Product, PLC and Services
Chapters 10 - 12
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, Expected
product, Augmented product, Potential
product
Augmented
Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core
Benefit
or
Service
Warranty
Features
AfterSale
Service
Design
Product Classifications
PRODUCTS
Consumer
Products
Convenience
Products
Shopping
Products
Business
Products
Specialty
Products
Unsought
Products
Some Product Definitions
• Product line – a group of closely related
product items.
• Product mix – all products that a firm
sells.
• Width – refers to how many different
product lines the firm carries
• Depth – refers to how many variants of
each product are offered
Depth of the product lines
Gillette’s Product Lines
& Mix
Width of the product mix
Blades and
razors
Toiletries
Mach 3
Sensor
Trac II
Atra
Swivel
Double-Edge
Lady Gillette
Super Speed
Twin Injector
Techmatic
Series
Adorn
Toni
Right Guard
Silkience
Soft and Dri
Foamy
Dry Look
Dry Idea
Brush Plus
Writing
instruments
Lighters
Paper Mate
Flair
Cricket
S.T. Dupont
Product Line Strategies
• Extensions: Adding
additional products
to an existing
product line in order
to compete more
broadly in the
industry.
• Contractions:
deleting products
from product lines if
there are low sales,
cannibalization,
obsolesce or few
resources.
What is the Product Life
Cycle (PLC)?
• A concept that provides a way to trace
the stages of a product’s acceptance,
from its introduction (birth) to its decline
(death).
• It is based on the product category.
The Product Life Cycle
Introductory Growth
Stage
Stage
Maturity
Stage
Decline
Stage Product
Dollars
Category
Sales
Product
Category
Profits
0
Time
Introduction Stage
•
•
•
•
•
•
•
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production costs
Negative profits
Promotion focuses on awareness and
information
• Intensive personal selling to channels
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
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
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
Marketing Strategies for PLC
INTRODUCTION
Product
Strategy
Distribution
Strategy
Promotion
Strategy
Pricing
Strategy
Limited models
Frequent
changes
GROWTH
More models
Frequent
changes.
Limited
Expanded
Wholesale/
dealers. Longretail distributors term relations
MATURITY
DECLINE
Large number
Eliminate
of models.
unprofitable
models
Extensive.
Margins drop.
Shelf space
Awareness.
Aggressive ads. Advertise.
Stimulate
Stimulate Promote heavily
demand.Sampling
demand
Higher/recoup Fall as result of
Prices fall
competition &
development
(usually).
efficient produccosts
tion.
Phase out
unprofitable
outlets
Phase out
promotion
Prices
stabilize at
low level.
Percentage of Adopters
Categories of Product
Adopters
Early
Innovators Adopters
2.5%
13.5%
Early
Majority
34%
Time
Late
Majority
34%
Laggards
16%
Diffusion Process and
PLC Curve
Introduction
Growth
Decline
Maturity
Sales
Product
life cycle
curve
Early majority
Late majority
Early adopters
Innovators
Laggards
Diffusion
curve
What is a Service?
• Any act or performance that one party
can offer to another that is essentially
intangible and does not result in the
ownership of anything
• Medical, utilities, entertainment,
professional (law, medical),
transportation, financial
Characteristics of Services
• Intangibility – cannot be touched, seen,
tasted, heard or felt in the same manner
as goods.
• Inseparability –services are produced
and consumed simultaneously
• Heterogeneity – services are less
standardized and uniform than goods.
• Perishability – services cannot be
stored, warehoused or inventoried.
Managing Services
• Managing differentiation
– Can’t live by price alone
– Reliability, innovativeness and resilience
• Managing service quality
– Service gaps
– Common practices
• Managing productivity
– Seven approaches