Product/Service Product/Service ManagementManagement

Chap. 30-32Chap. 30-32

ProductProduct• Anything tangible offered to a Anything tangible offered to a

market by the business to satisfy market by the business to satisfy needs.needs.

Product FailureProduct Failure• 50% of new products fail50% of new products fail• New products costs on average New products costs on average

hundreds of thousands of dollars to hundreds of thousands of dollars to produce and introduceproduce and introduce

• Products fail because they do not Products fail because they do not meet the needs of the customersmeet the needs of the customers

Product ClassificationProduct Classification• 1. Convenience1. Convenience• 2. Shopping2. Shopping• 3. Specialty3. Specialty• 4. Unsought4. Unsought

Convenience GoodsConvenience Goods• Easiest purchase possibleEasiest purchase possible• Product location importantProduct location important

Convenience GoodsConvenience Goods• 1. Staple Goods- Regular 1. Staple Goods- Regular

purchases, usually made upon purchases, usually made upon brands, price important brands, price important

• 2. Impulse Goods- Spur of the 2. Impulse Goods- Spur of the moment without planningmoment without planning

• 3. Emergency Goods- Goods or 3. Emergency Goods- Goods or services you need immediately, services you need immediately, price unimportantprice unimportant

Convenience GoodsConvenience Goods

Shopping GoodsShopping Goods

• Larger purchases that are more Larger purchases that are more important to the buyerimportant to the buyer

• Promotion showing quality of the Promotion showing quality of the product is important product is important

Specialty GoodsSpecialty Goods• Customers will only buy one brand Customers will only buy one brand

of a product of a product • Market to the qualities that make it Market to the qualities that make it

uniqueunique• Only brand that will provide Only brand that will provide

satisfactionsatisfaction• Not make a purchase until they find Not make a purchase until they find

their favorite brandtheir favorite brand

Unsought GoodsUnsought Goods

• Products, Services or Brands that Products, Services or Brands that customers do not plan on purchasingcustomers do not plan on purchasing

• Promotion and Distribution is important Promotion and Distribution is important to get the product or service noticedto get the product or service noticed

Product Life CycleProduct Life Cycle• Think of a product you are familiar Think of a product you are familiar

with and how has its marketing with and how has its marketing changed over time?changed over time?

• How does marketing a new product How does marketing a new product differ from marketing an existing differ from marketing an existing (older) product?(older) product?

Stages of the Product Stages of the Product Life CycleLife Cycle

• 1. Introduction1. Introduction• 2. Growth2. Growth• 3. Maturity3. Maturity• 4. Decline4. Decline

IntroductionIntroduction• Sales are lowSales are low• Profits are negativeProfits are negative• Product is basic, find what the customers Product is basic, find what the customers

dislike and make the correctionsdislike and make the corrections• Distribution will have to be limited with Distribution will have to be limited with

little knowledge about the productlittle knowledge about the product• Price will be high to offset the many costsPrice will be high to offset the many costs• Promotion is informative towards the Promotion is informative towards the

target market drawing their attentiontarget market drawing their attention

GrowthGrowth• Sales are increasingSales are increasing• Profits are growing toward the Profits are growing toward the

maximum levelsmaximum levels• Product will begin to add features and Product will begin to add features and

optionsoptions• Distribution becomes more wide spreadDistribution becomes more wide spread• Price has a wide range depending on Price has a wide range depending on

the features and optionsthe features and options• Promotion becomes persuasivePromotion becomes persuasive

MaturityMaturity• Sales begin to level offSales begin to level off• Profits reach maximum levels and then drop Profits reach maximum levels and then drop

offoff• Many similar competitive products in the Many similar competitive products in the

marketmarket• Price becomes very important because of Price becomes very important because of

product similarityproduct similarity• Distribution becomes wide spread and very Distribution becomes wide spread and very

intensiveintensive• Promotion becomes remindingPromotion becomes reminding

DeclineDecline• Sales decrease to zeroSales decrease to zero• Profits drop to negativeProfits drop to negative• Lack of profits do not allow for product Lack of profits do not allow for product

modificationsmodifications• Distribution is cut back to only profitable Distribution is cut back to only profitable

areasareas• Prices are usually reduced to increase salesPrices are usually reduced to increase sales• Decrease promotion and attempt to target Decrease promotion and attempt to target

loyal customers.loyal customers.

Examples of ProductsExamples of Products

Product MixProduct Mix• All the different products that a All the different products that a

company makes or sells.company makes or sells.

PepsiCo

Product LineProduct Line• Group of closely related products Group of closely related products

manufactured or sold by a businessmanufactured or sold by a business

Product WidthProduct Width• The number of product lines a The number of product lines a

company manufactures or sellscompany manufactures or sells

Product DepthProduct Depth• Number of items offered within each Number of items offered within each

product lineproduct line

BrandBrand• Name, term, design, symbol, or Name, term, design, symbol, or

combination of these elements that combination of these elements that identifies a product or service and identifies a product or service and distinguishes it from its competitors.distinguishes it from its competitors.

BrandingBranding• Brand name- Word, group of words, or Brand name- Word, group of words, or

letters that represent a productletters that represent a product• Brand mark- Symbol, coloring, lettering, Brand mark- Symbol, coloring, lettering,

or other design elements of a brandor other design elements of a brand• Tradename- Identifies and promotes a Tradename- Identifies and promotes a

company or divisioncompany or division• Trademark- Combination of brand name Trademark- Combination of brand name

and brand mark that is legally and brand mark that is legally protected.protected.

Types of BrandsTypes of Brands• 1. National Brand- National manufacturer1. National Brand- National manufacturer• Ex- Hershey Foods, Whirlpool, FordEx- Hershey Foods, Whirlpool, Ford• 2. Private Distributor Brands (Private 2. Private Distributor Brands (Private

Brands)- Developed by wholesaler or Brands)- Developed by wholesaler or retailerretailer

• Ex- Meijer, KrogerEx- Meijer, Kroger• 3. Generic Brands- No brand name and 3. Generic Brands- No brand name and

50% cheaper.50% cheaper.• Paper towel, pancake mixPaper towel, pancake mix

Branding StrategiesBranding Strategies• 1. Brand Extension- Existing brand 1. Brand Extension- Existing brand

name used to promote a new name used to promote a new productproduct

• http://www.pepsico.com• 2. Brand Licensing- Allow other 2. Brand Licensing- Allow other

companies to use your brand.companies to use your brand.

Branding StrategiesBranding Strategies• 3. Mixed Brands- Offer a combination of 3. Mixed Brands- Offer a combination of

manufacturer, private, and generic manufacturer, private, and generic brandsbrands

• Ex- Michelin makes their own tires and Ex- Michelin makes their own tires and the Sears brand namethe Sears brand name

• 4. Co-branding- Combines one or more 4. Co-branding- Combines one or more brands in the manufacturing of a productbrands in the manufacturing of a product

• Ex- Kellog Pop-Tarts with Smucker’s fruit Ex- Kellog Pop-Tarts with Smucker’s fruit filling.filling.

PackagingPackaging• A physical container or wrapping for A physical container or wrapping for

a product.a product.

Functions of PackagingFunctions of Packaging• 1. Promoting and selling the product1. Promoting and selling the product• 2. Define product identity2. Define product identity• 3. Provide information3. Provide information• 4. Meeting customer needs4. Meeting customer needs• 5. Ensuring safe use5. Ensuring safe use• 6. Protecting the product6. Protecting the product• 7. Theft Reduction7. Theft Reduction

LabelingLabeling• Information tag, wrapper, seal, or Information tag, wrapper, seal, or

imprinted message that is attached imprinted message that is attached to a product or its package.to a product or its package.

Types of LabelsTypes of Labels• 1. Brand label- gives the brand name, 1. Brand label- gives the brand name,

brand mark (logo), or trademarkbrand mark (logo), or trademark• 2. Descriptive label- gives information 2. Descriptive label- gives information

about the product’s use, construction, about the product’s use, construction, care, performance, and other features.care, performance, and other features.

• Ex-Food LabelsEx-Food Labels• 3. Grade label- States the quality of the 3. Grade label- States the quality of the

productproduct• Ex-EggsEx-Eggs

WarrantyWarranty• Promise or guarantee give to a Promise or guarantee give to a

customer that a product will meet customer that a product will meet certain standardscertain standards

Express WarrantyExpress Warranty• Written or verbally expresses the Written or verbally expresses the

warrantywarranty• 1. Full warranty- Product is found 1. Full warranty- Product is found

defective within a certain time defective within a certain time period it will be repaired or replacedperiod it will be repaired or replaced

• 2. Limited warranty- Excludes 2. Limited warranty- Excludes certain parts of the productcertain parts of the product

Implied WarrantyImplied Warranty• Takes place automatically by lawTakes place automatically by law• 1. Warranty of merchantability- Product 1. Warranty of merchantability- Product

is fit for its intended purposeis fit for its intended purposeEx- Lawnmower will cut the grassEx- Lawnmower will cut the grass• 2. Warranty of fitness- Seller advises a 2. Warranty of fitness- Seller advises a

customer that a product is suitable for a customer that a product is suitable for a particular use.particular use.

Ex.- Truck can pull a certain amount of Ex.- Truck can pull a certain amount of weightweight

Warranty DisclaimerWarranty Disclaimer• Statement that contains exceptions Statement that contains exceptions

to and exclusions from a warranty.to and exclusions from a warranty.

Extended WarrantyExtended Warranty• Provide repairs and maintenance for Provide repairs and maintenance for

a specified period of time beyond the a specified period of time beyond the normal warranty period that a normal warranty period that a customer must purchase.customer must purchase.

Developing New IdeasDeveloping New Ideas• 1. Generate ideas- Any source1. Generate ideas- Any source• 2. Screen ideas- Ideas are evaluated2. Screen ideas- Ideas are evaluated• 3. Develop a business proposal (business 3. Develop a business proposal (business

plan)plan)• 4. Develop the product- physical shape - 4. Develop the product- physical shape -

PrototypePrototype• 5. Test the product with consumers- focus 5. Test the product with consumers- focus

group and test marketsgroup and test markets• 6. Introduce the product- 6. Introduce the product- • 7. Evaluate customer acceptance- research7. Evaluate customer acceptance- research

CreditCredit• An arrangement to receive cash, An arrangement to receive cash,

goods, or services now and pay for goods, or services now and pay for them in the futurethem in the future

Advantages of CreditAdvantages of Credit• Buy now pay laterBuy now pay later• Only acceptable form of paymentOnly acceptable form of payment• If responsible will build credit scoreIf responsible will build credit score• Proof of purchaseProof of purchase• ConvenientConvenient

Disadvantages of CreditDisadvantages of Credit• Temptation to overspendTemptation to overspend• Failure to repay lowers credit scoreFailure to repay lowers credit score• Loss of property or incomeLoss of property or income• Does not increase your purchasing Does not increase your purchasing

powerpower• Higher purchase priceHigher purchase price• InterestInterest

Credit ScoreCredit Score• 3-digit number that predicts how 3-digit number that predicts how

you will pay your billsyou will pay your bills• 300-850300-850

What Determines a What Determines a Credit ScoreCredit Score

1.1. Payment History (35%)Payment History (35%)2.2. Amount Owed (30%)Amount Owed (30%)3.3. Length of Credit History (15%)Length of Credit History (15%)4.4. Inquiries (10%)Inquiries (10%)5.5. Mix of Credit (10%)Mix of Credit (10%)

How to build a good How to build a good credit scorecredit score

1.1. Open a savings accountOpen a savings account2.2. Use a debit card and keeps a safe Use a debit card and keeps a safe

cushion of $200cushion of $2003.3. Get a credit card and use sparinglyGet a credit card and use sparingly4.4. ALWAYS MAKE PAYMENTS ON ALWAYS MAKE PAYMENTS ON

TIMETIME

Types of CardsTypes of Cards1.1. Bank Credit Cards – Normal credit cards Bank Credit Cards – Normal credit cards

issued through banksissued through banks- Ex- Visa offered through Bank of AmericaEx- Visa offered through Bank of America2. Store Credit Cards – Credit cards to 2. Store Credit Cards – Credit cards to

retail storesretail stores- Ex- JC Penny, TargetEx- JC Penny, Target3. Travel and Entertainment Cards- Used to 3. Travel and Entertainment Cards- Used to

pay for business expenses.pay for business expenses.- Ex- American Express- Ex- American Express

Types of CardsTypes of Cards4. Reward Cards – Rebates, points, or awards 4. Reward Cards – Rebates, points, or awards

are offered when used.are offered when used.- Ex- Visa SignatureEx- Visa Signature5. Affinity Cards – Percentage of purchase is 5. Affinity Cards – Percentage of purchase is

returned to schools, clubs, or organizations.returned to schools, clubs, or organizations.6. Debit Cards – Electronic Check6. Debit Cards – Electronic Check7. Special Customer Cards – Neither credit or 7. Special Customer Cards – Neither credit or

debit but adds purchases and gives rewardsdebit but adds purchases and gives rewardsEx- Kroger or SpeedwayEx- Kroger or Speedway

Government AgenciesGovernment Agencies• Federal Trade Commission (FTC) – Federal Trade Commission (FTC) –

Protects consumers from unfair business Protects consumers from unfair business practicespractices

• Federal Drug Administration (FDA) - Federal Drug Administration (FDA) - Regulate the labeling and safety of food, Regulate the labeling and safety of food, drugs, and cosmeticsdrugs, and cosmetics

• United States Department of Agriculture United States Department of Agriculture (USDA) – Responsible for developing and (USDA) – Responsible for developing and executing policy farming, agriculture, and executing policy farming, agriculture, and forestryforestry

Government AgenciesGovernment Agencies• Environmental Protection Agency Environmental Protection Agency

(EPA) - Monitor and reduce air, (EPA) - Monitor and reduce air, water, and waste pollution.water, and waste pollution.

Consumer LawsConsumer Laws• Magnuson-Moss Consumer Product Magnuson-Moss Consumer Product

Warranty Act- Governs written Warranty Act- Governs written warranties for products over $15.warranties for products over $15.

• Consumer Product Safety Act- Oversee Consumer Product Safety Act- Oversee the safety of productsthe safety of products

• Consumer Product Safety Consumer Product Safety Improvement Act- Requires a third Improvement Act- Requires a third party testing of children’s products, party testing of children’s products, due to lead.due to lead.

Consumer LawsConsumer Laws• Food, Drug, and Cosmetic Act- Food, Drug, and Cosmetic Act-

Ensures that products are safe, Ensures that products are safe, pure, wholesome, and effective.pure, wholesome, and effective.

Ex- Informative labels and truthful Ex- Informative labels and truthful advertisingadvertising

• Lemon Laws- Protect consumers Lemon Laws- Protect consumers against poorly built carsagainst poorly built cars

Credit LawsCredit Laws• Truth in Lending Act- requires lenders Truth in Lending Act- requires lenders

to disclose information about loans.to disclose information about loans.• Fair Credit Reporting Act- lender must Fair Credit Reporting Act- lender must

report the name and address of the report the name and address of the credit bureau when a consumer is credit bureau when a consumer is denied creditdenied credit

• Equal Credit Opportunity Act- sets Equal Credit Opportunity Act- sets guidelines for review of credit guidelines for review of credit applications and prohibits discriminationapplications and prohibits discrimination

Credit LawsCredit Laws• Fair Debt Collection Practices – Prevents Fair Debt Collection Practices – Prevents

harassing or abusing customers from debt harassing or abusing customers from debt collectorscollectors

• Fair Credit and Charge Card Disclosure – Fair Credit and Charge Card Disclosure – requires credit card issuers to provide requires credit card issuers to provide customers with information about cost of customers with information about cost of credit and charge accountscredit and charge accounts

• Fair and Accurate Credit Transactions Act – Fair and Accurate Credit Transactions Act – requires business to verify identities of people requires business to verify identities of people opening accounts to prevent identity theftopening accounts to prevent identity theft

Credit LawsCredit Laws• Credit Card Accountability, Credit Card Accountability,

Responsibility and Disclosure Act – Responsibility and Disclosure Act – Changes how interest rates are Changes how interest rates are charged and changes, requires 45 charged and changes, requires 45 day notice to change rates, and send day notice to change rates, and send bills 3 weeks before they are duebills 3 weeks before they are due

Government Agencies, Consumer and Credit LawsGovernment Agencies, Consumer and Credit Laws

1.1. Federal Trade Commission (FTC)Federal Trade Commission (FTC)2.2. Federal Drug Administration (FDA)Federal Drug Administration (FDA)3.3. United States Department of Agriculture (USDA)United States Department of Agriculture (USDA)4.4. Environmental Protection Agency (EPA)Environmental Protection Agency (EPA)5.5. Magnuson-Moss Consumer Product Warranty ActMagnuson-Moss Consumer Product Warranty Act6.6. Consumer Product Safety ActConsumer Product Safety Act7.7. Consumer Product Safety Improvement ActConsumer Product Safety Improvement Act8.8. Food, Drug, and Cosmetic ActFood, Drug, and Cosmetic Act9.9. Lemon LawsLemon Laws10.10. Truth in Lending ActTruth in Lending Act11.11. Fair Credit Reporting ActFair Credit Reporting Act12.12. Equal Credit Opportunity ActEqual Credit Opportunity Act13.13. Fair Debt Collection PracticesFair Debt Collection Practices14.14. Fair Credit and Charge Card DisclosureFair Credit and Charge Card Disclosure15.15. Fair and Accurate Credit Transactions ActFair and Accurate Credit Transactions Act16.16. Credit Card Accountability, Responsibility and Disclosure ActCredit Card Accountability, Responsibility and Disclosure Act