Uw Product Management

Product Management
4/5/2013
RVS/ FoM/ Product Management
What is a product?
Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Includes: physical objects, services, events, persons, places, organizations, ideas, or some combination thereof.
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Attributes Quality Options Style Sizes Services Warranties Returns Brand name Packaging Product Lines/Product
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Product
(Idea, Good, or Service)
What is a Service?
A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Examples: banking, hotel, airline, retail, tax preparation, home repairs. Variable, perishable, inseparable from the provider
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The Product-Service Continuum
Sugar
Restaurant
University Education
Pure Tangible Good
Pure Service
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Product and Service Attributes
Quality Features
Style & Design
7-6 4/5/2013
Performance and Satisfaction Includes Level & Consistency Differentiates a product from the competition; assessed based on value and cost Style = Appearance Design = heart of the product
Industrial Products
Raw materials, manufactured materials, and parts
Materials and Parts
Products that aid in buyers production or operations
Capital Items
Supplies and Services
Operating supplies, repair, and maintenance items
7-7 4/5/2013
Individual Product Decisions
7-8 4/5/2013
Levels of a Product Levels of a Product
9
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Product Levels
Installation brand name quality Delivery and credit packaging core benefit features styling
Basic, expected, and augmented product
Core Benefit Warranty
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Aftersale service RVS/ FoM/ Product Management
10
Discussion
Comparison of the Product Concepts of Full Service vs No Frills or Budget Airlines The Evolving Product Concept in Coffee Marketing
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Discussion
Product Mix width and Product Line depth- case of a computer company
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Product Mix - Dell Small Business Division Product Lines*

http://www.dell.com/us/en/dhs/default.htm
Product Mix Width

Desktops Laptops Workstations
Servers
Dimension OptiPlex
Inspiron 3800 Inspiron 5000 Inspiron 7500 Latitude CP Latitude CS Latitude LS
Precision 220 PowerEdge 1300 Precision 420 PowerEdge 2400 Precision 620 PowerEdge 2450
Product Line Depth
PowerEdge 1300
PowerEdge 4400 PowerEdge 6400 PowerEdge 6450 PowerEdge 8450 13
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*Partial
The Evolving Product Concept in Coffee Marketing
14
Four-Level Structure of Product Strategy

Platform Strategy Includes: - What platforms to develop? - How to develop them - When develop them Vision Primary Strategic Levels
Product Platforms
Product Lines
Individual Products
McGrath, 1995, Ch. 1
Product Platform Product Family Planning
High Cost High Perf. MidRange Low Cost Low Perf.
Entry premium product (features/cost)
Entry mid-range product Entry mid-range product Entry mid-range product (features/cost) (features/cost) (features/cost) Entry low-end product (features/cost)
Entry low-end product (features/cost)
Entry low-end product (features/cost)
Initial Platform
Platform Extension
Platform Extension
Segment A
Segment B
Segment C
Shared Product Platform Common Subsystems and Interfaces

16 4/5/2013 RVS/ FoM/ Product Management
Meyer, 1997, p. 27
International PLC Introduction: 3G Europe Growth: 3G Asia Mature:386/486 PC Kenya Decline: Analogue Mobile Phones UK
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17
Characteristics
Sales
Introduction
Low sales
Growth
Rapidly risingsales
Maturity
Peak sales
Decline
Declining sales
Costs
High cost per customer Negative Innovators Few
Average cost per customer Rising profits Early adopters Growing number
Low cost per customer High profits
Low cost per customer Declining profits Middle majority Laggards Declining number
Profits Customers Competitors
Stable number beginning to decline
18
General Marketing Objectives
Introduction
Create product awareness and trial
Growth
Maturity
Decline
Maximize market share; Maximize profit Reduce expe sustain growth as long while defending share and milk the brand as possible.
19
Marketing Mix Strategies
Introduction
Growth
Maturity
Decline
Product Price
Offer a basic product
Offer product extensions
Diversify brands/models Price to match or best competitors
Phase out weak items Cut price
Try to use price/ Price to penetrate value; Cost-plus frequent; market skimming vs. penetration Build selective distribution Build product awareness among early adopters and dealers Build intensive distribution Build awareness and interest in the mass market
Distribution
Build more intensive distribution Build preference; stress brand differences and and benefits
Go selective: phase out unprofitable channels Reduce to level needed to retain hard-core loyals
Advertising
Sales Promotion
Use heavy sales promotion Reduce to take Increase to encourage to entice trial advantage of heavy brand switching level consumer demand 20
Reduce to m
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Characteristics
Sales
Introduction
Low sales
Growth
Maturity
Decline
Costs
High cost per customer Negative Innovators Few
Profits Customers Competitors
General Marketing Objectives
Create product
Strategies
Product Price Offer a basic product Try to use price/value; Cost-plus frequent; skimming vs. penetration Build selective distribution Build product awareness among early adopters and dealers Use heavy sales promotion to entice trial
Distribution
Advertising
Sales Promotion
21
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Product Life Cycles

Sales
Effects of Extension Strategies

Time 22
Product Life Cycles

Sales/Profits PLC and Profits
PLC
Profits Losses Break Even
23
Time
Innovation Diffusion Process
Process by which an idea spreads from its source of invention to its ultimate users or adopters.
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Customer Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Aware, lack information
Full, regular use
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Types of Adopters
34%
34% 16% Laggards
2.5% Innovators
Early Late Early adopters majority majority

Time
13.5%
26
Designing Products with Customers in Mind
Quality Diffusion of innovations
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What affects rate of Adoption

Complexity (L): Divisibility (T) Compatibility (C) Observability(0) is difficult to understand/ use can be tried on a limited basis matches values/experiences of the target group its beneficial results are easily observable/describable to others
Relative Advantage (A) appears superior
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---------------------Industry?
The promise, image, company, name, package, and ingredients are all part of the product, as are the stores where it is sold.
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Branding
Creating, maintaining, protecting, and enhancing products and services. A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service.
7-30 4/5/2013
Branding
Advantages to buyers: Product identification Product quality
Advantages to sellers: Basis for products quality story Provides legal protection Helps to segment markets
7-31 4/5/2013
Packaging
Designing and producing the container or wrapper for a product. Developing a good package:
Packaging concept Package elements Product safety Environmental concerns
7-32 4/5/2013 RVS/ FoM/ Product Management
Labeling
Printed information appearing on or with the package. Performs several functions:

Identifies product or brand Describes several things about the product Promotes the product through attractive graphics
Discussion
Product width and product line depth of a consumer appliances company
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Product Mixes and Product Strategies of Consumer Appliance Companies
35
Product Line Stretching
36
Product Mix Decisions

Product Mix: all of the product lines and items that a particular seller offers for sale. Width: the number of different product lines the company carries. Depth: the number of versions offered of each product in the line. Consistency: how closely related the various lines are.
7-37 4/5/2013
Product Positioning
How is a product or brand perceived in relation to the preferences of segments of the market, and in relation to competitive products
Example: Positioning for Beer xxx
Bitter
xx
xxx
xx
Weak
strong
xxxx
Sweet
Market gap
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How value is added
Kotlers 5 levels of Product benefit
Core benefits Basic benefits Expected benefits Augmented benefits Potential benefits
Discussion: Mobile phones At what product benefit level does competition occur?
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Copelands Product Classification
How to bring bring products to the market?
Convenience goods Frequently purchased, low prices, low risk in purchase Shopping goods More expensive, of more interest to the customer, some risk in purchase , customers will shop around, promo material should have high info content Specialty goods Very differentiated, high levels of prestige, customers may insist only on one brand, high levels of service required, high prices, restricted distribution
Discussion: Examples?
Ansoffs Matrix
Product-Market Scenario
Current Product New Product
Existing Market
Market Penetration Product Development
New Market
Market Development Diversification
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Ansoffs Matrix
Market Penetration: increasing sales of an existing product and

penetrating the market further. Product Development: develop new products for the existing market. Market Development: sell existing products to new markets. Diversification: Moving away from what you are selling (your core activities) to providing something new e.g. Moving over from selling foods to selling cars. Consolidation: Withdrawing from particular markets, scaling back on operations and concentrating on its existing products in existing markets.
4/5/2013

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Product Management

RVS/ FoM/ Product Management

RVS/ FoM/ Product Management

(Idea, Good, or Service)

RVS/ FoM/ Product Management

RVS/ FoM/ Product Management

The Product-Service Continuum

Pure Tangible Good

RVS/ FoM/ Product Management

Product and Service Attributes

Raw materials, manufactured materials, and parts

Materials and Parts

Products that aid in buyers production or operations

Supplies and Services

Operating supplies, repair, and maintenance items

RVS/ FoM/ Product Management

Individual Product Decisions

RVS/ FoM/ Product Management

Levels of a Product Levels of a Product

Basic, expected, and augmented product

Core Benefit Warranty

Aftersale service RVS/ FoM/ Product Management

RVS/ FoM/ Product Management

RVS/ FoM/ Product Management

Product Mix - Dell Small Business Division Product Lines*

Product Mix Width

Inspiron 3800 Inspiron 5000 Inspiron 7500 Latitude CP Latitude CS Latitude LS

Product Line Depth

RVS/ FoM/ Product Management

The Evolving Product Concept in Coffee Marketing

Four-Level Structure of Product Strategy

Product Platform Product Family Planning

High Cost High Perf. MidRange Low Cost Low Perf.

Entry premium product (features/cost)

Entry premium product (features/cost)

Entry premium product (features/cost)

Entry low-end product (features/cost)

Entry low-end product (features/cost)

Shared Product Platform Common Subsystems and Interfaces

RVS/ FoM/ Product Management

High cost per customer Negative Innovators Few

Low cost per customer High profits

Profits Customers Competitors

Stable number beginning to decline

General Marketing Objectives

Marketing Mix Strategies

Offer a basic product

Offer product extensions

Diversify brands/models Price to match or best competitors

Phase out weak items Cut price

RVS/ FoM/ Product Management

High cost per customer Negative Innovators Few

Profits Customers Competitors

General Marketing Objectives

RVS/ FoM/ Product Management

Product Life Cycles

Effects of Extension Strategies

Product Life Cycles