Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGING THE PRODUCT

Simultaneous Production and Consumption

Service products are characterized as

those that are being consumed at the same time they are being produced. The tourist attrac-

tion is producing entertainment or pleasure at the same time it is being consumed. In con-

trast, goods products are produced, stored, and then consumed. A result of this characteristic

is that the provider of the service is often present when consumption takes place. Dentists,

doctors, hair stylists, and ballet dancers are all present when the product is used.

Little Standardization

Because service products are so closely related to the peo-

ple providing the service, ensuring the same level of satisfaction from time to time is quite

difficult. Dentists have their bad days, not every baseball game is exciting, and the second

vacation to Disney World may nol be as wonderful as the first.

High Buyer Involvement

With many service products, the purchaser may provide

a great deal of inout into the final form of the product. For example, if you wanted to take

a Caribbean cruise., a good travel agent would give you a large selection of brochures and

pamphlets describing

various cruise locations, options provided in terms of cabin loca-

size, islands visited, food, entertainment, prices, and whether they are set up for

children. Although the task may be quite arduous, an individual can literally design every

moment of the vacation.

should be noted

these four characteristics associated with service products vary

in intensity from product to product. In fact, service products are

viewed as being on

a continuum in respect to these four characteristics. (See Figure 7.2.)

The point of this disclaimer is to suggest: (1) that service products on the right side

of the continuum--e.g., high intangibility-are different from good products on the left side

of the continuum, (2) that most marketing has traditionally taken place on the left side, and

(3) service products tend to require certain adjustments in their marketing strategy because

of these differences.

CHARACTERISTICS THAT DISTINGUISH GOODS FROM SERVICES

Goods

Services

!---II--+----+-----------t------I

Salt

VCR

Auto

Fast Food Customer

Airlines

Teaching

Investment

Restaurant

Clothes

Advice

Tangible

Intangible

Low Customer

High Customer

Involvement

Involvement

Low Quality

High Quality

Control Problems

Control Problems

Easy to Evaluate

Hard to Evaluate

Inventories

No Inventories

No Time Criteria

Strict Time Criteria

Low Importance of

High Importance of

Contact Points

Contact Points

FIGURE 7.2

Characteristics that distinguish goods from services

PRODUCT PLANNING AND STRATEGY FORM ULATION

159

While this discussion implies that service products are marketed differently than goods

products, it is important to remember that all

whether they are goods, services,

blankets, diapers, or plate glass, possess peculiarities that require

in the mar-

keting effort. However, "pure" goods products and "pure" service products (i .e., those on the extreme ends of the continuum) tend to reflect characteristics and responses from customers that suggcSt opposite marketing strategies. Admittedly, offering an

prod-

uct at the right price, through the most accessible channels, promoted extensively and

accurately,

work for any type of product. The goods/services classification provides

the same useful insights provided by the consumer/industrial classification discussed earlier.

PRODUCT PLANNING A ND ST RATEGY FORMULATION

The

purpose of this chapter is to introduce the idea that products

planned, and

that a whole series of decisions go into this planning process-from

moment the prod-

uct idea is first conceptualized to the day it is finally deleted. The particular label placed

on the company's

for marketing its product is the product strategy. It is part of the

marketing strategy and should harmonize with it. Like the marketing

it contains

three important elements. (1) the determination of product objectives, (2) the development

of product plans that will help reach product objectives, and (3) the development of strate-

gies appropriate for the introduction and management of products .

The Determination of Product Objectives

There are a great many objectives that relate to the product management effort. Rather

attempting to provide a complete list, a discussion of the most common product objectives

will provide an adequate illustration.4

It is safe to conclude that a universal objective is growth in sales as a result of the introduction of a new product or the improvement of an existing product. Certainly, there

is little need to engage in either product activity unless this objective is present.

An objective related to growth in sales is finding new uses for established products .

Since this process is generally easier than developing new products, the search for new uses

of older products goes on endlessly. For example, Texas Instruments has found numerous

uses for their basic product, the semiconductor.

Using excess capacity is another commonly stated product objective. This objective

is prompted by the rapid turnover

products and the resulting changes in market share.

Of course, such utilization is

a short-run consideration. In the long

only those

products that

generate a continuing

of profitability should be retained, regardless

of the problem of excess capacity.

Maintaining or improving market share may also be an objective

by many com-

panies. In such cases, the emphasis of the firm is on their competitive position rather

attaining a target level of profits. Creating product differentiation is often the primary strategy employed to reach this objective.

Developing a full line ofproducts is another typical objective. A company with a par-

tial product line may well consider the objective of rounding out its product offerings . Often, the sales force provides the impetus for this objective in that they may need a more complete product line to offer their

or the resellers themselves may request a greater

assortment.

Expanding a product's appeal to new market segments is a common objective. John

Deere is attempting to increase its small share of the consumer power products market by

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