Small Business Discussion Board 10

cam15

Chapter_15_Product_and_Supply_Chain_Mgt.pdf

Home >Business & Finance homework help >Management homework help >Small Business Discussion Board 10

Small Business Management, 18e

Longenecker/Petty/Palich/Hoy

distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Product Development and

Supply Chain Management

Chapter 15

service or otherwise on a password-protected website for classroom use.

Learning Goals:

 Recognize the challenges associated with the

growth of a small business.

 Explain the role of innovation in a company’s

growth.

 Identify stages in the product life cycle and

the new product development process.

 Describe the building of a firm’s total

product.

service or otherwise on a password-protected website for classroom use.

Learning Goals (cont.):

 Understand product strategy and the

alternatives available to small businesses.

 Discuss how the legal environment affects

product decisions.

 Explain the importance of supply chain

management and the major considerations in

structuring a distribution channel.

service or otherwise on a password-protected website for classroom use.

To Grow or Not to Grow

 Growth sufficient to maintain the status

quo is a goal of some entrepreneurs.

 Growing a business too quickly can be

stressful for the small firm.

 A “growth trap” may occur when a firm’s

growth soaks up cash faster than it can be

generated.

 Growth also puts pressure on a small

firm’s personnel. 15–5

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Innovation: A Path to Growth

 Competitive Advantage and Innovation

Innovation and entrepreneurship often go

hand-in-hand.

Coming up with and perfecting new products

or services is often not easy.

The risk of failure increases when innovation

is the goal.

Innovation is a means by which a firm can

sustain its competitive advantage.

15–6

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Reducing the Risk of Failure

While Innovating

 Base innovative efforts on your experience.

 Focus on overlooked products or services.

 Be sure there is a market for the product

or service you are hoping to create.

 Pursue innovation that customers will perceive

as adding value to their lives.

 Focus on new ideas leading to more than one

product or service.

 Raise sufficient capital to launch the new

product or service.

15–7

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Achieving Sustainability

 Sustainable Competitive Advantage

A value-creating position that endures over

time

Is difficult to imitate

Creates high barriers to market entry

Can be patented or copyrighted

Is renewable at higher performance capabilities

15–8

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Achieving Sustainability (cont.)

 Stages in the Competitive Advantage Life

Cycle

Develop: invest resources

Deploy: boost performance

Decline: competitors overcome advantage

15–9

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Competitive Advantage Life Cycle15.1

The Product Life Cycle and

New Product Development

 Product Life Cycle

A detailed picture of what happens to a

specific product’s sales and profits over time

Promotion, pricing, and distribution policies must

be adjusted to the product’s position on the curve.

It is important to revitalize product lines before

they lose their commercial potential.

The life cycle of a product rises then falls—

innovation is necessary for a firm’s survival.

15–11

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Product Life Cycle15.2

New Product Development

Process

password-protected website for classroom use.

Idea

Accumulation

Business

Analysis

New Product

Development

Product

Testing

New Product Development

Process  Idea Accumulation

Increasing the number of ideas under

consideration

Sources for ideas:

 Sales, engineering, or other personnel within the firm

 Government-owned patents

 Privately owned patents listed by the U.S. Patent Office

 Small companies available for acquisition or merger

 Competitors’ products and advertising

 Requests and suggestions from customers

15–14

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

New Product Development

Process (cont’d)

 Business Analysis

 Testing to determine if an idea can be

profitable.

 Key factors to consider:

1. Product’s relationship to the existing product line

2. Cost of development and introduction

3. Available personnel and facilities

4. Competition and market acceptance

15–15

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

New Product Development

Process (cont’d)

 Development of the Physical Product

Branding, packaging, pricing, and promotion

 Product Testing

Proving the product design through

consumer reaction to the product.

15–16

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Building the Total Product

 Branding

A verbal and/or symbolic means

of identifying a product.

 Brand Name

A brand that can be spoken (tangible)

 Brand Mark

A brand that cannot be spoken (tangible)

 Brand Image

Symbolic (Intangible)

15–17

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Components of a Brand Identity15.3

Building the Total Product

(cont’d)

 Rules for Naming a Product:

1. Select a name that is easy to pronounce and

remember.

2. Choose a descriptive name.

3. Use a name that is eligible for legal protection.

4. Select a name with promotional properties.

5. Select a name that can be used on several

product lines of a similar nature.

15–19

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Building the Total Product

(cont’d)

 Designing a Logo:

1. Be simple.

2. Design for visibility

3. Leave it open to interpretation.

4. Be relentlessly consistent.

5. Recognize the importance of logo design.

6. Get good advice.

7. Don’t expect miracles.

15–20

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Protecting the Product Offering

 Trademark

An identifying feature used to

distinguish a manufacturer’s product

 Service Mark

A legal term indicating the

exclusive right to use a

brand to identify a service.

15–21

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Building the Total Product

(cont’d)

 Packaging

Color, design, and protection for the product.

 Labeling

Shows the brand and informs the consumer

about product features, correct use, and care.

15–22

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Building the Total Product

(cont’d)

• Warranties

A promise that the product will perform at a

certain level or meet certain standards.

Implied and written warranties

Policy considerations: Cost, service capability,

competitive practices, customer perceptions, legal

implications

15–23

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Product Strategy

 Product Strategy

The way the product component of the

marketing mix is used to achieve a firm’s

objectives.

Product item

 The lowest common denominator in the product mix—the

individual item

Product line

 The sum of the related individual product items

15–24

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Product Strategy (cont.)

 Product Strategy

Product mix

A firm’s total product lines

Product mix consistency

The similarity of product lines in a product

mix

15–25

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Product Lines and Product Mix for 180s LLC

Source: Compiled from “180s,” http://www.180s.com, accessed January 26, 2011.

15.4

password-protected website for classroom use.

Services Marketing Versus Goods Marketing15.5

Product Strategy (cont’d)

 Product

A total bundle of satisfaction—a service, a

good, or both—offered to consumers in an

exchange transaction.

Includes both the main element (physical

product or core service) and

complementary components (features).

15–28

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Product Strategy Options

 Alternatives

One product/one market

One product/multiple

markets

Modified product/one

market

Modified product/multiple

markets

Multiple products/one

market

◦ Multiple products/multiple markets

 Options

Convince nonusers in

the targeted market to

become customers

Persuade current

customers to use

more of the product

Alert current

customers to new

uses for the product

15–29

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Legal Environment  Consumer Protection

Labeling

Nutrition Labeling and Education Act of 1990

 Listing of contents

 Proper care and use

Product safety

Consumer Product Safety Act of 1972

 Consumer Product Safety Commission

Nutrition Labeling and Education Act of 1990

 Packaging

 Use instructions

 Disposal

15–30

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Legal Environment (cont’d)

 Trademark Protection

The Lanham Trademark Act grants exclusive rights of

use of a registered non-generic name, symbol or

other mark to identify a product or service.

Trademarks are researched and then registered with

the U.S. Patent and Trademark Office (PTO).

Loss of rights

If the mark enters into use as a generic term.

If the mark is not labeled with the symbols tm or® or

the phrase “Registered in the U.S. Patent and Trademark

Office.”

15–31

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Legal Environment (cont’d)

 Patent Protection

The registered, exclusive right of an inventor to

make, use, or sell and invention.

Utility patent

Registered protection for a new process or product’s

function

15–32

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Legal Environment (cont’d)

 Patent Protection (cont.)

Design patent

Registered protection for the appearance

of a product and its inseparable parts

Plant patent

Registered protection for any distinct

and new variety of plant

15–33

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

The Legal Environment (cont’d)

 Copyright

The exclusive right of a creator to reproduce,

publish, perform, display, or sell his or her works.

Copyright notice

 Year the work was published

 Copyright owner’s name

 Trade Dress

Are elements of a firm’s distinctive image (“look”)

Can be protected under trademark law

15–34

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Supply Chain Management

 Supply Chain Management

Integrates and coordinates the means by

which a firm creates or develops a product

or service and delivers it to customers.

 Distribution

Physically moving products and establishing

intermediary relationships to support such

movement.

15–35

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Supply Chain Management

(cont’d)

 Physical Distribution (Logistics)

The activities of distribution involved in the

physical relocation of products.

 Channel of Distribution

The system of relationships established to

guide the movement of a product.

15–36

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Channels of Distribution15.7

Channels in Supply Chain

Management

password-protected website for classroom use.

Channels of

Distribution

Direct

Channel

Dual

Distribution

Indirect

Channel

Supply Chain Management

(cont’d)

 Functions of Intermediaries

Perform the marketing function better.

Provide efficient distribution of the product.

 Types of Intermediaries

Merchant middlemen

Take title to the goods they distribute.

Agents/brokers

Do not take title to the goods they distribute.

15–39

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Scope of Physical Distribution

(cont’d)

 Storage

Lack of storage space is a common problem.

 Materials Handling

Protecting the firm’s output during

warehousing.

15–40

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Scope of Physical Distribution

(cont’d)

 Specifying Responsibility for Delivery

Terms

Paying freight costs—F.O.B. origin, freight

collect.

Selecting the carriers.

Bearing the risk of damage.

Selecting the modes of transport.

15–41

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Scope of Physical Distribution

(cont’d)  Logistics Companies

Firms which specialize in providing cost-effective

transportation, storage, and distribution services

to small companies.

Trucking

Packaging

 Warehousing

Third-Party Logistics Firm (3PL)

A firm that provides transportation and distribution

services to companies that prefer to focus their efforts

on other facets of their business.

15–42

part, except for use as permitted in a license distributed with a certain product or service or otherwise on a

password-protected website for classroom use.

Key Terms agents/brokers

brand

brand image

brandmark

brand name

channel of distribution

common carriers

contract carriers

design patent

direct channel

distribution

dual distribution

indirect channel

merchant middlemen

patent

physical distribution (logistics)

plant patent

private carriers

product

product item

product life cycle

product line

product mix

product mix consistency

product strategy

service mark

supply chain management

sustainable competitive advantage third-party

logistics firm (3 PLs)

trade dress

trademark

utility patent

warranty

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.