Applied Science
Lucy Bell
Module_SLID_CH08.pptxChapter 8
Product Strategy
Chapter 8 Learning Objectives
Learn the range of product and service variation.
Understand the issues of product line formation.
Identify the strategy considerations over the product life cycle.
Know the strategic implication of alternative branding strategies.
2
Introduction
Three dimensions of a product or service
Core value
Actual product
Associated services
FIGURE 8-1 The Three Dimensions of a Product or Service
Learning Objective 1
The focus of marketing revolves around the products and services to meet customers’ needs.
Products can be divided into two groups.
Nondurable goods
Durable goods
A wide range of health care activities involve services—intangible activities or processes offered to customers to solve problems.
Learning Objective 1
The 5 I’s of service
Intangibility—services cannot be felt, touched, or heard before they are encountered.
Inconsistency—health services are delivered by people: nurse practitioner, physician, or admitting clerk in the group practice.
Inseparability—services cannot be separated from the individuals who deliver them.
Learning Objective 1
The 5 I’s of service (cont.)
Inventory—a concept that is common to product business and is often ignored
Interaction with customers—a service is the quality of the interaction between the customer and the service provider
Customer contact audit (medical practice blueprint) is a flowchart of the point of interaction between the customer and the service offering.
Learning Objective 1
Products are classified by type of user.
Consumer goods—products purchased by the ultimate consumer
Convenience goods—products that the consumer purchases frequently that require little deliberation of search prior to purchase
Shopping goods—products in which the consumer engages in significant amount of research to compare competing brands on selected attributes
Specialty goods—those products a consumer specifically seeks out
Learning Objective 1
Products can be classified by type of user.
Industrial products—purchased for use in the manufacture of other products, and which will, at some point, be purchased by the ultimate consumer
Production goods—items that are used to become part of a final product.
Support goods—items used to assist in the producing of other products.
Learning Objective 1
Services can be classified by how they are delivered—by people or equipment.
Equipment-based delivery has fewer problems with inconsistency.
Health care industry: for-profit or non-profit
In for-profit businesses, some portion of profit often is directed to shareholders.
In non-profit service organizations, excess revenues are redirected back to the organization to continue maintenance of the service.
Learning Objective 2
All businesses must decide which products or services to offer.
Companies must determine the breadth and depth of the product mix.
Most companies manage multiple product lines and items.
Learning Objective 3
Product life cycle—stages a product goes through as it exists in the market, from its first introduction to its final withdrawal
Four stages
Introduction
Growth
Maturity
Decline
Learning Objective 3
Introduction—occurs when the product is first rolled out into the marketplace.
Growth—sales of the product begin to increase rapidly.
Maturity—sales of the product begin to slow.
Decline—the organization must recognize that the service cannot continue to grow.
Learning Objective 3
Product life cycle issues
Alternative product life cycles
Length of the life cycle
Product life cycle concerns
Modifying the product life cycle
Product modification
Market modification
Repositioning the product
Learning Objective 4
Brand—any name, term, color, or symbol that distinguishes one seller’s product from another
Trademark—a brand name or trade name given legal protection
Learning Objective 4
Branding strategies
Multiproduct strategy—the company places one brand name on all of the products in its line.
Example: A hospital puts its name on an outpatient surgery center or walk-in emergency center.
Multibrand strategy—the company places a different name on each item.
Example: Proctor and Gamble makes Tide, Cheer, Ivory Snow, etc.
Learning Objective 4
Branding strategies (cont.)
Reseller and mixed strategy—one company sells its product under the name of another company.
Sears sells Craftsman tools and Kenmore appliances.
Co-branding—one organization markets its name alongside another brand name.
Lexus automobiles with Coach luggage leather seats
Learning Objective 4
The diffusion of innovation
The rate at which a product is adopted by the market
Innovators
Early adopters
Early and late majority
Laggard
FIGURE 8-8 The Diffusion of Innovation
Learning Objective 4
Factors affecting adoption
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
Homophilious groups
Pace of innovation
Norms, roles, and social networks
Infrastructure
Summary
Products and services differ in terms of tangibility.
Consumer goods can be differentiated by the amount of effort and manner of search the consumer uses in purchasing the product.
Industrial goods are classified as either production or support goods.
When establishing the product element of the marketing mix, a company must decide its product mix, line, and its breadth and depth.
Summary (cont.)
All products and services have life cycles consisting of four stages: introduction, growth, maturity, and decline.
The length of the product life cycle is affected by uncontrollable forces, such as technology and demographics. An organization can impact its sales in each stage relative to competition through its marketing mix strategy.
In the early stages of the product life cycle, a new entrant can price high to skim only the most likely buyers, or penetrate the largest market by pricing low.
Summary (cont.)
Organizations can stretch the life cycle in the mature phase through either product or market modification.
An organization’s brand name can have value or equity in the marketplace. In deciding on a brand, a firm can pursue a multiproduct, multibrand, reseller, or co-branding strategy.
Summary (cont.)
Acceptance of a product is the result of diffusion through the population. Individuals differ in the rate of adoption of new products.
The rate of adoption of a new product is affected by perception of relative advantage, compatibility, complexity, divisibility, communicability, homophilous groups, pace of innovation, norms, roles, social networks, and infrastructure.
