Core Concepts of Marketing

168 CHAPTER 7 INTRODUCINGANDMANAGINGTHEPRODUCT

ProductDeletion Eventuallya productreachesthe endofitslife. Thi sistheleast

understoodstageofproduct management, becausewe humanbeingsareveryreluctantto

thinkaboutdeath, eventhatof a product.

Thereareseveral r easonsfo r deletinga matureproduct.First,whena productislos-

ingmoney, it isa prime deletioncandidate.Inreg ardtothis indication,it isimportantto

makesurethat thelossistru ly attributabletotheproductandnotjusta'luirkinthecom-

pany's accounti ngsystem.

Second,therearetimeswhena companywithalongproductlinecanbenefi~if the

weakestoftheseproducts aredropped.Thisthinningofthelineis referredtoasproduct-

linesimplification.Productoverpopulationspreadsa company's productive, financial, and

marketingresources very thin. Moreover, anexcess of products i n th eline,so meofwhich

serveoverlappingmarkets,notonlycreates internalcompetitionamongthecompany's own

products, butalso creates confusion inthe mindsof consumers.Consequentl y, a company

mayapplyseveralcriteriato allits productsanddeletethosethatfare worst.

A third re asonfordeletinga product i s thatproblemproc'uctsab sorbtoomuch man-

agement attention. Manyofthecosts inculTed byweakproduclsareindirect:management

time,inventorycosts,promotionexpenses, declineofcompanyreputation, andso forth.

Missedopportunity costsreflect thefinalreasonforproductdeletion.Evenifa mature

productismakinga profitcontributionanditsindirect cost consequencesarere cognized

and consideredjustifiable, thecompanymightstillbebett~roff'vithouttheproductbecause

of its opportunity cost.Theopportunitycostofa matureproductisthe profitcontribution

that a newandhealthyproductcould produceiftheeffort andresourcesbeingdevotedto

the mature itemwereredirected.

Thefinalis sueisactuallygoingthrougha productdeletionprocedure.Sometimes,

however,a productcanberevived(seethenext I ntegratedMarketingbox).

StrategiesforDevelopingNewProducts

Forseveraldecades, businesshasco meincreasinglytotherealizationthatnew andimproved

products mayhold the keytotheir survivalandultimatesuccess. Consequently, professional

managementhas becomeanintegralpartof this process. As aresult,manyfirmsdc:velop

newproductsbasedon anorderlypro cedure, employingcomprehensiveandrelevantdata.

andintelligentdeci sionmaking.^9

MARKETING CAPSULE •

1.A product is anything,eithertangibleorintangible,offered

bythefirm as a solutionto the needsandwantsofthe con-

sumer, thatis profitableorpotentiallyprofitableandmeets

therequirementsofthe variouspublics,governing,orinflu-

encingsociety.Thereis a coreproduct,a tangibleprod-

uct,anaugmentedproduct,anda promisedproduct.

2.Consumergoods arepurchased forpersonal consumption.

3. Industrialgoodsaremodified ordi stributedforresa le.

4.Serviceproducts,incontrast togoodsproducL,arechar-

acterizedas beingin tangible'mdhavingsimultaneouspro-

ductionlo)i,sumption, little standardization, an d high

buyerinvolvement

5.Theproductplanprocess includesthefollowing:

a. Determinationofproductobjectives

b. Developmentofproductplanstoreachobjectives

c. Developmentofappropriatestrategies