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Lecture notes for Product and Services
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Products, Services and BrandingProducts
- Convenience goods with limited shopping efforts
- Shopping goods- great deal of time and effort
- Specialty goods- only of interest to a segment of the population
Product refers to more than tangible goods, but also includes services
Some products can be difficult to make according to standards demanded by today’s markets.
1. French fries- taste, consistency despite potato season, maximization of time until fries
run out, balance taste and calories (health)
2. Razor- should be as efficient, skin should be shaven in one pass
3. Nail polish- dry quickly, avoid chemicals
Product Line- the assortment of similar things that the firm holds
Nike shoes, clothing, hairbands, bags
Product Mix: Assortment of different products
- Some firms have one focused or narrow line (KFC only chicken)
- Others have wide product mix- 3M makes large assortment of goods
Depth- The variety offered within each line
Company can spread its product lines and mix across different brands- PnG, Always
Different brands for different lines- Tide, Gain
Some companies combine both tangible product and service- surgery is a service, products are
pain medication, staples, and sutures
Product-Service Continuum: It doesnt matter whether the product can be used to perform a
service, it matters what is being provided by the seller, which is the tangible good.
It is irrelevant that it can also be used as a service (ex- washing machine)
Product Life Cycle (PLC)
Products invented, started with low use. As costs decrease and tech improves, more people
adopt it.
1. Product successful after launch, reach public acceptance, sales go ip
2. Saturation point MAY be reached where there is no further growth
3. Replaced by a later innovation
Introductory stage:
- Low awareness, not many people know, price is high
- Less reliable and clumsier, features are limited,
- Low or negative profit- limited sales and high expenses
- Limited competition
- Fear that the technology may not survive and be replaced quickly
, Growth stage:
- Greater awareness, “growth phase”- sales increase dramatically
- More firms enter with models, but competition is not intense yet
- Profitability is higher, and price is lower because of upcoming competition
Maturity stage:
- Greater competition, low price, more features, higher quality
- Limited growth opportunities, limited opportunities to reinvest in the category, need to
enter new markets
- Although cost of production is lowest, lower prices will decrease profiitability from the
peak stage
Decline stage:
- Eventually occurs because product category is being replaced by something better
- Producers driven out of the business
- But product can still be used as a specialty (typewriter is still used to fill out old forms)
Plateau- product category is not being actively replaced by anything else, but growth is stopped.
- Not replaced
- But everyone who likes th eproduct already has one
Revitalization- reached maturity or decline, but the product re-emerges
- Cranberry juice consumption increased once ppl new it cured UTI
Fads- product spreads rapidly but quickly loses appeal
PLC timeline: (tied to diffusion of innovation)
1. Demand for the product- people who are willing to pay a premium and take a a risk on it
2. Awareness of the product
3. Competition in supplying the product- as market matures
a. Reinvest profits in growth
b. Downward pressure on prices
c. Grow in features and quality (differentiation)
d. Also competes with an increasing number of other categories that also fulfil
customer needs
4. Profitability
a. High during growth
b. Shrinks during maturity
c. Negative during decline
5. Alternatives available
Later stages- PLC should modify its market strategies
Two-sided platforms
- Connect two parties without providing direct service themselves
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