Unit 3By:

Sydney Eaker, Lauren David, Parker Stone, Lauren Wallace, Sarah Neely, and Khiala

Myers

Product/Service Management3.01 A, B, and C

Product/Service Management

A marketing function that involves obtaining, developing, maintaining and improving a product.

Factors affecting Product/Service Management

1. Customer Needs and Wants2. Company Goals and Strategies 3. Cost and Available Resources4. Competition5. Product Itself6. Government Regulation7. Stages in Life Cycle8. Business and Economic Trends

Benefits Offer products consumers want and

company’s profits increase When developing the right products,

a company can gain new customers When products are well managed

there is less of a chance for failure

The Role in Marketing Affects positioning of product Improves product success Gives product an image

3 Main Phases Developing New Products Monitoring Existing Products Eliminate Weak Products

Product Life Cycle represents the stages that a product

goes through during its life 4 Stages:

1. Introduction2. Growth3. Maturity4. Decline

PRODUCT LIFE CYCLE What are good examples of the stages?

Goals of Introduction Stage Increase Product Awareness Get the Customers attention with

promotion Lots of Special Promotions

Growth Stage Customers are aware of product,

sales increase Companies focus on customer

satisfaction Competition starts from other

companies

Maturity and Decline Stage Maturity

› The product’s sales level off. More money is spent on competition during this stage.

Decline› Sales start to decline. A company must

decide to alter the product, discount, or discontinue product.

Technology1. Point-of-Sale Systems

2. Interactive Touch Screen Computer

Technology3. Interactive TV

4. Customer Relationship Management

Technology5. Enterprise Resource Planning Systems

6. Internet

Technology7. Mass customization is a

technologically advanced method that allows businesses to produce products that are specialized for a very few customers.

Ethical Packaging3.01 D

Ethical Product Packaging Why do you think companies package

and label their products?› Creates a good impression, Help sell product, and

Communicate benefits

Packaging Concerns Product Safety

› Glass now plastic› Tamper-resistant packages› Airtight containers for foods› Wasteful packaging› Switching for spray cans and pumps

Label Information1. Must have name of

manufactures

2. Quantity of contents

Label Information3. Nutritional Information

4. Health claims are the same on all products; light, fat free, etc.

Label Information5. Warnings on products like alcohol and

cigarettes

6. How to care for clothes

Ethical Labeling What happens when a company fails to

inform customers about product risks?1. Company can get sued2. Harm to Customer

Planned Obsolescence› Making products that are known to not last

long, or change, so that people will need to replace them

3.02

Competitive Advantage the set of unique features of a

company and its products that are perceived by the target market as significant and superior to the competition

Multiple Products designed to integrate -Competitive Advantage

Positioning developing a specific marketing mix to

influence potential customers’ overall perception of a brand, product line or organization in general.

Purpose of Positioning Used to find a place for the product in

the marketplace and distinguish the product from competitors

Actual Position› How the customers see the product

The position and the actual position is the product are the same, IF MARKETING HAS BEEN SUCCESSFUL.

Relationship between the Target Market and Positioning

The objective is for marketers to position their products to appeal to the desires and perceptions of a target market.

Relationship between Competition and Positioning

It is important to use positioning to your advantage. You want to position your product so that customers will continue to purchase from you rather than the competition.  

The pricing, promotion, product development, and distribution strategies are all planned with an eye toward the competition.

Market Position unique image of a product or service in

a consumer’s mind relative to similar competitive offerings.

6 Bases For Positioning:1. Attibute- one way of positioning a

product is to highlight a product feature or attribute.

2. Price and Quality – this position strategy may stress high price as a sign of quality, or emphasize low price as an indication of value.

3. Use or Application – stressing unique uses or applications can be an effective means of positioning a product.

6 Bases Cont.4. Product User – this positioning strategy

encourages use of a product or service by associating a personality or type of user with the product.

Product Classification – when positioning according to product class, the objective is to associate the product with a particular category of products.

Competitor – sometimes marketers make an effort to demonstrate how they are positioned against the competitors that hold a strong market position.

Positioning Strategies revolve around 3 areas

Consumer perception – are the images consumers have of competing goods and services in the marketplace.

Competitors in the marketplace – The ideal situation is when consumers perceive a business’ products to be superior to its competitors’ products or services.

Changes in the business environment – organizations need to be aware of changes in the business environment that might affect the position of their products or services.

Brand Name Should: Describe the product’s benefits and uses Be easy to read, pronounce, and

remember Create appealing images Be distinctive Be adaptable Be legally available for use Be appropriate for packaging and

advertising

Levels of Brand Loyalty Brand Recognition – is when consumers

become aware of a brand and recognize the brand.

Brand Preference – when consumers prefer to purchase a certain product brand based on their positive experience with the brand.

Brand Insistence – when the consumer insists on “their” brand and will not accept substitutes.

Brand Strategies Brand Positioning – means the way

consumers see the brand as compared to a competitive brand.

Brand extension – in which an existing brand name is used for a new or improved product line. Starbucks extends its coffee line to include ice cream and candy bars.

Brand Strategies Cont. Brand licensing - allows one company to

use its brand name, logo, or character for a fee.

For example, NFL Teams allow logo to be used on merchandise

Co-branding. – occurs when companies join forces to increase recognition, customer loyalty, and sales of both brands.

For example, United Airlines and VISA combine brands for a credit card.

International Branding Marketers must research their brands

to determine whether they would be acceptable in different countries.

How would the brand be pronounced in Italian, Spanish, German, etc.

Is the brand name culturally taboo in certain areas of the world?

Impact of Internet on Branding

MUST have a web presence to be successful.

Most companies must determine what URLs are available. They need to have web addresses that represent their brands.

It is also more common for companies to promote their product using social media sites such as Facebook and Twitter.

Forms of Branding A brand is a design, name, symbol,

term or word that distinguishes and identifies a company and/or products or services

A corporate brand represents the entire company or organization

For example, Coca-Cola, Ford, McDonalds, Kraft or Microsoft

Forms of Branding A product brand represents a

specific product of a company or organization

For example, Diet Vanilla Coke, Big Mac, or Windows XP

Forms of Branding A private distributor brand, also

called a store brand For example, Radio Shack brand of

batteries, Lowe’s brand of macaroni and cheese

Trade Character Personified symbol that represents

the brand name

3.03

Product Mix All the types of products a company

makes or sells Some companies have different

brands for different markets› Coca-Cola has different drinks for

sparkling beverages, water, juice, performance, coffee, tea, and international flavors.

Reasons to Narrow Product Mix

Product Width – number of different product lines

CONTRACTING› Ease on management› Cost effective› Simplicity› Consistency

Reasons to Broaden Product Mix

Product Width – number of different product lines

EXPANDING› Reach all markets› Competitive advantage› Ex: Red Lobster specializes in seafood, but

offers chicken and steak to broaden their product mix.

Reasons to Deepen Product Mix

Product Depth – number of items offered within each product line

EXPANDING› Variety› QuantityEx: Kohl’s carries various quantities of sizes,

colors, & styles of Levi Jeans.

Reasons to Offer to Shallow Product Mix

Product Depth – number of items offered within each product line

CONTRACTING› Cost effective› Satisfy small markets

Importance of Product Mix Businesses must plan their product

mix carefully because they cannot offer all the products that customers may want.

They should be a profitable market for product offered by a company

Trading Up/Down Trading up: Adding a higher-priced

product to a line to attract a higher-income market and improve the sales of existing lower-priced products.

Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status.

Positioning Product Mix Strategies

Positioning – actions marketers take to create a certain image of a product in the minds of the customers• In Relation to a Competitor• In Relation to a Product Class or Attribute• In Relation to a Target Market• By Price and Quality • Difficult to change

Ways Lines can be organized

Product Line – group of closely related products manufactured by a business

Product Item – specific model, brand, or size of a product within a lineEx: P&G has over 250 products within 21

product linesDish care is a product line

Cascade, Dawn, Joy, & Ivory are items

3.04

Physical Distribution Organizing and moving products

through the channels Logistics = ordering, transporting,

storing, handling and inventory control

Channel Functions Providing marketing information:

› Companies rely on market research to determine their target markets’ needs and wants

› Ex: small business producing handmade greeting cards

Promoting products:› Can be expensive› Retailers often take a large portion of

promotion responsibilitiesEx: local supermarkets/discount stores

Channel Functions Cont. Contact Matching Negotiating with the customers:

› Different prices are paid by the wholesaler, retailer and consumers based on negotiation

Physical distribution Financing and risk taking:

› Moving products through a channel costs money› When channel members work together to finance

activities and to assume financial risks, channels will be more effective

Tasks of Intermediaries-Retailer

Much stronger personal relationship with the consumer

Hold a variety of products Offer consumers credit Promote and merchandise products Price the final product Build retailer ‘brand’ in the high street

Tasks of Intermediaries-Internet

Sell to a geographically disperse market

Able to target and focus on specific segments

Relatively low set-up costs Use of e-commerce technology (for

payment, shopping software, etc) Paradigm shift in commerce and

consumption

Horizontal Conflict Occurs between channel members at

the same level› Good, old-fashioned business

competition› Ex: two retailers selling pet supplies

compete to sell to the same target market

Vertical Conflict Occurs between channel

members at different levels within the same channel› Producers and wholesalers,

wholesalers & retailers, or producers and retailers

Dual Distribution A manufacturer may sell its products

through multiple outlets at the same time:› Toll-free phone system› Company website› Multiple retailers

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