Product and Service Management

Exploring Product/Service Management

Brand Extension• A marketing tool in which a company will

develop a new product as a “spinoff” or “line extension” of a well known product.

• Examples would be – Mr. Clean Mr. Clean Magic Eraser– Clorox Clorox Pen– Kool Aid Kool Pops

PositioningCompetitive Advantage

• Why would a business expand its product mix?– To provide a wider selection of products to

customers hoping to increase business.• Product width – how many different types of

products are • Product depth – how many different types of one

product is there.

Positioning

Width of product – How many Pepsi products are there?

Depth of product – How many types of Mt Dews are there.

Competitive Advantage

Competitive Advantage

How will you “beat” your competition?

You will need to get an “advantage” over your competition that your customers will trust.

A competitive advantage is an advantage over competitors gained by :1. Offering consumers greater value, either by means

of lower prices or2. providing greater benefits and service that

justifies higher prices.

Will customers pay the higher price at your business because your service is better?

Positioning

POSITIONINGis how your target market (customer) defines

you (your business) in relation to your competitors.

Purpose of PositioningThe purpose of positioning is to make your product or service stand out in a crowd. Positioning is important because you are• competing with all the noise out there

competing for your potential customers’ attention.

• If you can stand out with a unique benefit, you have a chance at getting their attention.

Positioning

Examples of PositioningI might drive by 3 gas stations to buy gas because I get better gas mileage on the gas at that station. The product makes me continue to go there.

I love coupons. I would drive extra miles to get “triple” coupons.

Clothes might be more expensive at this store, they offer free alterations, gift wrapping, and easy returns. I will pay the extra price for the service.

Positioning

“THOUGHT”

• A company may view itself and see its products in a different way than customers or potential customers view the products.

• This would lead to failure to the business.

• Can you think of an example???

Positioning

Why Positioning is Important

• When positioning your product/service, it is important to focus on how your target market (customers) perceives you. After all, the target market makes up those consumers that are most likely to purchase your product/service.

• Key tip: you can never make everyone happy, but you must make your target market happy in order for your business to survive.

Positioning

Relationship Between Competition and Positioning

Is our product the first in its market?If not, how are our competitors positioned?

Do we have enough money to position our product/service similarly to the market leader and thus take over as the market leader?

If not, we must find an unoccupied position in the market that thetarget market cares about.

Example: Target was certainly not the first mass merchandiser, but it was the first to successfully position itself as the “trendy, hip mass merchandiser” in the eyes of its target market.

Positioning

www.target.com

Positioning Strategies• There are seven positioning strategies that can be pursued:• Product Attributes: What are the specific product

attributes?• Benefits: What are the benefits to the customers?• Usage Occasions: When/how can the product be used?• Users: Identify a class of users.• Against a Competitor: Positioned directly against a

competitor.• Away from a Competitor: Positioned away from

competitor.• Product Classes: Compared to different classes of products.

Positioning

Marketing Mix and Positioning

• Each of the 4 P’s should be examined as potential tactics for differentiating your product/service and reinforcing its positioning in the minds of the target market.

Positioning

For example, Krispy Kreme doughnuts were originally available to consumers only at Krispy Kreme bakeries. In the early 2000’s, the company decided to alter its distribution (Place) strategy to include supermarkets and gas stations. While that decision radically increased sales potential by making the product available to more consumers, it also changed how the target market perceived the Krispy Kreme brand.

www.krispykremem.com

• Think about it: Do you view a sandwich that you buy at a gas station differently from a sandwich that you purchase at a restaurant?

Marketing Mix and PositioningPositioning

How the 4 P’s Affect Product/Service Positioning

Product/Service What does the customer want from the product/service?

What needs does it satisfy? How and where will the customer use it? How is it differentiated versus your

competitors’ products/services?

Positioning

www.picklebarrelme.com


Place Where do buyers look for your product or service? If they look in a store, what kind? A specialist boutique or in a

supermarket, or both? Or online? Or direct, via a catalogue? How can you access the right distribution channels? Do you need to use a sales force? Or attend trade fairs? Or make

online submissions? Or send samples to catalogue companies? What do your competitors do, and how can you learn from that

and/or differentiate what you do from them?

Positioning

Would you pay more for someone to pump your gas and clean your windshield??

Price• What is the value of the product or service to the buyer?• Are there established price points for products or services in this area?• Is the customer price sensitive? Will a small decrease in price gain you

extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?

• What discounts should be offered to trade customers, or to other specific segments of your market?

• How will your price compare with your competitors?

Positioning


How far will you drive to fine the best price!!

Promotion Where and when can you get across your marketing

messages to your target market? Will you reach your audience by advertising in the press,

or on TV, or radio, or on billboards? By using direct mail? Through PR? On the Internet?

When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?

How do your competitors do their promotions? And how does that influence your choice of promotional activity?

Positioning


How Marketing Mix and PositioningCan Affect a Business

• If a business extends its operating hours to accommodate its customers, it may increase the number of customers but it will also increase the cost of payroll to pay for the extra hours.

Positioning

• Convenience is important to customers. When a business offers a service that saves time for a customer, it is hoping to attract more customers thus increasing their profits.

Examples of convenience


Positioning

Source: www.mcdonalds.com

• Customized Services will cost a customer more but many people are willing to pay more for special services. – Offering customized services can lead to higher

profit margins for the business.

• With a SAM’S Credit Card, you can enter the store 2 hours early.

• You can call and have your order pulled and ready for pick up.

• You must have a SAM’s Credit Card.


Positioning

www.samsclub.com

• By emphasizing its economic values (lower prices) in the marketplace, a business is positioning it’s products based on prices.

If a business that emphasizes a product's environmental friendliness is positioning the product by focusing on attributes or features of a product.


Positioning

Source: http://www.askprimerica.com

• Sometimes the quality of a product is used to for emphasis. The products is being positioned based on its quality. Customers will sometimes pay more for quality.


Positioning

vs

Source: www.nikeinc.com

• Why should I use one competitors product over another? When a company emphasizes the advantages of its product over a competitors, it is positioning the product based advantages.


Positioning

Source: gadgetcage.com

Product and Service Management

Education

Transcript of Product and Service Management