Product and Service Management
This domain tests product and service decisions: product levels, classification, product mix and line, the product life cycle, branding, new-product development, and service characteristics.
Core rules
- Product levels: core benefit, actual product, and augmented product.
- Consumer products include convenience, shopping, specialty, and unsought goods; industrial products are used in business operations.
- Product mix width is the number of product lines; depth is the number of items within a line. Line filling adds items; line stretching moves up or down.
- Product life cycle: introduction, growth, maturity, decline. Sales and profits follow different curves, and strategies change by stage.
- New-product development: idea generation, screening, concept testing, business analysis, prototype, test marketing, commercialization.
- Services differ from goods: intangibility, inseparability, variability, and perishability. People, process, and physical evidence support service quality.
Worked example
A company sells a reusable water bottle. Core benefit = hydration; actual product = bottle, lid, and insulation; augmented product = lifetime warranty and replacement parts. In maturity, sales flatten and competitors copy the design. Profits may peak then decline. The firm should modify the market (new users), modify the product (new color or size), and modify the mix (bundle with a carrying strap), not automatically abandon the product.
Traps that cost marks
- Confusing the core benefit with the actual product.
- Treating decline as an automatic exit signal; harvesting or repositioning may work.
- Mixing product mix with product line.
- Confusing service variability (inconsistent quality) with perishability (cannot be stored).
- Skipping test marketing and moving straight to commercialization.