Module 3 Product Marketing What is a product good service or idea Or a combination o Goods physical o Services intangible result of human efforts o Ideas concept or philosophy Consumer products purchased for personal needs solve consumer needs o Buy water or soda for thirst o Convenience products on the fly purchase o Shopping products spend more time thinking o Specialty specific to needs o Unsought they find you o Business products purchased by businesses for resale or use in manufacturing Managing products o Product hierarchy core branded augmented Car then image of car warranties and terms Core vs Brands Strategic product management o Core could be just as good as brand but the brand makes it more attractive o Product mix all products a company sells coke sells a lot of beverages P G sells batteries pringles based in Cincinnati o Product lines closely related products Nabisco sells many types of oreos Splenda has different kinds of sweeteners Nevartis has exedrin different kinds of pills Depth breadth Product line depth how many products exist In the product line Excedrin has 8 Product line breadth number of different lines Nevartis has 40 lines Cokes breadth is the same as the mix Pepsi has many different products Extensions Up and down o PLC Product life cycle introduced 7up 10 High failure rates and costly grows coke zero recoup r D distribution is solidified matures diet coke Reap profits to put into new r D and make more money dies pepsi blue rc cola Decide not to produce anymore Technology has different phases with new models fads grow fast then die quick Extending PLC keep it as long as possible in the mature phase Start targeting a new segment Stimulate more use Sell more at one time Different use for the same product Arm and hammer or dryer sheets Reposition and improve arm and hammer baking soda can clean fridge and freezer as well as cook with Improve Wendy s fries Sink in toilet Extension cord that goes under carpet o Alternatives NPD New product development is risky Product Modifications change one or more characteristics new cars Chevrolet corvette Not selling the old brand Less risky is a line extension bring a new product into closely related products o Up market extension better improved with higher price o Brand extension extending into another market Starbucks coffee into starbucks ice cream Lifesavers made soda Cost reduction products at lower price Hamburger helper reduced amount of spices Hershey kissables replace cocoa butter walnuts replace pecans Products at the same price but lower costs Functional modifactions change packaging Crystal light change packaging for bottled water Campbells change soup so it can be microwaved the way it is Heinz ketchup on the go Developing new products 80 of new products fail Too much of a separation from the home brand Colgate making food Baby mop not too promising Really smart people can get it wrong a product that looks like it will fail but will work Business side of npd o Idea generation neurofocus was bought by Nielsen Specializes in using medical devices when consumers like something People like the cheeto dust on their fingers o Idea screening filtering good and bad products o Concept analysis what will the product become Forecasting target market costs price Use focus group to decide if the product is viable or not o Beta and market testing top cities that simulate the US Hardees footlong pepsi gum soda Mcdonalds test spaghetti o Product launch sun chip decomposable back and qwikster Firms need new products to keep upwards Product adoption process customer perspective o Awareness o Interest o Evaluation o Trial o Adoption BASES introSCAPE by neilsen assess the steps on how customers react Nielsen helps with screening New Product Adoption o Innovators first to adopt Companies target them o Early adopters o Early majority o Late majority o Laggards last to get a new product Jobs in new product development o Where engineering meets marketing Managing Services Phil Kotler grandfather of marketing Professor of Kellog made the 4 P s Services a deed process or performance o Service exists in all physical goods Customer service o Distribution o 82 of US employment is service o 80 of GDP is service o Trade surplus of services mcdonalds amex fedex o All new job growth comes from services o GDP chart retain services and losing manufacturing Service matters so companies have loyal customers main reason people leave is bad service o Developed countries have high service compared to developing Why the growth o Baby boomers who are older need more healthcare need more services o More leisure time use more services o More money to spend buy lawnworkers o Changing social and cultural values Current state of service industry o United breaks luggage airline business Separate service from products o Big 4 Intangible can t be touch Perishable can t inventory services Inseparable can t separate consumer from seller Variable difficult to produce consistent high quality services o Tangibility spectrum o Intangibility strategy stress tangible cues food and stadium o Price quality relationship Wine and lawyers o Customer referrals word of mouth o Perishable strategy Dinner at 7pm in a restraunt Manage supply and demand use the marketing mix Pricing movie matinees early bird specials Promotions frequent flyer restrictions to go on less popular times o Inseparability employees are key Bank or haircut Physical environment matters Restaurant or Wrigley field Good bar Other customers matter obnoxious person on a plane o Heterogenity customize a physical good standardize a service Mcdonalds is the same Manage risk same quality service everytime Customized goods priced more Services to be standardize and physical goods to be customized Service blueprinting standardize the service operation for consistency o Service strategy heterogeneity and inseparability solution Mcdonalds in paris that is self serving Reduce variability of wrong order and the employees aren t the best Car repair Don t know enough and hope and trust Even after purchase not sure what you Three other characteristics o Search qualities evaluate before purchase Test drive a car Cant do this in services o Experience qualities Hair cut Have to experience it to decide o Credence qualities cannot evaluate 7 Ps of service marketing got o Product o Price o Place o Promotion o People o Process o Physical evidence The services marketing mix traditional mix is different o Product core
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