What is product planning?

Chapter 30

Product Planning

• All the decisions about the features that are needed to sell a businesses products, businesses products, services, and ideas.

• Includes: packaging, labeling, warranties, branding, and product mix

Product Planning allows businesses to…

• Coordinate existing products

• Add new products– http://www.hershey

Reese's Peanut Butter cup with caramel

Hershey’s Kissable – http://www.hersheys.com/products/details/kissables/index.asp?name=kissables

• Delete products that no longer appeal to customers

Hershey’s Kissable Brand Chocolate Candies

Hershey's Cookies 'n' Mint chocolate bar

Product Mix

• All the different products that a company makes or sells

• EX) Procter & Gamble makes hand soaps (Ivory), body lotions (Oil of Olay), laundry detergent (Tide), shampoos (head and shoulders) etc.Kraft Products

Product Mix

• Retailer has a product mix that is made up of different products that fill the store.fill the store.

• Must plan carefully, only limited space, and must satisfy needs of customers

Product Mix

• Adding more products, may not result in increase sales, sometimes it can take away sales from existing products.– Ex) Pepsi One takes away from Diet Pepsi sales– Ex) Pepsi One takes away from Diet Pepsi sales

• The type and number of products that a retail store offers must be based on the image the business is trying to project and the market they are trying to reach.

Product Mix

• Product mixes are different for each store based on objectives and market servedand market served

• Ex) Express has more trendsetting popular clothing while Brooks Brothers has more clothing targeted to the business segment

1/16/09 To Do List

• Gap Article

• Product Planning Notes 8-16

• Pet Products Activity www.petsmart.com• Pet Products Activity www.petsmart.com

• Homework: Read Chapter 30—Quiz Wednesday

• Sign Up for Competitive Events

• Sample Role Play

Product Line• A group of closely

related products manufactured/sold by a companya company

• EX) Ford has many product lines: SUV’s, Full size trucks, luxury,

• Kellogg’s Cereal

• Pillsbury Cake Mixes and Bread products

Product Line

• Retailers usually carry more than one product line. EX) Dierbergs has Libby and Del has Libby and Del Monte canned fruits

• Creve Coeur Camera carries Kodak, Memorex, & Scotch videotapes

Product Item• A specific model,

brand,or size in product line.

• Retailers can many • Retailers can many product items for each product line they sell

• Ex) Famous Barr carries many styles & sizes of GUESS? Jeans for men/women/kids Ford Excursion

Product Width

• The number of different product lines a business makes or sellssells

• EX) TGI FRIDAYS has a large selection of food entrees

• Famous Barr has a large selection of different products: women's, men's, juniors, jewelry, make-up, toys, electronics

Product Depth

• Number of product items offered with in each product line

• EX) Red Lobster • EX) Red Lobster specializes in seafood dinners and have great depth within a narrow product line. You can order shrimp prepared 16 different ways.

vs.

Product WidthKohl’s Department store stocks several brands of jeans: Lei, Levi’s, J-Lo, & Wrangler which demonstrates product width. Product Depthvs.

The product depth is the number of sizes, price ranges, colors, and styles for each brand of jeans (Lei jeans have boot cut, flare, low rise, ankle etc).

To Determine Product Mix:

• 1.) What is the target market?

• 2.) What does the customer want?

• 5.) Should existing product lines be expanded, modified, or deleted?customer want?

• 3.) What does the competitor offer?

• 4.) How many product lines/ & items are needed?

or deleted?

• 6.) What image does each product/ or line project?

• 7.) What image does the business want to project?

Determining Product Mix

• A business must answer these questions by deciding their objectives.objectives.

• Ex) Objective is to increase sales by adding more product lines/items or identify new use for existing product

Product Mix Strategies

• The plan for how the business determines which products it will make or carry

• 1) Develop new product lines or add new • 1) Develop new product lines or add new products to existing lines

• 2) Expand or modify current lines

• 3) Drop existing products

Steps in Developing New Products

• 1) Generate ideas-brainstorm, conduct market research, shop other stores

• 4) Testing the product- test marketed to obtain customers responsesother stores

• 2) Screen ideas- what is the size of the market? What is the level of risk?

• 3) Develop the product- prototype is made and improved

responses

• 5) Introducing the product- marketing plan takes action

• 6) Evaluating customer acceptance-sales and behavior is tracked

New Product Development• Who are the best

customers for our new product?

• What new products • What new products are customers buying?

• How often do customers buy the new product?

• When did the customer last buy the new product?

Expanding the Product Line• Build on product of

company image- Sony (high quality tech products) introduces the walkmanthe walkman

• Increase sales and profits-

• Appeal to new markets- Lancôme fragrances were successful, so they introduced men’s

Modify Product Lines

• Product modification is an alteration in existing product

• EX) Offer new colors, • EX) Offer new colors, sizes, varieties, features, etc

• Quick & easy way to add new products to line Chocolate Rice

Krispies

Deleting a Product Line

• Product is dropped to make room for other products- Quik Trip drops Snapple for

• Product is obsolete- 8 tracks, albums, cassette tapes

• Product has lost Arizona Teas

• Product no longer profitable- IBM drops line of word processors

• Product conflicts w/ other product line-

• Product has lost appeal- Ovaltine, Lavoris mouthwash

• Product does not match company objectives- Sears sold Coldwell Banker Real Estate Firms

End of Section 30.1