1 / 60

MKTG 504 - Product and Product Management

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.

Anita
Download Presentation

MKTG 504 - Product and Product Management

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MKTG 504 - Product and Product Management A product is anything the consumer thinks it is!! Dr. Dennis Pitta University of Baltimore

  2. 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.”

  3. Product: Not limited to goods - it is goods, ideas, services, people, organizations, places.

  4. Product: = Physical product + other tangible components + intangible components + social impact

  5. 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

  6. What is the product? University degree Politician You - Yourself as a job candidate

  7. Really what is product? ANYTHING A CONSUMER THINKS IT IS

  8. Examples of what people think • Bubble-Yum Bubble Gum - MADE WITH SPIDER’S EGGS • Kentucky Fried RAT • WORMS in Big Macs

  9. 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.....

  10. Sales&profits($) Introduction Growth Maturity Decline Time Sales & Profit Life Cycles

  11. Important Characteristics => PLC • SALES • RATE OF SALES GROWTH • # OF COMPETITORS • PRODUCT • PROMOTIONAL STRATEGY • PRICING • DISTRIBUTION

  12. Tracking the PLC over time: PETRIFICATION SALES __________ RATE OF SALES GROWTH __________ # OF COMPETITORS __________ PRODUCT __________ PROMOTIONAL STRATEGY __________ PRICING __________ DISTRIBUTION __________

  13. Bucky Beaver and Ipana

  14. 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

  15. CLASSIFYING PRODUCTS • Product Category (Class): • Automobile/container/Timepiece • Product Form: • Convertible/Tin Can/Watch - Wrist • Product Item (brand): • Ford Probe/American Can/Seiko

  16. How much effort would you spend buying chewing gum?

  17. How much effort would you spend buying a refrigerator?

  18. How much effort would you spend buying a one of a kind masterpiece by Rembrandt?

  19. CLASSIFICATION OF CONSUMER GOODS • CONVENIENCE • SHOPPING • SPECIALTY • UNSOUGHT

  20. Convenience Products Shopping Products Unsought Products Specialty Products Consumer-Goods Classification • 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 • 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

  21. 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

  22. 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….

  23. Product Mix - all the product lines offered Consistency Product Mix Width - number of different product lines Length - total number of items within the lines Depth - number of versions of each product

  24. 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’

  25. Product Mix Strategy 1 WIDTH - How many different product line there are within the company. (Sears - WIDE - Circuit City - NOT AS WIDE; Britches - NARROW)

  26. 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?

  27. 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

  28. Product Mix Strategy A continual addition of new products and deletions of old to meet the company’s needs.

  29. Something new... New Product Development

  30. Product Innovation Process (New Product Development) • Starts with a product idea • Let’s take a North American summer staple - corn

  31. How does one hold corn on the cob?

  32. How does one hold corn on the cob? • With a corn holder!!

  33. What does corn look like? •  One end is pointed • One end is blunt

  34. 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

  35. The Solution?

  36. The Pitta Improved Cornholder (PIC)

  37. 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)

  38. Where would someone get this idea? …from eating corn!!

  39. Product Innovation Process • 1 IDEA GENERATION • Sources: • Organization • Secondary sources: • Patent Office; Idea Mills; • Independent Inventors • Consumers (e.g., Kleenex)

  40. Who thought of the product: • Army nurses (after WWI) • Thought cellulose fiber bandages might be useful • ‘Facial Tissue’

  41. 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??

  42. 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)

  43. The Pitta Improved Cornholder (PIC) Critical Evaluation • We asked friends • We asked our mothers • We asked our wives • We demonstrated the PIC to strangers...

  44. Product Innovation Process - Stage 3 • 3 ECONOMIC ANALYSIS • Forecast Sales • Return on Investment • Effect on Product Line • Cash Flow • Profit • Breakeven Analysis

  45. 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

  46. (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

  47. (PIC) Breakeven Analysis • BE = FC/(P-VC) = units • BE (in units) = $27,000/(.50-.20) = 90,000 units • Forget it!

  48. 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)

  49. MKTG 504 - Product and Product Management Commercialization – the last stage of the Product Innovation Process Dr. Dennis Pitta University of Baltimore

  50. COMMERCIALIZATION • A public offering of the product to the marketplace • Two forms • Commercialization - Nationwide • Roll Out – limited geographic areas – one at a time

More Related