UA OM 300 Nunnely Exam 2 Questions and
Answers
product differentiation options - --Differentiation
-Low Cost
-Rapid Response
-Product Life Cycle - -The stages through which goods and services move from the time
they are introduced on the market until they are taken off the market.
-Product Life Cycle (4 Stages) - -introduction, growth, maturity, decline
-introduction stage of product life cycle - -The product is introduced to the target market.
Characterized by:
1. Sales grow slowly.
2. Minimal profits as a result of large investment costs in development
-growth stage of product life cycle - -Characteristics:
•Rapid increases in sales
•Competition appears
•Profit peaks
•Advertising shifts to selective demand.
•Sales grow at an increasing rate because of new people trying the product and repeat
purchasers bought again.
•Changes appear..."New and Improved!"
-maturity stage of product life cycle - -Total industry sales slow, and marginal competitors
begin to leave the market. Sales increase at a decreasing rate, and most consumers who
would buy the product are either repeat purchasers of the item or have tried and
abandoned it. Fewer new buyers enter the market.
Marketing actions are focused on maintaining market share through product
differentiation and finding new buyers.
-Examples: Soft drinks and DVD players.
-decline stage of product life cycle - -Sales drop, often because of environmental changes.
For example, CD's declined as digital music players proliferated.
Companies typically follow one of two strategies:
1. Deletion: dropping the product from the company's product line...the most drastic
strategy. This option is not taken lightly because there is usually a residual core of
customers who continue to consume or use the product even in the decline stage. Example:
IBM stopped making laptop computers.
, 2. Harvesting: the company retains the product but reduces marketing costs. The product
continues to be offered, but salespeople do not allocate time in selling nor are advertising
dollars spent. The purpose of harvesting is to maintain the ability to meet customer
requests. Coca-Cola, for instance, still sells Tab, its first diet cola, to a small group of die-
hard fans.
-Considerations in Generating a new Product - -Understanding the Customer
Economic change
Sociological and demographic change
Technological change
Political/legal change
Market practice, professional standards, suppliers, and distributors
-Quality Function Deployment (QFD) - -An approach that integrates the "voice of the
customer" into both product and service development
1. Customer wants
2. How the good/service will satisfy customer wants
3. Customer wants to product hows
4. Relationship between the firm's hows
5. Importance ratings
6. Competing products
7. Compare performance
-Product Development Organization Methods - -Traditional
- Departments, defined responsibilities
Champion
- Product manager drives the product through system and related organizations
Team approach
- Cross functional, team approach
- Product development teams, design for manufacturability teams, value engineering teams
Japanese approach
- Whole organization, less structure
-Robust Design - -- Small variations in production or assembly don't adversely affect
product
- Lower cost and higher quality
-Modular Design - -- Easily segmented components
- Flexibility for production and marketing
-CAD/CAM - -Computer Aided Drawing / Computer Aided Manufacturing. The instructions
stored in a computer that will be translated to very precise operating instructions to a
robot, for tasks such as assembling cars or laser-cutting signage.
(Computers to design products and prepare engineering documentation)
Answers
product differentiation options - --Differentiation
-Low Cost
-Rapid Response
-Product Life Cycle - -The stages through which goods and services move from the time
they are introduced on the market until they are taken off the market.
-Product Life Cycle (4 Stages) - -introduction, growth, maturity, decline
-introduction stage of product life cycle - -The product is introduced to the target market.
Characterized by:
1. Sales grow slowly.
2. Minimal profits as a result of large investment costs in development
-growth stage of product life cycle - -Characteristics:
•Rapid increases in sales
•Competition appears
•Profit peaks
•Advertising shifts to selective demand.
•Sales grow at an increasing rate because of new people trying the product and repeat
purchasers bought again.
•Changes appear..."New and Improved!"
-maturity stage of product life cycle - -Total industry sales slow, and marginal competitors
begin to leave the market. Sales increase at a decreasing rate, and most consumers who
would buy the product are either repeat purchasers of the item or have tried and
abandoned it. Fewer new buyers enter the market.
Marketing actions are focused on maintaining market share through product
differentiation and finding new buyers.
-Examples: Soft drinks and DVD players.
-decline stage of product life cycle - -Sales drop, often because of environmental changes.
For example, CD's declined as digital music players proliferated.
Companies typically follow one of two strategies:
1. Deletion: dropping the product from the company's product line...the most drastic
strategy. This option is not taken lightly because there is usually a residual core of
customers who continue to consume or use the product even in the decline stage. Example:
IBM stopped making laptop computers.
, 2. Harvesting: the company retains the product but reduces marketing costs. The product
continues to be offered, but salespeople do not allocate time in selling nor are advertising
dollars spent. The purpose of harvesting is to maintain the ability to meet customer
requests. Coca-Cola, for instance, still sells Tab, its first diet cola, to a small group of die-
hard fans.
-Considerations in Generating a new Product - -Understanding the Customer
Economic change
Sociological and demographic change
Technological change
Political/legal change
Market practice, professional standards, suppliers, and distributors
-Quality Function Deployment (QFD) - -An approach that integrates the "voice of the
customer" into both product and service development
1. Customer wants
2. How the good/service will satisfy customer wants
3. Customer wants to product hows
4. Relationship between the firm's hows
5. Importance ratings
6. Competing products
7. Compare performance
-Product Development Organization Methods - -Traditional
- Departments, defined responsibilities
Champion
- Product manager drives the product through system and related organizations
Team approach
- Cross functional, team approach
- Product development teams, design for manufacturability teams, value engineering teams
Japanese approach
- Whole organization, less structure
-Robust Design - -- Small variations in production or assembly don't adversely affect
product
- Lower cost and higher quality
-Modular Design - -- Easily segmented components
- Flexibility for production and marketing
-CAD/CAM - -Computer Aided Drawing / Computer Aided Manufacturing. The instructions
stored in a computer that will be translated to very precise operating instructions to a
robot, for tasks such as assembling cars or laser-cutting signage.
(Computers to design products and prepare engineering documentation)
