product/service management lap 17 nature of product/service management

Product/Service Management

LAP 17

Nature of Product/Service Management

ObjectivesObjectives

Describe the product/serviceDescribe the product/servicemanagement function.management function.

Discuss the phases of Discuss the phases of product/service management.product/service management.

Describe the product/service Describe the product/service management function.management function.

ObjectiveObjective

• What was the last product you What was the last product you purchased?purchased?

• Have you ever thought about Have you ever thought about who’s responsible for it?who’s responsible for it?

• Managing products and Managing products and services well—important for services well—important for any businessany business

• Products don’t appear Products don’t appear overnight:overnight:

Chick-fil-A sandwich—over Chick-fil-A sandwich—over six years in developmentsix years in development

Polio vaccine—over 10 years Polio vaccine—over 10 years in developmentin development

Google search—over three Google search—over three years in developmentyears in development

• Products must be managed Products must be managed through through allall stages of their stages of their life cycles.life cycles.

Products and ServicesProducts and Services

• Product/Service management:Product/Service management:

Marketing functionMarketing function

Involves obtaining, developing, Involves obtaining, developing, maintaining, and improving a maintaining, and improving a product or service mix in response product or service mix in response to market opportunitiesto market opportunities


• Product—either a good or a serviceProduct—either a good or a service

• Good—a tangible object that can be Good—a tangible object that can be manufactured and produced for manufactured and produced for resale, along with its associated resale, along with its associated benefitsbenefits

Examples:Examples:

Desk chairDesk chair

TruckTruck

Rose bushRose bush


• Service—an intangible activity Service—an intangible activity performed by other people in performed by other people in exchange for payment, along exchange for payment, along with its associated benefitswith its associated benefits

Examples:Examples:

ManicureManicure

Internet connectionInternet connection

Employee searchEmployee search

Product-related service—Product-related service—attached to some sort of attached to some sort of tangible goodtangible good Examples:Examples:

InstructionInstruction

MaintenanceMaintenance

Delivery Delivery

CreditCredit

RepairRepair

Pure service—not attached Pure service—not attached to any sort of tangible goodto any sort of tangible good Examples:Examples:

BanksBanks

Insurance companiesInsurance companies

Product/Service Management ActivitiesProduct/Service Management Activities

• Every business participates in Every business participates in product/service management!product/service management!

• Activities include:Activities include: Discovering new-product Discovering new-product

opportunitiesopportunities Developing marketing plans Developing marketing plans

and strategies for productsand strategies for products Coordinating the product mixCoordinating the product mix

Sustaining successful Sustaining successful products as long as possibleproducts as long as possible

Reassessing products that are Reassessing products that are not meeting expectationsnot meeting expectations

Eliminating products that have Eliminating products that have become liabilitiesbecome liabilities

Factors AffectingFactors AffectingProduct/Service ManagementProduct/Service Management

• Customer needs and wantsCustomer needs and wants Remember that customers buy Remember that customers buy benefitsbenefits, not products., not products.

Manage from their point of view.Manage from their point of view.

Market research can be helpful. Market research can be helpful.


• Company goals and strategiesCompany goals and strategies Internal factorsInternal factors

Each business has unique Each business has unique objectives—product/service objectives—product/service management must align management must align with them.with them.


• Costs and available resourcesCosts and available resources

Especially important during new-Especially important during new-product development phaseproduct development phase

Product may be great on paper but Product may be great on paper but not cost-effective.not cost-effective.


• CompetitionCompetition Product/Service managers must Product/Service managers must

be watchful.be watchful.

May need to introduce a new May need to introduce a new product or modify an existing one product or modify an existing one to keep up with the competitionto keep up with the competition

• The product itselfThe product itself


• Government regulationsGovernment regulations Control issues such as:Control issues such as:

ProductionProduction

Information companies must Information companies must provideprovide

WarrantiesWarranties

Construction and safety standardsConstruction and safety standards

Packaging and labelingPackaging and labeling


• Stage in the product life cycleStage in the product life cycle Stages:Stages:

IntroductionIntroduction

Growth Growth

Maturity Maturity

DeclineDecline

Stages are the basis for Stages are the basis for product/service management.product/service management.


• Business and economic trendsBusiness and economic trends Must operate within framework of Must operate within framework of

current economycurrent economy Must be flexibleMust be flexible

Benefits of Successful Product/Service Benefits of Successful Product/Service ManagementManagement

• Improved sales and profitsImproved sales and profits

• Improved market shareImproved market share

• Improved ability to beat the Improved ability to beat the competitioncompetition

• New customers gainedNew customers gained

• Less exposure to financial riskLess exposure to financial risk

Role of Product/ServiceRole of Product/ServiceManagement in MarketingManagement in Marketing

• Affects positioning—strategy Affects positioning—strategy in which a business creates a in which a business creates a certain image or impression of certain image or impression of a product in the minds of a product in the minds of consumersconsumers

• Improves product successImproves product success

• Gives product an image Gives product an image (branding)(branding)

Who HandlesWho HandlesProduct/Service Management?Product/Service Management?

• Associated job titles:Associated job titles: Product managerProduct manager

Brand managerBrand manager

Project managerProject manager

Product coordinatorProduct coordinator

Marketing managerMarketing manager

Product line managerProduct line manager

• May be an entire department May be an entire department in bigger companiesin bigger companies

• May be the owner or manager May be the owner or manager in small businessesin small businesses

Discuss the phases ofDiscuss the phases ofproduct/service management.product/service management.

ObjectiveObjective

Phases of Product/Service Management:Phases of Product/Service Management:

New-Product DevelopmentNew-Product Development

• Types of new products:Types of new products: Have never been offered Have never been offered

beforebefore

Have been modified in Have been modified in some waysome way

Will be presented or Will be presented or distributed in a new distributed in a new mannermanner


New-Product DevelopmentNew-Product Development

• Ways businesses obtain Ways businesses obtain new products:new products:

Purchase from another Purchase from another person or companyperson or company

License from another License from another person or companyperson or company

Acquire by purchasing Acquire by purchasing another companyanother company

Develop internallyDevelop internally

Phases of Product/Service Management: New-Product Development:Phases of Product/Service Management: New-Product Development:

Steps to Internal DevelopmentSteps to Internal Development

• Generate ideas—could come from Generate ideas—could come from anywhere!anywhere!

• Screen ideasScreen ideas Find any that are unworkableFind any that are unworkable

Too expensive?Too expensive?

Tried unsuccessfully in the past?Tried unsuccessfully in the past?

Not in line with company goals?Not in line with company goals?

May include managers from many May include managers from many different departmentsdifferent departments



• Test the product conceptTest the product concept

Get feedback from potential customersGet feedback from potential customers

Answer the questions:Answer the questions: Is our target market interested in Is our target market interested in

this product?this product?

Is it the right time to introduce this Is it the right time to introduce this product?product?

What benefits does our target market What benefits does our target market expect from this product?expect from this product?

May involve a simple questionnaire May involve a simple questionnaire or an actual prototypeor an actual prototype

Any further steps require much Any further steps require much more financial investment from more financial investment from the companythe company



• Conduct a business or feasibility Conduct a business or feasibility analysisanalysis

In-depth analysis that considers:In-depth analysis that considers: DemandDemand

CostsCosts

CompetitionCompetition

Required investmentRequired investment

Potential profitPotential profit

May involve managers from many May involve managers from many different departmentsdifferent departments

May take months to completeMay take months to complete



• Develop the productDevelop the product

Chick-fil-A took six years Chick-fil-A took six years and over $500,000 to and over $500,000 to develop their chicken develop their chicken sandwich.sandwich.

Lengthy step that could take months Lengthy step that could take months or yearsor years

Can be very expensiveCan be very expensive

Working model of product is Working model of product is developed, tested, modified, and developed, tested, modified, and retested as many times as it takes.retested as many times as it takes.

Cost of production estimatedCost of production estimated

Plans made for:Plans made for:

PackagingPackaging

LabelingLabeling

Brand nameBrand name

PromotionPromotion

DistributionDistribution

Safety tests conductedSafety tests conducted



• Test market the productTest market the product

White Castle test markets a White Castle test markets a BBQ pulled pork sandwich.BBQ pulled pork sandwich.

Introduce to a limited market Introduce to a limited market to gauge acceptanceto gauge acceptance

Guides marketing strategiesGuides marketing strategies



• Commercialize the productCommercialize the product Put it into full-scale productionPut it into full-scale production

Put marketing plan in placePut marketing plan in place

Conduct sales and service Conduct sales and service trainingtraining

Begin product life cycle!Begin product life cycle!


Monitoring of Existing ProductsMonitoring of Existing Products

• Existing products—goods and Existing products—goods and services already on the marketservices already on the market

• Monitored in terms of:Monitored in terms of:

SalesSales

ProfitProfit

Market shareMarket share

How well they’re meeting How well they’re meeting goals and expectationsgoals and expectations


Monitoring of Existing ProductsMonitoring of Existing Products

• Decisions product/service Decisions product/service managers may make:managers may make: Leave product as isLeave product as is

Modify productModify product

Reposition productReposition product

Eliminate productEliminate product


Elimination of Weak ProductsElimination of Weak Products

• Also called product Also called product discontinuationdiscontinuation

• Weak products—goods and Weak products—goods and services with declining sales services with declining sales and profitabilityand profitability

• Elimination must be planned Elimination must be planned carefully to maintain carefully to maintain customer goodwill.customer goodwill.

DISCONTINUEDDISCONTINUED

• Courses offered by educational institutions are products.

• At your educational institution: Who is responsible for product/service management? What factors are currently affecting product/service

management? How does product/service management influence

overall marketing success? What are the current activities as far as new-product

development, monitoring of existing products, and elimination of weak products?

• Janna and Leah exchange new-product ideas.

• Leah takes Janna’s idea to her own manager.

• Is this ethical?

MBAResearchAcknowledgments

Original DevelopersChristopher C. Burke,

Sarah Bartlett Borich, MBAResearch

Version 1.0

Copyright © 2009MarkED Resource Center

Digital-based photography sources:

CORBIS CORP.Small BusinessObj. B: #059Photos copyright 1998 Corbis Corp.750 Second Street, Encinitas, CA 92024

DIGITAL VISION LTD.;Teenagers Today Obj. B: #130271Photos copyright Digital Vision Ltd., all rights reserved. 833 Fourth Ave. SW, Suite 800 Calgary, AB, Canada T2P 3T5

T/Maker Company; ClickArtObj. B: #dinpar6, #dinpar22Photos copyright T/Maker Company; 1390 Villa Street: Mountain View, CA 94041; tel. (415) 962-0195. Copyright 1994, all rights reserved. ClickArt is a registered trademark of T/Maker Company. ClickArt Images copyright 1984-1994 by T/Maker Company. All rights reserved.

Copyright:

All photographic digital images on this CD are owned by the aforementioned photographic resources or their licensors and are protected by the United States copyright laws, international treaty provisions, and applicable laws. No title to or intellectual property rights to the images on this CD are transferred to you. These sources retain all rights and are not to be used, digitally copied, transferred, or manipulated in any way. To do so is a violation of federal copyright laws.

product/service management lap 17 nature of product/service management

Documents

productservice management

development products

successful products

businessmanaging products

business products dont

objective slide

possible reassessing

product mix