PRIN OF MARKETING
PRIN OF MARKETING MKT 301
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This 6 page Study Guide was uploaded by Vinnie Haley on Saturday September 26, 2015. The Study Guide belongs to MKT 301 at Clemson University taught by James Gaubert in Fall. Since its upload, it has received 56 views. For similar materials see /class/214201/mkt-301-clemson-university in Marketing at Clemson University.
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Date Created: 09/26/15
Chapter 11 Product and Service Strategies 1 Products and Services Products items consumed for personal or business use Services activates that deliver bene ts to consumers or businesses Every product is de ned by a set of attributes Attributes unique characteristics of each product including producing features options product design brand name quality logos identi ers packaging and warranty Include features functions bene ts and uses Purpose of a product is deliver bene ts to consumers Consumers evaluate attributes and bene ts of products Choose product that offers maximum set of bene ts Bene ts de ne a product s utility or what a product does for a customer 4 Ways Services differ from Physical Goods 1 Intangibility service can t be perceived by 5 senses before its purchased and delivered 2 Inseparability service can t be separated from whomever is providing the service 3 Variability service quality can be inconsistent because it depends on factors that are dif cult to control skill of people providing the service 4 Perishability service cannot be stored for later use Through sale and use of products services that bene ts are delivered to customers Product strategy refers to all decisions that impact rm s product offerings Successful product management can grow sales improve margins amp increase customer satisfaction a Levels of Product Consumers buy products for a variety of reasons and distinguish between various levels of product Levels of Product comprise all products 3 levels each additional level adds greater value for customer Core Bene ts fundamental product bene ts that a customer is buying car for transportation Actual Product combination of tangible and intangible attributes that delivers the core bene ts ex Horsepower brand power emotional rewards in additional to functional ones Augmented Product Additional service or bene ts that enhance ownership of the actual product ex Buying new car can secure nancing extend warranty When all products in a category have similar core bene ts appeal can be enhanced by differentiating it at actual or augmented level b Product Classi cation Marketers classify products based on customer behavior clear implications for marketing strategy Customer Products products that directly ful ll the desires of consumers and are not intended to assist in the manufacture of other products C 39 Products Bought f 1 quotJ with little or no advanced planning ex Gum Low prices amp widely distributed Brand loyalty is low Mass promotion by manufacturing Shopping Products more complex bought less frequently than convenience products ex Blue jeans tv sets Spend more time crosscomparing features and benefits Prices amp Brand Loyalty are higher Distributed through fewer outlets customer will make extra effort to find them Promoted though advertising and personal selling at pointofsale by manufactured and retailers Specialty Products unique characteristics like highly prized brand names or one of kind features ex Luxury cars fine china Purchased infrequently Consumers spend most effort on trying to find exactly what they want High price and brand loyalty Distributed to fewest number of outlets Promotion is highly targeted to particular audiences and lifestyles by retailer and manufacture Unsought Products items customers often do not like to think about purchasing ex Funerals life insurance Unaware of brand names or specific product benefits Infrequently purchased with minimal amount of effort Promoted by heavy advertising and personal selling by manufacture and retailer gotta be aggressive Industrial Products products sold to business and governments customers for their direct use or as inputs to the manufacture of other products Products consumed by the B2B Market Equipment ex buildings copy machines personal selling and product customization MRO Products items used for maintenance repair and operations of a business purchased frequently affordable as possible Raw Materials common marketing strategies are lower prices are superior customer service ex lumber wheat cotton Processed Material and Service ex fabric for clothing or copy machine repair service Components finished products organizations use to fabricate their own products ex LCD are components for cell phone manufacturers c New Product Development New Product Development process of creating planning testing and commercializing products Must develop study stream of new products New product development process incorporates insight into a f1rm s customers and its environment Product Development Steps 1 Idea Generation formulate ideas for new product service must have a large number of ideas that could survive idea screening to advance N Idea Screening Review ideas to ensure it meets customers wants and company goals ideas should have market potential and should be consistent with rm s capabilities and goals in order to advance E Concept Development concretely de ne the features and bene ts of the new product must have potential to be realized in concrete terms that deliver customer bene ts in order to advance to next step 4 Marketing Strategy create a market strategy for product s introductions marketing strategy must be crafted for intended customers including promotion distribution and pricing in order to advance to next step V39 Business Analysis Validate that the new product will meet all sales and pro t objectivities product cost sales and pro tability must meet the company s nancial requirements in order to advance to the next step 0 Concept Testing Developing prototypes of the product for concept testing and market research con rmed product acceptance among intended customers in order to advance to the next step 7 Commercialization launch the new product in the marketplace Only a few ideas will survive to commercialization During concept development stage focus groups often used to re ne product ideas based on customer feed back Test marketing is o en used before commercialization Test marketing involve a full scale launch in a select geographic area can be costly but helps avoid more costly mistakes amp improve product d Product Development Steps Roles and Requirements Discontinuous Innovations new product ideas that change out everyday lives in dramatic ways example PC Peter Fisk s 3 Kinds of New Product Ideas Cosmetic Change most basic type of innovation involves some evolutionary change to an existing product or service Context Change an existing product or service is taken into a new context or market Concept Change an advanced innovation that changes everything Other sources of innovation come from mistakes and packaging e Product and Service Quality Consumers will only pay for a product if it has an adeqduate level of quality at a fair price Quality Customer s overall reaction to the attributes of a product or service Product Quality Strategy specifies a level of performance for each product attribute relative to the target market s perception of quality and value Quality product is one that excels in a few dimensions that are important to the customers and merely adequate in others To implement a Product Quality Strategy set performance level targets for attributes in alignment with customers needs and wants Quality Function Deployment QFD is a method used to translate customer needs into product and quality requirements Good product quality strategy reduces costs improves customer satisfaction reduce customer defection increase sales and improve profitability f Product Design Potential to add differentiation and value Product Style refers to the visual appearance of a product Product Design broader term that includes a product s style tactile appeal and its usability Well designed product is more pleasurable to look at feels better in hands and is easier to use Good design evokes positive feelings in customer and source of strategic advantage 11 Product Portfolio Product Portfolio Product Mix is the quot quot of all products and services olTered by a company If product is successful firm introduces additional variation on original product or additional new products into its portfolio Product portfolio includes all brands subbrands and varieties of products and services it offers Portfolio Management comprises all of the decisions or strategic wagers a company makes regarding its portfolio of current and future products Product Line group of closely related products ex Sony s different gaming systems Fullline Product Strategy offering a wide rand of product lines within a product portfolio ex PampG s variety of household products in different categories oral care child care Limitedline Product Strategy focusing on one or a few product lines within a product portfolio Resourceinvestment decisions made on which products company believes have greater or lesser potential in the marketplace Can t foresee product s failure or success Resulting set of investment decisions add up to a f1rm s collective wagers or bets on the future performance of the portfolio Product Portfolio is managed along three dimensions Product mix width Product mix length and Product mix depth Product Mix Width refers to the number of product lines a company offers Product Mix Length refers to the number of products a company offers Product Mix Depth refer to the number of versions of products within a line Line Extensions additions to an existing product line oneway to increase depth of a product line Line Expansions occur when entirely new lines are added to the product mix Change Product Mix Length by adding or subtracting a new product line Change Product Mix Depth by line extension or by stretching it upward or downward by introducing products with superior or lesser quality price Cannibalization occurs when new product takes market share from established product Ruins business if new less profitability product is an attractive substitute for an older more profitability entry Necessary when an aging product needs to be replaced by new fresher alternative due to changes in consumer taster or technological advantage 111 Product Life Cycle Product Life Cycle PLC is a model that describes the evolution of a product s sales and pro ts throughout its lifetime stages are Introduction Growth Maturity and Decline Popularity of a product evolves over time growing and fading as consumer tastes change or as a newer more desirable product is introduced in that product s place Contains implications for marketing strategy at each stage of evolution Introduction stage New product is introduced into marketplace Sales and profit are low Marketing goal is to build awareness for product category The product is basic Price may be high or low Distribution is selective with a few outlets Promotion is heavy expenditure to build targeted awareness Growth Stage Sales are growing and profit is rising Marketing goals are to take advantage of growing demand build brand preference Add features and product line extensions Price lowers amp more outlets Mass communication to build general awareness Maturity Stage Peak sales curve flatten outs Profit falls Marketing goal is to maximize market share and profit Product diversify to attract new customers and extend life cycle Max number of outlets Mass communication to build brand preference Decline Stage Sales and pro t decline Eliminate product and reduce investment Price is low Penetration Strategy during introduction stage holding price to gain share Skimming Strategy during introduction stage keeping price high to maximize returns Divesting take themselves out of the market Harvesting rm continues to sell a product wile gradually reducing and eventually eliminating all of its marketing investment Innovators 25 most willing to adopt innovations open minded younger and better educated Early Adopters 135 more socially aware media savy Early Majority 34 Don t want to be the rst or last to try a new product Late Majority 34 Older and more conservative only necessary or social pressure Lagards 16 heavily bound by tradition
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