Chapter 11
Product Strategies
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The introduction of this product by
Radio Shack leads you to initially
believe the promotional Product is
something other than what it turns
out to be.
11-2
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What is a Product?
 Product: bundle of physical, service, and
symbolic attributes designed to enhance
buyers’ want satisfaction
11-3
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This advertised product provides
attributes designed to satisfy a
customer’s wants and needs in a
time when it is most needed.
11-4
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What is a Service?
 Service: intangible task that satisfies
consumer or business user needs
 Goods-services continuum
11-5
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What is a Service?
 Characteristics that distinguish services from
goods:
Intangibility
Inseparability
Perishability
Difficulty of standardization
Frequent requirement of
interaction between buyer
and Seller
Variability
11-6
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An example of a pure service:
Charles Schwab positions its
brokerage services as something
other than the “traditional.”
11-7
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 U.S. Trust
Illustrating
That Services
Are Intangible
11-8
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Class Discussion
Which of the service characteristics fit a trip to
Disneyland? Intangibility, Inseparability, Perishability,
Difficulty of Standardization, Frequent Requirement of
Interaction Between Buyer and Seller, Variability.
11-9
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Importance of the Service Sector
 The service sector makes a crucial
contribution to the U.S. economy.
 The service sector produces almost $2.5
billion annually in sales receipts.
 Services account for four out of five jobs in
the U.S.
11-10
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 Evite.Com
 Desire for Speed
and Convenience
– Technological
Advances
Contribute to
Growth in Services
11-11
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 E-Loan’s Service
Technology Satisfies
Demand for Speed and
Convenience
11-12
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Classifying Goods and Services for
Consumer and Business Markets
 Consumer products: products destined for
use by ultimate consumers
 Business products: products that contribute
directly or indirectly to the production of other
products
11-13
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Types of Consumer Products
 Convenience product: purchased frequently,
immediately, and with minimal effort
Impulse goods and services
Staples
Emergency goods and services
11-14
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 PayDay
Peanut Caramel
Bar
An Impulse
Convenience
Good
11-15
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Types of Consumer Products
 Shopping product: purchased only after the
customer compares competing offerings from
competing vendors
Typically higher priced
Includes tangible items.
Shopper gathers
information during buying
process.
11-16
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 Target
Target ad for a
shopping
product
11-17
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Types of Consumer Products
 Specialty product
 Unsought product
11-18
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 Gucci
A Specialty Product
Print reads:
Gucci
timepieces
neiman marcus
11-19
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What classification would you place
the product in this commercial in?
Would you agree it falls in the
“specialty” product area?
11-20
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Types of Business Products
 Installation: major capital investment by a
business buyer that typically involves expensive
and long-lived products
11-21
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Types of Business Products
 Accessory equipment: capital product,
usually less expensive and shorter-lived than
installations
11-22
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 Promoting Accessory
Equipment
11-23
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Types of Business Products
 Component parts and
materials: finished
business products that
become parts of buying
firms’ final products
 Raw materials: farm
product or natural product
that become part of a final
product
11-24
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 General Mills
Bakers Flour
 A Component
Product
11-25
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Types of Business Products
 Supplies: products that represent regular
expenses necessary to carry out a firm’s daily
operations but are not part of the final product.
MRO
11-26
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Types of Business Products
 Business service: intangible product
purchased to facilitate a firm’s production and
operating processes
11-27
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Importance of Quality
 Quality is a key component to a firm’s success
in a competitive marketplace.
 Total quality management involves all
employees in continually improving products and
work processes to achieve customer satisfaction
and world-class performance
11-28
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Importance of Quality
11-29
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Worldwide Quality Programs
 The quality movement is very strong in
European countries.
 ISO 9002: International Standards
Organization
11-30
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The Role of Benchmarking
 Benchmarking: Improving performance by
continually comparing and measuring itself
against the leading firms in an industry
11-31
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Development of Product Lines
 Product Line: a series of related products
Fuels growth
Enhances market position
Better uses company resources
Exploits the product life cycle
11-32
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Cox Communications Has
Developed Its Product Line from
Basic Cable Service to Hundreds of
TV Channels, High Speed Internet
Connections, and Digital Telephone
Service
11-33
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The Product Mix
 A company’s assortment of product lines and
individual offerings
Product Width
Product Length
Product Depth
11-34
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The Product Mix
Clorox’s Mix
Laundry Additives
Clorox
Stain Out
Household Cleaners
Clorox toilet bowl
Formula 409
Liquid-Plumber
Pine Sol
Soft Scrub
S.O.S.
Bags and Containers
Glad
Water Filtration
Automotive Care
Armor All
No. 7
Rain Dance
Rally
Charcoal
Kingsford
BBQ Bag
Match Light
Insecticides
Black Flag
Roach Motel
Combat
Maxforce
Cat Litter
Ever Clean
EverFresh
Jonny Cat
Scoop Away
Fresh Step
Fresh Step Scoop
Dressings and Sauces
Hidden Valley
K.C. Masterpiece
Kitchen Bouquet
Home Fireplace
Crackling HearthLogg
HearthLogg
StarterLogg
Brita
11-35
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Product Mix Decisions
 A firm may lengthen or widen or prune its
product mix
 Line extension: introduction of a new
product that is closely related to other
products in the firm’s existing line
11-36
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Pepsi uses humor to
introduce Pepsi Twist--a line
extension to its existing
product offerings.
11-37
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The Product Life Cycle
11-38
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E*Trade.com Using Humor to
Attract Potential Customers
During the Growth Stage
11-39
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George Foreman Grills reach
maturity stage. This ad highlights
the depth of the product-line and
varied users of the product.
11-40
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Strategies for Managing the Product
Life Cycle
 Product life cycles can stretch indefinitely as a
result of decisions designed to:
Increase the frequency of use
Increase the number of users
Find new uses for the product
Change package sizes, labels, or quality
11-41
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 Quaker Oats
 A new application
for a mature
product
11-42
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 Bounce
 Finding new uses
for Bounce Fabric
Softener
11-43
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 Kraft
 New cubed
cheese for
snacking
11-44
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Product Deletion Decisions
 Product lines must sometimes be pruned and
marginal products eliminated
 However, an unprofitable item may be
continued to provide a complete line for
customers
11-45
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