Professional Documents
Culture Documents
MANAGING PRODUCT
1
DEFINITION
A product is anything that can
be offered to a market for
attention, acquisition, use, or
consumption that might
satisfy a want or need. It
includes physical objects,
services, places, organizations
and ideas 2
PRODUCT LEVELS
3
CORE PRODUCTS
The most basic level is core
product.
Marketer must uncover the core
benefit to the consumer of every
product and sell these benefits
rather than merely selling
features.
4
FACILITATING PRODUCTS
Facilitating products are
services or goods that must be
present for the guest to use the
core product.
A firstclass corporate hotel
must have check in and check
out services, telephones,
a restaurant and valet.5
One important aspect
of facilitating
products is
accessibility.
Product design requires an
understanding of the target
markets and the facilitating
services that they require.
6
SUPPORTING PRODUCTS
Core products require
facilitating products but do not
require supporting products.
Supporting products are extra
products offered to add value to
the core product and help to
differentiate it from the
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competition.
Ideally, firms should choose
supporting products that are
not easily matched by the
competition.
They should also be able to
deliver supporting services in a
professional manner.
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THE
AUGMENTED
PRODUCT
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From managerial standpoint, the
core product provides a focus for the
business; it is the reason for being.
Facilitating products are those that
are essential for providing the core
product to the target market.
Supporting products can help
position a product
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11
The Augmented Product
ATMOSPHERE:
THE PHYSICAL ENVIRONMENT
Atmosphere is a critical
element in services. It can be
the customer’s reason for
choosing to do business with
an establishment.
The main sensory channels
for atmosphere are sight,
sound, scent and touch. 12
The Augmented Product
ISUAL dimension of atmosphere are color, bright
URAL dimension of atmosphere are volume and p
LFACTORY dimensions of atmosphere are scent
ACTILE dimensions of atmosphere are softness
13
The Augmented Product
vAtmosphere may serve as an attentioncreatin
vAtmosphere may serve as a messagecreating m
vAtmosphere may serve as an effectcreating me
vAtmosphere may serve as an moodcreating me
14
The Augmented Product
Atmosphere must be
As marketer we should
understand what the customer
wants from the buying experience
and what atmospheric variables
will fortify the beliefs and
emotional reaction that the
buyers are seeking or, in some 15
cases, escaping
The Augmented Product
CUSTOMER INTERACTION
WITH THE SERVICE DELIVERY
SYSTEM
16
The Augmented Product
JOINING STAGE
17
The Augmented Product
CONSUMPTION PHASE
18
The Augmented Product
DETACHMENT PHASE
When the customer is through using
a product and departs
Eg: hotel guests may need a bell
person to help with the bags, acquire
transportation to the airport,
directions, road conditions etc.
Tourism promotion should
include training policies and 19
procedures to assist visitors.
The Augmented Product
CUSTOMER INTERACTION
WITH OTHER CUSTOMER
An area that is drawing the interest of
hospitality researches is the
interaction of customers with each
other.
Hospitality organizations must
manage the interaction of customers
to ensure that some do not negatively
affect the experience of others.
20
The Augmented Product
CUSTOMER
COPRODUCTION
Involving the guest in
service delivery can
increase capacity,
improve customer
satisfaction and
21
reduce cost.
BRAND
DECISION
22
BRAND
Is a name, term, sign, symbol,
design or a combination of
these elements that is intended
to identify the goods or services
of a seller and differentiate
them from competitors.
A brand name is the part of
brand that can be vocalized 23
5 CONDITIONS CONTRIBUTE TO
THE BRANDING DECISION
1)The product is easy to
identify by brand or
trademark
3)The product is perceived
as the best value for the
price
5)Quality and standards
24
are easy to maintain
5 CONDITIONS CONTRIBUTE TO
THE BRANDING DECISION
4)The demand for the general product
class is large enough to support a
regional, national or international
chain. Developing a critical mass
to support advertising and
administrative overhead is
important
25
5)There are economies of scale
THE DESIRABLE
CHARACTERISTICS OF
A BRAND
NAME
A brand name derives its value
from consumer perceptions.
Brands attract customers by
developing a perception of good
quality and value. 29
As tourist destination, Cancun and
Palm Spring have developed strong
reputations, consumer perceptions
and expectations.
People who promote and develop
tourist destinations must assume
responsibility for enhancing and
ensuring favorable brand images.
30
QUALITY AND STANDARDS
ARE EASY TO MAINTAIN
To be successful, large multiunit brand
such as Pizza Hut and Holiday Inn
Express must develop system wide
standards to meet customer expectations
If the brand is successful in developing
an image of quality, customers will
expect quality in all outlets
carrying the same brand name. 31
nt standards and policies will detract from the v
y and standardization are critical factors.
32
The major benefit of branding
comes from the development of
loyal customers.
They purchase a brand whenever it
is available; the greater the
availability, the greater power of
the brand name.
33
THE DEMAND FOR THE GENERAL
PRODUCT CLASS IS LARGE ENOUGH
TO SUPPORT A REGIONAL,
NATIONAL OR INTERNATIONAL
CHAIN
New products are generally
developed to serve a particular
market niche. Later, the product
may be expanded to encompass
multi niches, or the original niche
may grow in market size until it is a
huge market-share product
34
THERE ARE ECONOMIES OF
SCALE
35
LEVERAGING BRAND EQUITY
Brand equity can be leveraged
through cobranding and
partnerships. In some cases
companies that have common
ownership offer their brands
under one roof. Eg : KFC and
Pizza Hut
36
NEW
PRODUCT
DEVELOPMENT
37
A company has to be good at
developing new products. It
also has to be good at
managing them in the face of
changing tastes, technologies
and competition.
All hospitality companies and tourist
destinations must continuously be alert to
trends and ready to try new products.
Every company needs a new product 38
development program.
NEW PRODUCT DEVELOPMENT
39
IDEA GENERATION
New product development starts with idea
generation, the systematic search for new
ideas.
A company typically has to generate many
ideas to find a few good ones.
The search for new product ideas should
be systematic rather than haphazard
40
The co. should carefully define the new
product development strategy.
The strategy should start with what
products and markets to emphasize.
IDEA GENERATION
42
43
CUSTOMERS
44
COMPETITORS
About 27% of new product ideas
come from analyzing
competitors’ products.
Many companies buy competing new
products, see how they are made, analyze
their sales, & decide whether they should
bring out new products of their own.
A company can also watch competitors’
ads & other communications to obtain 45
clues about new products.
DISTRIBUTORS & SUPPLIERS
Distributors are close to the market & can
pass along information about consumer
problems and new product possibilities.
Suppliers can tell the co. about new
concepts, techniques, & materials that can
be used to develop new products.
They can also tell which food
products are moving in
competitive restaurants & new 46
products ordered by hotels.
OTHER SOURCES
Other idea sources include trade
magazines, shows & seminars,
government agencies, new product
consultants, advertising agencies,
marketing research firms, university
& commercial laboratories &
inventors
47
IDEA SCREENING
The purpose of screening is to spot
good ideas and drop poor ones as
quickly as possible.
Product development costs rise
greatly in later stages, so the
company wants to proceed only with
ideas that will turn into profitable
products. 48
CONCEPT DEVELOPMENT
& TESTING
49
MARKETING STRATEGY
Designing an initial marketing
strategy for introducing the
product into the market.
The marketing strategy statement
consist of 3 parts.
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MARKETING STRATEGY
1) Describes the target market, the
planned product positioning, and the
sales, market share and profit goals for
the first few years.
2) Outlines the product’s
planned price, distribution and
marketing budget for the first
year
3) Describes the planned longrun sales, 51
profit goals and marketing mix strategy
BUSINESS ANALYSIS
Once management decides on the product
concept and marketing strategy, it can
evaluate the business attractiveness of the
proposal.
Business analysis involves a review of the
sales, costs and profit projections to
determine whether they satisfy the
company’s objectives.
If they do, the product can move to the 52
productdevelopment stage.
PRODUCT DEVELOPMENT
If the product concept passes the
business test, it moves into product
development & into a prototype.
Developing a successful
prototype can take days,
weeks, months or even years.
53
One problem with developing a
prototype is that the prototype is often
limited to the core product.
Many as the intangible
aspects of the product, such
as performance of the
employees cannot be
included 54
TEST MARKETING
If the product passes functional &
consumer tests, the next step is
market testing which the product &
marketing program are introduced
into realistic market settings.
55
Market test allows the marketer to
gain experience in marketing the
product, to find potential problems &
to learn where more information is
needed before the co. goes to the great
expense of full introduction.
Market testing evaluates
the product & the entire
marketing program in real
market situations. 56
The products, its positioning strategy,
advertising, distribution, pricing,
branding, packaging & budget levels are
evaluated during market testing.
Market testing result can be used
to make better sales & profit
forecast.
The amount of market testing needed
varies with each new product.
Market testing costs can be enormous &
market testing takes time, during which 57
competitors may gain an advantage.
COMMERCIALIZATION
Marketing testing gives management the
information it needs to make a final
decision about whether to launch
a new product.
If the co. goes ahead with
commercialization, it will face high
costs.
In launching a new product the co. must
make four decision: when, where,
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to whom and how
PRODUCT
LIFECYCLE
STRATEGIES
59
PRODUCT
LINE
REVIEW
PHASEOUT
DELETION
ANALYSIS
RETURN
TO LINE RUNOUT
DELETION
DECISION
DELETE
IMMIDIATE
DROP 60