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Product, PLC and Services
Chapters 10 - 12
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What is a Product?
Anything that can be offered to a market
to satisfy a want or need. It is usually
judged on (1) product features (2)services mix & quality and (3) price
appropriateness
Core benefit, Basic product, Expectedproduct, Augmented product, Potential
product
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Brand
Name
Quality
Level
Packaging
Design
Features
Delivery
& Credit
Installation
Warranty
After-Sale
Service
Core
Benefitor
Service
Augmented
Product
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Product Classifications
UnsoughtProducts
SpecialtyProducts
ShoppingProducts
ConvenienceProducts
ConsumerProducts
BusinessProducts
PRODUCTS
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Some Product Definitions
Product line a group of closely related
product items.
Product mix all products that a firmsells.
Width refers to how many different
product lines the firm carries Depth refers to how many variants of
each product are offered
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Gillettes Product Lines
&MixBlades and Writingrazors Toiletries instruments Lighters
Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. DupontTrac II ToniAtra Right GuardSwivel SilkienceDouble-Edge Soft and DriLady Gillette FoamySuper Speed Dry LookTwin Injector Dry IdeaTechmatic Brush Plus
Width of the product mix
Depthofthe
productlines
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Product Line Strategies
Extensions: Adding
additional products
to an existingproduct line in order
to compete more
broadly in the
industry.
Contractions:
deleting products
from product lines ifthere are low sales,
cannibalization,
obsolesce or few
resources.
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What is the Product Life
Cycle (PLC)? A concept that provides a way to trace
the stages of a products acceptance,
from its introduction (birth) to its decline(death).
It is based on the product category.
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The Product Life Cycle
Time
Dollars
ProductCategory
Profits
ProductCategory
Sales
IntroductoryStage
GrowthStage
MaturityStage
DeclineStage
0
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Introduction Stage
High failure rates
Little competition
Frequent product modification Limited distribution
High marketing and production costs
Negative profits
Promotion focuses on awareness andinformation
Intensive personal selling to channels
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Growth Stage
Increasing rate of sales
Entrance of competitors
Market consolidation
Initial healthy profits
Promotion emphasizes brand ads
Goal is wider distribution Prices normally fall
Development costs are recovered
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Maturity Stage
Declining sales growth
Saturated markets
Extending product line
Stylistic product changes
Heavy promotions to dealers and consumers
Marginal competitors drop out Prices and profits fall
Niche marketers emerge
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Decline Stage
Long-run drop in sales
Large inventories of unsold items
Elimination of all nonessential marketing
expenses
Options for Deleting Products:
Maintaining
Deletion Harvesting
Contracting
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Marketing Strategies for PLC
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited modelsFrequent
changes
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Limited
Wholesale/
retail distributors
Expanded
dealers. Long-
term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Awareness.
Stimulate
demand.Sampling
Aggressive ads.
Stimulate
demand
Advertise.
Promote heavily
Phase out
promotion
Higher/recoup
development
costs
Fall as result of
competition &
efficient produc-tion.
Prices fall
(usually).
Prices
stabilize at
low level.
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Categories of Product
Adopters
Perc
entageofAdo
pters
Time
Innovators2.5%
EarlyAdopters
13.5%
LateMajority
34%
EarlyMajority
34%
Laggards16%
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Diffusion Process and
PLC Curve
Innovators
Early adopters
Early majorityLate majority
Laggards
Productlife cyclecurve
Diffusioncurve
Introduction Growth Maturity Decline
Sales
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What is a Service?
Any act or performance that one party
can offer to another that is essentially
intangible and does not result in theownership of anything
Medical, utilities, entertainment,
professional (law, medical),transportation, financial
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Characteristics of Services
Intangibility cannot be touched, seen,
tasted, heard or felt in the same manner
as goods.
Inseparabilityservices are produced
and consumed simultaneously
Heterogeneity services are less
standardized and uniform than goods.
Perishability services cannot be
stored, warehoused or inventoried.
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Managing Services
Managing differentiation
Cant live by price alone
Reliability, innovativeness and resilience Managing service quality
Service gaps
Common practices Managing productivity
Seven approaches