Mar3023 Exam 3 Study Guide Module 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 successful What 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 ideas o 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 LEGO 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 o 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 product o Have 46 retail stores 34 in the US o Transitioning from making something tangible to something intangible o 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 products o shopping o specialty niche products have to seek o unsought products you don t seek out o Business products purchased to use o Training people to sell Business business products o One business is selling to consumer one business is selling to other businesses Managing Existing Products o Most products are thought out thoroughly Product Hierarchy o Different parts of every product o Core products are the physical or intangible service that the customer receives o Branded products are the core products plus the characteristics that allow the consumer to differentiate it from similar products o Augmented products have characteristics that enhance value beyond that of the core and branded product o 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 consumers o Core product its functionality o 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 o Core vs Brands o 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 changes o 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 line o A product line consists of the closely related products marketed by an organization o How to leverage the existing brands they have in ways that extend their market share water o Ex Coca cola is a complete beverage company water energy drinks vitamin o 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 tastes o 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 evolve around one Product Line Depth brand Excedrin o Example Nevardis makes Excedrin o Have different variations depending on what consumers are looking for Ex back and body tension headache sinus headache migraine o Companies that have different products can have really deep product lines o The number of items in a product lines o In the Excedrin example the product depth would be 8 there are 8 different kinds of o Example the amount of diet coca colas the company makes o Ex however many different kinds of Oreos Oreo makes o Depth top to bottom o Breadth horizontally o 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 depth o 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 lifecycle o When it is introduced growth maturity decline o 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 product Promote 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 categories o 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 different lifecycles Several kinds of product life cycles are possible o high technology products fads and styles or fashions Extending the PLC How do you extend the PLC find new segments o Ex Harley Davidson targeting women Stimulate more
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