Page 343 - Foundations of Marketing

310 Part 4 | Product and Price Decisions

Figure 11.4 Product Deletion Process

Return
to line Phase out
Product line Deletion Deletion
review analysis decision

Delete Run out

Immediate
drop

Source: Martin L. Bell, Marketing: Concepts and Strategy , 3rd ed., p. 267; Copyright 1979. Houghton Mifflin Company. Reprinted by permission of
Mrs. Martin L. Bell.

There are three basic ways to delete a product: phase it out, run it out, or drop it imme-
diately (see Figure 11.4 ). A phase-out allows the product to decline without a change in the
marketing strategy; no attempt is made to give the product new life. A run-out exploits any
strengths left in the product. Intensifying marketing efforts in core markets or eliminating
some marketing expenditures, such as advertising, may cause a sudden jump in profits. This
approach is commonly taken for technologically obsolete products, such as older models of
computers and CD players. Often, the price is reduced to get a sales spurt. The third alterna-
tive, an immediate drop of an unprofitable product, is the best strategy when losses are too
great to prolong the product’s life.

LO 6 . Understand the charac- MANAGING SERVICES
teristics of services and how
these characteristics present
Many products are services rather than tangible goods. The organizations that market service
challenges when developing
products include for-profit firms, such as those offering financial, personal, and professional
marketing mixes for service
services, and nonprofit organizations, such as educational institutions, churches, charities, and
products.
governments. In this section, we focus initially on the growing importance of service industries
in our economy. Then we address the unique characteristics of services. Finally, we deal with the
challenges these characteristics pose in developing and managing marketing mixes for services.
Nature and Importance of Services

All products—whether goods, services, or ideas—are to some extent intangible. Services are
usually provided through the application of human and/or mechanical efforts directed at peo-
ple or objects. For example, a service such as education involves the efforts of service provid-
ers (teachers) directed at people (students), whereas janitorial and interior decorating services
direct their efforts at objects. Services also can involve the use of mechanical efforts directed
at people (air or mass transportation) or objects (freight transportation). A wide variety of
services, such as health care and landscaping, involve both human and mechanical efforts.
Although many services entail the use of tangibles such as tools and machinery, the primary
difference between a service and a good is that a service is dominated by the intangible portion
of the total product. Services, as products, should not be confused with the related topic of
customer services. While customer service is part of the marketing of goods, service market-
ers also provide customer services.

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