o Be able to distinguish between product types Review for Exam 3 o Products broadly defined as a good service idea or a combination of these o Be able to explain the difference between a good service and idea and recognize an example of each Goods a tangible physical entity Services an intangible result of application of human and mechanical efforts to people or objects hybrids Ideas concept philosophy image or issue Consumer Products Purchased to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them Convenience products Bought spur of the moment easy to pick up Shopping products You spend more time thinking about Specialty products These products are for a special need Sub set Unsought Products You don t really seek these products out they find you service such as insurance or utilities Business Products Purchased to use for operations to resell or to use in manufacture of other products A majority of products are produced for other businesses not consumers Such as the government as a business buying things from other businesses Wholesaler buying from a manufacturer in order to sell to a retailer A company buying components to create an end product to put on the market o Be able to explain the product hierarchy Products are more than just what you see on the surface You are buying much more than just what you see on the shelf you buy the brand and what it says about you Core Products are the physical or intangible service that the customer receives The Car itself Branded Products are the core products plus the characteristics that allow the consumer to differentiate it from similar products What that brand of car stands for and what it says about you Augmented products have characteristics that enhance value beyond that of the core and branded product Warranties repair terms of financing o Be able to explain product management including product mix product line product line breadth and product line depth examples in the slides Product Mix Product Line A product mix is all of the products a company sells P G s Proctor Gamble mix Duracell Pringles A product line consists of the closely related products marketed by an organization Like all the varieties of Oreo s Nabisco you can buy at the store Novartis sells a variety of Excedrin for whatever you need Product Line Depth Product Line Breadth The number of items in a product line how many varieties of the product exist In the Excedrin example the Product Depth would be 8 The number of different lines that a company or SBU markets For example Coke sells all sorts of different types of drinks Coke PowerAde sprite Sunkist Another example is Pepsi they sell drinks chips and other foods In the Excedrin example Novartis Consumer Health markets 40 lines of consumer health products so their breadth score would be 40 o Be familiar with the product life cycle including the phases and the different types of product life cycles Intro Stage High failure rates A lot of risk involved Little competition Frequent product modification Limited distribution High advertising and production costs Negative profits Promotion focuses on Growth Stage Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Aggressive advertising of the differences between brands Wider distribution Prices normally fall Maturity Stage Sales increase at a decreasing rate Saturated markets Annual models appear Lengthened product lines Service and repair assume important roles Heavy promotions to dealers and The money you are generating in this phase is typically used in research and development of products that are in the introductory phase Cash Cows Decline Stage Long run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Several kinds of product life cycles are possible High technology products fads and styles or fashions The curve of the life cycle is different for each product The length of time a product stays in a phase depends on the type of product it is o Be able to explain how companies extend the PLC Try to come up with ways to keep a product in the mature phase How do you grow Selling to new segments If the target market is typically male target females Stimulate more frequent use Making a toothbrush that can be used anywhere Encourage more use per occasion Supersize and sell at a cheaper price Promoting more varied use Come up with different uses for the product o Be familiar with repositioning and improvements Repositioning Arm Hammer They redid the packaging to promote using it as a fridge freezer deodorant and promote that instead of using it for cooking Improvements Modifications to product formulas or service processes Wendy s redoing their fries to make them better o Understand the less risky alternatives to NPD what they are and why they are less risky Alternatives to NPD New product development NPD is risky because it is expensive Less risky alternatives Line extensions product developed is closely related to one or more successful products in existing product line but specifically designed to meet a somewhat different need Alternatives to NPD New Product Development NPD is risky because it is expensive Less risky alternatives Product modifications product modification means changing one or more of the products characteristics different from lone extensions because the original product is removed from product line Cars are a good example when they come out with a new model they stop selling the old version Product Modifications Changes to one or more characteristics of a product The old version usually doesn t stay in the line Products at a lower price Products at Same Price at Lower Manufacturing Costs They find ways to reduce cost by removing things or changing it hoping Cost Reduction Quality Modification consumers won t notice Functional Modifications Mainly changing the packaging Like making to go beverage mixes Basically changing the packaging to make a product easier for consumers to use o Know the difference between Down Market Extensions and Up Market Extensions Down Market Extensions Mercedes B class Extend the line to capture a new group of consumers that are buying at a lower price point Up Market Extensions You have a core brand and you re using it to leverage a higher price point Big in snack food industry by making different kinds of a snack Like different kinds of Hershey Bars and they can charge
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