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Marketing Essentials. n Chapter 30 Product Planning. Section 30.1 Product Planning, Mix, and Development. SECTION 30.1. Product Planning, Mix, and Development. What You'll Learn. The nature and scope of product planning The concept of product mix

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slide1

Marketing Essentials

nChapter 30 Product Planning

Section 30.1 Product Planning, Mix, and Development

slide2

SECTION 30.1

Product Planning, Mix, and Development

What You'll Learn

  • The nature and scope of product planning
  • The concept of product mix
  • The different product mix strategies
  • The steps in new product development
slide3

SECTION 30.1

Product Planning, Mix, and Development

Why It's Important

  • Product planning allows a business to make or sell products that are wanted by customers. Product planning is also used to design appropriate marketing programs that help create increased sales and profit opportunities.
slide4

SECTION 30.1

Product Planning, Mix, and Development

Key Terms

  • product planning
  • product mix
  • product line
  • product item
  • product width
  • product depth
  • product modification
slide5

SECTION 30.1

Product Planning, Mix, and Development

Product Planning

A product is anything a person receives in an exchange—a tangible item (car), a service (haircut), an idea (a good education), or a combination of all of these concepts. Productplanning involves making decisions about features needed to sell a business's products, services, or ideas.

slide6

SECTION 30.1

Product Planning, Mix, and Development

Product Mix

  • Product mix includes all the different products that a company makes or sells.
  • A large manufacturer may have hundreds of products in its product mix.
  • Retail stores must plan their product mix carefully because they cannot offer all of the products that customers may want.
slide7

SECTION 30.1

Product Planning, Mix, and Development

Product Items and Lines

  • A product line is a group of closely related products manufactured and/or sold by a business.
  • A product item is a specific model, brand, or size of a product within a product line.
slide8

SECTION 30.1

Product Planning, Mix, and Development

Product Width and Product Depth

  • Product width refers to the number of different product lines a business manufactures or sells.
  • Product depth refers to the number of product items offered within each product line.
slide9

SECTION 30.1

Product Planning, Mix, and Development

The Concept of Product Mix

Width of the Product Mix

Blades and

Razors

WritingInstruments

Lighters

Toiletries

Series

Adorn

Toni

Right Guard

Silkience

Soft and Dri

Foamy

Dry Look

Dry Idea

Brush Plus

MACH 3

Sensor

Trac II

Atra

Swivel

Double-Edge

Lady Gillette

Super Speed

Twin Injector

Techmatic

Cricket

S.T. Dupont

Paper mate

Flair

The width and depth of product lines define product mix. What does product depth tell you about the importance of a given product line? Why do you think a company would choose to produce so many different razors?

slide11

SECTION 30.1

Product Planning, Mix, and Development

Product Mix Strategies

A product mix strategy is the plan for how the business determines which products it will make or stock. Businesses will either develop a new product or expand an existing product to add to their mix.

slide12

SECTION 30.1

Product Planning, Mix, and Development

Developing New Products

  • New products can add substantially to a company’s overall sales and boost its market share. New products can:
    • make a company look innovative
    • increase profits because they are generally priced 10 to 15 percent above older items
    • become a major part of a product line

Slide 1 of 2

slide13

SECTION 30.1

Product Planning, Mix, and Development

Developing New Products

  • New product development generally involvesseven key steps:

1. Generating ideas

2. Screening ideas

3. Developing a business proposal

4. Developing the product

5. Testing the product

6. Introducing the product (commercialization)

7. Evaluating customer acceptance

Slide 2 of 2

slide14

SECTION 30.1

Product Planning, Mix, and Development

Generating Ideas

  • New product ideas come from a variety of sources:
    • customers
    • competitors
    • channel members
    • company employees
    • research and development departments
slide15

SECTION 30.1

Product Planning, Mix, and Development

Screening Ideas

Ideas for new products are screened and evaluated, and matched against the company's overall objectives to see if they fit. Some ideas are eliminated. The best ideas are put through further evaluation. Finally, one or two ideas are selected for development.

slide16

SECTION 30.1

Product Planning, Mix, and Development

Developing a Business Proposal

A product idea must be considered in regard to its potential for profit. A business proposal is developed to evaluate the size of the market, potential sales, production requirements, costs, profit potential, technological trends, and risk.

slide17

SECTION 30.1

Product Planning, Mix, and Development

Developing the Product

During product development, a prototype (a model of the product) is made, and marketers develop a marketing strategy. The prototype is tested, and adjustments are made to improve the final product.

slide18

SECTION 30.1

Product Planning, Mix, and Development

Testing the Product

  • Newly developed products are usuallytested to obtain customers' responses. Common strategies are:
    • test marketing in a certain geographic area
    • evaluation by a focus group
slide19

SECTION 30.1

Product Planning, Mix, and Development

Introducing the Product

  • If customer response is favorable, the product is introduced into the marketplace. This stage is called commercialization. The costs of introducing a new product often are quite high. At this stage, the company will need to:
    • advertise the product
    • create or revise a distribution network
    • train its sales force
slide20

SECTION 30.1

Product Planning, Mix, and Development

Evaluating Customer Acceptance

After the product has been introduced, marketers track new product performance to evaluate customer acceptance of the product and the marketing strategies used to introduce the product.

slide21

SECTION 30.1

Product Planning, Mix, and Development

Developing Existing Products

  • In order to build on an established image, appeal to new markets, and increase sales and profits, companies can either:
    • expand an existing product line or
    • modify an existing product

Slide 1 of 3

slide22

SECTION 30.1

Product Planning, Mix, and Development

Developing Existing Products

  • Line Extensions Companies can expand product offerings by adding new product lines, items, or services.
  • Example:Tylenol expanded to Tylenol Flu, Tylenol Cold, and Tylenol Allergy/Sinus
  • Extensions can also be new lines of products.
  • Example:Bic pens and Bic lighters

Slide 2 of 3

slide23

SECTION 30.1

Product Planning, Mix, and Development

Developing Existing Products

  • Product modification is an alteration in a company's existing product. Product modifications are a relatively quick and easy way to add new products to a company's product line.

Slide 3 of 3

slide24

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Sometimes companies decide that they will no longer produce or sell a particular product or perhaps even a whole product line. Some of the reasons for this are:
    • obsolescence
    • loss of appeal
    • conflict with current company objectives
    • replacement with new products
    • lack of profit
    • conflict with other products in the line

Slide 1 of 4

slide25

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Obsolescence Changing interests and technology make many products obsolete. They are dropped in favor of newer technologies.

Slide 2 of 4

slide26

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Loss of Appeal As consumer tastes change, companies drop products that no longer appeal to popular tastes.

Slide 2 of 4

slide27

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Conflict with Current Company Objectives Sometimes a product does not match a company's current objectives.
  • Example:Sears sold unrelated businesses to concentrate on retail.

Slide 3 of 4

slide28

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Replacement with New Products A store decides it can make more money selling a different brand, or replaces one brand for another because another manufacturer offers better terms.

Slide 3 of 4

slide29

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Lack of Profit To increase profits, retailers will handle only fast-moving and profitable items. Product developers may drop products when sales drop below company objectives.

Slide 4 of 4

slide30

SECTION 30.1

Product Planning, Mix, and Development

Deleting a Product or Product Line

  • Conflict with Other Products in the Line Sometimes increased sales of one product can cause decreased sales of another product.

Slide 4 of 4

slide31

ASSESSMENT

30.1

Reviewing Key Terms and Concepts

  • 1. What is product planning?
  • 2. What is product mix?
  • 3. Name four product mix strategies.
  • 4. Identify the steps for new product development.
  • 5. Name one advantage and one disadvantage to expanding a product line.
slide32

ASSESSMENT

30.1

Thinking Critically

  • Suppose a company is developing a new product, when a competitor introduces a new product that is similar. What are some things the company should consider in deciding whether to proceed with the development of its new product?
slide33

30.1

Graphic Organizer

Developing New Products

Evaluate Customer

Acceptance

Introduce the

Product

Test the

Product

Develop a

the

Product

Develop a

Business

Proposal

Screen

Ideas

Generate Ideas

slide34

Marketing Essentials

End of Section 30.1