Mar3023 Exam 3 Study GuideModule 3.1—Product Concepts- Marketing is all about developing great product, the ones consumers will seek out and pay extra money for - Products are what makes companies strong and successfulWhat is a product?- A good, service, or idea (or a combination of 2 or more of these)o Includes supporting services: installations, guarantees, warranties - 80% of what we do isn’t tangible… education is considered a service - intangible: services, ideaso eBay provides a platform for others to sell products… eBay is considered a product Products Defined- goods: a tangible, physical entity- services: an intangible, result of application of human and mechanical efforts to people or objects - ideas: concept, philosophy o can you touch it can you feel it—tangible o intangible—consulting advice, education, health care Product Concepts- ways to do things that appeal to consumers, and ways to do things that turn people off- which fire truck would kids want to build and play with?o Ex: Lego reinvented the fire truck, it didn’t look much like an actual fire truck, this made their profits go down LEGOo Privately held Danish company that has product the iconic toys since 1932. Name is derived from the Danish words “Leg godt” meaning “play well”o Play performance in the core LEGO business led to recent changes to the existing producto Have 46 retail stores, 34 in the US o Transitioning from making something tangible to something intangibleo Legos retail stores theme parks 6 theme parks: Denmark, Germany, UK, San Diego, Orlando, Malaysia o good to have a well-balanced stock portfolio Product Types o consumer products: purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them o convenience productso shoppingo specialty—niche products, have to seek o unsought—products you don’t seek outo Business products: purchased to use o Training people to sell Business- business productso One business is selling to consumer, one business is selling to other businesses Managing Existing Productso Most products are thought out thoroughly Product Hierarchyo Different parts of every producto Core products: are the physical or intangible service that the customerreceives o Branded products: are the core products plus the characteristics that allow the consumer to differentiate it from similar productso Augmented products: have characteristics that enhance value beyond that of the core and branded producto This boils down to what you’re buying o Branded products: not only buying the function, but the brand is important, it means something to consumerso Core product: its functionalityo Augmented: a warranty.. not only do you get the functionality, you get the brand, and the guarantee that it will work o Installation, repair, delivery: augment the product oCore vs. Brandso Core product: cereal (eat in the morning when you’re hungry)o Cola, you buy the core product and you know what it is you’re getting o When you put a brand on a product, your perception of the product changeso Ex: cheerios vs. “scooters” o Ex: stop and shop cola vs. coca cola o Ex: acetaminophen vs. Tylenol o Ex: generic beer vs. keystone light Product lineo A product line consists of the closely related products marketed by an organizationo How to leverage the existing brands they have in ways that extend their market shareo Ex: Coca-cola is a complete beverage company, water, energy drinks, vitamin watero Ex: Nabisco Oreos double stuffed, peanut butter, reduced fat, chocolate, vanilla and chocolate, or just vanilla (this is the product line) it suits different needs All Oreo cookies but are slightly different to suit different tasteso Products lines evolve from a segmentation strategy (dividing up a product line to aim it at consumers with different wants and needs)o Splenda: brown sugar, granulated, etc. o Key to understand: a group of closely related products that generally evolvearound one brand o Example: Nevardis: makes Excedrin o Have different variations depending on what consumers are looking for Ex: back and body, tension headache, sinus headache, migraineProduct Line Deptho Companies that have different products, can have really deep product lineso The number of items in a product lineso In the Excedrin example, the product depth would be 8 (there are 8 different kinds of Excedrin)o Example: the amount of diet coca-colas the company makeso Ex: however many different kinds of Oreos, Oreo makeso Depth top to bottomo Breadth—horizontallyo Example: Coca-Cola how many different types of beverages they produce Sprite, powerade, dr. pepper, vitamin water, energy drinks, water Broad array of different types of beverages Underneath each product you can see the depth - Product line breadth: the # of different lines that a company or SBU markets- Each breadth has a deptho Breadth stays the same, but the depth can vary depending on the number of variations they make o In the Excedrin example, Novartis consumer health markets 40 lines of consumer health products, so their breadth score would be 40.- PLC (Product lifecycle) in the beverage industry - Each product goes through a lifecycleo When it is introduced growth maturity declineo Maturity: it probably won’t change (diet coke) flatten out o Decline phase Pepsi, their market share is going down - Product life cycles- 7up ten, entering a crowded market, diet soda drinks aimed at men, coke 0, Pepsi maxx - introductory phase high failure rates, little competition, frequent- RND research and development costs that company have to pay Producers of 7up 10— must change their production facility for the new productPromote it - Their tends to be negative profits in the introductory stage - Be familiar what happens in each one of the PLC stages - Distribution starts to improve as you go through the stages Product Life Cycle- Tend to be different trends over time that define different product categorieso Ex: high tech products has a lifecycle that goes up really quickly, then there tends to be a fall When new products come in there is a temporary fall in sales, and then you respond, and sales go back up -Products are nothing more than stocks—buy low, and sell high - Fad products are a one time thing, short term o Fashions, go up really quickly, and their cyclical over time - Be familiar that different products have
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