Transcript MM 8.02 Slide Show

Wednesday, April 13th
Unit E – Product Service Management
• Obj. 8.02 – Product Assortments
– Slide Show/notes
– Worksheets/Activities
• Obj. 8.03 – Classify Quality Assurances
– Slide Show/Notes
– Worksheets/Activities
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UNIT E
PRODUCT/SERVICE MANAGEMENT AND
PRICING
8.02 Summarize product
assortments for ongoing business
success.
Product mix
• Product item: A specific
version, model, brand, or size
of a product.
• Example – Diet Coke
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Product mix
• Product line: A group of items that are
sold together because of marketing,
technical, or end-use considerations.
• Example – diet coke, diet coke lime, diet
coke with splenda, etc
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Product mix (cont.)
• Product assortment (mix): The total of
all products a business offers to a
market.
• Example – Snack Shack sells Coke
products, Pepsi products, private store
brand drinks, Dansani, etc, etc, etc
• Coca Cola’s product mix includes coke,
diet coke, sprite, etc.
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Product mix (cont.)
• Product assortment (mix) includes:
– Product width (breadth):
– Product depth:
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Product mix (cont.)
• Product assortment (mix) includes:
– Product width (breadth): The number
of different product lines a business
manufactures or sells.
– Example – Belks carries Levis, Lee and
Wrangler jeans so product width is 3
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Product mix (cont.)
• Product assortment (mix) includes:
– Product width (breadth): The number
of different product lines a business
manufactures or sells.
• Broad assortment
• Narrow assortment
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Product width (breadth)
• Broad assortment: A product assortment
that includes many product lines.
• Example – Coca-Cola – offers a product line
for Coke – (reg coke, caffeine free coke, coke
zero, vanilla coke, etc), Diet Coke – (diet
Coke, Caffeine Free Diet Coke, etc)
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Product width (breadth)
• Narrow assortment: A product
assortment offering a limited number of
product lines.
• Example – Bojangles –
– Product lines limited to biscuits, no
sandwiches
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Product mix (cont.)
• Product assortment (mix) includes:
– Product depth: The number of items
offered within each product line:
– Example – Belks offers many sizes,
cuts, washes, colors for each of the 3
brands of jeans they carry.
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Product depth
• Deep assortment:
• Shallow assortment:
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Product depth
• Deep assortment: A product
assortment offering many product
items within the product line.
• Example – Levis has a deep assortment
of boot cut jeans.
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Product depth
• Shallow assortment: A product
assortment offering a limited number of
product items within the product line.
• Example – Cafeteria line
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Product mix – (cont)
• Product modification: An alteration
in a company’s existing product.
• Example – Coke - , then Vanilla Coke
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Product mix (cont.)
• Product or line deletion: A company
decision to no longer carry a product or
even an entire product line.
• Example – Burger King discontinued
their BK Breakfast Shots
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Product mix (cont.)
• Product or line deletion:
• Decisions can be based on the following:
– Obsolescence – change in customer preference
&/or change in technology (VCRs vs DVDs)
– Loss of appeal – consumer tastes change
– Company objective changes – Company may
determine product no longer matches their
direction/goals.
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Product mix (cont.)
• Product or line deletion: (cont)
• Decisions can be based on the following:
– Product replacement – new and improved
products come onto market
– Lack of profit – product no longer profitable for
company.
– Product conflict in product line – one product’s
sales take away another’s
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Product mix (cont.)
• Product development: The process of
creating or improving a product or
service.
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Worksheet
• Visit Hershey’s website
• Visit Nestle’s website
• Answer questions on handout
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Steps in new product development
1. Idea generation
New product ideas come from:
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–
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–
–
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Research and development
Customers
Employees
Competitors
Distributors
Suppliers
Other
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Steps in new product development
2. Idea screening
Developers eliminate ideas that do not have
potential to be successful
– Reduces cost
– Allows focus on ideas with merit
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Steps in new product development
3. Concept development and testing
– Detailed description of the potential product
presented to potential buyers/customers
– In terms that are understandable and
meaningful to consumer
– To gain their reaction and
– Measure customer appeal
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Steps in new product development
4. Marketing strategy development
• Initial marketing strategy designed to:
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Outline target market
Planned product positioning
Sales
Market share
Profit goals
• For 1st year in life of product
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Steps in new product development
5. Business analysis
Review
– Sales
– Costs
– Profits
To determine feasibility of continued development
of the product idea
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Steps in new product development
6. Product development
• A prototype is created to make sure the idea
can be successfully moved from descriptions
and drawings to a workable product.
• Requires the combined efforts of
– Product engineering
– Research and development
– Marketing
• To make best decisions.
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Steps in new product development
7. Test marketing
New product and its marketing program are
introduced to the public in selected
geographical areas to test product
acceptance in authentic markets.
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Steps in new product development
8. Commercialization
• Plans for full-scale production and
marketing are implemented.
• Product placed in the competitive market.
• Fine-tuning of product continues in:
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Production
Quality control
Distribution
Marketing
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