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Product Planning Final


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Product Planning Final

  1. 1. Chapter 30
  2. 2. Product Planning <ul><li>Product anything a person receives during an exchange—product, service, idea, abstract good (education), or a combination of both. </li></ul><ul><li>Product planning —Decisions a business makes about features to be used when marketing a product, service, or idea. </li></ul><ul><ul><ul><li>Packaging, labeling, branding, services (warranties and guarantees), and product mix. </li></ul></ul></ul><ul><li>Well-developed product plan includes: </li></ul><ul><ul><li>coordination of products already available to customers </li></ul></ul><ul><ul><li>addition of new products </li></ul></ul><ul><ul><li>deletion of products </li></ul></ul><ul><ul><li>allows a business to design appropriate marketing programs. </li></ul></ul>
  3. 3. Product Mix <ul><li>Product mix —All the products a company produces or sells. </li></ul><ul><ul><li>Large manufacturers  hundreds of products </li></ul></ul><ul><ul><li>Retailer’s product mix—All the products and services a retailer sells. </li></ul></ul><ul><ul><ul><ul><li>Must be planned carefully because they can’t offer every item consumers want. </li></ul></ul></ul></ul>
  4. 4. Retailer’s Product Mix <ul><li>Retailers must choose the type and number of products. </li></ul><ul><ul><li>Decisions are based on: </li></ul></ul><ul><ul><ul><li>objectives of the business </li></ul></ul></ul><ul><ul><ul><li>image they want to create </li></ul></ul></ul><ul><ul><ul><li>target market </li></ul></ul></ul><ul><ul><li>However, they must choose these products while adhering to the marketing concept. </li></ul></ul>
  5. 5. Product Mix <ul><li>A product mix consists of all product lines and items offered by a business. </li></ul><ul><ul><li>Product Category —a group of related products of varying brands </li></ul></ul><ul><ul><ul><ul><li>All shoes at Shoe Carnival—Nike, Adidas, Puma, K Swiss, etc. </li></ul></ul></ul></ul><ul><ul><li>Product line —a group of closely related products manufactured or sold by a business </li></ul></ul><ul><ul><ul><ul><li>All Nike shoes, all Adidas shoes </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Businesses usually carry more than 1 product line. </li></ul></ul></ul></ul><ul><ul><li>Product item —a specific model, brand, or size of a product within a product line </li></ul></ul><ul><ul><ul><ul><li>Nike Zoom </li></ul></ul></ul></ul>
  6. 6. Category/Line/Item Product Category Product Line Product Item
  7. 7. Product Width/Product Depth <ul><li>Product width —The number of different product lines a business/manufacturer sells. </li></ul><ul><li>Product depth —The number of items offered within each product line. </li></ul><ul><ul><li>Some businesses have a large product width but small product depth </li></ul></ul><ul><ul><li>Some businesses have small product width but large product depth </li></ul></ul><ul><li>Decisions are based on: </li></ul><ul><ul><li>company objectives </li></ul></ul><ul><ul><li>projected image </li></ul></ul><ul><ul><li>target market </li></ul></ul><ul><ul><li>competition </li></ul></ul>
  8. 8. Product Width/Product Depth, Cont’d. <ul><li>They must review their product lines to see if they need to be expanded, decreased, or eliminated. </li></ul><ul><li>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 . </li></ul>
  9. 9. Product Mix Strategies <ul><li>Product mix strategies—deciding which products a business will produce/stock </li></ul><ul><li>Depends on the business’s resources available and objectives </li></ul><ul><li>Strategies: </li></ul><ul><ul><li>Developing new products </li></ul></ul><ul><ul><li>Developing existing products </li></ul></ul><ul><ul><li>Deleting a product/product line </li></ul></ul>
  10. 10. Developing New Products <ul><li>Helps companies increase sales/increase market share </li></ul><ul><li>New products =35% of total sales </li></ul><ul><li>Improve a company’s image by gaining the reputation of being an innovator and leader </li></ul><ul><li>Profits are higher because they’re priced 10-15% higher </li></ul><ul><li> </li></ul>
  11. 11. 6 Steps <ul><li>1) Generating Ideas </li></ul><ul><li>Ideas can come from customers, competitors, employees, or channel members by having focus groups or idea sessions. </li></ul><ul><li>Some companies provide incentives </li></ul><ul><li>2) Screening Ideas </li></ul><ul><li>Ideas are evaluated to find which products should be further researched </li></ul><ul><li>Evaluation is based on: </li></ul><ul><ul><li>the company strategy </li></ul></ul><ul><ul><li>size of the market </li></ul></ul><ul><ul><li>profit potential </li></ul></ul><ul><ul><li>risk level </li></ul></ul><ul><ul><li>the effect on the company image </li></ul></ul><ul><ul><li>production requirements </li></ul></ul><ul><ul><li>appeal to the customers </li></ul></ul>
  12. 12. Product Development Process <ul><li>6 Steps: </li></ul><ul><ul><li>Generating ideas </li></ul></ul><ul><ul><li>Screening ideas </li></ul></ul><ul><ul><li>Developing the product </li></ul></ul><ul><ul><li>Testing the product </li></ul></ul><ul><ul><li>Introducing the product </li></ul></ul><ul><ul><li>Evaluating customer acceptance </li></ul></ul>“ It’s so new we don’t know what it does, but nobody else has it so we’re selling it.”
  13. 13. 6 Steps Cont’d. <ul><li>3) Developing the Product </li></ul><ul><li>New product idea takes shape </li></ul><ul><li>Prototype —model of the product being developed. </li></ul><ul><li>Marketing plan is developed </li></ul><ul><ul><li>plans related to production tests, packaging, labeling, branding, promotion, distribution </li></ul></ul><ul><li>For some products, the government requires testing </li></ul><ul><ul><li>$$$$$$$$ </li></ul></ul><ul><ul><li>May cause long delays in the development of the product </li></ul></ul><ul><li>4) Testing the Product </li></ul><ul><li>Some products are test marketed in certain geographic areas </li></ul><ul><li>Not every product needs to be test-marketed </li></ul><ul><li>Products may not be test marketed due to: </li></ul><ul><ul><li>costs </li></ul></ul><ul><ul><li>previous focus groups </li></ul></ul><ul><ul><li>not wanting to give competitors information that will lead to the competitor developing a product </li></ul></ul>
  14. 14. 6 Steps Cont’d. <ul><li>5) Introducing the Product </li></ul><ul><li>Can be very expensive due to: </li></ul><ul><ul><li>costs related to advertising </li></ul></ul><ul><ul><li>promoting </li></ul></ul><ul><ul><li>development of a new distribution network </li></ul></ul><ul><ul><li>training for the sales force </li></ul></ul><ul><li>Being first-to-market can be extremely beneficial to businesses </li></ul><ul><ul><li>allows them to beat competition </li></ul></ul><ul><ul><li>establishes leadership in the new product </li></ul></ul><ul><ul><ul><li>acquires new customers and builds brand loyalty </li></ul></ul></ul><ul><li>6) Evaluating Customer Acceptance </li></ul><ul><li>Conducting marketing research and evaluating sales information to determine the level of customer acceptance </li></ul><ul><ul><li>How often do customers buy? </li></ul></ul><ul><ul><li>When did customers last buy the product? </li></ul></ul><ul><ul><li>Where are the best customers for our product? </li></ul></ul><ul><ul><li>What new products are customers buying? </li></ul></ul><ul><li>Also used to answer questions concerning new product development </li></ul>
  15. 15. Developing Existing Products <ul><li>Expanding the product line </li></ul><ul><li>Build on the established image and brand </li></ul><ul><li>Appeals to new markets </li></ul><ul><li>Increase sales and profits </li></ul><ul><ul><li>Takes advantage of customer’s positive attitudes towards the brand </li></ul></ul>
  16. 16. Methods of Developing Product Line <ul><li>Line extensions —different product that appeals to the needs of customer needs (increase depth) </li></ul><ul><li>Product Modifications —an alteration in a company’s existing product </li></ul><ul><ul><li>Modified products offered in different varieties, colors, styles, sizes, etc. </li></ul></ul><ul><li>Disadvantage: Costly to add a new product </li></ul><ul><ul><li>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. </li></ul></ul><ul><li> </li></ul>
  17. 17. Deleting a Product/Product Line <ul><li>Reasons to delete: </li></ul><ul><ul><ul><li>Obsolescence—changes in customer interests—(desktop computers) </li></ul></ul></ul><ul><ul><ul><li>Loss of appeal—Changes in customer’s tastes—(box TV’s) </li></ul></ul></ul><ul><ul><ul><li>Changes in company objectives—(Sauder) </li></ul></ul></ul><ul><ul><ul><li>Replacement with new products—(in retail stores/department stores) </li></ul></ul></ul><ul><ul><ul><li>Lack of profit—(adding machines) </li></ul></ul></ul><ul><ul><ul><li>Conflict with other products in the line— </li></ul></ul></ul>