FSU MAR 3023 - CH 11: Managing Existing Products

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CH 11: managing existing products-product- a good, service, or idea received in an exchange• good- a tangible physical entity a) ex: book, magazine, video game• service-an intangible result of the application of human and mechanical efforts to people or objectsa) ex: hotels trying to accommodate you, manicure/pedicure etc• idea- a concept, philosophy, image, or issue a) ex: Mothers against drunk driving (MADD)- philosophy that attempts to stop drinking and driving -the core product consists of its fundamental utility or main benefit• whether you buy, Dasani, Aquafina or Fiji; they all are there to quench your thirst• supplemental features- these can include installation, delivery, financing, etc• symbolic and experimental benefits- some products provide symbolic meaninga) ex you can buy a teddy bear anywhere but at “build a bear” you can choose any kind of teddy bear, size, and stuff it yourselfb) ex: a rolex is not simply just to tell time, it provides symbolic meaning of successclassifying products- 2 general categories of products: consumer and business products• Consumer products- products purchased to satisfy personal and family needs• Business products- products bought to use in a firms operations, to resell, or to make other products -consumer products• Convenience products- relatively inexpensive, frequently purchased items for which buyers exert minimal purchasing effort; usually found at retail storesa) Ex: chewing gum, bread, soft drinks, newspapers, gas etcb) Not much thought put into which to buy or don’t compare brands and prices• Shopping products- items for which buyers are willing to expend considerable effort in planning and making purchases; buyers spend time comparing brands and prices; last a relatively long timea) Ex: Furniture, appliances, cameras, shoes etc• Specialty products- items with unique characteristics that buyers are willing to expend considerable effort to obtaina) One does not consider substitutes and only wants the specific productb) Ex: a mont blanc pen, a one of a kind piece of baseball memorabilia • Unsought products- products purchased to solve a sudden problem, products of which customers are unaware, and products that people do not necessarily think of buyinga) Ex: a new radiator if yours breaks on the highway, medicine if you get the flu-business products• Installations- facilities and non-portable major equipment; decisions made by top level management because these products are expensive and intended for long useA) Ex: buildings, factories, and very large machines • Accessory equipment- equipment that does not become part of the final physical product but is used in production or office activitiesa) Ex: calculators, tools, file cabinets etc• Raw materials- basic natural materials that become part of a physical product a) Ex: Minerals, chemicals, agricultural products and materials from forest & oceans• Component parts- items that become part of the physical product and are either finished items ready for assembly or items that need little processing before assembly a) Ex: brakes, spark plugs, tires are all component parts of an automobile • Process materials- materials that are used directly in the production of other products but not readily identifiable Ex: Caesar salad dressing has a little bit of vinegar in it; but the vinegar is not identifiable • MRO supplies- maintenance, repair and operating items that facilitate production and operations but do not become part of the finished product a) Ex: paper, pencils, cleaning agents and paint all fall into this categoryb) Ex: febreeze is an MRO supply to hotels but is a consumer good to us• Business services-intangible products that many organizations use in their operations a) Ex: Janitorial services, financial services, law services etc -product item- a specific version of a product that can be designated as a distinct offering among a firms products • Product line- a group of closely related product items viewed as a unit because of marketing, technical, or end- use considerationsa) Ex: Colgate tooth whitening, Colgate cavity control, Colgate sensitive gums, etcb) Ex: proctor and gamble detergent line includes: tide, bold, cheer, gain, and era-product mix- the composite, or total, group of products that an organization makes available to customers• Width of product mix- the number of product lines a company offersa) Ex: GE has different types of products including houseware, healthcare, commercial• Depth of product mix- the average number of different products offered in each product line-product life cycle• Product life cycle- the progression of a product through 4 stages: introduction, growth, maturity, and decline -introduction stage- the initial stage of a products life cycle; its first appearance in the marketplace when sales start at zero and profits are negative -growth stage- the product life cycle stage when sales rise rapidly, profits reach a peak and then they start to decline• Profits start to decline at end of this stage when other competitors enter the market-maturity stage- the stage of a products life cycle when the sales and curve peaks and starts to decline, and profits continue to fall • Characterized by intense competition • Companies begin using promotional or globalizing • 3 objectives of companies in maturity stagea) Generate cash flowb) Maintain share of marketc) Increase share of customer -decline stage- the stage of a product life cycle when sales fall rapidly • Companies begin to eliminate products or product lines that are no longer profitableproduct adoption-product adoption process- 5 stage process of buyer acceptance of a product: awareness, interest, evaluation, trial, adoption• Awareness- buyer becomes aware of a new product• Interest- buyer seeks information about new product• Evaluation- buyer decides to use new product or not• Trial- buyer tries new product to see if it meets his/her needs• Adoption- buyer tries product, likes it, and is expected to buy it again-Innovators- first adopters of new technology-Early adopters- people who adopt new products early, choose new products carefully, and are viewed as “the people to check with” by later adopters-early majority- individuals who adopt a new product just prior to the average person-late majority- skeptics who adopt new products when they feel it is necessary-laggards- the last adopters who distrust new products • Most


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FSU MAR 3023 - CH 11: Managing Existing Products

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