Objectives To examine the nature and scope of product planning. To analyze the steps in the product development process. To distinguish between the width and depth of product lines. To identify the elements of a product mix. To recognize the importance of product research and monitoring. Main Menu
Product Planning Product Development Products Can be defined as a good or a service Are obtained through an exchange Are often targeted to a specific group of people May be associated with an image or reputation
Goods Are the physical items available for customers Include a product you can touch, taste or feel Encompass an items physical features and related services Services Cannot be touched or tasted Are performed as an action
May be categorized as either pure or product-related Pure Services Do not include a tangible product Are the primary product of a business Include direct services offered by businesses, such as: banks insurance agencies beauty salons
Product-Related Services Include services which correspond to a physical product, such as: product warranties delivery services gift wrapping cleaning or repair services Product Planning Refers to the decisions and processes used to create a product mix
Involves decisions about a products features and services Consists of factors, such as: creating new products eliminating old products improving current products Product Plans Allow businesses to create new marketing opportunities Help to evaluate the success or failure of current products Require extensive research and development
Identify new markets and potential sales outlets Follow a product from conception to sales Product Decisions Include: brand name packaging label product design product-related services
Brand Name Is a name, term or symbol used to identify related products Should be distinctive and easy to recognize Is developed to attract customers attention Is often a companys greatest asset Is an essential element of a products development Branding Creates a specific image for a
product or company Helps to position a product within a given market Can be used as a powerful marketing tool and resource Allows an easy transition for new products due to familiarity Represents a perceived level of quality Reminds customers to purchase a certain brand Packaging
Should meet the following requirements: be eye-catching and appealing protecting the product creating a positive product image identifying the brand or manufacturer Can also be designed to shoplifting or shipment costs reduce Statistics show the cost of a products packaging may account
for nearly 40 percent of a consumers retail price. However, effective and appealing packaging may also increase sales by almost 50 percent. Labeling Provides critical product information, such as: brand name quality or grade weight or size ingredients product care and instructions manufacturing origin
possible warnings artwork, slogans or logos Product Design Refers to the way a product works or looks Can help to sell a product based on specific features, such as: creating spill-proof shelves in a refrigerator adding a camera lens to a cell phone designing a miniature detergent pen to fit on a keychain producing vertical ice cube trays to
fit inside a water bottle Design Decisions Include: color appeal to the products target market change based on consumer preferences alter the demand for a product used to distinguish various brands
relate to the image and packaging of a product toothpaste should reflect a fun or refreshing color bottled drinks in a clear container must be appealing Design Decisions Include: quality related to the parts, materials or construction elements of a product considered in relation to sales price determined before a product is created or
produced distinguish competing products for example: a company may choose to print catalogs on a higher quality paper in order to stand out from the competition Quality Control Is the process of maintaining product standards Is an important aspect of product development Is often associated with a companys image
Quality standards can be set for the following: appearance performance consistency safety Quality Control Methods Quality circles consisting of a small group of employees who identify methods for product improvement in an informal and constructive manner
allowing employees to make decisions about production and design Include: monitor large defects and errors prior to distribution Quality Control Methods Include: formal inspections should occur at each stage of the production process
are costly, yet effective are conducted by employees, equipment, auditors and inspectors consist of specified check-list evaluations Quality Control Should be included in a product plan Should consider customer needs and protection May occasionally be dictated by government regulations for example: if a car seat
manufacturer initiates a product recall, they must replace the old car seat with a new seat Product-Related Services Benefit both the customer and company customers receive valuable services for a bundled price businesses create additional customer loyalty and brand recognition
Could include post-sales services, such as: providing free jewelry cleaning to customers providing custom alterations on a mens suit offering an extended warranty on a lawn mower Product Line Is a group of related items or brands sold by the same company Comprises products of similar sizes and types Includes specific product divisions or categories, such as:
Kelloggs cereal line Kelloggs Pop-tarts line Kelloggs fruit snack line Multiple Product Lines Can be similar or unrelated products in a companys overall product mix most companies offer more than one product line and offer numerous items within each line for example: Proctor & Gamble manages more than 100 different brands within approximately 25 product lines
Proctor & Gamble Product lines include: cosmetics dishwashing hair care household cleaners laundry and fabric care oral care paper products shaving products snacks and coffee
Proctor & Gamble Specific brands include: correspond to a specific product line or category include nearly 100 brand names, such as: Comet Ivory Jif Cover Girl Crisco Hawaiian Punch Sunny Delight Vicks
Mr. Clean Pringles Iams Head&Shoulders Pantene Tide Bounty Duracel Pampers Old Spice Cascade Tampax
Folgers Cheer Product Divisions Within each individual company or brand there may be additional product divisions or product categories, for instance: Pampers may divide products into lines based on sizes (new born, infants, toddlers, preschoolers) Vicks is divided into lines for baby rub, vapor rub, etc.
Duracel has divided products into related categories (batteries, rechargeables, flashlights, hearing aids, photo imaging, etc.) Kraft Product Lines Snack Beverage Cheese cookies coffee
dinner kits mayonnaise frozen pizzas pie crusts hot dogs dry desserts pastas and sauces
Product-Line Decisions Consist of offering the right combination of products within a given line Are usually made by product managers responsible for the following decisions: determining the expansion of a product line considering which product items should be eliminated from a line evaluating the impact of product additions and deletions on the profitability of other items in the line allocating resources to items on the basis of
recommended marketing strategies Product Item Describes a specific brand or individual product within a line Refers to the model, size or design of a given item Post Raisin Bran cereal Nike Mens Golf Shoe Samsung MiniDV Digital Camcorder As another example, all the courses a college or university offers constitute its product mix; courses in the marketing
department constitute a product line; and the basic marketing course would be the product item. Product Mix Includes ALL the products a company makes or sells Consists of the specific products a business offers Includes the lines, brands and products a business produces May vary based on customer needs or preference
Refers to the width and depth of a business product offerings Product Life Cycle Is the cycle through which every product goes through from launch to expiration Steps consist of: 1. introduction stage - the product is introduced to the market 2. growth stage - increase in sales and profits 3. maturity stage - product is established and manufacturer tries to maintain the demand
4. decline stage - the demand for the product decreases Product Width Refers to the number of different product lines a business produces Consists of the variety of categories or divisions a business offers for example: an athletic retailer which markets four brands of shoes: Nike, Reebok, Adidas and New Balance has a product width of 4 since
it sells four distinct shoe lines Product Depth Refers to the number of available items offered in each product line Refers to the range of items a customer can purchase in each category for example: Nike may produce hundreds of shoe products within their mens line, each varied by color, size, style, fabric, price, etc.
Is geared toward a specific group or marketing segment Product Mix Decisions Include: some companies may offer a wide product mix buffet-style restaurant may offer a wide range of food styles and types of cuisines some companies may offer a deep product mix Mexican restaurant may offer 40 different dinner combinations but within a narrow (Mexican food)
product line Determining a Product Mix Is a key element of product-service planning Involves the following steps: identifying an appropriate target market selecting which lines and items to sell reviewing or modifying product offerings creating and developing new products selecting effective marketing strategies for each product
Product Development Is the process of creating new or improved products Involves brainstorming, designing, building, testing and marketing products Is conducted by the research and development department of large companies Consists of significant trial and error research New Product Development Consists of recognizing product opportunities
Involves investigating and developing product concepts Involves an organized research and development process Product Development Process Includes: idea generation idea screening concept assessment product development product testing
commercialization evaluation Idea Generation Consists of brainstorming new product ideas Should be relevant to company objectives Can come from a variety of sources: customer feedback competitors employees research and development teams
Idea Screening Includes evaluating product ideas and feasibility Involves eliminating inappropriate or weak product ideas Analyzes ideas on the basis of: practicality financial capability marketability demand and profit potential company objectives
Concept Assessment Includes evaluating design factors and influences, such as: production costs production capabilities feasibility and resources potential sales impact potential for risk or loss Product Development
Includes creating a physical model or sample of the product Consists of engineering and technical evaluations, such as: durability tests range and motion studies health and safety assessments Requires a prototype of the product Prototype
Is a working model or sample of a product May be a miniature version of a design May consist of slightly different materials than the final model Allows developers to study the product design and make additional changes before the final production Methods for Product Development Outsourcing Includes input, decisions and work from businesses and individuals outside of the actual
company may be utilized for specific product development tasks, such as: strategic design and specifications materials specifications packaging design assembly drawings
user guides and owner manuals Methods for Product Development Include: In-house development may be unrealistic due to available resources and manpower allows companies to control product quality and production is conducted within the actual company Product Testing
Is expensive and complicated, but may ultimately save companies millions of dollars May include the following strategies: focus groups test markets marketing research Focus Groups Include a selected group of people used to analyze and test the concept of a given product Involve 8 to 12 people in a group interview
process Are usually held in a conference room and conducted by a moderator Can be used to evaluate the effectiveness or likeability of a product Test Markets Include marketing or selling a product in an exclusive area Are used to determine potential demand for a product Include a limited introduction of a product to
analyze public reaction Are used to prevent possible distribution of unsuccessful products Are usually conducted within specific regions or cities Do not provide a guarantee of actual success Approximately five percent of new products are ever sold on shelves. Marketing Research Is the process of gathering, analyzing and collecting information about a particular target market, competitor or product Is used to:
develop or test products assess customer needs and attitudes determine sales prices evaluate market growth and potential verify competitor information Commercialization Includes introducing a product to the marketplace Includes mass distribution to targeted
customers Requires advertising and marketing the product Involves a great deal of cost and planning Why Do New Products Fail? The market size was overestimated Products were poorly designed or positioned Production and development costs were too high The commercialization process took too long and additional competitors emerged
Additional Product Planning Includes: monitoring new or existing products improving current products creating product variations eliminating weak products New Products Must be continually monitored Account for nearly 35 percent of a companys
total sales Can help build or sustain a brand image May increase mark-ups and profit rates due to novelty Become a major component of a companys product mix Line extensions include adding new products or product lines. Improved Products Are usually identified by the words New & Improved Include a complete revision or new model of
an item examples include: Pentium computer processor has been improved multiple times (Pentium 2, Pentium 3, Pentium 4) car companies must continually improve their gas mileage or safety features in order to sustain sales Product Variation Consists of making slight variations or changes to an original product
Is used to create different models, shapes, sizes, colors and uses for a specific item Can help to increase sales and popularity for an established brand examples include: Febreeze odor remover spray Swifter dry mop Eliminating Weak Products Is an important strategy for the long term success of a business Allows companies to invest in more
successful items Products may be eliminated for any of the following reasons: lack of customer appeal product or service is obsolete or has been replaced product conflicts with company objectives lack or loss of profit Failed Products Include: Coca Colas Surge drink
Crystal Clear Pepsi Edible Deodorant Garlic Cake Heinz green ketchup Heinz chocolate French fries References (2008). Retrieved October 8, 2008, from Proctor & Gamble: www.pg.com (2008). Retrieved October 8, 2008, from Kraft: www.kraft.com (2008). Retrieved October 8, 2008, from Nike: www.nike.com 'Garlic Cake' and edible deodorant: When products go wrong . (2000, February 1). Retrieved October 8, 2008, from CBCNews:
http://www.cbc.ca/consumers/market/files/home/failedproducts/ind ex.html Acknowledgements Production Coordinators Liz Weber Amy Baker Maggie Bigham Brand Manager Megan OQuinn Graphic Designer Daniel Johnson Technical Writer
Jessica Odom V.P. of Brand Management MMXIV Clayton Franklin CEV Multimedia, Ltd. Executive Producer Gordon W. Davis, Ph.D.
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