Download Product/Service Management

MARKETING 3.01
Product/Service
Management
Intro
• Who is responsible for the last product you
bought?
• Did you know…..
-It took over 3 years to develop Google’s
search engine
-It took over 4 years to develop the famous
chicken sandwich at Chick-fil-a
Product/Service Management
• A marketing function that involves
obtaining, developing, maintaining, and
improving a product or service mix in
response to market opportunities.
Product and Service Classification
System
• Convenience goods - little effort, relatively
inexpensive
• Shopping goods - e.g ‘white goods’, DIY
equipment, more expensive, infrequent
• Speciality goods - extensive search e.g
Jewellery, gourmet food
• Unsought goods - e.g. double glazing,
• Industrial goods
• Installations - ‘speciality’ goods of industrial
markets - plant and machinery
• Accessories - maintenance and office
equipment
• Raw materials
• components
• Business to business e.g. consultants,
accountants
Product/Service Management
• Factors affecting Product/Service
Management:
1. Customer Needs and Wants
2. Company Goals and Strategies
3. Cost and Available Resources
4. Competition
5. Product Itself
6. Government Regulation
7. Stages in Life Cycle
8. Business and Economic Trends
Product/Service Management
• What are Benefits to Product/Service
Management?
-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
Product/Service Management
• What role does Product/Service Management
play in Marketing?
1. Affects positioning of product
-what image do you want to create about the product in
the minds of consumers?
2. Improves product success
3. Gives product an image
-what impressions do you have of certain brands
Product/Service Management
• Who is responsible for managing
product/service management?
-Several employees of a company, certain departments, 1 employee
or just the boss. Normally depends on size of company.
• 3 Main Phases of Product/Service
Management
1. Developing New Products
2. Monitoring Existing Products
- Sales, Profit, Market Share
3. Eliminate Weak Products
Now let’s see if you got it…
• 8 student groups
• Assign each group one factor (remember –
there are 8 factors?) that affect product/
service management.
• Allow each group to choose a product.
• Discuss how their assigned factor affects that
product.
• Present their findings to the class.
Product Life Cycles
Stage 1 of Product life cycle –
Introduction of the Product
• Product is launched. A product launch is always risky.
You never know how the market will receive the
product. There have been numerous failures in the
past to make marketers nervous during the launch of
the product. The length of the introduction stage
varies according to the product.
• If the product is technological and receives
acceptance in the market, it may come out of the
introductory phase as soon as it is launched.
Whereas if the product is of a different category
altogether and needs market awareness, it may take
time to launch.
Characteristics of Introductory Stage
• Higher investment, lesser profits
• Minimal Competition
• Company tries to Induce acceptance and gain
initial distribution
• Company needs Promotions targeted towards
customers to increase awareness and demand
for product
• Company needs Promotions targeted towards
channel to increase confidence in the product
Stage 2 of Product Life Cycle
Growth of the Product
• Product starts showing better returns on
investment.
• Your customers and channels begin
responding.
• There is better demand in the market and
slowly the product starts showing profits.
Growth (CONT.)
• This is a stage where competition may step in to
squash the product before it has completely
launched.
• Any marketing mistakes done at this stage affect the
product considerably as the product is being exposed
to the market and bad news travels fast.
• Thus special care has to be taken in this stage to
ensure competition or bad decisions do not affect
the growth stage of the product.
Characteristics of Growth Stage
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Product is successfully launched
Demand increases
Distribution increases
Competition intensifies
Company might introduce secondary
products or support services.
Better revenue generation and ROI
Stage 3 of Product Life Cycle
Maturity Stage
• One of the problems associated with maturity
stages in a technologically advanced
environment is the problem of duplication.
• Not only is the product available in duplicate
markets, but also there are several competing
products which arise with the same features
and capabilities.
• As a result, the product becomes less
attractive.
Characteristics of Maturity Stage
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Competition is high
Product is established and promotion expenditures
are less
Little growth potential for the product
Penetration pricing, and lower profit margins
The major focus is towards extending the life cycle
and maintaining market share
Converting customers product to your own is a
major challenge in maturity stage
Stage 4 of Product Life Cycle
Stage of Decline
• 1 product, 10 competitors, minimum profits, huge
amount of manpower and resources in use – A
typical scenario which a product might face in its last
stage. In this stage the expenditures begin to equal
the profits or worse, expenses are more than profits.
• Typical scenario for the product to exit the market. It
also becomes advantageous for the company as the
company can use resources it was spending on the
declining product on an altogether different project.
Characteristics of Decline Stage
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Market is saturated
Sales and profits decline
Company becomes cost conscious
A lot of resources are blocked in rejuvenating
the dead product.
Ethics & Packaging
• Have you ever seen commercials for an item that
looks great, but when you actually buy one it doesn't
look anything like it did on TV????
• Well that is sometimes what happens with packaged
products.
• The product looks great on the outside of the box,
but when the box is opened the product is
completely different from the way the packaging
described it.