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11. Product & Service Strategies

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Products

• Product: tangible goods vs. services• Levels of product

– Class & form– Core, actual, augmented

• Product line– Product line length– Add new products to existing lines through

• Product line stretching• Product line filling

• Product mix– Width – Depth– Length – Consistency

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Product Classifications

• Consumer products (B2C)– Convenience products (impulse, staple, & emergency)– Shopping products– Specialty products– Unsought products

• Industrial products (B2B)– Process consumables

• Raw materials and component parts

– Capital items• Factory installations & accessory equipment

− Support consumables• Supplies/MRO items & business services

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Product Life-Cycle

• Product life-cycle– Can describe product class, product form, or brand– Can be applied to styles, fashions, and fads

• Five distinct stages– New product develop. stage – Maturity stage– Introduction stage – Decline stage– Growth stage

• Framework for describing how products & markets work– Drawbacks indicate need for careful application

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Product Life-Cycle Stages

• Introduction– Profits negative or low– Prices high– Few competitors

• Growth– Sales climb quickly– New competitors may enter

• Profit growth eventually slows, then levels off– Prices fall only slightly– Product modification may begin– Goal of promotion shifts– Trade-off: high market share vs. high current profit

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Product Life-Cycle Stages (Cont.)

• Maturity stage– Sales growth slows, then levels off

– Management practices include:• Market modification

• Further product modification

• Marketing mix modification

• Decline stage– Sales and profits decline

– Required decisions: harvest or delete/drop

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Classification of Services

• Service provider– Government, private nonprofits, businesses

• Goods-services continuum• Service characteristics

– Intangibility– Inseparability– Inconsistency– Perishability

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Service Quality

• Strategies– Service-profit chain (relates to quality of

service encounter)• Internal service qualitySatisfied employees

Greater service valueSatisfied customers Profits & growth

• Assessing quality: Gap analysis– Expectations vs. experience

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Service Quality (Cont.)

• Internal marketing• Interactive marketing• Major marketing tasks for service firms:

– Increase competitive differentiation• Through branding/addition of supplementary

services to core service product

– Integrate capacity management with efforts to build demand

• E.g., through off-peak pricing