MAR3023 Exam 3 Study Guide Product Concepts A product is a good service or idea or combination of two or more of these Includes supporting services installations guarantees warranties Examples of products 1 Good tangible product physical entity like an iPod 2 Service intangible product result of application of human and mechanical efforts like education or concert 3 Idea intangible concept philosophy or issue ex eBay creating a virtual platform for consumer to consumer selling Example Which fire truck would kids want to build and play with LEGO first had large fun fire truck Then built a smaller newer one which was not successful at all Had to go back and redo the fire truck to make it bigger like the first one Bad decision impact the health of the company Poor performance in the core LEGO business led to recent changes to the existing products More recently this company has created theme parks Transitioning from a tangible product truck to intangible idea theme park Product Types Consumer Products according to how buyers generally behave when purchasing them Purchased to satisfy personal and family needs and are classified Example Convenience products Shopping Products Specialty Products Unsought Products ones you don t seek out more in environment Purchased to use for operations to resell or to use in manufacture impulse Business Products of other products Example Businesses selling products to another business Managing Existing Products 1 Core Products are the physical or intangible services that the customer receives Example The clicker used to control the PowerPoint instead of walking over to computer each time 2 Branded Products are the core products PLUS the characteristics that allow the consumer to differentiate it from similar products Example A Sony clicker The clicker core product with the brand Sony functions 3 Augmented products have characteristics that enhance value beyond that of the core associated with that product that may allow particular needed and branded product Example Warranty Repair and Installation Getting the core brand you want and a guarantee it works for a certain amount of time Core vs Brands Core product is generic Honey nut Scooters Virgin Cola VS Brand product Honey Nut Cheerios Coca Cola has a lot of power tend to react much more favorably chosen due to recognition People buy the core product to satisfy a need but buy the brand to satisfy the want Product Line A product line consists of the closely related products marketed by an organization that generally evolve of one brand Ex Coca Cola making many beverages Water Dasani Vitamin Water Ex Sysco creating Oreos Double Stuff Peanut Butter Reduced Fat Chocolate are product lines Ex Splenda Product lines evolve from segmentation and marketing strategies from different consumer wants and needs Product Line Depth the number of items in a product line Coca Cola has large product depth Coke Zero Coke with Lime In the Excedrin example the product depth would be 8 How many different types of Oreos would define the depth around 7 How many different types of Coca Cola Products would define Coke s depth Product Line Breadth the number of different lines that a company or SBU markets Broad array of different types of beverages underneath each beverage is the depth Ex Coke s of different beverages they produce Vitamin water Energy drinks Powerade Sprite Product Life Cycle Each Product goes through a life cycle Introduction Growth Maturity Stage Decline Stage Introductory Stage High failure rates Little competition Negative profits Limited Distribution Promotion focuses on awareness and information Growth Stage Increasing rate of sales Entrance of competitors Initial healthy profits Prices normally fall Wider distribution Maturity Stage Sales increase at a decreasing rate Annual models appear Prices and profits fall Lengthened product lines Saturated markets Decline Stage Long run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Over time there tends to be different trends that define different product categories and product life cycles Ex high technology products like Apple Large spike until competitor Andriod hits company responds with another large spike Ex Fads Increase until fad is out short term Ex Styles of Fashion Increase the squiggly decrease fashon styles come back every now and then Extending the PLC Product Life Cycle Several ways to extend product life cycle 1 Selling to new segments 2 Stimulate more frequent use ex Harley Davidson extending segment to women ex Toothbrush company s creating on the go toothbrush with toothpaste already on it ex McDonalds selling more of the product at a relatively discounted price 3 Encourage more use per Occasion 4 Promoting more Varied use ex Dryer sheets on a hat Nats are propelled with dryer sheets Dryer sheet companies will market product at outdoor events and games etc Not necessarily designed for this Reposition Improvements Take products and create results that are attractive to Wall Street and Investors Repositioning Arm Hammer came out with an idea that their baking soda product is used for refrigerator freshness Came out with a product Not only for Baking For Fridge and Freezer Improvements modifications to product formulas or service processes ex Wendys improved their fry formula to improve sales Alternatives to NPD New Product Development NPD is risky and expensive Less risky alternatives Line extensions product developed is closely related to one or more successful products in existing product line Not designing a whole new product but a line extension which is similar to the successful product already in the market Extension of the product Take the core product and enter higher or lower ingredients making it higher or lower cost Down Market Extensions Example Mercedes extended its line downward creating the B class vehicle Wanted to attract a different segment of consumers the cheaper market segment Up Market Extensions Example 1 Hershey s Chocolate has gone up market Ex 2 600 Beer Ex 3 Nissan wanted an up market extension attracting higher income class so they created Infiniti Ex 4 Honda creating an up market extension Acura Brand Extensions Brand Extensions somewhat related to one or more products in existing product line product developed is not closely but should still be Whatever the company does really well should be captured in the brand extensions Example Starbucks sells coffee but more
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