chapter 8.docx

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Simon Fraser University
Business Administration
BUS 343
Zaheer Jiwani

Manage the product (Chapter 8) PRODUCT PLANNING Objective and strategies for individual product  Introduce new products  Regional product: introduce nationally  Mature product: increase consumer enthusiasm for the product (bring new life to a product while holding on to the traditional brand personality Objective and strategies for individual product Cannibalization—occurs when the new item eats up sales of an existing brand as the firm’s current customers simply switch to the new product.  Product line extensions  Stretching: adding new items to line  Downward: adds items at the lower end.  Upward : adds new items—higher-priced entrants that claim better quality or offer more bells and whistles  Two-way: add product at both upper and lower ends.  Filling: adding sizes or styles of previously available in a product category  Contracting a product line: dropping items  Product mix  Increase width of product mix  Product width―the number of product lines offered  Product length―the number of different products a firm sells  Product depth―variations in each product that a firm markets in its mix EG. Johnson baby 品牌分SKIN CARE, HEALTH CARE, 吃的… (Width) Health care 里面分colds/nutritional/dental… (Length) Colds 里面分Matrin pain/ Tylenal/ simply sleep (depth) TQM (total quality management) maximizes customer satisfaction; to continually improve quality; to suggest ways to improve products Type of product modification  Quality modification (durability)  Functional modification (safety)  Style modification (aesthetic) Quality guidelines  1987 IOS9000  1994 IOS14000 5-step process called “DMAIC”—define, measure, analyze, improve, and control. Product life cycle  Product life cycle (PLC) –explain how the market’s response to a product and marketing activities change, over the life of the product.  Introduction stage  No profits because the company is recovering R&D costs  Informing consumers about the product, how to use it and its promised benefits  The growth stage  Profit increase and peak  Encourage brand loyalty  The maturity stage  Sales peak, profit margin narrow  Firm try to sell their product through as many outlets as possible because availability is crucial in a competitive market.  Longest stage  The decline stage  Market shrinks: sales fall/ profit fall  Sales decrease as customer needs change BRANDING Good brand designers say there are four “easy” tests:  easy to say,  easy to spell,  easy to read,  and easy to remember The name should also “fit” four ways:  Fit the target market  Fit the product’s benefits  Fit the customer’s culture  Fit legal requirements Brand equity  Brand equity—describes a brand’s value over and above the value of the generic versio
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