MARKETING 3.01

1. MARKETING 3.01 Product/Service Management

2. Intro • Who is responsible for the last product you bought? • Did you know….. -It took over 3 years to develop Google’s search engine -It took over 4 years to develop the famous chicken sandwich at Chick-fil-a

3. Product/Service Management • A marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.

4. Product and Service Classification System • Convenience goods - little effort, relatively inexpensive • Shopping goods - e.g ‘white goods’, DIY equipment, more expensive, infrequent • Speciality goods - extensive search e.g Jewellery, gourmet food • Unsought goods - e.g. double glazing,

5. Industrial goods • Installations - ‘speciality’ goods of industrial markets - plant and machinery • Accessories - maintenance and office equipment • Raw materials • components • Business to business e.g. consultants, accountants

6. Product/Service Management • Factors affecting Product/Service Management: 1. Customer Needs and Wants 2. Company Goals and Strategies 3. Cost and Available Resources 4. Competition 5. Product Itself 6. Government Regulation 7. Stages in Life Cycle 8. Business and Economic Trends

7. Product/Service Management • What are Benefits to Product/Service Management? -Offer products consumers want and company’s profits increase -When developing the right products, a company can gain new customers -When products are well managed there is less of a chance for failure

8. Product/Service Management • What role does Product/Service Management play in Marketing? • Affects positioning of product -what image do you want to create about the product in the minds of consumers? 2. Improves product success 3. Gives product an image -what impressions do you have of certain brands

9. Product/Service Management • Who is responsible for managing product/service management? -Several employees of a company, certain departments, 1 employee or just the boss. Normally depends on size of company. • 3 Main Phases of Product/Service Management 1. Developing New Products 2. Monitoring Existing Products - Sales, Profit, Market Share 3. Eliminate Weak Products

10. Now let’s see if you got it… • 8 student groups • Assign each group one factor (remember – there are 8 factors?) that affect product/ service management. • Allow each group to choose a product. • Discuss how their assigned factor affects that product. • Present their findings to the class.

11. Product Life Cycles

13. Stage 1 of Product life cycle – Introduction of the Product • Product is launched. A product launch is always risky. You never know how the market will receive the product. There have been numerous failures in the past to make marketers nervous during the launch of the product. The length of the introduction stage varies according to the product. • If the product is technological and receives acceptance in the market, it may come out of the introductory phase as soon as it is launched. Whereas if the product is of a different category altogether and needs market awareness, it may take time to launch.

14. Characteristics of Introductory Stage • Higher investment, lesser profits • Minimal Competition • Company tries to Induce acceptance and gain initial distribution • Company needs Promotions targeted towards customers to increase awareness and demand for product • Company needs Promotions targeted towards channel to increase confidence in the product

15. Stage 2 of Product Life CycleGrowth of the Product • Product starts showing better returns on investment. • Your customers and channels begin responding. • There is better demand in the market and slowly the product starts showing profits.

16. Growth (CONT.) • This is a stage where competition may step in to squash the product before it has completely launched. • Any marketing mistakes done at this stage affect the product considerably as the product is being exposed to the market and bad news travels fast. • Thus special care has to be taken in this stage to ensure competition or bad decisions do not affect the growth stage of the product.

17. Characteristics of Growth Stage • Product is successfully launched • Demand increases • Distribution increases • Competition intensifies • Company might introduce secondary products or support services. • Better revenue generation and ROI

18. Stage 3 of Product Life Cycle Maturity Stage • One of the problems associated with maturity stages in a technologically advanced environment is the problem of duplication. • Not only is the product available in duplicate markets, but also there are several competing products which arise with the same features and capabilities. • As a result, the product becomes less attractive.

19. Characteristics of Maturity Stage • Competition is high • Product is established and promotion expenditures are less • Little growth potential for the product • Penetration pricing, and lower profit margins • The major focus is towards extending the life cycle and maintaining market share • Converting customers product to your own is a major challenge in maturity stage

20. Stage 4 of Product Life Cycle Stage of Decline • 1 product, 10 competitors, minimum profits, huge amount of manpower and resources in use – A typical scenario which a product might face in its last stage. In this stage the expenditures begin to equal the profits or worse, expenses are more than profits. • Typical scenario for the product to exit the market. It also becomes advantageous for the company as the company can use resources it was spending on the declining product on an altogether different project.

21. Characteristics of Decline Stage • Market is saturated • Sales and profits decline • Company becomes cost conscious • A lot of resources are blocked in rejuvenating the dead product.

22. DECLINE - Only three options left with the company • Re positioning or Rebranding of the product to extend product life cycle • Maintain the product as it is and reduce costs to get maximum profits till the product can produce profits • Take the product off the market.

23. What is a product that has been around for as long as you can remember? How has it changed over the years?

24. EXAMPLE Purina Cat Chow- offers food for fat cats, hairball cats, indoor cats, kittens, old cats, and cats with kidney problems.

25. Product Life Cycle 1. Introduction 2. Growth 3. Maturity 4. Decline Product Life Cycle represents the stages that a product goes through during its life. There are 4 Stages of Life Cycle:

27. Product Life Cycle • To increase product awareness • Get the customer’s attention thru promotion • Lots of special promotion • During Growth Stage: • Customers are aware of product, sales increase • Companies focus on customer satisfaction • Competition starts from other companies • What are the goals of the Introduction Stage?

28. Product Life Cycle • Discussion: Have class to choose a mature product • Discuss how company is managing: 1. Competition 2. Advertising 3. Distribution – Is it only sold at 1 place 4. Other Strategies they have put in place • What happens during Maturity Stage? • The product’s sales level off. More money is spent on competition during this stage.

29. The life product cycle model Growth Growth Development Maturity Decline Development Maturity Decline Few: Few: Growing adopters: Growing adopters: Growing selectivity Growing selectivity Drop-off Saturation of Drop-off Saturation of trial of trial of trial of trial of of purchase of purchase in usage users in usage users early early product/service product/service Repeat purchase Repeat purchase adopters adopters reliance reliance Entry of Entry of Exit of some May be many Exit of some May be many Fight to maintain Fight to maintain competitors competitors competitors competitors share share

30. Product Life Cycle • During the Decline Stage: • Sales start to decline. A company must decide to alter the product, discount, or discontinue product.

32. How can you extend a product’s lifecycle? • All businesses want to maximize their profits by ensuring that the lifespan of their product is as long as possible. • Businesses can adopt several strategies to extend the life of their product.

33. Extending a Product’s Lifecycle • make modifications to the product • eg new car model • change the packaging • reduce the price • export to a new market • introduce new varieties • eg lime-flavoured Coke • increase the advertising

34. Extending a Product’s Lifecycle (cont.) • Some businesses may decide not to employ any extension strategies, and simply withdraw the product from the market. • At the decline stage, the business should be prepared and have a second product ready to replace the declining product.

35. Extending a Product’s Lifecycle (cont.) • Consider how these products have had their life cycle extended: • Coca-Cola • Kit Kat • Playstation console

36. 4 IMPORTANT TERMS • Product Mix • Product Line • Product Width • Product Depth

37. Product MIX = All the products a given company produces comprise the product mix, or product assortment.

38. Product LINE = a group of these products associated by function, by consumer group, by distribution channel or by price range. A company could have one line or several lines, but all the products within this line or lines would be the mix.

39. Product WIDTH = Number of product lines that a company sells • Small and upstart businesses will usually not have a wide product mix. • It is more practical to start with some basic products and build market share.

40. Product DEPTH = Total number of variations for each product. • Variations can include size, flavor and any other distinguishing characteristic. • For example, if a company sells three sizes and two flavors of toothpaste, that particular brand of toothpaste has a depth of six.

41. REVIEW Teams of 2 Agree to use one of the 2 products you each wrote down for the intro (“What is a product that has been around for as long as you can remember?”) Write down the 4 stages of the life cycle. Write down how it changed over the years for each of the 4 stages. If you believe it has not yet reached the stage, predict what you think the future holds for the product when it does hit this stage – what could be done?

42. Technology in Product/Service Management

43. Intro Describe the use of technology in Product/Service Management

44. How technology is used to manage the product life cycle • Technology provides a shared platform for collaboration among product • The product lifecycle management (PLM) software market is evolving rapidly and growing fast.

46. How technology is used to manage the product life cycle • Product Lifecycle Management (PLM) Systems enable technology for PLM to integrate people, data, processes, and business systems and provide a product information backbone for companies and their extended enterprise. • Techonology allows integration of these tools with methods, people and the processes through all stages of a product's life

47. How technology is used to manage the product life cycle (cont.) • Data Mining and Data Warehousing are two technology components which are collectively used for deriving valuable pieces of knowledge (in form of trends, patterns and rules) from hoards of data.

48. Technology in Product/Service Management 1. Point-of-Sale Systems 2. Interactive Touch Screen Computer 3. Interactive TV 4. Customer Relationship Management 5. Enterprise Resource Planning Systems 6. Internet Applications of Technology in Marketing:

49. Technology in Product/Service Management 1. Point-of-Sale Systems • Scanners at cash registers, touch screens, • hand-held devices at checkout 2. Interactive Touch Screen Computer • Example: Kiosks Applications of Technology in Marketing:

50. Technology in Product/Service Management Continued • Where TV is like a computer- order movies, • click on Ragu for recipes, order food • A customer can track an order. The CRM or • business can track customer satisfaction 3. Interactive TV 4. Customer Relationship Management