More than 4 out of 5 jobs are service related jobs82% of the Total US EmploymentRALPH LAURENHe changed is name from Ralph Lifshitz to Ralph Lauren.From New York, started off selling ties on the streetExam 2 Review SheetCh. 11 & 12 Product Concepts and Managing Products Product Classification Consumer products- products purchased to satisfy personal and family needs- 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 timec) 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 productEx: 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 buying a) Ex: a new radiator if yours breaks on the highway, medicine if you get the flu Business products- products bought to use in a firms operations, to resell, or to make other products Installations- facilities and non-portable major equipment; decisions made by top level management because these products are expensive and intendedfor long useEx: 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 activitiesEx: 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 assemblyEx: 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 Product Line and Product Mix - 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 housewares, healthcare, commercial- Depth of product mix- the average number of different products offered in each product line Product Life Cycles and Marketing Strategies 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 profitable Product Adoption Process product adoption process- 5 stage process of buyer acceptance of a product: awareness, interest, evaluation, trial, adoption1) Awareness- buyer becomes aware of a new product2) Interest- buyer seeks information about new product3) Evaluation- buyer decides to use new product or not4) Trial- buyer tries new product to see if it meets his/her needs5) Adoption- buyer tries product, likes it, and is expected to buy it again Line Extension- development of a product that is closely related to other products in the line but is design specifically to meet different customer needs- For example the Porsche cayenne S Hybrid V-1 can drive short distances using electric power but at high speeds can switch to gas an match the powerof a V-8 engine. Product Modifications changes in one or more characteristics of a product.- Example: Ford 2011, Ford 2012There are 3 types of product modifications:- Quality: changes to a product’s dependability and durability- Functional: changes affecting a product’s versatility, effectiveness, convenience, or safety- Aesthetic: changes relating to the sensory appeal of a product Developing New Products - New Product : an innovative product that has never been sold by an organization, such as the digital camera was when introduced for the first time. New Product Development Processo 7 Phase process for introducing products1) Idea generation: seeking product ideas to reach organizational objectives2) Screening: selecting the ideas with the greatest potential for further review3) Concept testing: seeking a sample of potential buyers’ responses to a product idea4) Business Analysis: evaluating the potential impact of a product idea on the firm’s sales, costs, and profits5) Product development: determining if producing a productis technically feasible and cost effective6) Test marketing: a limited introduction of a product in geographic areas chosen to
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