Chapters 11 12 Product concepts and managing products Marketing Exam 2 Study Guide Product good service intangible human or mechanical efforts or idea concept philosophy 1 2 Includes supporting services installation guarantees warrantees that help differentiate brands Includes customer product experience symbolic meaning of product for the buyer Product hierarchy 1 Core product physical or tangible product that customer receives 2 Branded product core product plus differentiating characteristics brand package 3 Augmented product characteristics that enhance product value beyond branded warranty delivery Consumer products to satisfy personal family needs classified according to purchasing behavior 1 Convenience products inexpensive frequently purchased minimal purchasing effort 2 3 4 Unsought products solve specific problem not planned ex emergency medical service auto repairs Shopping products considerable purchasing effort less retail outlets than convenience Specialty products unique features more purchasing effort limited retail outlets purchased less frequently Business products for operations to resell or to use in manufacture of other products Installations equipment facilities or non portable equipment 1 2 Raw materials basic materials that become part of physical product 3 Component parts become part of physical product 4 MRO supplies maintenance repair operating items Product line closely related products marketed by 1 organization to target different market consumer needs Product line depth number of items styles types in product line of coke flavors Excedrin types Splenda pack Product line breadth width number of different lines that a company SBU markets coke makes sprite fanta etc Product life cycle progression of product by 4 stages Introduction stage product s first appearance in marketplace high failure rates little competition frequent modification limited distribution negative profits high advertising production costs intense promotion 2 Growth stage increase sales entrance of competitors market consolidation aggressive advertising of differences btw brands wider distribution decrease prices adjust market strategy 3 Maturity Stage sales curve peaks then decline sales increase less lengthened product lines service and repair assume roles marginal competitors drop out prices profits fall niche marketers emerge 4 Decline stage drop in sales large inventories of unsold items elimination of nonessential marketing expenses Extending product life cycle sell to new segments promote more varied use improve reposition 1 New product development risky 2 Line brand extension similar product targeting different need starbucks makes liquor Up market extension increase quality Hershey s luxury chocolate Down market extension decrease quality Marcedes B class Product modification change product and delete original Quality modification to sell at lower or higher price change in ingredients or production costs Functional modification for different uses soup to go crystal light packets 4 Aesthetic modification relating to sensory appeal of product New product development process 7 stages 1 2 1 3 Idea generation Screening most promising ideas 1 2 3 Concept testing present product to sample of potential buyers 4 Business analysis analyze potential contribution to firm s sales costs and profits 5 Product development see if product is technically feasible 6 7 Commercialization plan for full scale release Test marketing limited introduction Product adoption process 5 stages rejection can occur at any stage 1 Awareness buyer becomes aware of product 2 3 4 5 Adoption buyer purchases product is expected to use again when needed Interest buyers seek information are receptive to learning about product Evaluation buyer considers product benefit and decides whether to try it Trial buyer examines tests or tries product to determine if it meets needs Types of buyers 1 2 Innovators 1st to adopt new product Early adopters careful choosers of new product 3 4 5 Early majority people adopt it just before the average person Late majority skeptics who adopt product when they feel it is necessary Laggards last to adopt distrust new products 80 of new products fail for not meeting customer needs inconsistent branding poor timing overestimation of market size ineffective promotion insufficient distribution or failure of one or more of 4 P s Product deletion elimination of product when necessary difficult to do Phase out let product decline 1 2 Run out increase marketing efforts in core markets Immediate drop when product generates big losses 3 Product development and management Product manager responsible for product s product line or single brand bran manager 1 2 Market manager manage marketing activities for particular customer group 3 Venture team cross functional team responsible for all aspects of product development Chapter 13 Managing service products Service deed process or performance makes up about 82 or US employment 80 of GDP and continues growing 1 Poor service is 40 of reason for customer switch 2 Customer service support of manufactured good dell rep ordering 3 Distribution of physical good even for bulk goods 4 Return of defective goods 4 Characteristics of services 1 3 Intangibility lack of tangible assets that can be seen touched or smelled prior to purchase Strategy implications stress tangible cues have price quality relationship customer referrals word of mouth Continuum of intangibility from pure goods salt to pure services teaching 2 Perishability inability of unused service to be inventoried or stored Strategy implications manage supply demand using pricing promotions early bird special Inseparability simultaneous production consumption customer present for service can t take it home Key factors employees environment Fenway Park other customers crying babies drunks 4 Variability heterogeneity hard to control level of service quality at specific moments be consistent Strategy implications customize specialize good 5 Customer contact level of interaction depending on service Service marketing mix 7 P s 1 Product core vs peripheral supplement airline transportation vs meal service hotel bed vs maid service 2 Price denotes quality can be charged on a time or service basis 3 Place distribution of services typically direct 4 Promotion manage expectations offer guarantees depends on word of mouth usually use tangible things 5 People functional quality employees and customers appearance
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