product & service strategies jeremy kees, ph.d.. the basics… what is a product… –anything...

Product & Service Strategies

Jeremy Kees, Ph.D.

The Basics…

• What is a product…– Anything that can be offered to a

market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

• Do we market products and services in the same manner???

Distinguishing Factors

• Intangibility

• Inseparability– Requirement of

interaction between buyer and seller

• Perishability

• Difficulty of standardization / variability in service offering

Types of Consumer Products

• Convenience Products– Inpluse Items– Staples– Emergency Items

• Shopping Products– Homogeneous– Heterogeneous

• Specialty Products• Unsought Products

Consumer Product Classification

The Product Mix

Using AB as an example…

• Product Mix (or Assortment)– Product lines

(beer, specialty beer, imports, specialty malt beverages…)

– Product types(Within “beer”, AB has the “Bud family”,

“Michelob family”, “Busch family”…)

– Items(Bud Light, Mic Ultra, Bacardi Silver)

The Product Mix –Width, Length, and Depth• Width = # of product lines

• Length = # of products within the line(s)

• Depth = # of variants of each product

• http://www.jnj.com

Product Mix Decisions: Product Line Analysis• Evaluate sales and profits associated

with each item in product line• Evaluate line positioning relative to

competition• Decide whether to build, maintain,

harvest, or divest

Product Mix Decisions: Product Line Analysis• Depending on success of various lines

versus the competition, we can….– Stretch the Line

• Up-stretching: AB acquiring Imports and Microbrews

• Down-stretching: AB developing Natural Light

– Prune the Line• Goal: volume (market share) objectives• If the goal is profitability, then shorter

lines might be a more viable strategy

Product Mix Decisions: Product Line Analysis• When extending lines, an important

consideration is consistency and capitalizing on equity built in the original brand

• Michelob Light• Mic Ultra• Mic Ultra Amber

New Product Development

• http://www.youtube.com/watch?v=jVb8EC1Y2xM

New Product Development

• Where do product ideas come from??– Customers– Organizations– Experts– Government– Private labs– Research institutions– Suppliers– Retailers– Partners– Etc….

New Product Development

Product Adoption Process

AwarenessAwareness

InterestInterest

EvaluationEvaluation

AdoptionAdoption

TrialTrial

Product Adoption Process

Product Adoption Process

• Innovators – venturesome, educated, high socio-economic status

• Early adopters – social leaders, popular, educated

• Early majority – deliberate, many informal social contacts

• Late majority – skeptical, traditional, lower socio-economic status

• Laggards – neighbors and friends are main info sources, fear of debt

Have you adopted….

• Iphone?

• GPS?

• Blackberry?

Product Life Cycle: Key Decisions at Each Stage• Draw on Board

– Sales– Profits– Prices

Product Life Cycle: Key Decisions at Each Stage• Introduction

– Inform potential customers– Introduce product trial

• Examples for low and high end products??

– Secure retail distribution

Product Life Cycle: Key Decisions at Each Stage• Growth

– Improve quality, add new features, and improve styling

– Add new models and flanker products– Enter new segments– Increase distribution coverage and enter

new channels– Shift from product-awareness to product-

preference advertising– Lower prices to attract the next layer of

price-sensitive buyers

Product Life Cycle: Key Decisions at Each Stage• Maturity

– Market modification– Product modification– Marketing program modification

Product Life Cycle: Key Decisions at Each Stage• Decline

– Harvest– Divest– Liquidate

Product Life Cycle: Key Decisions at Each Stage

• Strategies for extending the PLC…