Chapter 11
Product Strategies
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Objectives
1. Define the term product and distinguish between goods and
services.
2. List the classifications of consumer goods and services, and
briefly describe each category.
3. Describe each of the types of business goods and services.
4. Discuss how total quality management (TQM) is
implemented.
5. Explain the role benchmarking plays in achieving continuous
improvement.
6. Explain why firms develop lines of related products rather
than marketing individual items.
7. Identify the major product mix decisions that marketers must
make.
8. Explain the concept of the product life cycle and how a firm
can extend a product’s life cycle.
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The introduction of this product by Radio
Shack leads you to initially believe the
promotional Product is something other
than what it turns out to be.
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What is a Product?
• People buy want satisfaction rather than
objects.
• A product is a bundle of physical, service, and
symbolic attributes designed to satisfy a
customer’s wants and needs.
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This advertised product provides
attributes designed to satisfy a
customer’s wants and needs in a time
when it is most needed.
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Several Ways Services Can Be
Distinguished From Goods
1. Services are intangible.
2. Services are inseparable from the service
providers.
3. Services are perishable.
4. Companies cannot easily standardize
services.
5. Buyers often plan roles in the development
and distribution of services.
6. Service quality shows wide variations.
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Importance of the Service Sector
• The service sector makes a crucial
contribution to the U.S. economy.
• The service sector produces almost $2.5
billion annually in sales receipts.
• Services account for four out of five jobs in
the U.S.
• Services also play a crucial role in the
international competitiveness of U.S. firms.
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Types of Consumer Products
• Convenience Products
– Goods and services that consumers want to
purchase frequently, immediately, and with
minimal effort.
– Marketers further subdivide the convenience
category:
• Impulse goods and services are purchased on
the spur of the moment.
• Staples are convenience goods and services
that consumers constantly replenish to maintain
a ready inventory.
• Emergency goods and services are bought in
response to unexpected and urgent needs.
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Shopping Products
 Consumers buy shopping products only after
comparing competing offerings on such characteristics
as price, quality, style, and color
 Typically cost more than convenience purchases.
 Include tangible items.
 Purchaser of a shopping product lacks complete
information prior to the buying trip and gathers
information during the buying process.
 Features distinguish shopping products: physical
attributes, service attributes such as warranties and
after-sale service terms, prices, styling, and places of
purchase.
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Specialty Goods
•
•
•
•
•
Offer unique characteristics.
Typically carry a high price.
Represent well-know brands.
Purchasers know what they want.
Buyer is willing to pay asking price.
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Classification of Consumer Products
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What classification would you place the
product in this commercial in?
Would you agree it falls in the “specialty”
product area?
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Quality as a Product Strategy
Quality is a key component to a firm’s success
in a competitive marketplace.
Total quality Management (TQM)—continually
improve products and work processes with
the goal of achieving customer satisfaction
and world-class performance.
The quality movement is very strong in
European countries.
ISO 9002 standards define international
criteria for quality management and quality
assurance.
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ISO standards define criteria for quality
management and quality assurance for firms
seeking certification.
ISO 9001 2000 QUALITY MANAGEMENT, what
are the requirements for becoming certified?
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The Benchmarking Process
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TQM
• Total Quality Management (TQM)—continually
improve products and work processes with the
goal of achieving customer satisfaction and
world-class performance.
• How can a business achieve this “TQM”?
– This web site has several ideas.
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Why Firms Develop Lines of Related
Products
•
•
•
•
Desire to grow.
Enhancing the company’s position.
Optimal use of company resources.
Exploit the product life cycle.
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Product Mix
The assortment of product lines and individual
product offerings that the company sells. The
right blend of product lines and products allows a
firm to maximize sales opportunities.
• Product Width-the number of product lines
offered.
• Product Length-the number of different
products a firm sells.
• Product Depth-variations in each product
that a firm markets in its mix.
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The Product Life Cycle
Introductory Stage
• A firm works to stimulate demand for the new market
entry.
• Technical problems are common during the introductory
stage.
Growth Stage
• Sales volume rises rapidly during the growth stage
• Success attracts competitors
• A firm may need to make improvements and changes to
a product during this stage.
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The Product Life Cycle (2 of 2)
Maturity Stage
• Sales or a product category continue to grow
• Differences between competing products diminish.
available supplies exceed industry demand for the first
time.
• Heavy promotional outlays emphasize any differences
that still separate competing products.
Decline Stage
• Innovations or shifts in consumer preferences bring
about an absolute decline in industry sales.
• Sales fall, profits for the product category decline.
• Companies gradually drop the declining items.
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Product Life Cycle
“Although the life of different products varies, in
general product life cycles are getting
shorter. This is partly due to rapidly changing
technology--one new invention may make
possible many new products that replace old
ones.”
Source: toLearn.net/marketing
This web site provides a very good overview of PLC.
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Extend the Product Life Cycle
• Increasing frequency of use or users
• Finding new uses for the product
• Changing package size, label, or quality.
• Purified Ice Cubes, AquaICE by Icerocks, 4
trays of 12 cubes each in plain & flavors, $4
($.10/cube) 7/06
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