Product Management and Development: Goods, Services, and Product Life Cycle, Study notes of Marketing Management

Download Product Management and Development: Goods, Services, and Product Life Cycle and more Study notes Marketing Management in PDF only on Docsity! MODULE-IV 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”. Core Product Attributes Styling Colour Brand Name Packaging Quality Instructions Manual After sales services Delivery points & systems Installation (for bulky products) Customer education and Training Customer complaint management Payment options (for high priced prod- cts) Replacement or returns policy Guarantees & warranties Core Product Formal Product Augmented Product Future ProductThe total product concept 5 Level of PRODUCT (Customer Values) Core Benefit Basic Product Expected Product Augmented product (Consumption System) Potential Product LEVITT’s CLASSIFICATION 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 Unsought Products Micm CUM INnlat NOR Long-term health care (nursing home) insurance, Remedial math programs Consumer Convenience Products Promucts Impulse Items: Magazines, Disposable camera, Snack foods Staples: Gasoline, Deane att at al Gs Emergency room visit, Plumbing iccielia Asthma inhalers 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. 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 product lines and individual offerings Product Width--the number of product lines offered. Product Length--the number of different products a firm sells. Product Depth--variations in each product that a firm markets in its mix. 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 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 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 Old Product New Product Old Market eye UH Market Penetration DEVE) atleat New Markel Product Market Development Diversification 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 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 DELL COMPUTERS ORACLE CNG Auto NOKIA ACE Defining New Products New to Organization(30%) 10% new to the world 20% new product lines Changes within existing product line 70% 26% addition to existing product lines 26% revisions or improvements 11% repositioning 7% cost reductions 11.3 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 Interaction Creativity Technique Attribute Listing Forced Relationship Morphological analysis Reverse Assumption Analysis Mind Mapping New Context 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 Testing Product 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 CONJOINT ANALYSIS: A method for deriving the utility values that consumers attach to varying levels of a product attributes. Scale 0 to 1.Eg: Credit card, Airlines, Hotel industry, Pharmaceutical drugs. 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