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Chapter 7

BUS 343 Chapter Notes - Chapter 7: Marketing Mix, New Product Development, Final Good


Department
Business Administration
Course Code
BUS 343
Professor
Jason Ho
Chapter
7

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Chapter 7: Product Strategy
Build a Better Mousetrap
New product failure a new product that does not reach expectations for success,
failing to reach sales objectives
Woodstreams and Cokes failures underscore the importance of creating products that
provide benefits people seek
Creating and Nurturing Products
Firms that plan well succeed
Strategies outlined in the product plan tell how the firm expects to develop a product that
will meet marketing objectives
Product Objectives
When markets develop product strategies, they are making decision about product
benefits, features, styling, branding, labelling, logos, and packaging
Clearly stated product objectives provide focus and direction, they should support the
broader marketing objectives of the business unit in addition to supporting the overall
mission of the firm
Product objectives need to specify how product decisions will support or contribute to
reach a desired market share or level of sales
To be effective, product-related objectives must be measurable, clear, and unambiguous,
and feasible, and must specify a time frame
Firm can follow one of the four strategies, depending on whether the products or markets
are current or new
oGood way for a firm to use the grid is to ensure it has a good balance between
the four quadrants
Planners must keep in touch with consumers or business customers so that their
objectives accurately respond to customer needs
Equally important in developing product objective is an up-to-date knowledge of
competitive product innovations
The Product Concept
Goods tangible products we can see, touch, smell, hear, or taste
Intangible products services, ideas, people, places
Marketers think of the product as more than just a thing that comes in a package, they
view a product as a bundle of attributes including
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oPackaging, brand name, benefits, and supporting features, in addition to a
physical good
Layers of the Product Concept
The product has three distinct layers
oCore, actual, and augmented
Core product all the benefits the product will provide for consumers or business
customers
Actual product the physical good or the delivered service that supplies the desired
benefit
Augmented product the actual product plus other supporting features such as a
warranty, credit, delivery, installation, and repair service after the sale
Consumers dont buy product features, they buy the benefits offered by the product
Marketers should focus on marketing communications efforts on the benefits the brand
provides to consumers
Product Line Decisions
Strategies for Individual Products
Strategies for individual products may be quite different for new products, for regional
products, and for mature products
For new products
oObjectives relate to successful introduction
For regional products
oObjective is to start introducing the product nationally
For mature products
oObjectives may focus on breathing new life into a product long taken for granted
while holding onto the traditional brand personality
Strategies for Multiple Products
Large firms usually markets a mix of related products, which strategic decisions may
affect two or more products at once, thus the firm must think in terms of its entire
portfolio
Product planning means developing product line and product mix strategies that
encompass multiple offering
Product Line Strategies
Product line a firms total product offering designed to satisfy a single need or desire
of target customers
Full line strategy
oWhen a firm has a large number of variations in its product line
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oPossible to please many customer segments, thus increasing total sales potential
Limited line strategy
oMarkets a smaller number of product variations
oCan improve image of the firm because it is perceived to be a specialist and has
a clear specific position in the market
In developing product strategies, organization may decide to extend their product lines by
adding more brands or models
When company stretches its product line, it must decide on the best direction in which to
go
Upward line stretch
oCurrent product line: middle and lower end items
oAdd: upper end items with higher price, better quality, or more features
Downward line stretch
oCurrent product line: upper end items
oAdd: middle and lower end items
oMake sure the lower end items dont blur the images of higher-priced upper-end
offerings
Two way stretch
oExisting product line is meeting the needs of only a small portion of the market
and that there is more than one opportunity for growth
oAdding items at both the upper and lower ends
Filling-out
oAdding sizes or styles not previously available in a product category
Contract a product
oWhen some of the items are not profitable
Sometimes the expansion of product lines or introduction of new product lines will cause
cannibalization
oCannibalization - the loss of sales of an existing product when a new item in a
product line or product family is introduced
Product Mix Strategies
Product Mix the total set of all products a firm offers to sale
In developing a product mix strategy, planners usually consider the width of the product
mix, the number of product lines produced by the firm
Reduce the risk associated with putting all their eggs in one basket
Develop a mix of product lines that have some similarities
Expand into new product lines to take advantage of a strong brand reputation with an
existing target market
Service Strategy
Marketing decision makers need to decide what type of service, they are going to
provide, at what level of quality
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