Mktg 504 product and product management
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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

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Mktg 504 product and product management

MKTG 504 - Product and Product Management

A product is anything the consumer thinks it is!!

Dr. Dennis Pitta

University of Baltimore


Product

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.”


Product1

Product:

Not limited to goods - it is goods,

ideas, services, people, organizations, places.


Product2

Product:

= Physical product + other tangible

components

+ intangible components

+ social impact


Product component examples

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

What is the product?

University degree

Politician

You - Yourself as a job candidate


Really what is product

Really what is product?

ANYTHING A CONSUMER

THINKS IT IS


Examples of what people think

Examples of what people think

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

  • Kentucky Fried RAT

  • WORMS in Big Macs


Product life cycle

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

Sales&profits($)

Introduction

Growth

Maturity

Decline

Time

Sales & Profit Life Cycles


Important characteristics plc

Important Characteristics => PLC

  • SALES

  • RATE OF SALES GROWTH

  • # OF COMPETITORS

  • PRODUCT

  • PROMOTIONAL STRATEGY

  • PRICING

  • DISTRIBUTION


Tracking the plc over time petrification

Tracking the PLC over time: PETRIFICATION

SALES__________

RATE OF SALES GROWTH__________

# OF COMPETITORS__________

PRODUCT__________

PROMOTIONAL STRATEGY__________

PRICING__________

DISTRIBUTION__________


Bucky beaver and ipana

Bucky Beaver and Ipana


Examples of products in each plc stage

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

CLASSIFYING PRODUCTS

  • Product Category (Class):

    • Automobile/container/Timepiece

  • Product Form:

    • Convertible/Tin Can/Watch - Wrist

  • Product Item (brand):

    • Ford Probe/American Can/Seiko


How much effort would you spend buying chewing gum

How much effort would you spend buying chewing gum?


How much effort would you spend buying a refrigerator

How much effort would you spend buying a refrigerator?


How much effort would you spend buying a one of a kind masterpiece by rembrandt

How much effort would you spend buying a one of a kind masterpiece by Rembrandt?


Classification of consumer goods

CLASSIFICATION OF CONSUMER GOODS

  • CONVENIENCE

  • SHOPPING

  • SPECIALTY

  • UNSOUGHT


Consumer goods classification

  • Convenience Products

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 goods1

CLASSIFICATION OF CONSUMER GOODS

  • 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 goods2

CLASSIFICATION OF CONSUMER GOODS

  • 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

Product Mix -

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

Product Mix Strategy

Decisions made at three levels:

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

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

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


Product mix strategy1

Product Mix Strategy

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

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


Product mix strategy2

Product Mix Strategy

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?


Product mix strategy3

Product Mix Strategy

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 strategy4

Product Mix Strategy

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


Something new

Something new...

New Product Development


Product innovation process new product development

Product Innovation Process (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

How does one hold corn on the cob?


How does one hold corn on the cob1

How does one hold corn on the cob?

  • With a corn holder!!


What does corn look like

What does corn look like?

  •  One end is pointed

  • One end is blunt


What is a problem with ordinary corn holders

What is a problem with ordinary corn holders?

  • 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

The Solution?


The pitta improved cornholder pic

The Pitta Improved Cornholder (PIC)


Pic product benefits

PIC Product Benefits

  • 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

Where would someone get this idea?

…from eating corn!!


Product innovation process

Product Innovation Process

  • 1IDEA GENERATION

  • Sources:

    • Organization

    • Secondary sources:

      • Patent Office; Idea Mills;

      • Independent Inventors

      • Consumers (e.g., Kleenex)


Who thought of the product

Who thought of the product:

  • Army nurses (after WWI)

  • Thought cellulose fiber bandages might be useful

  • ‘Facial Tissue’


A product is anything someone thinks it is

A product is anything someone thinks it is….

  • 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

Product Innovation Process - Stage 2

  • 2SCREENING

  • 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

The Pitta Improved Cornholder (PIC) Critical Evaluation

  • We asked friends

  • We asked our mothers

  • We asked our wives

  • We demonstrated the PIC to strangers...


Product innovation process stage 3

Product Innovation Process - Stage 3

  • 3 ECONOMIC ANALYSIS

    • Forecast Sales

    • Return on Investment

    • Effect on Product Line

    • Cash Flow

    • Profit

    • Breakeven Analysis


The pitta improved cornholder pic economic analysis

The Pitta Improved Cornholder (PIC) Economic Analysis

  • 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

(PIC) Breakeven Analysis

  • 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 analysis1

(PIC) Breakeven Analysis

  • BE = FC/(P-VC) = units

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

  • Forget it!


Product innovation process1

Product Innovation Process

4DEVELOPMENT

Determining Product Benefits

Creating the Package, Brand Name

5TEST MARKETING

(Small Scale Introduction)

Marketing Plan

6COMMERCIALIZATION (Roll Out)


Mktg 504 product and product management1

MKTG 504 - Product and Product Management

Commercialization – the last stage of the Product Innovation Process

Dr. Dennis Pitta

University of Baltimore


Commercialization

COMMERCIALIZATION

  • 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

Roll out – an example

  • 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

very 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

34%

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

What is a Brand?

User

Culture

Personality

Features

Benefits

Advantages


Good brand names

Good Brand Names:

Lack Poor

Foreign

Language

Meanings

Distinctive

Suggest

Product

Qualities

Suggest

Product

Benefits

Easy to:

Pronounce

Recognize

Remember


Product differentiation

Product Differentiation

Form

Fea-

tures

Perfor-

mance

Quality

Conform-

ance

Quality

Dura-

bility

Relia-

bility

Repair-

ability

Style

Design


Maturity stage

Maturity Stage

  • Market Modification

  • Product Modification

  • Marketing-Mix Modification


Decline stage

Decline Stage

  • Increase investment

  • Resolve uncertainties - stable investment

  • Selective niches

  • Harvesting

  • Divesting


Market evolution

Market Evolution

  • Emergence

  • Growth

  • Maturity

  • Decline


Upcoming topic

Upcoming Topic

  • PRICE


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