6-1

6-1

Product and Services

Strategy

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 6-2
What
What is
is aa Product?
Product?
6-2

• Anything that can be offered to a market

for attention, acquisition, use or
consumption.
• A Product is a bundle of attribute that
satisfies a want or a need.
• Includes:
–Physical Products
–Services
–Persons
–Places
–Organizations
–Ideas
–Combinations of the above
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Levels
Levels of
of Product
6-3
Product
6-3
Augmented
Augmented
Product
Product

Installation

Packaging

Brand Features
Name Core
Core
Delivery Benefit
Benefit After-
or
or Sale
& Credit
Service
Service Service
Quality
Design
Level

Warranty

Actual
Actual Core
Core
Product
Product Product
Product
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 6-4
6-4
Five
Five Product
Product Levels
Levels

Potential product
Augmented product
Expected product
Basic product
Core benefit

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Product
Product Classifications
Classifications
6-5
6-5

Consumer
Consumer Products
Products
Convenience Products Shopping Products
> Buy frequently & immediately > Buy less frequently
> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods

Specialty Products Unsought Products

> 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

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Individual
Individual Product
Product Decisions
Decisions
6-6
6-6

Product
Product Attributes
Attributes

Branding
Branding

Packaging
Packaging

Labeling
Labeling

Product
Product Support
Support Services
Services
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Product
Product Attribute
Attribute
6-7
6-7

Decisions
Decisions

Quality
Quality Features
Features

Design
Design

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Packaging
Packaging
6-8
6-8

Sales Competitive Product

Tasks Advantages Safety
Packaging
Packaging

Labeling
Labeling

Identifies Describes Promotes

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Product
Product -- Support
Support Services
Services
6-9
6-9

Companies should design its support services to

profitably meet the needs of target customers.
How?

• Step 1. Survey customers to determine

satisfaction with current services and any
desired new services.

• Step 2. Assess costs of providing desired

services.

• Step 3. Develop a package of services to delight

customers and yield profits.
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Product
Product Line
Line Decisions
Decisions
6-10
6-10

Product
Product Line
Line Length
Length
Number
Number of
of Items
Items in
in the
the Product
Product Line
Line

Stretching Filling
Lengthen beyond Lengthen within
current range current range

Downward

Upward

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Product
Product Mix
Mix Decisions
Decisions
6-11
6-11

Width
Width -- number
number of
of
different
different product
product
lines
lines
Consistency

Length
Length -- total
total Product
Product MixMix --
number
number of of items
items all
all the
the product
product
within
within the
the lines
lines lines
lines offered
offered

Depth
Depth -- number
number
of
of versions
versions of
of
each
each product
product

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Characteristics
Characteristics of
of Services
Services
6-12
6-12

Can’t be seen, tasted, felt, heard,

Intangibility
Intangibility or smelled before purchase.

Inseparability
Inseparability Can’t be separated from service
providers.

Variability
Variability Quality depends on who provides
them and when, where and how.
Perishability
Perishability Can’t be stored for later sale or use.

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Product
Product Life
Life Cycle
Cycle
6-13
6-13

Sales and Profits Over the Product’s Life From

Introduction to Decline
Sales and
Profits ($)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments ($)

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Introduction
Introduction Stage
Stage of
of the
the PLC
PLC
6-14
6-14

Summary of Characteristics, Objectives, & Strategies

Sales
Sales Low
Low sales
sales
Costs
Costs High
High cost
cost per
per customer
customer
Profits
Profits Negative
Negative
Marketing Create
Create product
product awareness
awareness
Marketing Objectives
Objectives
and
and trial
trial
Product
Product Offer
Offer aa basic
basic product
product
Price
Price Use
Use cost-plus
cost-plus
Distribution
Distribution Build
Build selective
selective distribution
distribution
Advertising
Advertising Build
Build product
product awareness
awareness among
among
early
early adopters
adopters and
and dealers
dealers
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Growth
Growth Stage
Stage of
of the
the PLC
PLC
6-15
6-15

Summary of Characteristics, Objectives, &

Strategies
Sales
Sales Rapidly
Rapidly rising
rising sales
sales
Costs
Costs Average
Average cost
cost per
per customer
customer
Profits
Profits Rising
Rising profits
profits
Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Product
Product Offer
Offer product
product extensions,
extensions,
service,
service, warranty
warranty
Price
Price Price
Price to
to penetrate
penetrate market
market
Distribution
Distribution Build
Build intensive
intensive distribution
distribution
Advertising
Advertising Build
Build awareness
awareness and
and interest
interest in
in
the
the mass
mass market
market
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Maturity
Maturity Stage
Stage of
of the
the PLC
PLC
6-16
6-16

Summary of Characteristics, Objectives, &

Strategies
Sales
Sales Peak
Peak sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits High
High profits
profits
Marketing
Marketing Objectives
Objectives Maximize
Maximize profit
profit while
while defending
defending
market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models
Price
Price Price
Price to
to match
match or
or best
best
competitors
competitors
Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution
Advertising
Advertising Stress
Stress brand
brand differences
differences and
and
benefits
benefits
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Decline
Decline Stage
Stage of
of the
the PLC
PLC
6-17
6-17

Summary of Characteristics, Objectives, &

Strategies
Sales
Sales Declining
Declining sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits Declining
Declining profits
profits
Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditure
expenditure and
and milk
milk the
the
brand
brand
Product
Product Phase
Phase out
out weak
weak items
items
Price
Price Cut
Cut price
price
Distribution
Distribution Go
Go selective:
selective: phase
phase out
out
unprofitable
unprofitable outlets
outlets
Advertising
Advertising Reduce
Reduce to
to level
level needed
needed toto retain
retain
hard-core
hard-core loyal
loyal customers
customers
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