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Simon Fraser University
Business Administration
BUS 343
Todd Green

BUS 343 November 1, 2010 Lecture 8 Product Strategy Chapter 7 Product  Product Objective must be: (should be long term implications) Objects  Measurable (241)  Clear  Feasible  Specify a Time Frame Product  Goods: Tangible products we can see, touch, smell, hear or taste Concept Current Markets New Markets (242) Current Products Market Penetration Market Development New Products Product Development Diversification  Layers of the Product Concept  Core Product: Basic Benefits  Actual Product: Features, Package, Brand, Quality, Appearance  Augmented Product: Warranty, After Sale Service, Installation, Delivery, Credit, Product-Use Instruction  Strategies for Individual Products  Introduction of Product  Changing old image of Product  Strategies for Multiple Products See figure 7.4, 244  Product Line: A firm’s total product offering designed to satisfy a single need or desire of target customers  Full Line: A long length of products under a category  Limited Line Strategy: A smaller number of variations but images to be a specialist  Upward Line Stretch: Adding more products to the upper expensive end of the product line  Downward Line Stretch: Adding more product to the lower cheaper end of the product line  Two Way Stretch: Adding items in both the upper and lower end  Filling Out Strategy: Added sizes or styles not previously available in a product category  Contract Product Line: Make items only when they are popular, dispose of when not  Cannibalization: Loss of sales of an existing product when a new item in a product line or product family is introduced  Product Mix: Total set of all products a firm offers for sale Goods- Service Continuum  Goods-Service Continuum: As goods move to more tangible, the greater the importance on physical object and more to intangible, greater on service See figure 7.5, 247 (246)  Embodying: The inclusion of a service with the purchase of a physical good  Equipment or Facility Driven Services needs  Operational Factors: Technologies must move customers smoothly through the service  Location Factors: Locations are fixed and convenient  Environmental Factors: Must create attractive environment Services (249)  Services: Intangible products that are exchanged directly from the producer to the customer  Characteristics  Intangibility  Perishablility: Cannot store  Capacity Management: The process by which organizations adjust their offerings in an attempt to match demand  Variability  Inseparability: Service can only take place at time the service provider performs an act  Service Encounter: The actual interaction between the customer and service provider  Disintermediation: The process of eliminating interaction between customers and service providers for potential negative effects Developing New  Phases of Development: See figure 7.6, 251 Product (250)  Visionary: Idea generation, screen new product concepts, complete a business analysis  Estimating technical success, is the new product technologically feasible  Estimating commercial success, Deciding whether anyone is likely to buy the product  Conduct a business analysis, see if a product can be a profitable contribution to the organization  Planning and Development  Commercial Development: Putting a business plan together that builds on initial projections  Technical Development: Firm’s engineers work with marketers to refine design and production process  Testing and Improving the Product  Test Marketing: Testing the complete marketing plan in a small geographic area that is similar to the larger market the firm hopes to enter, very expensive  Because of price, firms often use stimulated Test Markets, which are tests that imitate the introduction of a product into the market place using software  Product Launch: Launching the product on a full sca
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