Exam 11: Developing and Managing Goods and Services

Because of the heterogeneity and intangibility of services, customers tend to believe company-sponsored advertising rather than word-of-mouth communication while gathering information about a service product.

Scenario 11.2 Use the scenario to answer the questions. Jonathan Moore, President of Polar Manufacturing Company, has just reviewed the performance reports for the previous year and observes that there are certain areas in which the company needs to improve. He specifically feels that Polar's product mix can be managed in a more effective way. Jonathan summons a meeting of all the managers responsible for each of the product lines that Polar currently manufactures. The group reaches a consensus that the complete industrial product line of ice chests needs to be eliminated. It contemplates to do so by letting the product decline without making any changes in the marketing strategy or product. The group also decides to delete Polar's line of personal thermal underwear within a week, owing to its unprofitability. While discussing these strategies, the group also uncovers several customer segments at which new products could be targeted. The managers decide to assemble a group of people from all functional areas of the company and confer them responsibilities for all aspects of the new-product development. -Refer to Scenario 11.2. The Polar management team is currently in the stage of the new-product development process.

Concerns about cannibalization of current product sales must be addressed in the phase of the new-product development process.

Quality modifications never seek to reduce quality of existing products.

An important question in the business analysis stage of the new-product development process is, "Will a new product meet an organization's profit goal?"