Chapter 30 Section 30.1.ppt

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Chapter 30  Product Planning 1

Marketing Essentials

Marketing

Essentials

 Chapter 30 Product Planning

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SECTION 30.1

What You'll Learn

Product Planning, Mix,

and Development

Product Planning, Mix,

and Development

_{The nature and scope of product planning}

_{The concept of product mix}

_{The different product mix strategies}

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SECTION 30.1

Product Planning, Mix,

and Development

Why It's Important

Why It's Important

Product planning allows a business to make or sell products that are wanted by

customers. Product planning is also used to design appropriate marketing programs that help create increased sales and profit

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SECTION 30.1

Product Planning, Mix,

and Development

Key Terms

Key Terms

 _{product planning}  _{product mix}

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SECTION 30.1

Product Planning, Mix,

and Development

A product is anything a person receives in an exchange—a tangible item (car), a service (haircut), an idea (a good education), or a combination of all of these concepts.

Product planning involves making decisions about features needed to sell a business's

products, services, or ideas.

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• Among other things, major decisions are

made involving:

– Packaging

– Labeling

– Branding

SECTION 30.1

Product Planning, Mix,

and Development

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SECTION 30.1

Product Planning, Mix,

and Development

Product Mix

Product mix includes all the different products that a company makes or sells.

A large manufacturer may have hundreds of products in its product mix.

Retail stores must plan their product mix

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SECTION 30.1

Product Planning, Mix,

and Development

Product Mix

The type and number of products carried by a company is based upon

–Business objectives,

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SECTION 30.1

Product Planning, Mix,

and Development

Product Items and Lines

A product line is a group of closely related products manufactured and/or sold by a business.

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SECTION 30.1

Product Planning, Mix,

and Development

Product Width and Product Depth

Product width refers to the number of different product lines a business

manufactures or sells.

Product depth refers to the number of

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SECTION 30.1

Product Planning, Mix,

and Development

The width and depth of product lines define product mix. What does product depth tell you about the importance of a given product line? Why do you think a company would choose to produce so many different razors?

The Concept of Product Mix

Width of the Product Mix

MACH 3 Sensor Trac II Atra Swivel Double-Edge Lady Gillette Super Speed Twin Injector Techmatic Series Adorn Toni Right Guard Silkience Soft and Dri Foamy Dry Look Dry Idea Brush Plus Paper mate Flair Cricket S.T. Dupont Blades and

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SECTION 30.1

Product Planning, Mix,

and Development

A product mix strategy is the

plan

for how the business determines

which products

it will

make

or

stock

. Businesses will either

develop a new product

or

expand

an existing product to add to their mix.

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SECTION 30.1

Developing New Products

New products can add substantially to a

company’s overall sales and boost its market share. New products can:

 _{make a company look}

innovative



increase profits

_{because they are}

generally

priced

10 to 15

percent above older items

 _{become a}

major part

_{of a product line}

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SECTION 30.1

New product development generally involves seven key steps:

1. Generating ideas

2. Screening ideas

3. Developing a business proposal

4. Developing the product

5. Testing the product

6. Introducing the product (commercialization)

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SECTION 30.1

Product Planning, Mix,

and Development

New product ideas come from a

variety

of sources:

 _customers

 _competitors

 _{channel members}

 _{company employees}

 _{research and development departments}

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SECTION 30.1

Ideas for new products are

screened

and

evaluated

, and

matched

against the

company's overall

objectives

to see if they fit. Some ideas are

eliminated

. The best ideas are put through further

evaluation

. Finally,

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SECTION 30.1

A product idea must be considered in regard to its

potential

for

profit

. A

business

proposal

is developed to evaluate the

size

of the

market

•

potential

sales

•

production

requirements

•

Costs

•

profit

potential

•

technological

trends & risk

_.

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SECTION 30.1

During product development, a

prototype

(a model of the product) is made, and marketers develop a

marketing strategy

. The

prototype is

tested

, and

adjustments

are made to

improve

the

final

product.

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SECTION 30.1

Newly developed products are usually

tested

to obtain customers' responses. Common strategies are:

 _{test marketing in a certain}

geographic

area

 _{evaluation by a}

focus group

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SECTION 30.1

If customer response is favorable, the product is

introduced into the marketplace. This stage is called

commercialization

. The costs of introducing a new product often are quite

high

. At this stage, the company will need to:



advertise

the product



create

_or

revise

_{a distribution network}

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SECTION 30.1

Evaluating Customer Acceptance

After the product has been introduced, marketers

track

new product

performance to evaluate customer

acceptance

of the product and the

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SECTION 30.1

Developing Existing Products

In order to build on an established image, appeal to new markets, and increase sales and profits, companies can either:

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SECTION 30.1

Line Extensions Companies can expand

product offerings by

adding new

product lines, items, or services.

_Example:_{Tylenol expanded to Tylenol Flu,}

Tylenol Cold, and Tylenol Allergy/Sinus Extensions can also be new lines of products.

_Example:_{Bic pens and Bic lighters}

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SECTION 30.1

Product

modification

is an alteration in a company's existing product. Product

modifications are a relatively quick and easy way to add new products to a company's

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SECTION 30.1

Deleting a Product or Product Line

Sometimes companies decide that they will no longer produce or sell a particular product or

perhaps even a whole product line. Some of the reasons for this are:

 _obsolescence  _{loss of appeal}

 _{conflict with current company objectives}  _{replacement with new products}

 _{lack of profit}

 _{conflict with other products in the line}

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SECTION 30.1

Obsolescence

Changing interests and technology make many products obsolete. They are dropped in favor of newer

technologies.

Loss of Appeal

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SECTION 30.1

Conflict with Current Company

Objectives

Sometimes a product does not match a company's current objectives.

_Example:_{Sears sold unrelated businesses}

to concentrate on retail.

Replacement with New Products A store decides

it can make more money

selling a different

brand

, or replaces one brand for another because another manufacturer offers

better

terms

.

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SECTION 30.1

Lack of

Profit

To increase profits,

retailers will handle only fast-moving and profitable items. Product developers may drop products when sales drop below

company objectives.

Conflict with Other

Products in the

Line

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30.1

Graphic Organizer

Developing New Products

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30.1

A

SSESSMENTSSESSMENT

Reviewing Key Terms and Concepts

1. What is product planning?

2. What is product mix?

3. Name four product mix strategies.

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30.1

A

SSESSMENTSSESSMENT

Thinking Critically

Suppose a company is developing a new product, when a competitor introduces a new product that is similar. What are some things the company should consider in

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Marketing Essentials

Marketing

Essentials