Product Planning Final
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Product Planning Final Product Planning Final Presentation Transcript

  • Chapter 30
  • Product Planning
    • Product anything a person receives during an exchange—product, service, idea, abstract good (education), or a combination of both.
    • Product planning —Decisions a business makes about features to be used when marketing a product, service, or idea.
        • Packaging, labeling, branding, services (warranties and guarantees), and product mix.
    • Well-developed product plan includes:
      • coordination of products already available to customers
      • addition of new products
      • deletion of products
      • allows a business to design appropriate marketing programs.
  • Product Mix
    • Product mix —All the products a company produces or sells.
      • Large manufacturers  hundreds of products
      • Retailer’s product mix—All the products and services a retailer sells.
          • Must be planned carefully because they can’t offer every item consumers want.
  • Retailer’s Product Mix
    • Retailers must choose the type and number of products.
      • Decisions are based on:
        • objectives of the business
        • image they want to create
        • target market
      • However, they must choose these products while adhering to the marketing concept.
  • Product Mix
    • A product mix consists of all product lines and items offered by a business.
      • Product Category —a group of related products of varying brands
          • All shoes at Shoe Carnival—Nike, Adidas, Puma, K Swiss, etc.
      • Product line —a group of closely related products manufactured or sold by a business
          • All Nike shoes, all Adidas shoes
          • Businesses usually carry more than 1 product line.
      • Product item —a specific model, brand, or size of a product within a product line
          • Nike Zoom
  • Category/Line/Item Product Category Product Line Product Item
  • Product Width/Product Depth
    • Product width —The number of different product lines a business/manufacturer sells.
    • Product depth —The number of items offered within each product line.
      • Some businesses have a large product width but small product depth
      • Some businesses have small product width but large product depth
    • Decisions are based on:
      • company objectives
      • projected image
      • target market
      • competition
  • Product Width/Product Depth, Cont’d.
    • They must review their product lines to see if they need to be expanded, decreased, or eliminated.
    • Category Killer : A specialty retailer that typically has a small product width but large product depth, which results in lower prices because of its segmenting capabilities, especially national chains .
  • Product Mix Strategies
    • Product mix strategies—deciding which products a business will produce/stock
    • Depends on the business’s resources available and objectives
    • Strategies:
      • Developing new products
      • Developing existing products
      • Deleting a product/product line
  • Developing New Products
    • Helps companies increase sales/increase market share
    • New products =35% of total sales
    • Improve a company’s image by gaining the reputation of being an innovator and leader
    • Profits are higher because they’re priced 10-15% higher
    • http://www.youtube.com/watch?v=DyAPyWZU2oY
  • 6 Steps
    • 1) Generating Ideas
    • Ideas can come from customers, competitors, employees, or channel members by having focus groups or idea sessions.
    • Some companies provide incentives
    • 2) Screening Ideas
    • Ideas are evaluated to find which products should be further researched
    • Evaluation is based on:
      • the company strategy
      • size of the market
      • profit potential
      • risk level
      • the effect on the company image
      • production requirements
      • appeal to the customers
  • Product Development Process
    • 6 Steps:
      • Generating ideas
      • Screening ideas
      • Developing the product
      • Testing the product
      • Introducing the product
      • Evaluating customer acceptance
    “ It’s so new we don’t know what it does, but nobody else has it so we’re selling it.”
  • 6 Steps Cont’d.
    • 3) Developing the Product
    • New product idea takes shape
    • Prototype —model of the product being developed.
    • Marketing plan is developed
      • plans related to production tests, packaging, labeling, branding, promotion, distribution
    • For some products, the government requires testing
      • $$$$$$$$
      • May cause long delays in the development of the product
    • 4) Testing the Product
    • Some products are test marketed in certain geographic areas
    • Not every product needs to be test-marketed
    • Products may not be test marketed due to:
      • costs
      • previous focus groups
      • not wanting to give competitors information that will lead to the competitor developing a product
  • 6 Steps Cont’d.
    • 5) Introducing the Product
    • Can be very expensive due to:
      • costs related to advertising
      • promoting
      • development of a new distribution network
      • training for the sales force
    • Being first-to-market can be extremely beneficial to businesses
      • allows them to beat competition
      • establishes leadership in the new product
        • acquires new customers and builds brand loyalty
    • 6) Evaluating Customer Acceptance
    • Conducting marketing research and evaluating sales information to determine the level of customer acceptance
      • How often do customers buy?
      • When did customers last buy the product?
      • Where are the best customers for our product?
      • What new products are customers buying?
    • Also used to answer questions concerning new product development
  • Developing Existing Products
    • Expanding the product line
    • Build on the established image and brand
    • Appeals to new markets
    • Increase sales and profits
      • Takes advantage of customer’s positive attitudes towards the brand
  • Methods of Developing Product Line
    • Line extensions —different product that appeals to the needs of customer needs (increase depth)
    • Product Modifications —an alteration in a company’s existing product
      • Modified products offered in different varieties, colors, styles, sizes, etc.
    • Disadvantage: Costly to add a new product
      • More inventory, promotion, storage, distribution costs, sales rep training; takes sales away from existing products; if unsuccessful, the entire product line and business can suffer.
    • http://www.youtube.com/user/drpeppervideos?feature=pyv&ad=4550305122&kw=coke%20commercial#p/u/0/2tuS7Yap0KY
  • Deleting a Product/Product Line
    • Reasons to delete:
        • Obsolescence—changes in customer interests—(desktop computers)
        • Loss of appeal—Changes in customer’s tastes—(box TV’s)
        • Changes in company objectives—(Sauder)
        • Replacement with new products—(in retail stores/department stores)
        • Lack of profit—(adding machines)
        • Conflict with other products in the line—
  •