Transcript PRODUCT STRATEGY

Chapter 12: PRODUCT STRATEGY
Delivering More Value
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© 2009 South-Western, a division of Cengage Learning
LOOKING AHEAD
• What is the marketing definition of product?
• What are the different categories of consumer
and business products?
• How can products be differentiated?
• How does innovation relate to new product
development?
• What is the product life cycle and how does it
relate to marketing?
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© 2009 South-Western, a division of Cengage Learning
PRODUCT DEFINITION: IT’S
PROBABLY MORE THAN YOU THINK
Car Wash ~ Cooking Lesson ~ Computer ~ Soap ~ Car
Product – anything a company offers to
satisfy customer needs and wants.
Brand ~ Image ~ Packaging ~ Reputation ~ Guarantee
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SERVICES: A PRODUCT BY
ANY OTHER NAME
Most services embody
these qualities:
Intangibility
Inseparability
Variability
Perishability
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GOODS V. SERVICES: A MIXED BAG
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PRODUCT LAYERS:
PEELING THE ONION
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PRODUCT CLASSIFICATION:
IT’S A BIRD, IT’S A PLANE….
Consumer Products • Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products
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PRODUCT CLASSIFICATION:
IT’S A BIRD, IT’S A PLANE:
• Installations
Business
Products
• Accessory Equipment
• Maintenance, Repair, and
Operating Products
• Raw Materials
• Component Parts &
Processed Materials
• Business Services
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PRODUCT DIFFERENTIATION
AND PLANNING
• A Meaningful Difference:
– Product Quality
– Features & Benefits
– Product Lines & Product
Mixes
– Branding
– Packaging
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PRODUCT QUALITY
Quality Level – how well a
product performs its core
functions.
Product Consistency – how
reliably a product delivers it
promised level of quality.
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QUALITY INDICATORS
Internet Search Engine: Fast, relevant, far-reaching
results
Stylish Blue Jeans: High-profile designer, high
price, celebrity customers
TV Editing Equipment: Reliability, flexibility, and
customer services
Roller Coasters: Thrill factor, design and setting
Chain Saws: Effectiveness, safety, and
reliability
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FEATURES AND BENEFITS
Product Features –
specific characteristics of a
product.
Customer Benefit – the
advantage that a customer
gains from specific product
features.
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PRODUCT FEATURES AND
BENEFITS
Subway Sandwiches
Lower fat
Looser pants
Contact Lenses
Different colors
A new-looking you
High-definition TV
46-inch screen
The party’s at your house
Hybrid Car
Lower gas mileage
More cash for other needs
Triple Latte
Caffeine, caffeine…
More time to, uh, study
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PRODUCT LINE AND
PRODUCT MIX
Product Line – products
that are closely
related, either in terms
of how they work, or the
customers they serve.
Product Mix – the total
number of product
lines by a single firm.
Cannibalization –
a producer offers
a new product
that takes sales
away from its
existing product.
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BRANDING
Brand - a product’s
identity that sets it
apart from other
players in the same
category.
Brand Equity – the extra
money that consumers
will spend to buy that brand.
Brand Name – a catchy,
memorable name is
a powerful part
of strong brand.
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LINE EXTENSIONS AND
BRAND EXTENSIONS
Line
Extensions
Brand
Extensions
Similar
products offered
under the same
brand name
A product in a
new category
under an existing
brand name
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GOOD AND BAD BRAND
EXTENSIONS
GOOD
• Snoop Dog Pet
Accessories
• Tide To Go stain
removal pen
• Budweiser Barbeque
Sauce
• Starbucks Coffee
Liqueur w/ Jim Beam
BAD
• Cheetos Lip Balm
• Smackers Starburst
Bath and Body
Collection
• Hooters Air
• Harley Davidson Cake
Making Kit
• Maxim Hair Color For
Men
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COBRANDING
Cobranding - established brands
from different companies join
forces to market the same product.
Examples:
• Ford markets the Eddie Bauer Explorer
• Frito-Lay markets KC Masterpiece BBQ chips
• Betty Crocker markets brownies with Hershey’s syrup
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NATIONAL BRANDS VS. STORE
BRANDS
National Brands/
Manufacturer Brands –
Brands owned and marketed by
the producer.
Store Brands/
Private Label Brands –
brands produced and marketed
by the retailer.
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BECOME CEO OF ME, INC.
Create a meaningful brand for yourself
• Become CEO of Me, Inc.
– What makes you different from others?
– Better than your competition?
• Once you define your brand
– Be sure to deliver
– Pump up your visibility
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A BRAND NEW YOU
• Millions recognize Donald Trump’s trademark
blond hair
• Trump stands for autocratic power and
self-indulgent luxury
• There is a 25% premium for any property that
carries his name
• He told BusinessWeek that he is “a bigger
brand now than Pepsi Cola or Coca-Cola.”
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PACKAGING
• Protect the Product
• Provide Information
• Facilitate Storage
• Suggest Product Uses
• Promote the Brand
• Attract Buyer Attention
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PRODUCT LIABILITY AN ISSUE?
• Toilet brush: “Do not use for personal hygiene.”
• Scooter: “This product moves when used.”
• Thermometer: “Once used rectally, the
thermometer should not be used orally.”
• Electric blender: “Never remove food or other
items from the blades while the product is
operating.”
• Bag of packing air: “Do not use this product as
a toy, pillow, or flotation device.”
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NEW PRODUCT DEVELOPMENT
Nuts, Bolts,
And A Spark
Of Brilliance
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NEW PRODUCT DEVELOPMENT
PROCESS
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PRODUCT ADOPTION
CATEGORIES
How willing are consumers
to buy/try new products?
• First Adopters – 2.5%
– Adventurous
– Risk Takers
• Laggards – 16%
• Everybody else falls
in between
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PRODUCT DIFFUSION RATES
Observability
How visible is the product
to other potential consumers?
Trialability
How easily can potential
consumers sample the new product?
Complexity
Can potential consumers easily understand
what your product is and how it works?
Compatibility
How consistent is your product
with the existing way of doing things?
Relative Advantage
How much better are the benefits of your
new product compared to existing products?
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THE PRODUCT LIFE CYCLE:
RESULTS OVER TIME
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PRODUCT LIFE CYCLE AND
MARKETING STRATEGIES
Phase
Examples
Sales/Profits
Marketing Strategies
Introduction
Plasma TV, fuel cell
technology
Low sales, low
profits
Build awareness, trial, and distribution
Growth
Hybrid cars, video
cell phones,
Increasing sales
and profits
Reinforce brand positioning, often
through heavy advertising
Maturity
Airlines, DVD
players
Flat sales and
declining profits
Target competitors, new product
features, competitive advertising,
promotion, and price cuts
Decline
Pagers,
videocassettes
Declining sales
and profits
Reduce spending and consider
terminating the product
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© 2009 South-Western, a division of Cengage Learning
LOOKING BACK
• What is the marketing definition of product?
• What are the different categories of consumer
and business products?
• How can product be differentiated?
• How does innovation relate to new product
development?
• What is the product life cycle and how does it
relate to marketing?
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© 2009 South-Western, a division of Cengage Learning