12-7

The Total Bundle of Satisfaction

Physical Product or Core Service Packaging

Labeling

Branding

Customer Service

Warranty

12-2

At the heart of a great At the heart of a great brand is a great productbrand is a great product

12-3

What is a Product?What is a Product?

A product is anything that can be offered to a market to satisfy a want or need, including

physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

5 Product Levels5 Product Levels

Five Product LevelsFive Product Levels• Core benefit —service or benefit (e.g., hotel

guest is buying “rest and sleep”)• Basic product —turn core benefit into basic

product (e.g., hotel room includes a bed, bathroom, towels, desk, dresser, and closet)

• Expected product – set of attributes and conditions buyers normally expect (e.g., clean bed, fresh towels, working lamps)

• Augmented product—exceeds customer expectations (e.g., free health spa)

• Potential product—all the possible augmentations and transformations (e.g., free internet connections and use)

Total Product Experience Diagram

15-year manufacturer pole warranty

15-year manufacturer pole warranty

Free Shipping to household

Free Shipping to household

Accepts credit and debit

Accepts credit and debit

Comes with glow-in-the-dark

volleyball

Comes with glow-in-the-dark

volleyballHighest quality,

reasonable price

Highest quality,

reasonable price

Product for the athletic lifestyle

Product for the athletic lifestyle

Heavy-duty nylon bag with

full zipper

Heavy-duty nylon bag with

full zipper

Compact and convenient

design

Compact and convenient

design

Resistant to weather elements

Resistant to weather elements

A unique, time

extending product

Monthly Payments

Easy Setup& 3x32

Professional Netting

Easy Setup& 3x32

Professional Netting

An automobile offers personal transportation (core product), has

many different features and attributes (actual product), and may include a manufacturer's warranty or dealer's discounted service contract

(augmented product).

Product DifferentiationProduct Differentiation

• Product form—size, shape, or physical structure• Features—supplement basic functions• Customization–individual versus mass• Performance—level at which the product’s

primary characteristics operate • Conformance—degree to which all the produced

units are identical and meet the promised specifications

• Durability—product’s operating life• Reliability—probability that a product will not

malfunction or fail• Repairability—the ease of fixing a product when

it malfunction or fails• Style—product’s look and feel to the buyer.

Service DifferentiationService Differentiation• Ordering ease—how easy to place an order• Delivery—how well (e.g., speed, accuracy, and care)

product or service is brought to the customer• Installation—work done to make a product operational• Customer training—training the customer’s employees

to operate the vendor’s equipment properly and efficiently• Customer consulting—data, information, systems, and

advice that the seller offers to buyers• Maintenance and repair—service programs for helping

customers keep purchased products in good working order• Returns

12-11

Dunkin’ Donuts’ Dunkin’ Donuts’ DifferentiationDifferentiation

12-12

Design DifferentiationDesign Differentiation

12-13

Maintenance and RepairMaintenance and Repair

      

                                     "Engineered like no other car in the world"

        

Mercedes buyers value safety, high performance, and prestige.    

      Consumers might visualize a Mercedes as being a wealthy,

middle-aged business executive. 

12-8

The Product Life Cycle

Sales Curve

Dol

lars

Time

Growth Maturity Decline

Profit Curve

Product

Development

Introduction

Time of adoptionInnovators: 2.5%(or Lead Users)

EarlyAdopters:13.5%

Early Majority:34%

Late Majority:34%

Laggards:16%

•Innovators - venturesome; they are willing to try new ideas at some risk.•Early Adopters - guided by respect; they are opinion leaders and adopt new ideas early but carefully. •Early Majority - deliberate; they adopt new ideas before the average person, although they rarely are leaders. •Late Majority - skeptical; they adopt an innovation only after a majority of people have tried it.•Laggards - adopt the innovation only when it takes on a measure of tradition itself.

The Product Life Cycle

Boston Consulting Group Growth-Share Boston Consulting Group Growth-Share

MatrixMatrix

• Question Marks– Businesses that operate in high growth markets (above

10%) but have relative low market shares– Most businesses start out as question marks– They require a lot of cash because the company has to

spend money on plants, equipment, and personnel– The company must decide whether to continue pouring

money into the business• Stars

– A successful question mark becomes a star business– Market leaders in a high-growth market– The company must spend substantial funds to keep up

with the high growth and fight off the competitor’s attacks

Boston Consulting GroupBoston Consulting Group

• Cash Cow– A star becomes a cash cow when the annual growth rate

falls below 10% and still leads the market– The business provides a lot of cash for the company– Company uses cash cow revenues to pay bills and

support other businesses– May become a dog, if it loses market share

•  Dogs– Businesses that have market share in low-growth

markets– Generate low profits or losses– These businesses consume more management time than

they are worth and need to be phased down or out.

12-10

Small Business Management, 11th editionLongenecker, Moore, and Petty©2000South-Western College Publishing

Product Strategy Options

One Market

Multiple Markets

One Product

Modified Product

Multiple Products

(1)

(2)

(3)

(4)

(5)

(6)

Product Mix Strategy Alternatives Target Market(s)

Key to Strategy Alternatives(1) One product/one market (4) Modified product/multiple markets(2) One product/multiple markets (5) Multiple products/one market(3) Modified product/one market (6) Multiple products/multiple markets

1 3 - 9

S m a l l B u s i n e s s M a n a g e m e n t , 1 1 t h e d i t i o nL o n g e n e c k e r , M o o r e , a n d P e t t y© 2 0 0 0S o u t h - W e s t e r n C o l l e g e P u b l i s h i n g

B e n e f i t s o f C r e d i t t o B u y e r s a n d S e l l e r sB e n e f i t s o f C r e d i t t o B u y e r s

1 . T h e a b i l i t y t o s a t i s f y i m m e d i a t e n e e d s a n d p a y f o r t h e m l a t e r2 . B e t t e r r e c o r d s o f p u r c h a s e s o n c r e d i t b i l l i n g s t a t e m e n t s3 . B e t t e r s e r v i c e a n d g r e a t e r c o n v e n i e n c e w h e n e x c h a n g i n g

p u r c h a s e d i t e m s4 . E s t a b l i s h m e n t o f a c r e d i t h i s t o r y

B e n e f i t s o f C r e d i t t o S e l l e r s

1 . C l o s e r a s s o c i a t i o n w i t h c u s t o m e r s b e c a u s e o f i m p l i e d t r u s t2 . E a s i e r s e l l i n g t h r o u g h t e l e p h o n e - a n d m a i l - o r d e r s y s t e m s3 . S m o o t h e r s a l e s p e a k s a n d v a l l e y s , s i n c e p u r c h a s i n g p o w e r i s

a l w a y s a v a i l a b l e4 . E a s y a c c e s s t o a t o o l w i t h w h i c h t o s t a y c o m p e t i t i v e

13-10

Small Business Management, 11th editionLongenecker, Moore, and Petty© 2000South-Western College Publishing

Types of Credit

Consumer Credit• Open charge accounts• Installment accounts• Revolving charge accounts

Credit Cards• Bank credit cards• Entertainment credit cards• Retailer credit cards

Trade Credit

Consumer Credit• Open charge accounts• Installment accounts• Revolving charge accounts

Credit Cards• Bank credit cards• Entertainment credit cards• Retailer credit cards

Trade Credit

How Will Your Business How Will Your Business Position Your Products Position Your Products

•Prestigious – – luxury seats vs bleacher seats

•Better Bargain – – season tickets vs single game

tickets

•Equal in Quality – concessions, giveaways, merchandise

Product Positioning Chart

High price

High Quality

Low Price

Low Quality

Product Positioning Chart

12-25

What is the Fifth P?What is the Fifth P?

Packaging, sometimes called the 5th P, is all the activities of designing and producing

the container for a product.

12-26

Factors Contributing to the Factors Contributing to the

Emphasis on PackagingEmphasis on PackagingSelf-serviceSelf-service

Consumer affluenceConsumer affluence

Company/brand imageCompany/brand image

Innovation opportunityInnovation opportunity

Packaging ObjectivesPackaging Objectives

• Identify the brand• Convey descriptive and persuasive

information• Facilitate product transportation and

protection• Assist at-home storage• Aid product consumption

12-28

Functions of LabelsFunctions of Labels

Identifies

Grades

Describes

Promotes

12-29

Innovations in PackagingInnovations in Packaging

12-30

Warranties and GuaranteesWarranties and Guarantees