Product & Service Strategies
Jeremy Kees, Ph.D.
The Basics…
• What is a product…
– 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.
• Do we market products and
services in the same manner???
Distinguishing Factors
• Intangibility
• Inseparability
– Requirement of
interaction between buyer
and seller
• Perishability
• Difficulty of standardization /
variability in service offering
Types of Consumer Products
• Convenience Products
– Inpluse Items
– Staples
– Emergency Items
• Shopping Products
– Homogeneous
– Heterogeneous
• Specialty Products
• Unsought Products
Consumer Product Classification
The Product Mix
Using AB as an example…
• Product Mix (or Assortment)
– Product lines
(beer, specialty beer, imports,
specialty malt beverages…)
– Product types
(Within “beer”, AB has the “Bud family”,
“Michelob family”, “Busch family”…)
– Items
(Bud Light, Mic Ultra, Bacardi Silver)
The Product Mix –Width,
Length, and Depth
• Width = # of product lines
• Length = # of products within the
line(s)
• Depth = # of variants of each
product
• http://www.jnj.com
Product Mix Decisions:
Product Line Analysis
• Evaluate sales and profits associated
with each item in product line
• Evaluate line positioning relative to
competition
• Decide whether to build, maintain,
harvest, or divest
Product Mix Decisions:
Product Line Analysis
• Depending on success of various lines
versus the competition, we can….
– Stretch the Line
• Up-stretching: AB acquiring Imports and
Microbrews
• Down-stretching: AB developing Natural Light
– Prune the Line
• Goal: volume (market share) objectives
• If the goal is profitability, then shorter
lines might be a more viable strategy
Product Mix Decisions:
Product Line Analysis
• When extending lines, an important
consideration is consistency and
capitalizing on equity built in the
original brand
• Michelob Light
• Mic Ultra
• Mic Ultra Amber
New Product Development
• http://www.youtube.com/watch?v=
jVb8EC1Y2xM
New Product Development
• Where do product ideas come
from??
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–
–
–
–
–
–
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Customers
Organizations
Experts
Government
Private labs
Research institutions
Suppliers
Retailers
Partners
Etc….
New Product Development
Product Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Product Adoption Process
Product Adoption Process
• Innovators – venturesome, educated, high
socio-economic status
• Early adopters – social leaders, popular,
educated
• Early majority – deliberate, many informal
social contacts
• Late majority – skeptical, traditional, lower
socio-economic status
• Laggards – neighbors and friends are main
info sources, fear of debt
Have you adopted….
• Iphone?
• GPS?
• Blackberry?
Product Life Cycle: Key
Decisions at Each Stage
• Draw on Board
– Sales
– Profits
– Prices
Product Life Cycle: Key
Decisions at Each Stage
• Introduction
– Inform potential customers
– Introduce product trial
• Examples for low and high end
products??
– Secure retail distribution
Product Life Cycle: Key
Decisions at Each Stage
• Growth
– Improve quality, add new features, and
improve styling
– Add new models and flanker products
– Enter new segments
– Increase distribution coverage and enter
new channels
– Shift from product-awareness to productpreference advertising
– Lower prices to attract the next layer of
price-sensitive buyers
Product Life Cycle: Key
Decisions at Each Stage
• Maturity
– Market modification
– Product modification
– Marketing program modification
Product Life Cycle: Key
Decisions at Each Stage
• Decline
– Harvest
– Divest
– Liquidate
Product Life Cycle: Key
Decisions at Each Stage
• Strategies for extending the PLC…