Marketing Management

2nd Edition

Michael R. Czinkota and Masaaki Kotabe

Chapter 8:
Product and Service
Decisions

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 Chapter Outline
● Product Package
● Product Strategy
● Product Life Cycle
● Life Cycles and Marketing Strategy
● Product Portfolio
● Product Mix
● Product Standardization or Adaptation
● Packaging
● Distinctive Features of a Service
● Marketing Repercussions of Services

© 2000 South-Western College Publishing Slide #

 Product Package

Core
Core Tangible
Tangible
Product
Product Product
Product
(ring) (packaging)
(packaging)
(ring)

Augmented
Augmented
Product
Product
(psychological
(psychological
benefits)
benefits)

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 Product Strategy
PRODUCT

Present New
MISSION (MARKET)

Present Market Product

Penetration Development

Market
New Diversification
Development

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 Product Strategy (cont.)
Present product
Increase share of
Present market

existing product in
Market existing market
Penetration
Two strategies:
● Persuade users to buy
more product OR
● Take business from
competitors

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 Product Strategy (cont.)
New product
Major modification of

Present market
the product for the Product
current market Development

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 Product Strategy (cont.)

Find new uses for

existing product
Two strategies:
Present product ● Find new markets
for product OR
New market

Market ● Aim at a broader

Development
market

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 Product Strategy (cont.)

Launch new product

in a new market

New product

New market
Diversification

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 Product Life Cycle

Post
Introduction Growth Maturity Decline Mortem

$ Sales

Profit Time

Loss/profit

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 Other Life Cycles

● Life cycle extensions

● Fashions and fads
● Technological life cycles
● International product life cycle

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 Life Cycles and Marketing Strategy
Maximize distribution
Introduction
Introduction Build awareness & obtain trial

Extend distribution
Growth
Growth Advertise & promote heavily

Advertise product image

Maturity
Maturity Persuade customers to switch

Decline Milk the product for profits

Decline Determine if to terminate product

Postmortem Plan for postmortem expenses

Postmortem
Develop phase-out plan

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 Product Portfolios:
the BCG Matrix

High

Problem
Star child
Market
Growth

Cash
cow Dog
Low

High Relative Market Share Low

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 Product Portfolio of Two
Organizations

Company A Company B

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 Product Mix
P&G sells:
Product
Productmix
mix Tide detergent, Pringle’s
potato chips, and Ivory shampoo

P&G sells:
Product
Productline
line Different brands of laundry
detergent including Tide and Cheer.

P&G sells:
Product
Productdepth
depth Different forms and package sizes
of Tide detergent.

© 2000 South-Western College Publishing Slide #1

 Product Standardization or
Adaptation

Sell
Sellproduct
productas
asis
is

Modify
Modifyproduct
product
for
forother
othercountry
country

Design
Designnew
newproduct
product
for
fornew
newmarkets
markets

Introduce
Introduceaa
global
globalproduct
product

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 Packaging

Function
Function

Imagery
Imagery
Product
Product This coffee is the
best tasting coffee

description
description
in the world. That’s
because it’s made
with 100% arabica
beans, the finest
beans money can
buy.

Customer
Customer
Product
Product 12 oz.
demands
demands
amount
amount

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 Distinctive Features of a Service

Intangible High customer

involvement

Perishable
Requires
consistency
Service
capacity

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 Marketing Repercussions of Services

● Nature and aim of the service

● Role of personnel
● Lack of storage capacity
● Pricing and financing
● Distribution of services
● International aspects of services

© 2000 South-Western College Publishing Slide #1