Product, PLC and Services

Chapters 10 - 12

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, Expected product, Augmented product, Potential product

Augmented Product

Installation Packaging Brand Name

Delivery & Credit

Quality Level

Core Benefit or Service

Features
AfterSale Service

Design

Warranty

Product Classifications
PRODUCTS

Consumer Products

Business Products

Convenience Products

Shopping Products

Specialty Products

Unsought Products

Some Product Definitions

Product line a group of closely related product items. Product mix all products that a firm sells. Width refers to how many different product lines the firm carries Depth refers to how many variants of each product are offered

Gillettes Product Lines & Mix

Depth of the product lines Width of the product mix
Blades and razors
Mach 3 Sensor Trac II Atra Swivel Double-Edge Lady Gillette Super Speed Twin Injector Techmatic

Toiletries
Series Adorn Toni Right Guard Silkience Soft and Dri Foamy Dry Look Dry Idea Brush Plus

Writing instruments
Paper Mate Flair

Lighters
Cricket S.T. Dupont

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.

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.

The Product Life Cycle

Introductory Growth Stage Stage Maturity Stage Decline Stage Product

Category Sales
Dollars

Product Category Profits

Time

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

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

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

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

Marketing Strategies for PLC

INTRODUCTION GROWTH MATURITY DECLINE

Product Strategy

Limited models Frequent changes

More models Frequent changes.

Large number Eliminate of models. unprofitable models Extensive. Margins drop. Shelf space Phase out unprofitable outlets Phase out promotion Prices stabilize at low level.

Distribution Strategy

Limited Expanded Wholesale/ dealers. Longretail distributors term relations

Promotion Strategy Pricing Strategy

Awareness. Aggressive ads. Advertise. Stimulate Stimulate Promote heavily demand.Sampling demand Higher/recoup Fall as result of Prices fall competition & development (usually). efficient produccosts tion.

Categories of Product Adopters

Percentage of Adopters
Early Innovators Adopters 2.5% 13.5%

Early Majority 34%

Late Majority 34%

Laggards 16%

Time

Diffusion Process and PLC Curve

Introduction Growth Maturity Decline

Sales

Product life cycle curve

Early majority Late majority Early adopters

Innovators

Laggards

Diffusion curve

What is a Service?
Any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything Medical, utilities, entertainment, professional (law, medical), transportation, financial

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.

Managing Services
Managing differentiation
Cant live by price alone Reliability, innovativeness and resilience

Managing service quality

Service gaps Common practices

Managing productivity
Seven approaches