Product and Service
Management
Product Planning And Or
STANDARD 11
You will understand the concept of product planning and how it relates to marketing.
Objective 1: Understand product planning, mix, and development.
Explain the nature and scope of the product/service management function.
Explain the concept of the product mix. Plan a product mix.
Define: Product, good, service
Product/service management task are affected and influenced by many factors, both within a company and outside
Objective 2: Understand sustaining product sales.
Identify the impact of product life cycles on marketing decisions. Describe factors used by marketers to position products/businesses.
Have you ever thought about who’s
responsible for those products and what their job duties entail?
What do you think is necessary to
make a new product successful?
How do businesses develop new
product and position it for sale?
Why do businesses need to
introduce new products?
Product planning: (or
service planning) involves obtaining, developing,
maintaining, and improving a product or service mix in response to market opportunities.
Products Planning
http://www.imagacademy.org/warner%20lessons/8%20Product%20Service%20Management/37%20Product%20Planning%20and%20Development/37%20Produ ct%20Planning%20and%20Development.html http://images.businessweek.com/ss/06/10/yamaha/source/5.htm Product: is anything a person receives in an exchange. It can be either a good or a service.
Good: a tangible object that can be manufactured or produced for resale to create value
Service: an intangible activity preformed in exchange for payment to create value
Product Mix: includes all of the different products that a company makes or sells.
Importance of Product or Service planning Sales and profits improve if offering the
right products and the right time to the customer
Market share increases and the ability to
beat the competition
New products can bring new customers
Product Planning
Importance of Product Mix
Appealing to the target market
Helping to present a consistent
company image
Affecting profitability
Helping deal with competition
Product line: group of closely related products manufactured or sold by a business
Product item: a specific model, or brand of a product in a product line.
Product Width: refers to the number of different product lines a business manufactures or sells.
Breadth: Carrying items in many different product
categories. Offering several different types of service under one roof. Narrow or wide
Product Depth
Refers to the
number of items offered within each product line.
Shallow or deep.
Product Planning
• LAY'S® Balsamic Sweet Onion Flavored Potato Chips
• LAY'S® Barbecue Flavored Potato Chips
• LAY'S® Cajun Herb & Spice Flavored Potato Chips
• LAY'S® Cheddar & Sour Cream Flavored Potato Chips
• LAY'S® Chile Limon Flavored Potato Chips
• LAY'S® Chipotle Ranch Flavored Potato Chips
• LAY'S® Classic BLT Flavored Potato Chips
• LAY'S® Classic Potato Chips
• LAY'S® Creamy Garden Ranch Flavored Potato Chips
• LAY'S® Deli Style Original Potato Chips
• LAY'S® Dill Pickle Flavored Potato Chips
• LAY'S® FLAMIN' HOT® Flavored Potato Chips
• LAY'S® Garden Tomato & Basil Flavored Potato Chips
• LAY'S® Honey Barbecue Flavored Potato Chips
• LAY'S® Honey Mustard Flavored Potato Chips
Products move through the product
life cycle and require different
marketing strategies at each stage.
These stages are the basis for product planning.
Introduction
Growth
Maturity
Decline
Product Life Cycle
http://www.beasuccessfulentrepreneur.com/product-lifecycle-do-you-know-where-your-business-is/ S a les Res ea rc h & D ev elo p men t In tr o d u ct io n G row th M a turi ty D e cl ine Innovators Early Adapters Early Majority late Majority Laggards Time
Activity: Think of products that have been around most of your lives. For example, Coca-Cola, Barbie, etc.
Describe the different ways in which the product was marketed at different times.
What are the stages the products go through?
Does each stage require different marketing strategies?
The Key steps in product planning
Generate Ideas
Screen Ideas
Develop the Business Proposal
Test the Product Concept
Develop the Product
Commercialization
Evaluate Customer Acceptance
First Step
Generate Ideas
Brainstorm for new product ideas
Ideas for new products can come from
a variety of sources- Employees, customers, sales representatives, retailers, family members
New Product Planning Steps
Screen ideas
Identify any ideas that will potentially be unworkable
Test the Product concept
This means getting feedback from potential customers about the potential product
Is the target market interested in this product?
Is it the right time to introduce this product?
Business Proposal
Conduct a feasibility analysis
Market size Potential sales Cost
Profit potential
Overall competitive environment Level of risk
Production requirements Time needed to create Production efficiency
Develop the Product
This is a lengthy step that could take months or even years to finish
Prototype: during this step
a working model of the product is tested,
modified, and retested -
Commercialization
Introducing the product to customers
This is an expensive step
Evaluate Customer Acceptance
Keep a close eye on-
sales,
profit,
market share,
and how well the product is meeting company goals.
Develop a new product. (See activity sheets)
Activity: Focus group
Work in groups/pairs to generate ideas for a new product. Present your ideas to a focus group of several students. The focus group should discuss what they liked and
disliked about the products and any improvements they might suggest. Could finalize by writing a one page report.
Developing existing products
Line extensions
Product modifications
Product Planning
Deleting a product or product line
Obsolescence
Loss of appeal
Changes in company objectives
Lack of profit
Conflict with other products in the products in the line
Replacement with new products
Activity
Ask students to partner with someone and make a list of products they still use today that are 10 years old or
older.
Then create another list of products they think will be obsolete in the next ten years and the reason why. Have pairs share their answers.
Positioning
: a strategy in which a business creates a certain image or impression of a product in the minds of consumers.Perception map – reviles the
product positioning in customers mind
Customers indicate their perception of a product by where they place the dot.
In this instance customer perception of Twix is low priced, lower quality snack item
Where as Belgium Chocolates are perceived as high quality and high price
Positioning Strategies
Positioning by price and quality
Positioning by features and benefits
Positioning in relation to the
competition
Positioning in relation to other
products in a line
Product Positioning
Objective 3: Understand packaging, labeling, and branding elements and strategies.
Explain the nature of branding.
Explain branding strategies.
Objective 4: Understand packaging and labeling.
Explain the functions of packaging.
Explain labeling laws.
What is a product brand?
It is a name, term, symbol, or design, that identifies a product
and distinguishes it from competitors’ products
Brand Name
a word, group of words, letters, or numbers that represent a product or service. Also called product brand.
Trade Name
Identifies and promotes a company or a division of a particular corporation.
The trade name is the legal name that a company uses when it does business.
Brand mark: visually recognizable and does not need to be pronounced.
Example: U.S. Postal Service’s eagle or Apple Computer’s apple.
Trade character: one with human form or characteristics.
Trademark:
a word, name, symbol, device, or combination of these
elements that is given legal protection by the Federal government
Importance of Brands in Product Planning
To build product recognition and customer loyalty
To ensure quality and consistency
To capitalize on brand exposure
Branding
75% of all companies introduce a new product
Types of Brands
National Brands: also called
producer brands, they are owned by national manufacturers
Private distributor brands
Also called private brands, store brands,
dealer brands or private labels.
Manufacture does not appear on the
product.
Generic Brands
Products that do not carry a company
identity
Branding
Manufacture Brand Private brand
Brand Extension
Using an existing brand name on a new product
Brand Licensing
Allowing other companies to use their brand name
Co-Branding
Combining one or brands. Kellogg’s Pop-Tarts with Smucker’s fruit filling
What makes a good brand name?
The name should describe the product’s uses. Easy to read, pronounce, and remember
Create appealing images
Should be distinctive
Should be adaptable
Legally available
Appropriate for packaging and advertising
Brand Insistence - the goal of Branding
Definition: to be emphatic in demanding a specific brand.
How to Create Brand Insistence
The brand stands for something that is important to them
The brand connects with them on multiple levels across several
senses
The brand is unique (or at least appears to be) The brand is admirable
The brand interacts with them and does not disappoint them
The brand makes them feel good
Packaging: the physical container or wrapping for a product.
Functions of Packaging
Promote and sell the product
Defining Product Identity
Providing information
Expressing customer needs-various sizes, etc.
Ensuring safe use
Protecting the product
Packaging Types
Aseptic Packaging: technology that keeps food fresh without refrigeration, such as canning or bottling
Environmental Packaging: friendly to the environment
Cause Packaging: used to promote social and political causes
Label
: is an information tag, wrapper, seal, or imprinted message that isattached to the product.
Main function is to give information
Descriptive label
: information about the product’s use, construction, care, performance, and other features
Grade Label
: States quality of the product. Grade AA, A, B Labels must meet local and national law requirements.
Federal mandates required:
Name, address of manufacture or distributor
and quantity of contents and other items as required
Fair Packaging and Labeling Act (FLPA) of 1966 Requires mandatory labeling requirements
Federal Nutrition Labeling and Education Act 1990 protects consumers from deceptive labeling. Labels
must give nutritional information on how a food fits into an overall daily diet.
Federal Food and Drug Administration (FDA)
Regulates the labeling and safety of food, drugs, and cosmetics sold in the U.S.
Federal Trade Commission (FTC)
Monitors advertising that is false or misleading.
Activity
Ask students to think of a new product that currently
does not exist. Fun and crazy ideas are OK for this activity. Then have students using their idea to
create a line extension of the product.