areas Fragmented markets Shorter Product Life Cycle Social & Govt. constraints Cost of Development Capital Shortages Faster required development time
New Product Development Process
Idea Generation Identifying Prospective Customers/ Defining Target Market Concept Development and Testing Feasibility Analysis Product Development Test Marketing Commercialization
11.5
MANAGING NEW DEVELOPMENT PROCESS
1. IDEA GENERATION : New product ideas come from many sources including: • Sales force • Customers • Employees • R&D specialists • The competition • Suppliers • Retailers • Independent inventors
2. IDEA SCREENING : Screening separates ideas with
commercial potential from those that cannot meet company objectives Promising, Marginal, Rejects Idea Avoid two errors Drop error Go error Absolute product failure Partial product failure Relative product failure
3. Concept Development & Testing:
Concept development Product Testing Category Brand
4.Testing: Product concept to tgt audience
Rapid prototyping, Virtual testing
Consumers can be assessed on following basis: 1.Communicability & believability 2. Need level 3. Gap level 4. Perceived value 5. Purchase intention 6. User tgt, purchase occasions & frequency
5. Marketing Strategy Development Target mkt Size, Structure & Behavior Planned product Positioning Sales, Market share & Profit goals
6.Business Analysis
Estimating total Sales Estimating Cost & Profits Estimated Break-Even Analysis
6. Market Testing:
7.Commercialization: Timing, Place & Strategy
When Adoption Mass Market Approach Where To Whom Loyalty Heavy user target marketing Sequential set of activities for launching a new product.
Producer’s / Company criteria for New Product
1. Adequate demand for the product. 2. Product must satisfy key financial criteria. 3. Product Compatibility with environmental standards. 4. Product must fit into company’s present marketing structure.
Middlemen’s criteria for New Product
1. Good working relationship with producers.
2. Compatible distribution policies & practices. 3. Financial compatibility.
EMERGING ISSUES IN PRODUCT MGT
1. Adapting products to local conditions. 2. Threat from duplication. 3. Quality Improvement
doc_485940330.pptx
is to Classify products, Product mix decisions and line management, Length, width and depth of a line, line analysis,New Product development, stages of product development, kinds of consumers depending on stage of adoption, Adoption process & Brand management, Marketing of services.
1.Classification of products, Product mix decisions and line management, Length, width and depth of a line, line analysis,
2.New Product development, stages of product development, kinds of consumers depending on stage of adoption. 3.Adoption process & Brand management
4.Marketing of services
PRODUCT MANAGEMENT
• Product is a bundle of satisfaction or a solution to a customer’s problem that a customer buys. • Marketing is 4 P’s Technology is becoming almost standardized. Possible differentiation tools are Price & Promotion. • Product = Tangible Benefit + Intangible Benefits • Levitt believes that future competition will be in the “AUGMENTED PRODUCT CATEGORY”.
What are Goods and Services?
• Service: intangible task that satisfies consumer or business user needs • Goods-services continuum: device that helps marketers to visualize the differences and similarities between goods and services
Core Product
Guarantees & warranties After sales services Delivery points & systems
Replacement Attributes Styling or returns Colour policy Instructions Core Manual Product Payment options (for high priced prodcts)
Formal Product
Quality
Brand Name Packaging
Installation (for bulky products)
Customer complaint management
Augmented Product
The total product concept
Future Product
5 Level of PRODUCT
(Customer Values)
Core Benefit
Basic Product Expected Product Augmented product (Consumption System) Potential Product
LEVITT’s CLASSIFICATION
• Characteristics that distinguish services from goods:
– – – – – Intangibility Inseparability Perishability Difficulty of standardization Frequent requirement of interaction between buyer and Seller – Variability
Classifying Goods and Services for Consumer and Business Markets • Consumer products: products destined for use by ultimate consumers • Business (or B2B) products: those that contribute directly or indirectly to the output of other products for resale also called industrial or organizational products
Types of Consumer Products
• Convenience product: good or service that consumers want to purchase frequently, immediately, and with minimal effort – Impulse goods and services are purchased on the spur of the moment. – Staples are convenience goods and services that consumers constantly replenish to maintain a ready inventory. – Emergency goods and services are bought in response to unexpected and urgent needs.
• Shopping product: good or service purchased only after the customer compares competing offerings from competing vendors on such characteristics as price, quality, style, and color – Typically cost more than convenience purchases. – Include tangible items. – Shopper lacks complete information and gathers information during the buying process. • Specialty product: good or service with unique characteristics that cause the buyer to value it and make a special effort to obtain it. • Unsought product: good or service marketed to consumers who may not yet recognized in the need for it
Business Products
• Installation: major capital investment by a business buyer that typically involves expensive and relatively long-lived products, such as a new factory or piece of heavy machinery. • Accessory equipment: capital product, usually less expensive and shorter-lived that insulation, such as a laptop computer. • Component parts and materials: finished business products that become parts of buying firms’ final products, such as spark plugs for new cars. • Raw materials: business product, such as a farm product (wheat, cotton, soybeans) or natural product (coal, lumber, iron ore) that become part of a final product. • Supplies: products that represent regular expenses necessary to carry out a firm’s daily operations but are not part of the final product. Supplies are sometimes called MRO items.
Development of Product Lines Product Line: a series of related products. The following situations suggest a sub optimal product mix: a) Excess capacity in a firm’s manufacturing, warehousing or transportation facilities b) High proportion of profits from a small percentage of product items c) Insufficient use of sales force contacts and skills d) Steadily declining sales or profits Product mix decisions are dictated by the changes occurring in the market place.
The Product Mix
• A company’s assortment of all products and items that a company sells in a market. – Product Width—How many number of different product lines offered. – Product Length--the number of items in the mix, a firm sells. – Product Depth--variations in each product that a firm markets in its mix. PRODUCT LENGTH Product Product Product Line1 Line2 Line3 Detergents Soaps Shampoos Surf, Surf Lux, Dove Sunsilk, Dove Excel, Wheel Liril, Rexona PRODUCT WIDTH
• Product Mix Decisions – A firm may lengthen or widen its product mix. (Line Stretching) – A Company may decide to add variations that will attract new users. (Line Filling) – A product may be pruned or altered, and new product may extend the product life cycle – Line extension: introduction of a new product that is closely related to other products in the firm’s existing line
Model(lengt h) Vaio z Vaio e Vaio x
depth
user
Basic config. atom i7/i5 atom
O.S.
price
2 diff version 5 colors colors
businessma n Status seeker Mobility n style seeker student executive
Window7 Window7 Window7
109-159k 37-60k 54-90k
Vaio m Vaio w
styles colors
atom atom
Window7 Window7
23k 35k
Vaio s
Vaio f
versions
Colors & versions
High end user
gamers
i5/i3
i7
Window7
Window7
59-79k
129k
The Product Life Cycle
• Introduction Stage
– Firm works to stimulate demand for the new market entry – Promotional campaigns stress features – Additional promotions to intermediaries attempt to induce them to carry the product – Although prices are typically high, financial losses are common due to heavy promotional and research-and-development costs
Windows Media Play er.lnk
• Growth Stage
– – – – – Sales volume rises rapidly Firm usually begins to realize substantial profits Success attracts competitors Firm may need to make improvements to the product Additional spending on promotion and distribution may be necessary
• Maturity Stage
– Industry sales continue to grow, but eventually reach a plateau – Many competitors have entered the market, and profits began to decline – Differences between competing products diminish – Available supplies exceed industry demand for the first time – Competition intensifies and heavy promotional outlays are common
• Decline Stage
– Innovations or shifts in consumer preferences cause an absolute decline in industry sales – Industry profits fall -- sometimes become losses – Firms cut prices in a bid for the dwindling market – Manufacturers gradually drop the declining items from their product lines
Extending the PLC
• Marketers usually try to expand each stage of the life cycle for their products as long as possible • Product life cycles can stretch indefinitely as a result of decisions designed to: – Increase the frequency of use by current customers – Increase the number of users for the product – Find new uses – Change package sizes, labels, or product quality
Locating Products or Brands in their Life Cycle
a) Analysis of historical sales and growth trends in the brand and industry. b) Analysis of recent trends in the market place. c) Analysis of development of short term tactics of competitors. d) Analysis of historical information regarding life cycles of similar and related products. e) Based on the above analysis, project brand or product sales. f) Estimate probable years remaining for the brand or product. g) Fix brand or product’s position in the life cycle.
New Product Planning
Price-Promotion matrix
H P R I C E
Rapid Penetration Slow Penetration Rapid Skimming Slow Skimming
L
H L Promotion
Product Development Strategies
– Product positioning: consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages in relation to those of competing brand. – Cannibalization: a loss of sales of the current product due to competition from a new product in the same line
The Consumer Adoption Process
• Adoption process: Stages that consumers go through in learning about a new product, trying it, and deciding whether to purchase it again. – Awareness – Interest – Evaluation – Trial – Adoption or rejection • Consumer innovator: People who purchase new products almost as soon as the products reach the market • Diffusion process: Process by which new goods or services are accepted in the marketplace
• Rate of Adoption Determinants – Characteristics of a product innovation that influence its adoption rate include: • Relative advantage • Compatibility • Complexity • Possibility of trial use • Observability
Six Reasons for New product
1. New to the world products
2. New product lines
3. Adding to the existing product lines.
4. Improvements & revision of existing products
5. Repositioning
6. Cost reductions
SONY CNG Auto DELL COMPUTERS NOKIA MICRA
Defining New Products
New to Organization(30%)
10% new to the world 20% new product lines
26% addition to existing product lines
Changes within existing product line 70%
26% revisions or improvements
11% repositioning
7% cost reductions
11.3
CHALLENGES Shortage of important ideas in certain areas Fragmented markets Shorter Product Life Cycle Social & Govt. constraints Cost of Development Capital Shortages Faster required development time
New Product Development Process
Idea Generation Identifying Prospective Customers/ Defining Target Market Concept Development and Testing Feasibility Analysis Product Development Test Marketing Commercialization
11.5
MANAGING NEW DEVELOPMENT PROCESS
1. IDEA GENERATION : New product ideas come from many sources including: • Sales force • Customers • Employees • R&D specialists • The competition • Suppliers • Retailers • Independent inventors
2. IDEA SCREENING : Screening separates ideas with
commercial potential from those that cannot meet company objectives Promising, Marginal, Rejects Idea Avoid two errors Drop error Go error Absolute product failure Partial product failure Relative product failure
3. Concept Development & Testing:
Concept development Product Testing Category Brand
4.Testing: Product concept to tgt audience
Rapid prototyping, Virtual testing
Consumers can be assessed on following basis: 1.Communicability & believability 2. Need level 3. Gap level 4. Perceived value 5. Purchase intention 6. User tgt, purchase occasions & frequency
5. Marketing Strategy Development Target mkt Size, Structure & Behavior Planned product Positioning Sales, Market share & Profit goals
6.Business Analysis
Estimating total Sales Estimating Cost & Profits Estimated Break-Even Analysis
6. Market Testing:
7.Commercialization: Timing, Place & Strategy
When Adoption Mass Market Approach Where To Whom Loyalty Heavy user target marketing Sequential set of activities for launching a new product.
Producer’s / Company criteria for New Product
1. Adequate demand for the product. 2. Product must satisfy key financial criteria. 3. Product Compatibility with environmental standards. 4. Product must fit into company’s present marketing structure.
Middlemen’s criteria for New Product
1. Good working relationship with producers.
2. Compatible distribution policies & practices. 3. Financial compatibility.
EMERGING ISSUES IN PRODUCT MGT
1. Adapting products to local conditions. 2. Threat from duplication. 3. Quality Improvement
doc_485940330.pptx