Product decision
- 1. Product Line Decisions & Product Life cycle From- BADM Dept.
- 2. Basic Concept A product can be defined as a collection of physical, service and symbolic attributes which yield satisfaction or benefits to a user or buyer. A product is a combination of physical attributes say, size and shape; and subjective attributes say image or "quality". A customer purchases on both dimensions. The product involve several decisions for its formations as well as distribution to end consumer.
- 3. Definition According to W. Alderson describes product “A Product is a set of tangible and intangible attributes, including packaging, color, price, manufacturer’s and retailer’s services, which the buyer may accept as offering satisfaction of wants or needs.”
- 4. Characteristics of Product Set of Tangible & Intangible attributes Includes color, price, packaging and branding Group of utilities Designed and presented to satisfy some specific consumer needs
- 5. Characteristics of Product Main aim is to provide maximum consumer satisfaction Consumer satisfaction from product may be real or psychological in nature Each brand in marketing is a separate product It is first ‘P’ out of four Ps of marketing mix
- 6. Product Decisions Marketing mix describes how a business uses and manipulates the 4ps to market their product. Businesses employ different strategies when marketing products compared to services. As a physical product, marketers need to consider packaging, labelling and branding involved in marketing the overall product.
- 7. Type Of Decisions Product Design Decisions. Production decisions. When and Where to Launch decisions. Product Mix And Product Line
- 8. Product Design Decision Initial design ◦ More unique design less competitors‘ hence more profitability ◦ Uniqueness based on the technology. Change in existing design ◦ From Standardization to Adaptation ◦ For Improving the current prospects of sales ◦ Design decisions also culturally bound
- 9. Production Decisions The key question is, can we ensure continuity of production and supply? Decision may involve 1. Product manufacturing process 2. Batch flow line 3. Technology to use. 4. Product Quality
- 10. (Where to Launch) 1. Local products - seen as only suitable in one single market. 2. International products - seen as having extension potential into other markets. 3. Multinational products - products adapted to the perceived unique characteristics of national markets. 4. Global products - products designed to meet global segments.
- 11. 11 Product Items, Lines, and Mixes Product Item Product Line Product Mix A specific version of a product that can be designed as a distinct offering among an organization’s products. A group of closely-related product items. Categories of product All products that an organization sells.
- 12. 12 Product Mix Decisions Product- mix is the total sum of products in the different product lines of a company. It is a group of similar and consistent products marketed by a company. Dimensions of Product Mix- Width of Product Mix – how many product lines a company has. Depth of Product Mix – how many products are there in a each product line. It is measured by the sizes, colors and models offered within each product line. Consistency of Product Mix – how closely related the product lines are in end use (Similarities in different product lines). Inconsistency of Product Mix- It refers to heterogeneity of product lines of a company. A marketing company producing textiles, cement, chemicals and tires can be termed a company having inconsistency in product mix.
- 13. 13 Gillette’s Product Lines & Mix Blades and Writing razors Toiletries instruments Lighters Fusion – 5 blade Mach 3 Turbo Mach 3 Series Paper Mate Cricket Sensor Adorn Flair S.T. Dupont Trac II Toni S.T. Dupont Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mixDepthoftheproductlines
- 14. MAJOR PRODUCT MIX STRATEGIES Expansion of Product Mix Width - Mix extension. Depth - Line extension. Contraction of Product Mix Width- Mix extension. Depth - Line extension. Alteration of Existing Products Positioning the Product Position is the image that the product projects in relation to competitive products and to other products marketed by the company.
- 15. What is a Product Line? A product line is a broad group of products, intended for essentially similar uses and possessing reasonably similar physical characteristics. A product line is that combination of products which; Belongs to a single manufacturer Shares similar Attributes Serves the common general purpose but; Targets different market segments
- 16. Samsung
- 17. Why Product line decisions? Provides better market access Involves huge investment/disinvestment Products have close mutual influence
- 19. Expansion of product line Process of adding more products to the line Valid only if; a) There is a well established brand arena & customers are accustomed to switch. b) Competitor lacks a comparable product c) Competitor have already expanded to the proposed area.
- 21. Contraction of the product line Dropping a product from the line. The reasons behind a drop may be; a) Fine tuning the market performance b) Eliminating a poor performing product c) Uplifting a product with more potential • This is a much difficult task since much money is already been invested and hence products are allowed to linger on until they become a loss.
- 23. Alteration of the existing products An alteration may be in; a. Design b. Size c. Colour d. Texture e. Flavour f. Packaging g. Advertising appeal
- 25. Developing new use for the existing products This is intended to attract a new category of customers to the manufacturer without forming a new product. Investments in R&D and Advertisement is required.
- 27. TRADING UPAND TRADING DOWN Trading up: Adding a higher-priced, prestige product to a line in the hope of increasing the sales of existing lower-priced products. Trading down: Adding a lower-priced item to a line of prestige products in the hopes that people who cannot afford the original product will want to buy the new one, because it carries some of the status of the higher-priced good. Problems May confuse buyers Sales are at the expense of older products May permanently harm company reputation
- 28. Trading Up Adding a high priced prestigious product to the line so as to increase the sales of the existing low priced product.
- 30. Trading Down Introducing a low priced product to the prestigious line so as to cater increased demand.
- 32. PRODUCT DIFFERENTIATION AND MARKET SEGMENTATION Product differentiation: Developing and promoting an awareness of differences between one company's product and those of competitors Market Segmentation: To develop different products each one suited to one or more segments of the market.
- 33. Factors influencing Product Line Decisions
- 35. Changes in market demand
- 36. Competitive action and reaction
- 40. Concept of Product Life Cycle
- 41. The concept Every product has a life cycle, just as in case of human beings. The term first time used by Theodore Levitt in 1965 in Harvard Business Review article. A Product after being introduced in to the market, goes through different stages which is categorised on the basis of product, profit, competition and market behaviours. PLC is a concept which indicates various stages of product’s sales and history.
- 42. Definition According to Philip Kotler “ The product life- cycle is an attempt to recognize distinct stages in the sales history of the product.” According to Kollet, Blackwell Robeson, product life cycle is a “generalized model of sales and profit.”
- 43. Stages of Life Cycle 1. Introduction 2. Growth 3. Maturity 4. Saturation & 5. Decline
- 44. Introduction stage Product is Introduced in the market for the first time. Slow growth rate Negative or low profits Huge marketing expenses No competition Highly volatile in nature
- 46. Growth Stage Sales rises at an increasing rate Profitable returns from the market Reduced promotional expenses Hard work for the firm to establish dealerships & distribution outlets Competitors starts to explore the market
- 49. Maturity Stage Sales are still increasing, but at a decreasing rate. Severe competition Profits fall in line with falling prices, which is unavoidable to retain market share. Investments in promotional measures to differentiate the product New distribution strategies & alliances
- 52. Saturation Stage Sales are stable Profits fall drastically Competition is at the peak Continued need for promotion to maintain sales Firm has to plan product modifications
- 54. The old TV is getting replaced by..
- 55. Decline Characterised by falling sales for the whole industry. Prize cutting is continued and profit is at zero level. Firm has to take a major strategic decision whether to continue with the product or abandon it.
- 57. This old roofing tile industry is now switching to...
- 58. More examples for product replacement
- 60. The PLC Graph
- 61. Graph with Profit curve
- 62. An old PLC Curve!!
- 63. Conclusion Every product has got a life cycle and every product will pass through the stage of decline someday. But, through effective product line decisions and other strategies, we can extend its profitability period much longer to our benefits.
- 64. Thank You!!