Marketing Essentials

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Marketing Essentials
n Chapter 30 Product Planning
Section 30.1 Product Planning, Mix, and
Development
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SECTION 30.1
Product Planning, Mix, and Development
What You'll Learn

• The nature and scope of product planning
• The concept of product mix
• The different product mix strategies
• The steps in new product development

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SECTION 30.1
Product Planning, Mix, and Development
Why It's Important
Product planning allows a business to make or
sell products that are wanted by customers.
Product planning is also used to design
appropriate marketing programs that help create
increased sales and profit opportunities.
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SECTION 30.1
Product Planning, Mix, and Development
Key Terms

• product planning
• product mix
• product line
• product item
• product width
• product depth
• product modification

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SECTION 30.1
Product Planning, Mix, and Development
Product Planning
A product is anything a person receives in an
exchangea tangible item (car), a service
(haircut), an idea (a good education), or a
combination of all of these concepts. Product
planning involves making decisions about features
needed to sell a business's products, services,
or ideas.
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SECTION 30.1
Product Planning, Mix, and Development
Product Mix
Product mix includes all the different products
that a company makes or sells. A large
manufacturer may have hundreds of products in its
product mix. Retail stores must plan their
product mix carefully because they cannot offer
all of the products that customers may want.
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SECTION 30.1
Product Planning, Mix, and Development
Product Items and Lines
A product line is a group of closely related
products manufactured and/or sold by a business.
A product item is a specific model, brand, or
size of a product within a product line.
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SECTION 30.1
Product Planning, Mix, and Development
Product Width and Product Depth
Product width refers to the number of different
product lines a business manufactures or sells.
Product depth refers to the number of product
items offered within each product line.
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SECTION 30.1
Product Planning, Mix, and Development
The Concept of Product Mix
Width of the Product Mix
Blades and Razors
WritingInstruments
Lighters
Toiletries
MACH 3 Sensor Trac II Atra Swivel Double-Edge Lady
Gillette Super Speed Twin Injector Techmatic
Series Adorn Toni Right Guard Silkience Soft and
Dri Foamy Dry Look Dry Idea Brush Plus
Paper mate Flair
Cricket S.T. Dupont
The width and depth of product lines define
product mix. What does product depth tell you
about the importance of a given product line? Why
do you think a company would choose to produce
so many different razors?
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SECTION 30.1
Product Planning, Mix, and Development
Product Mix Strategies
A product mix strategy is the plan for how the
business determines which products it will make
or stock. Businesses will either develop a new
product or expand an existing product to add to
their mix.
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SECTION 30.1
Product Planning, Mix, and Development
Developing New Products

• New products can add substantially to a companys
  overall sales and boost its market share. New
  products can
• make a company look innovative
• increase profits because they are generally
  priced 10 to 15 percent above older items
• become a major part of a product line

Slide 1 of 2
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SECTION 30.1
Product Planning, Mix, and Development
Developing New Products

• New product development generally involvesseven
  key steps
• 1. Generating ideas
• 2. Screening ideas
• 3. Developing a business proposal
• 4. Developing the product
• 5. Testing the product
• 6. Introducing the product (commercialization)
• 7. Evaluating customer acceptance

Slide 2 of 2
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SECTION 30.1
Product Planning, Mix, and Development
Generating Ideas

• New product ideas come from a variety of sources
• customers
• competitors
• channel members
• company employees
• research and development departments

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SECTION 30.1
Product Planning, Mix, and Development
Screening Ideas
Ideas for new products are screened and
evaluated, and matched against the company's
overall objectives to see if they fit. Some ideas
are eliminated. The best ideas are put through
further evaluation. Finally, one or two ideas are
selected for development.
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SECTION 30.1
Product Planning, Mix, and Development
Developing a Business Proposal
A product idea must be considered in regard to
its potential for profit. A business proposal is
developed to evaluate the size of the market,
potential sales, production requirements, costs,
profit potential, technological trends, and risk.
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SECTION 30.1
Product Planning, Mix, and Development
Developing the Product
During product development, a prototype (a model
of the product) is made, and marketers develop a
marketing strategy. The prototype is tested, and
adjustments are made to improve the final product.
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SECTION 30.1
Product Planning, Mix, and Development
Testing the Product

• Newly developed products are usuallytested to
  obtain customers' responses. Common strategies
  are
• test marketing in a certain geographic area
• evaluation by a focus group

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SECTION 30.1
Product Planning, Mix, and Development
Introducing the Product

• If customer response is favorable, the product is
  introduced into the marketplace. This stage is
  called commercialization. The costs of
  introducing a new product often are quite high.
  At this stage, the company will need to
• advertise the product
• create or revise a distribution network
• train its sales force

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SECTION 30.1
Product Planning, Mix, and Development
Evaluating Customer Acceptance
After the product has been introduced, marketers
track new product performance to evaluate
customer acceptance of the product and the
marketing strategies used to introduce the
product.
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SECTION 30.1
Product Planning, Mix, and Development
Developing Existing Products

• In order to build on an established image, appeal
  to new markets, and increase sales and profits,
  companies can either
• expand an existing product line or
• modify an existing product

Slide 1 of 3
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SECTION 30.1
Product Planning, Mix, and Development
Developing Existing Products

• Line Extensions Companies can expand product
  offerings by adding new product lines, items, or
  services.
• Example Tylenol expanded to Tylenol Flu,
  Tylenol Cold, and Tylenol Allergy/Sinus
• Extensions can also be new lines of products.
• Example Bic pens and Bic lighters

Slide 2 of 3
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SECTION 30.1
Product Planning, Mix, and Development
Developing Existing Products
Product modification is an alteration in a
company's existing product. Product modifications
are a relatively quick and easy way to add new
products to a company's product line.
Slide 3 of 3
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SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line

• Sometimes companies decide that they will no
  longer produce or sell a particular product or
  perhaps even a whole product line. Some of the
  reasons for this are
• obsolescence
• loss of appeal
• conflict with current company objectives
• replacement with new products
• lack of profit
• conflict with other products in the line

Slide 1 of 4
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SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line
Obsolescence Changing interests and technology
make many products obsolete. They are dropped in
favor of newer technologies. Loss of Appeal As
consumer tastes change, companies drop products
that no longer appeal to popular tastes.
Slide 2 of 4
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SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line

• Conflict with Current Company Objectives
  Sometimes a product does not match a company's
  current objectives.
• Example Sears sold unrelated businesses
  to concentrate on retail.
• Replacement with New Products A store decides it
  can make more money selling a different brand, or
  replaces one brand for another because another
  manufacturer offers better terms.

Slide 3 of 4
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SECTION 30.1
Product Planning, Mix, and Development
Deleting a Product or Product Line
Lack of Profit To increase profits, retailers
will handle only fast-moving and profitable
items. Product developers may drop products when
sales drop below company objectives. Conflict
with Other Products in the Line Sometimes
increased sales of one product can cause
decreased sales of another product.
Slide 4 of 4
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ASSESSMENT
30.1
Reviewing Key Terms and Concepts
1. What is product planning? 2. What is product
mix? 3. Name four product mix strategies. 4. Ident
ify the steps for new product development. 5. Name
one advantage and one disadvantage to expanding
a product line.
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ASSESSMENT
30.1
Thinking Critically
Suppose a company is developing a new product,
when a competitor introduces a new product that
is similar. What are some things the company
should consider in deciding whether to proceed
with the development of its new product?
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30.1
Graphic Organizer
Developing New Products
Evaluate Customer Acceptance
Introduce the Product
Test the Product
Develop a the Product
Develop a Business Proposal
Screen Ideas
Generate Ideas
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Marketing Essentials
End of Section 30.1