MKTG 504 - Product and
Product Management
A product is anything the consumer
thinks it is!!
Dr. Dennis Pitta
University of Baltimore
PRODUCT
A complex bundle of attributes
Most important element of the marketing
mix.
Charles Revson: “In the factory we make
cosmetics, in the store we sell _HOPE”
Elmer Wheeler: “Don’t sell the steak, sell the
SIZZLE.”
Product:
Not limited to goods - it is goods,
ideas, services, people,
organizations, places.
Product:
= Physical product + other
tangible
components
+ intangible components
+ social impact
Product Component Examples:
Physical good:
wood, plastic, chemical (shaver)
Other tangibles:
service, brand name, close shave, package
Intangible:
Eminem likes it
Social Impact:
More young men are clean shaven
What is the product?
University degree
Politician
You - Yourself as a job candidate
Really what is product?
ANYTHING A CONSUMER
THINKS IT IS
Examples of what people think
Bubble-Yum Bubble Gum - MADE WITH
SPIDER’S EGGS
Kentucky Fried RAT
WORMS in Big Macs
Product Life Cycle
A dynamic model of how product changes
over time.
Importance:
different product characteristics at each
stage:
Lead to different marketing strategies
Emphasize different combinations of the 4
P’s.....
Sales & profits ($)
Sales & Profit Life Cycles
Introduction
Growth
Maturity
Time
Decline
Important Characteristics => PLC
SALES
RATE OF SALES GROWTH
# OF COMPETITORS
PRODUCT
PROMOTIONAL STRATEGY
PRICING
DISTRIBUTION
Tracking the PLC over time:
PETRIFICATION
SALES
RATE OF SALES GROWTH
# OF COMPETITORS
PRODUCT
PROMOTIONAL STRATEGY
PRICING
DISTRIBUTION
__________
__________
__________
__________
__________
__________
__________
Bucky Beaver and Ipana
Examples of Products in Each
PLC Stage
Intro: DVD-R DRIVES
Growth: DVD’S
Shakeout: PC’S
Mat-Sat: VCR’S
Decline: RECORD CHANGERS
Petrification: IPANA TOOTHPASTE
CLASSIFYING PRODUCTS
Product Category (Class):
Automobile/container/Timepiece
Product Form:
Convertible/Tin Can/Watch - Wrist
Product Item (brand):
Ford Probe/American Can/Seiko
How much effort would
you spend buying chewing
gum?
How much effort would
you spend buying a
refrigerator?
How much effort would
you spend buying a one of
a kind masterpiece by
Rembrandt?
CLASSIFICATION OF CONSUMER
GOODS
CONVENIENCE
SHOPPING
SPECIALTY
UNSOUGHT
Consumer-Goods
Classification
Convenience Products
Shopping Products
Buy frequently & immediately
> Low priced
> Many purchase locations
> Includes:
• Staple goods
• Impulse goods
• Emergency goods
Buy less frequently
> Gather product information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Specialty Products
Unsought Products
Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
New innovations
> Products consumers don’t
want to think about.
>Require much advertising &
personal selling
CLASSIFICATION OF CONSUMER
GOODS
 CONVENIENCE
PURCHASED WITH A MINIMUM OF EFFORT
 SHOPPING
HEAVY COMPARISON OF PRICE, QUALITY, AND
STYLE
 SPECIALITY
VERY STRONG BRAND PREFERENCE: SPECIAL
TIME AND EFFORT - PRICE NOT VERY
IMPORTANT
CLASSIFICATION OF CONSUMER
GOODS
 UNSOUGHT
This is a difficult product. Examples:
Life insurance to young unmarried men
Umbrellas to young unmarried men
Vacuum cleaners to young unmarried men…..
Chain Saws to young unmarried women….
Product Mix
Width - number of
different product
lines
Length - total
number of items
within the lines
Depth - number of
versions of each
product
Product Mix all the product
lines offered
Product Mix Strategy
Decisions made at three levels:
1 Product ITEM (specific version) - keep
or drop.
2 Product LINE (group of related
products) - deepen or shorten.
3 Product MIX (composite of all
products) - ‘what markets to be in’
Product Mix Strategy
1 WIDTH - How many different product
line there are within the company.
(Sears - WIDE - Circuit City - NOT AS
WIDE; Britches - NARROW)
Product Mix Strategy
2 DEPTH - The average number of items
offered by the company within each
line.
Maxwell House Coffee - DEEP; Sears NOT SO DEEP
The LIMITED STORE - How deep?
Product Mix Strategy
3 CONSISTENCY - Relationship of
products to one another - in end use.
(i.e., INTERACTION - together)
G.E.; XEROX - GOOD CONSISTENCY
HUNT-WESSON -Paint, Matches, Food
Product Mix Strategy
A continual addition of new products
and deletions of old to meet the
company’s needs.
Something new...
New Product Development
Product Innovation Process (New
Product Development)
Starts with a product idea
Let’s take a North American summer
staple - corn
How does one hold corn on the
cob?
How does one hold corn on
the cob?
With a corn holder!!
What does corn look like?
 One end is
pointed
One end is blunt
What is a problem with
ordinary corn holders?
It is tough to get
them out of an ear
that has been eaten
One sticks in the
blunt end
Getting it out is
often messy
The Solution?
The Pitta Improved Cornholder
(PIC)
St ainless st eel pins
Plunger
Spring
The Pit t a Improved Cornholder
PIC Product Benefits
Easy to remove (the one stuck in the
blunt end of the ear comes off easily)
Fun at parties - (dodge the flying corn
cob)
Saves laundry (less mess, less
laundry)
Where would someone get this
idea?
…from eating corn!!
Product Innovation Process
1 IDEA GENERATION
Sources:
Organization
Secondary sources:
Patent Office; Idea Mills;
Independent Inventors
Consumers (e.g., Kleenex)
Who thought of the
product:
Army nurses (after
WWI)
Thought cellulose
fiber bandages
might be useful
‘Facial Tissue’
A product is anything someone
thinks it is….
When was the last time someone blew
his or her ‘face’?
We use Kleenex as a disposable
handkerchief!
Is it a facial tissue??
Product Innovation Process Stage 2
2 SCREENING
Critical evaluation
Possible problems:
Rejecting a Good Product (Type 1
Error)
Accepting a Bad Product as a good one
(Type II Error) (I would hate to make this
type testing Handgrenades)
The Pitta Improved Cornholder
(PIC) Critical Evaluation
We asked friends
We asked our mothers
We asked our wives
We demonstrated the PIC to
strangers...
Product Innovation Process Stage 3
3 ECONOMIC ANALYSIS
Forecast Sales
Return on Investment
Effect on Product Line
Cash Flow
Profit
Breakeven Analysis
The Pitta Improved Cornholder
(PIC) Economic Analysis
Breakeven Analysis
The first cornholder cost $27,000
The second cost $.02
Probable retail price for two=> $1
Probable wholesale price for two
=>$.50
(PIC) Breakeven Analysis
Calculates # of units to be sold at a
price to just breakeven
Fixed Cost = $27,000
Variable Cost (per unit) = $.20 (2
holders, packaging, overhead)
Price (wholesale) = $.50 per unit
(PIC) Breakeven Analysis
BE = FC/(P-VC) = units
BE (in units) = $27,000/(.50-.20) =
90,000 units
Forget it!
Product Innovation Process
4 DEVELOPMENT
Determining Product Benefits
Creating the Package, Brand Name
5 TEST MARKETING
(Small Scale Introduction)
Marketing Plan
6 COMMERCIALIZATION (Roll Out)
MKTG 504 - Product and
Product Management
Commercialization – the
last stage of the
Product Innovation
Process
Dr. Dennis Pitta
University of Baltimore
COMMERCIALIZATION
A public offering of the product to the
marketplace
Two forms
Commercialization - Nationwide
Roll Out – limited geographic areas – one
at a time
Roll out – an example
Tio Sancho rolled
out its new nonfracturing taco shell
against the largest
Tex-Mex food
manufacturer – Old
El Paso.
Tio Sancho was
small with few
resources
Roll Out vs. Commercialization
Commercialization
Roll Out
very Costly
Complex
Hits the whole
market
simultaneously
(Comprehensive)
Less expensive
Simpler
Risks being copied
in the regions not
covered
Adopter Categorization of the Basis of
Relative Time of Adoption of Innovations
34%
Early
majority
2 1/2%
Innovators
13 1/2%
Early
adopters
34%
Late
majority
16%
Laggards
Time of adoption innovations
What is a Brand?
User
Culture
Features
Personality
Benefits
Advantages
Good Brand Names:
Distinctive
Suggest
Product
Qualities
Suggest
Product
Benefits
Lack Poor
Foreign
Language
Meanings
Easy to:
Pronounce
Recognize
Remember
Product Differentiation
Form
Features
Performance
Durability
Reliability
Repairability
Quality
Style
Conformance
Quality
Design
Maturity Stage
Market Modification
Product Modification
Marketing-Mix Modification
Decline Stage
Increase investment
Resolve uncertainties - stable
investment
Selective niches
Harvesting
Divesting
Market Evolution
Emergence
Growth
Maturity
Decline
Upcoming Topic
PRICE