11. Product & Service Strategies
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Products
• Product: tangible goods vs. services
• Levels of product
– Class & form
– Core, actual, augmented
• Product line
– Product line length
– Add new products to existing lines through
• Product line stretching
• Product line filling
• Product mix
– Width
– Length
– Depth
– Consistency
2
Product Classifications
• Consumer products (B2C)
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Convenience products (impulse, staple, & emergency)
Shopping products
Specialty products
Unsought products
• Industrial products (B2B)
– Process consumables
• Raw materials and component parts
– Capital items
• Factory installations & accessory equipment
− Support consumables
• Supplies/MRO items & business services
3
Product Life-Cycle
• Product life-cycle
– Can describe product class, product form, or brand
– Can be applied to styles, fashions, and fads
• Five distinct stages
– New product develop. stage – Maturity stage
– Introduction stage
– Decline stage
– Growth stage
• Framework for describing how products & markets
work
– Drawbacks indicate need for careful application
4
Product Life-Cycle Stages
• Introduction
– Profits negative or low
– Prices high
– Few competitors
• Growth
– Sales climb quickly
– New competitors may enter
• Profit growth eventually slows, then levels off
– Prices fall only slightly
– Product modification may begin
– Goal of promotion shifts
– Trade-off: high market share vs. high current profit
5
Product Life-Cycle Stages
(Cont.)
• Maturity stage
– Sales growth slows, then levels off
– Management practices include:
• Market modification
• Further product modification
• Marketing mix modification
• Decline stage
– Sales and profits decline
– Required decisions: harvest or delete/drop
6
Classification of Services
• Service provider
– Government, private nonprofits, businesses
• Goods-services continuum
• Service characteristics
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Intangibility
Inseparability
Inconsistency
Perishability
7
Service Quality
• Strategies
– Service-profit chain (relates to quality of
service encounter)
• Internal service qualitySatisfied employees
Greater service valueSatisfied customers
Profits & growth
• Assessing quality: Gap analysis
– Expectations vs. experience
8
Service Quality (Cont.)
• Internal marketing
• Interactive marketing
• Major marketing tasks for service firms:
– Increase competitive differentiation
• Through branding/addition of supplementary
services to core service product
– Integrate capacity management with efforts to
build demand
• E.g., through off-peak pricing
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