MAR3023 Basic Marketing Concepts EXAM 3 Chapter 9 Product Concepts o Product A good service or idea or a combination of two or more of these includes supporting services installations guarantees warranties etc Good Services a tangible physical entity ex An ipod an intangible result of application of human and mechanical efforts to people or objects ex Getting your oil changed a concert concept philosophy image or issue ex MADD Mothers Ideas Against Drunk Driving promotes safe alcohol consumption and strict enforcement of laws against drunk driving o Company to Know LEGO Fire truck lego redesigned the look and market share plummeted down bad decision for a core product Privately held Danish company producing iconic toys since 1932 Name derived from Danish words Leg godt meaning play well Poor performance in the core LEGO business led to recent changes to the existing products Now have 46 retail stores 34 in the U S 6 Theme Parks Denmark Germany UK Malaysia San Diego Orlando o Product Types Know the difference between Consumer Business Products Consumer Products purchases to satisfy personal and family needs and are classified according to how buyers generally behave when purchasing them Convenience Products sell at gas station or checkout of grocery store relatively inexpensive frequently purchased items for which buyers exert minimal purchasing effort Shopping Products go to mall to go and find items for which buyers are willing to expend considerable effort in planning and making purchases Specialty Products niche oriented shopping products items with unique characteristics that buyers are willing to expend considerable effort to obtain Unsought Products don t seek out impulse buys products purchased to solve a sudden problem products of which customers are unaware and products that people do not necessarily think of buying Business Products Purchased to use for operations to resell or to use in manufacture of other products most sales jobs are B to B Book Installations facilities and nonportable major equipment Accessory Equipment equipment that does not become part of the final physical product but is used in production or office activities Raw Materials basic natural materials that become part of a physical product Component Parts items that become part of a physical product and are either finished items ready for assembly or items that need little processing before assembly Process Materials materials that are used directly in the production of other products but are not readily identifiable MRO Supplies maintenance repair and operating items that facilitate production and operations but do not become part of the finished product Business Services intangible products that many organizations use in their operations Core Products the physical or intangible service that the customer receives what you re buying functionality o Ppl buy core product to address a need buy a brand to address a WANT Branded Products the core products plus the characteristics that allow the consumer to differentiate it from similar products buying the function AND brand buying the company associated with the function Augmented Products have characteristics that enhance value beyond that of the core and branded product warranty you get the functionality brand and something extra o Managing Existing Products Product Hierarchy o Strategic Product Management Product Mix all of the products a company sells Coca Cola is a beverage company with a portfolio Product Line a consists of the closely related products marketed by an organization Evolve from a segmentation strategy Product Line Depth the number of different products offered in each product line variation o Excedrin 8 diet coke has many variations Nabisco Oreos Product Line Breadth the number of different lines that a company or SBU markets o How many variations of beverages you have o In the Excedrin example Novartis Consumer Health markets 40 lines of consumer health products so their breadth score would be 40 The Width of Product Mix the number of product lines a company offers o BRAND Coca Cola PRODUCT LINE Diet Coke PRODUCT LINE DEPTH Diet Coke Caffiene free Diet Coke with Splenda ect PRODUCT LINE BREADTH Coca Cola Brand Coke Diet Coke Sprite ect Product Life Cycle the progression of a product through four stages Introduction the initial stage of a product s life cycle its first appearance in the marketplace when sales start at zero and profits are negative o 7UP 10 for Men Growth the product life cycle stage when sales rise rapidly profits reach a peak and then they start to decline o Coke Zero Maturity the stage of a product s life cycle when the sales curve peaks and starts to decline and profits continue to fall o Diet Coke not going to change flattens out so start adding different variations to maintain marketshare as flagship brand falls Decline the stage of a product s life cycle when sales fall rapidly o Pepsi Recognize what happens in each stage Be familiar with what happens in each type of life cycle How Companies Extend the PLC Selling to New Segments o Harley Davidson Targeted to Women Promoting More Varied Use o Dryer sheet to repel gnats Baking Soda for refrigerators Stimulate More Frequent Use o Toothpaste companies toothbrush paste on the go Encourage More Use per Occasion o McDonalds Supersize Reposition Improvements Other ways to extend PLC Repositionings Arm Hammer were limited bc no one uses a lot of baking soda promoted now for fridge freezer Improvements modifications to product formulas or service processes Wendy s created new fresh cut fries New Product Development is risky and expensive but there are less risky alternatives Less Risky Alternatives to NPD 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 o Popular bc it doesn t cost a lot Down Market Extensions core product minus certain things to charge less o Mercedes made a cheaper version to target a new market segment D Class EXACT EXAMPLE Up Market Extensions core product add premium ingredients or features and charge more o Hershey s Sam Adams Infinity Nissan Brand Extensions product developed is not closely but should still be somewhat related to one or more products in existing product line THIS IS AN ANSWER CHOICE LIKE 10 TIMES SO MAKE SURE YOU UNDERSTAND THESE o Starbucks ice cream and liquor variations in coffee o Honda boat engines lawn
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