Product and Service Strategies

The First P

Davood Wadi, PhD
  • Welcome to Week 7 of Introduction to Marketing.
  • Today we focus on the first P of the marketing mix: Product.
  • We will explore what makes a product successful from inception to decline.
Knowledge Check

Which of the following is true about a product?

The Concept

Defining a Product

  • A product is anything that can be offered to a market for attention, acquisition, use, or consumption.
  • It includes physical objects, services, events, persons, places, organizations, and ideas.
  • Products solve problems and deliver value to consumers.

Product Classifications: Consumer Goods

Consumer goods are bought by final consumers for personal consumption.

Convenience Goods

Frequent Purchase

Convenience goods are purchased frequently with minimal comparison (e.g. toothpaste).

Shopping Goods

Planned Purchase

Shopping goods require more planning and comparison on quality, price, and style (e.g. furniture).
Knowledge Check

Which statement accurately describes the characteristics of specialty and unsought goods?

Product Classifications: Specialty & Unsought

Specialty Goods

Unique Identification

Specialty goods have unique characteristics or brand identification requiring special purchase effort (e.g. luxury cars).

Unsought Goods

Hidden Needs

Unsought goods are products consumers do not normally think of buying (e.g. life insurance).

Strategic Approach

Each category requires a distinct marketing and pricing strategy.
Knowledge Check

What does the Product Life Cycle (PLC) describe?

The Concept

The Product Life Cycle

React Flow
  • The Product Life Cycle (PLC) describes the course of a product's sales and profits over its lifetime.
  • It consists of five distinct stages: development, introduction, growth, maturity, and decline.
  • Not all products follow this cycle strictly, but it provides a useful framework for strategy.

The PLC Stages: Introduction and Growth

Introduction

Creating Awareness

During introduction, sales are slow and profits are nonexistent due to heavy investment.
The marketing goal is to create product awareness and trial.

Growth

Market Expansion

During growth, the product achieves rapid market acceptance and increasing profits.
The firm focuses on maximizing market share as competition enters.

The PLC Stages: Maturity and Decline

Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers.
  • Profits level off or decline due to increased marketing outlays to defend against competition.
Decline is the period when sales fall off and profits drop.
  • Management may decide to maintain, harvest, or drop the declining product.
Reflection

Managing the Decline Stage

  • A legacy software product has steadily declining user numbers, but a core group of businesses still rely on it.
  • Shutting it down will upset loyal clients, but keeping it running costs engineering resources.

Group Discussion

Group Discussion

Do you harvest the remaining profits by cutting all support, or do you gracefully retire the product and force migration to a new system?
The Challenge

New Product Development

  • Companies must continually innovate to replace declining products.
  • New products can be original products, improvements, modifications, or new brands.

High Risk

Innovation carries high risk, with many new products failing in the marketplace.
Knowledge Check

According to the new product development process, what does the concept development and testing phase involve?

Strategy

New Product Development Process

React Flow
  • Idea generation and screening start the process by sourcing and filtering new concepts.
  • Concept development and testing involve testing the idea with a group of target consumers.
  • Marketing strategy development outlines the initial marketing strategy for the new product.
Strategy

Business Analysis to Commercialization

Analysis & Development

Feasibility

Business analysis evaluates the business attractiveness of the proposal.
Product development turns the concept into a physical and testable prototype.

Testing & Launch

Market Entry

Test marketing introduces the product and marketing program into realistic market settings.
Commercialization is the final step of introducing the new product into the market.
Knowledge Check

What does 'brand equity' represent in the context of branding strategy?

The Concept

Branding Strategy

  • A brand is a name, term, sign, symbol, or design that identifies the maker or seller of a product.
  • It represents the consumer's perceptions and feelings about a product and its performance.
  • Brand equity is the differential effect that knowing the brand name has on customer response to the product or its marketing.
Strategy

Building Strong Brands

Positioning

Mission & Vision

Brand positioning establishes the brand's mission and vision in the consumer's mind.

Name Selection

Distinctiveness

Brand name selection requires finding a name that suggests benefits, is easy to pronounce, and is distinctive.

Sponsorship

Brand Options

Brand sponsorship options include manufacturer brands, private brands, licensed brands, or co-branding.
The Concept

Packaging and Labeling

Packaging involves designing and producing the container or wrapper for a product.
  • It serves multiple functions: protecting the product, attracting attention, and describing the product.
Labeling identifies the product, grades it, describes it, and promotes the product through attractive graphics.
Knowledge Check

Which of the following is a key characteristic of services?

The Concept

The Nature of Services

  • Services are a form of product that consists of activities, benefits, or satisfactions offered for sale.
  • They are essentially intangible and do not result in the ownership of anything.

Market Context

The service economy is growing rapidly and dominates modern markets.
The Challenge

Four Service Characteristics

React Flow
  • Intangibility means services cannot be seen, tasted, felt, heard, or smelled before purchase.
  • Inseparability means services cannot be separated from their providers.
  • Variability means the quality of services depends on who provides them and when, where, and how.
  • Perishability means services cannot be stored for later sale or use.
Strategy

Marketing Services

  • Service firms must manage the interaction between the customer and the frontline employee.
  • Service profit chain links service firm profits with employee and customer satisfaction.
  • Internal marketing means the firm must orient and motivate its customer-contact employees.
Reflection

Overcoming Service Perishability

  • An airline has 50 empty seats on a flight departing in 24 hours. Once the plane takes off, the revenue opportunity for those seats is gone forever.
  • Offering deep last-minute discounts might fill the seats but could train customers to wait for cheap tickets in the future.

Group Discussion

Group Discussion

How should the airline balance the immediate need to capture perishable revenue against long-term brand pricing power?
Conclusion

Product and Service Strategies

  • The product is the foundation of the marketing mix and requires careful lifecycle management.
  • Continuous new product development is essential for long-term growth and survival.
  • Strong branding and effective packaging create lasting consumer connections.
  • Services require distinct strategies to manage their intangibility, inseparability, variability, and perishability.