Product_Concept_-_Lau

Product_Concept_-_Lau - The Product The Product Concept 1...

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Unformatted text preview: The Product The Product Concept 1 Product Concepts Product - is a bundle of tangible or intangible attributes that the seller offers to the potential buyer-the product includes the intangible attributes or unobservable attributes For Example : product prestige, safety, services offered with the product (delivery, credit, maintenance contracts) 2 Product Concepts Levitt believes that in the future firms will compete on the basis of what is added to the product such as packaging , services , advertising, customer advice , financing and delivery. 3 Product Concepts Important Point : Two firms selling the same tangible product may be satisfying different wants and needs with the intangible product e.g., Rolex vs. Casio Watches 4 Product Concepts Product Positioning - the process marketers go through in manipulating the marketing mix to achieve a particular product position 5 Product Concepts Positioning is the place a product holds in a consumers mind. 6 Product Classification Tangible product may be classified into durable and non-durable 7 Product Classification Product can also be classified by consumer search characteristics -1. Convenience Products - purchased by the customer with minimum time and effort - Examples : bread, milk, petrol, beer? wine 8 Product Classification Product can also be classified by consumer search characteristics -2. Shopping Products- purchased after the consumer shops around to find the best deal based on comparisons of price, quality, style, durability and intangibles. Examples: automobiles, appliances, major clothing items 9 Product Classification Product can also be classified by consumer search characteristics - 3. Speciaity Product - one the consumer desires and is willing to make a special effort to find purchase, sometimes travelling for long distances and making many comparisons. Examples : Strong Brand Loyalty Products, Holden Autos, Rolls Royce, Steinway Pianos 10 Product Classification Product can also be classified by consumer search characteristics - 4. Unsought Product - one that the consumer does not yet want or know he or she can purchase Examples : Encyclopedias, life insurance, preplanned funerals 11 Product Class vs. Level of Involvement Level of Involvement Specialty Shopping Convenience Product Classification Unsought Products 12 Product Classification Product can also be classified by consumer search characteristics - These Classifications often vary by and individual and market segment 13 Product Classification Marketers must determine how their target market views their product and adapt the marketing mix to meet their needs. 14 Product Classification Product Mix - the total set of products a company sells. Examples: Toyota develops cars for different family sizes and income. 15 Product Classification Product Mix - the total set of products a company sells. The set of products a company sells may be subdivided into product lines based on: consistency, breadth and depth 16 Product Classification The Product Mix is usually organized into product lines. Product Line - a group of products that are closely related because they are intended for the same end use, are sold to the same customer group, or fall within a given price range 17 Product Classification Consistency - defined as the interrelatedness of the product lines What are their end uses? What needs and wants are satisfied? 18 Toyota Product Classification T o y o t a P r o d u c t L in e E x a m p le T o y o ta P ro d u c ts C a rs C ro w n T ru c k s S e r v ic e s L exu s Consistency Breadth C o r o lla S ta n d a rd S p o rt D e lu x e C a m ry Depth 19 Product Classification Breadth - defined as the number of different product lines in the product mix Depth - defined as the number of items in each product line 20 The Product Life Cycle PLC - the stages a product moves through from its appearance on the market to disappearance from the market 21 _________________________________ The Product Life Cycle Profits __________________________________ Growth ___________________________________ Introduction Product Development ___________________________________ Sales and Profits ______________________________________________ Maturity Decline Sale s 22 The Product Life Cycle Introduction Stage - Only one product of this type - a true innovation - No direct competition - Lack of customer familiarity -- High price (Production and Promotion costs are high) - Markets are small and untested - Distribution channels restricted - Advertising directed at increasing primary demand 23 The Product Life Cycle Introduction Stage - Primary Demand - demand for a particular product class rather than a brand within that product class - Examples : Demand for MP3 players in 1998. Satellite phones. 24 _________________________________ __________________________________ ___________________________________ ___________________________________ Sales and Profits ______________________________________________ __________________________________________________________________ Product Development Introduction Maturity Decline Growth Sale s Profits The Product Life Cycle 25 The Product Life Cycle Growth Stage - - Product innovation is widely recognized - Rapid sales growth - Increased Competition - Price begins to decrease - Promotion begins to concentrate on selected demand 26 _________________________________ __________________________________ ___________________________________ ___________________________________ Sales and Profits ______________________________________________ __________________________________________________________________ Product Development Introduction Maturity Decline Growth Sale s Profits The Product Life Cycle 27 The Product Life Cycle The Maturity Stage - Market Stability - Almost all potential buyers have the product, replacement market improves - Product variation increases - Intense promotion activity which focuses on minor differences or intangibles - Market share is the critical strategic goal - Distribution is at its peak 28 _________________________________ __________________________________ ___________________________________ ___________________________________ Sales and Profits ______________________________________________ __________________________________________________________________ Product Development Introduction Maturity Decline Growth Sale s Profits The Product Life Cycle 29 The Product Life Cycle The Decline Stage - - Sales drop because a new innovation has been developed - technology has a major influence at the intro and decline stages - e.g. The Foster Curve 30 The Foster Curve Product Performance Efficiency ________________________________________ Tech B Tech C Tech A Technology Gap ___________________________________________________ Time 31 The Foster Curve Foster Product Performance Efficiency Competing Tech B Sales ________________________________________ PLC Tech A e A Competing Tech = Decline Stage New Tech = Intro Stage Time Time 32 PLC The Decline Stage -- Sales drop because a new innovation has been developed - technology has a major influence at the intro and decline stages - Sales slow to disappear, consumers hold on th old ways - Product variation and quality decrease 33 The Product Life Cycle Companies may introduce products at different stages of the PLC e.g., IBM PC vs. Apple IBM vs. Apple 34 The Product Life Cycle Sales and Profits ______________________________________________ ___________________________________ ___________________________________ __________________________________ Life Cycle Extension _________________________________ Sale s Profits __________________________________________________________________ Product Development Introduction Maturity Decline Growth 35 The Product Life Cycle Life Cycle Extension Strategies 1. Increase customer usage of the product e.g., Beef Short Cuts Ads 2. Find new uses for the product e.g., Banking Soda 3. Find new customers for the product. Universities in the US attracting mature age students 4. Modify the performance of the product e.g., video recorders, computers, stereos 36 Branding Brand Name - part of the brand that can be vocalized Brand Mark - part of the brand that can be seen but bot vocalized, e.g. Mercedes Benz 37 ...
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