Marketing Chapter 12

the value package- red | clasiffuing goods and services: orange | the product mix: yellow | BCG: green | product positon map: blue | developing new products: purple | variations in the process for services: pink

Product features

tangible and intangible qualities that a company builds into its products

value package

a product is marketed as a bundle of value; adding attributes, including a reasonable cost

consumer

person who purchases products for personal use

industrial buyer

a company or other organization that buys products for use in producing other products (goods or services)

convenience goods and services - consumer

inexpensive physical goods and services that are consumed rapidly and regularly

shopping goods and services - consumer

moderately expensive, infrequently purchased physical goods and services

speciality goods - consumer

expensive, rarely purchased physical goods and services

production items - organizational

goods or services that are used in the conversion (production) process to make other products

expense items - organizational

industrial products purchased and consumed within a year by firms producing other products

capital items - organizational

expensive, long-lasting, infrequently purchased industrial products, such as a building, or industrial services, such as a longterm agreement for data warehousing services

product mix

group of products that a firm makes available for sale

product line

group of products that are closely related because they function in a similar manner or are sold to the same customer group who will use them in similar ways

portfolio analysis

• managements evaluation of the products and businesses that makeup the company.

• direct resources toward more profitable businesses and phase down or drop its weaker ones.

Boston consulting group matrix

• method of analyzing the product portfolio of a business in terms of market share and market growth.

• analyze performance and current position of existing portfolios.

• planning action to be taken with existing products.

• planning introduction of new products.

market share

the percentage of sales in the total market sold by one business

market growth

the percentage of change in total size of a market (volume or value) over a period of time

Growth-share matrix

y axis: market growth rate (low→high)
x axis: relative market share (high→low)
Star - invest (high,high)
? - build (low, high)
$ {cash cow} - milk (high, low)
dog - divest (low, low)

Invest

grow the product

milk

use the cash flow to invest in other products

build

selectively invest

divest

exit, sell, or replace product

product positioning

how a new brand will relate to other brands in the market in the minds of cuonsumers

product position map

a graph that analyzes consumer perceptions of each group of competing products in respect of two product characteristics

uses of product position map to analyze

• potential gaps in the market

• niche potential for products

• opportunities for repositioning

mortality rates

new ideas/products that reach the market

speed to market

• strategy of introducing new products to respond quickly to customer or market changes

• one study reports that a product that is only 3 months late to market (3 months behind the leader) loses 12% of its lifetime profit potential

• after a 6 month delay, it will lose 33%

1) Product ideas

typically come from consumers, the sales force, R&D departments, suppliers, or engineering personnel

2) Screening

eliminate ideas that do not mesh with the firm’s abilities or objectives

3) Concept testing

companies use market research to get consumer’s input about benefits and prices

4) Business analysis

marketers compare production costs and benefits

5) Prototype development

engineering, R&D, or design groups produce a prototype

6) Product testing & test marketing

test the product to see if it meets performance requirements

7) Commercialization

the company begins full-scale production and marketing

1) Service ideas (SERVICE VARIATION)

defining the service value package, identifying tangible and intangible features, and stating service specifications

5) Service process design

1. process selection: identifying each step of the service, including sequence and timing

2. worker requirements: stating employee behaviors, skills, capabilities, and interactions with customers during service performance

3. facility requirement: designate all equipment that supports delivery of the service