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MKTG 504 - Product and Product Management. A product is anything the consumer thinks it is!! Dr. Dennis Pitta University of Baltimore. PRODUCT. A complex bundle of attributes Most important element of the marketing mix.

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Mktg 504 product and product management l.jpg

MKTG 504 - Product and Product Management

A product is anything the consumer thinks it is!!

Dr. Dennis Pitta

University of Baltimore


Product l.jpg
PRODUCT

  • A complex bundle of attributes

  • Most important element of the marketing mix.

  • Charles Revson: “In the factory we make cosmetics, in the store we sell _HOPE”

  • Elmer Wheeler: “Don’t sell the steak, sell the SIZZLE.”


Product3 l.jpg
Product:

Not limited to goods - it is goods,

ideas, services, people, organizations, places.


Product4 l.jpg
Product:

= Physical product + other tangible

components

+ intangible components

+ social impact


Product component examples l.jpg
Product Component Examples:

Physical good:

wood, plastic, chemical (shaver)

Other tangibles:

service, brand name, close shave, package

Intangible:

Eminem likes it

Social Impact:

More young men are clean shaven


What is the product l.jpg
What is the product?

University degree

Politician

You - Yourself as a job candidate


Really what is product l.jpg
Really what is product?

ANYTHING A CONSUMER

THINKS IT IS


Examples of what people think l.jpg
Examples of what people think

  • Bubble-Yum Bubble Gum - MADE WITH SPIDER’S EGGS

  • Kentucky Fried RAT

  • WORMS in Big Macs


Product life cycle l.jpg
Product Life Cycle

A dynamic model of how product changes over time.

Importance:

different product characteristics at each stage:

  • Lead to different marketing strategies

  • Emphasize different combinations of the 4 P’s.....


Sales profit life cycles l.jpg

Sales&profits($)

Introduction

Growth

Maturity

Decline

Time

Sales & Profit Life Cycles


Important characteristics plc l.jpg
Important Characteristics => PLC

  • SALES

  • RATE OF SALES GROWTH

  • # OF COMPETITORS

  • PRODUCT

  • PROMOTIONAL STRATEGY

  • PRICING

  • DISTRIBUTION


Tracking the plc over time petrification l.jpg
Tracking the PLC over time: PETRIFICATION

SALES __________

RATE OF SALES GROWTH __________

# OF COMPETITORS __________

PRODUCT __________

PROMOTIONAL STRATEGY __________

PRICING __________

DISTRIBUTION __________



Examples of products in each plc stage l.jpg
Examples of Products in Each PLC Stage

  • Intro: DVD-R DRIVES

  • Growth: DVD’S

  • Shakeout: PC’S

  • Mat-Sat: VCR’S

  • Decline: RECORD CHANGERS

  • Petrification: IPANA TOOTHPASTE


Classifying products l.jpg
CLASSIFYING PRODUCTS

  • Product Category (Class):

    • Automobile/container/Timepiece

  • Product Form:

    • Convertible/Tin Can/Watch - Wrist

  • Product Item (brand):

    • Ford Probe/American Can/Seiko





Classification of consumer goods l.jpg
CLASSIFICATION OF CONSUMER GOODS masterpiece by Rembrandt?

  • CONVENIENCE

  • SHOPPING

  • SPECIALTY

  • UNSOUGHT


Consumer goods classification l.jpg

Shopping Products

Unsought Products

Specialty Products

Consumer-Goods Classification

  • Buy frequently & immediately

  • Low priced

  • Many purchase locations

  • Includes:

    • Staple goods

    • Impulse goods

    • Emergency goods

  • Buy less frequently

  • Gather product information

  • Fewer purchase locations

  • Compare for:

    • Suitability & Quality

    • Price & Style

  • Special purchase efforts

  • Unique characteristics

  • Brand identification

  • Few purchase locations

  • New innovations

  • Products consumers don’t want to think about.

  • Require much advertising &

  • personal selling


Classification of consumer goods21 l.jpg
CLASSIFICATION OF CONSUMER GOODS masterpiece by Rembrandt?

  • CONVENIENCE

    • PURCHASED WITH A MINIMUM OF EFFORT

  • SHOPPING

    • HEAVY COMPARISON OF PRICE, QUALITY, AND STYLE

  • SPECIALITY

    • VERY STRONG BRAND PREFERENCE: SPECIAL TIME AND EFFORT - PRICE NOT VERY IMPORTANT


Classification of consumer goods22 l.jpg
CLASSIFICATION OF CONSUMER GOODS masterpiece by Rembrandt?

  • UNSOUGHT

    • This is a difficult product. Examples:

      • Life insurance to young unmarried men

      • Umbrellas to young unmarried men

      • Vacuum cleaners to young unmarried men…..

      • Chain Saws to young unmarried women….


Product mix l.jpg

Product Mix - masterpiece by Rembrandt?

all the product

lines offered

Consistency

Product Mix

Width - number of different product lines

Length - total number of items

within the lines

Depth - number of versions of each product


Product mix strategy l.jpg
Product Mix Strategy masterpiece by Rembrandt?

Decisions made at three levels:

1 Product ITEM (specific version) - keep or drop.

2 Product LINE (group of related products) - deepen or shorten.

3 Product MIX (composite of all products) - ‘what markets to be in’


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Product Mix Strategy masterpiece by Rembrandt?

1 WIDTH - How many different product line there are within the company.

(Sears - WIDE - Circuit City - NOT AS WIDE; Britches - NARROW)


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Product Mix Strategy masterpiece by Rembrandt?

2 DEPTH - The average number of items offered by the company within each line.

Maxwell House Coffee - DEEP; Sears - NOT SO DEEP

The LIMITED STORE - How deep?


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Product Mix Strategy masterpiece by Rembrandt?

3 CONSISTENCY - Relationship of products to one another - in end use. (i.e., INTERACTION - together)

G.E.; XEROX - GOOD CONSISTENCY

HUNT-WESSON -Paint, Matches, Food


Product mix strategy28 l.jpg
Product Mix Strategy masterpiece by Rembrandt?

A continual addition of new products and deletions of old to meet the company’s needs.


Something new l.jpg

Something new... masterpiece by Rembrandt?

New Product Development


Product innovation process new product development l.jpg
Product Innovation Process masterpiece by Rembrandt?(New Product Development)

  • Starts with a product idea

  • Let’s take a North American summer staple - corn


How does one hold corn on the cob l.jpg

How does one hold corn on the cob? masterpiece by Rembrandt?


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How does one hold corn on the cob? masterpiece by Rembrandt?

  • With a corn holder!!


What does corn look like l.jpg
What does corn look like? masterpiece by Rembrandt?

  •  One end is pointed

  • One end is blunt


What is a problem with ordinary corn holders l.jpg
What is a problem with ordinary corn holders? masterpiece by Rembrandt?

  • It is tough to get them out of an ear that has been eaten

  • One sticks in the blunt end

  • Getting it out is often messy


The solution l.jpg

The Solution? masterpiece by Rembrandt?


The pitta improved cornholder pic l.jpg
The Pitta Improved Cornholder (PIC) masterpiece by Rembrandt?


Pic product benefits l.jpg
PIC Product Benefits masterpiece by Rembrandt?

  • Easy to remove (the one stuck in the blunt end of the ear comes off easily)

  • Fun at parties - (dodge the flying corn cob)

  • Saves laundry (less mess, less laundry)


Where would someone get this idea l.jpg

Where would someone get this idea? masterpiece by Rembrandt?

…from eating corn!!


Product innovation process l.jpg
Product Innovation Process masterpiece by Rembrandt?

  • 1 IDEA GENERATION

  • Sources:

    • Organization

    • Secondary sources:

      • Patent Office; Idea Mills;

      • Independent Inventors

      • Consumers (e.g., Kleenex)


Who thought of the product l.jpg
Who thought of the product: masterpiece by Rembrandt?

  • Army nurses (after WWI)

  • Thought cellulose fiber bandages might be useful

  • ‘Facial Tissue’


A product is anything someone thinks it is l.jpg
A product is anything someone thinks it is…. masterpiece by Rembrandt?

  • When was the last time someone blew his or her ‘face’?

  • We use Kleenex as a disposable handkerchief!

  • Is it a facial tissue??


Product innovation process stage 2 l.jpg
Product Innovation Process - Stage 2 masterpiece by Rembrandt?

  • 2 SCREENING

  • Critical evaluation

  • Possible problems:

    • Rejecting a Good Product (Type 1 Error)

    • Accepting a Bad Product as a good one (Type II Error) (I would hate to make this type testing Handgrenades)


The pitta improved cornholder pic critical evaluation l.jpg
The Pitta Improved Cornholder (PIC) Critical Evaluation masterpiece by Rembrandt?

  • We asked friends

  • We asked our mothers

  • We asked our wives

  • We demonstrated the PIC to strangers...


Product innovation process stage 3 l.jpg
Product Innovation Process - Stage 3 masterpiece by Rembrandt?

  • 3 ECONOMIC ANALYSIS

    • Forecast Sales

    • Return on Investment

    • Effect on Product Line

    • Cash Flow

    • Profit

    • Breakeven Analysis


The pitta improved cornholder pic economic analysis l.jpg
The Pitta Improved Cornholder (PIC) Economic Analysis masterpiece by Rembrandt?

  • Breakeven Analysis

  • The first cornholder cost $27,000

  • The second cost $.02

  • Probable retail price for two=> $1

  • Probable wholesale price for two =>$.50


Pic breakeven analysis l.jpg
(PIC) Breakeven Analysis masterpiece by Rembrandt?

  • Calculates # of units to be sold at a price to just breakeven

  • Fixed Cost = $27,000

  • Variable Cost (per unit) = $.20 (2 holders, packaging, overhead)

  • Price (wholesale) = $.50 per unit


Pic breakeven analysis47 l.jpg
(PIC) Breakeven Analysis masterpiece by Rembrandt?

  • BE = FC/(P-VC) = units

  • BE (in units) = $27,000/(.50-.20) = 90,000 units

  • Forget it!


Product innovation process48 l.jpg
Product Innovation Process masterpiece by Rembrandt?

4 DEVELOPMENT

Determining Product Benefits

Creating the Package, Brand Name

5 TEST MARKETING

(Small Scale Introduction)

Marketing Plan

6 COMMERCIALIZATION (Roll Out)


Mktg 504 product and product management49 l.jpg

MKTG 504 - Product and Product Management masterpiece by Rembrandt?

Commercialization – the last stage of the Product Innovation Process

Dr. Dennis Pitta

University of Baltimore


Commercialization l.jpg
COMMERCIALIZATION masterpiece by Rembrandt?

  • A public offering of the product to the marketplace

  • Two forms

    • Commercialization - Nationwide

    • Roll Out – limited geographic areas – one at a time


Roll out an example l.jpg
Roll out – an example masterpiece by Rembrandt?

  • Tio Sancho rolled out its new non-fracturing taco shell against the largest Tex-Mex food manufacturer – Old El Paso.

  • Tio Sancho was small with few resources


Roll out vs commercialization commercialization r oll out l.jpg

very masterpiece by Rembrandt?Costly

Complex

Hits the whole market simultaneously (Comprehensive)

Less expensive

Simpler

Risks being copied in the regions not covered

Roll Out vs. CommercializationCommercializationRoll Out


Adopter categorization of the basis of relative time of adoption of innovations l.jpg

34% masterpiece by Rembrandt?

Late

majority

34%

Early

majority

13 1/2%

Early

adopters

16%

Laggards

2 1/2%

Innovators

Adopter Categorization of the Basis of Relative Time of Adoption of Innovations

Time of adoption innovations


What is a brand l.jpg
What is a Brand? masterpiece by Rembrandt?

User

Culture

Personality

Features

Benefits

Advantages


Good brand names l.jpg
Good Brand Names: masterpiece by Rembrandt?

Lack Poor

Foreign

Language

Meanings

Distinctive

Suggest

Product

Qualities

Suggest

Product

Benefits

Easy to:

Pronounce

Recognize

Remember


Product differentiation l.jpg
Product Differentiation masterpiece by Rembrandt?

Form

Fea-

tures

Perfor-

mance

Quality

Conform-

ance

Quality

Dura-

bility

Relia-

bility

Repair-

ability

Style

Design


Maturity stage l.jpg
Maturity Stage masterpiece by Rembrandt?

  • Market Modification

  • Product Modification

  • Marketing-Mix Modification


Decline stage l.jpg
Decline Stage masterpiece by Rembrandt?

  • Increase investment

  • Resolve uncertainties - stable investment

  • Selective niches

  • Harvesting

  • Divesting


Market evolution l.jpg
Market Evolution masterpiece by Rembrandt?

  • Emergence

  • Growth

  • Maturity

  • Decline


Upcoming topic l.jpg
Upcoming Topic masterpiece by Rembrandt?

  • PRICE


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