Transcript Module 6

Module 6
Developing and Utilizing a Marketing
Mix: Product Management
Kotler’s Chapters 10, 11, and 13
Chapter 10: Positioning the Market
Offering Through the Product Life Cycle
• Learning Objectives
– 1. Describe and apply how a firm can utilize
product, service, personnel, channel, or image
differentiation.
– 2. Describe and apply how to develop and
communicate a positioning strategy.
– 3. Describe the Product Life Cycle and apply
what it means for marketers.
Chapter 10/Objective 1: Describe/apply
how a firm can utilize differentiation.
• Differentiation – the act of designing a set
of meaningful differences to distinguish the
company’s offering from competitive
offerings. What these are may change over
time given the environment.
• Anything a customer sees as offering value
can be used to differentiate a product.
• Product, Service, Personnel, Channel,
and/or image.
Chapter 10/Objective 1: Describe/apply
how a firm can utilize differentiation.
• Product
– Form, features, performance quality, conformance
quality, durability, reliability, repairability, style, and
design (the totality of features that affect how a product
looks and functions in terms of customer requirements).
• Service
– Ordering ease, delivery, installation, customer
training/consulting (ex. Technical support),
maintenance and repair, and miscellaneous (ex.
Extended warranty, loyalty programs).
Chapter 10/Objective 1: Describe/apply
how a firm can utilize differentiation.
• Personnel
– Competence, Courtesy, Credibility, Reliability,
Responsiveness, and Communication.
• Channel
– Coverage, Expertise, and performance.
• Image (how public perceives firm/products)
– Symbols, media, atmosphere, and events.
– Image needs to convey character/value proposition in a
distinctive but consistent manner with emotional power
that is conveyed in all of its communication/contacts.
Chapter 10/Objective 2: Describe/apply
how to develop and communicate a
positioning strategy.
• Firms need to focus on those meaningful
differences to consumers that are
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Important (highly valued customer benefits)
Distinctive (differences memorable/unique)
Superior (better than competition)
Preemptive (hard to copy)
Affordable (consumers can pay for difference)
Profitable (must result in more profit for firm).
Chapter 10/Objective 2: Describe/apply
how to develop and communicate a
positioning strategy.
• Positioning
– The act of designing the company’s offering/image to
occupy a distinctive place in the target’s mind. End
result should be a market-focused value proposition.
– A firm can try to strengthen its own current position in
the consumer’s mind; grab an unoccupied position;
deposition/reposition the competitor; or focus on being
part of an exclusive club.
– The entire marketing mix needs to support the
positioning.
Chapter 10/Objective 2: Describe/apply
how to develop and communicate a
positioning strategy.
• Unique Selling Proposition – focus on one
consistent positioning message. Must be
something that customers care about and
understand. Focus all communication.
• Different positioning strategies include:
attribute, benefit, use/application, user,
competitor, product category, and
quality/price positioning.
Chp 10/Obj 3: Describe the PLC and
apply what it means for marketers.
• See Figure 10-4 (p. 304) and Table 10-5 (p. 316).
• Introduction
– Profits negative due to heavy costs of introduction and
sales are slow. Promotional expenditures at their
highest ratio to sales due to need to inform, induce trial,
and secure distribution. Pricing can focus on skimming
or penetration. There can be a pioneer advantage by
introducing product first in the market.
• Growth
– Rapid market acceptance and profit improvement as
costs spread out over a larger volume of sales. May
face a trade off between market share and profit.
Chp 10/Obj 3: Describe the PLC and
apply what it means for marketers.
• Maturity
– Slowdown in sales and profits stabilize/decline. Most
products are in the mature stage. May need to focus on
market modification (increase number of users or
amount used), product modifications (ex. quality,
feature, style improvements), or modifying marketing
mix.
• Decline
– Sales decline and profits erode due to technological
advances, changes in consumers’ tastes, or competition.
Can increase investment, maintain investment, decrease
investment selectively, harvest investment, or divest.
Chapter 11: Developing New
Market Offerings
• Learning Objectives
– 1. Describe and apply the eight stages of new
product development.
Chp 11/Obj 1: Describe/apply the eight
stages of new product development.
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Idea Generation
Idea Screening
Concept Development and Testing
Marketing Strategy Development
Business Analysis
Product Development
Market Testing
Commercialization
Chp 11/Obj 1: Describe/apply the eight
stages of new product development.
• 1. Idea Generation
– Good ideas can come from anywhere, consumers,
employees, management, suppliers, competition, etc…
The firm needs to encourage the flow of new ideas.
• 2. Idea Screening
– Given the high cost of new product development and
the high rate of failure, one needs to be able to weed out
the bad ideas before too many resources are devoted to
it. Most firms utilize a idea/new product committee
that screens initial ideas/estimates against key criteria.
Chp 11/Obj 1: Describe/apply the eight
stages of new product development.
• 3. Concept Development and Testing
– Firms need to test product concepts (elaborated version
of the idea expressed in meaningful consumer terms)
with appropriate targets.
• 4. Marketing Strategy Development
– Describe the target market’s size, structure, behavior;
the product’s positioning; and estimated sales, market
share, and profit for first few years.
– Outline marketing mix and marketing budget for first
year.
– Project long run sales, profit, and marketing strategy.
Chp 11/Obj 1: Describe/apply the eight
stages of new product development.
• 5. Business Analysis
– Determine if product meets firm’s objectives. Estimate
total sales, costs, and profits. Consider break even and
risk analysis. Cross functional teams are very useful
here.
• 6. Product Development – expensive
– Company produces a safe, affordable, prototype that
embodies the features customers’ value. Prototype
must go through rigorous consumer and functional
tests. Time is of the essence but have to be careful not
to miss key problems with new product
Chp 11/Obj 1: Describe/apply the eight
stages of new product development.
• 7. Market Testing – dress rehearsal
– For Consumer Goods: sales wave research, simulated
test marketing (lab), controlled test marketing, full test
markets. Trying to estimate trial, first repeat buy,
adoption, and purchasing frequency.
– For Business Goods – alpha/beta testing, trade shows,
distributor/dealer displays, full test markets.
• 8. Commercialization
– Address when (timing), where (geographic strategy –
single location, region, several regions, national,
international), to whom (target market prospects –
innovators/early adopters, heavy users, opinion
leaders), and how (introductory market strategy).
Chapter 13: Managing Product
Lines and Brands
• Learning Objectives
– 1. Describe and apply what is meant by
product levels, product classification, and the
product mix.
– 2. Discuss and apply the issues involved in
branding a product.
Chp 13/Obj 1: Describe/apply what is
meant by product levels, product
classification, and the product mix.
• Product
– Anything that can be offered to a market to satisfy a
want or need. Includes physical goods, services,
experiences, events, persons, places, properties,
organizations, information, and ideas.
• Product Level
– 5 levels and each level adds more customer value. The
5 levels constitute the customer value hierarchy.
– (1) core benefit, (2) basic product, (3) expected product,
(4) augmented product – exceeds expectations, and (5)
potential product – transformations/new ways to satisfy
customers.
Chp 13/Obj 1: Describe/apply what is
meant by product levels, product
classification, and the product mix.
• Product Classification
– Durability and Tangibility: nondurable,
durable, and services
– Consumer Goods: convenience, shopping,
specialty, and unsought
– Industrial Goods: materials and parts, capital
items, supplies and business services
• Product Mix – product assortment
– Consider width, length, depth, and consistency.
Chp 13/Obj 2: Discuss/apply the issues
involved in branding a product.
• Brand
– A name, term, sign, symbol, and/or design intended to
identify a product and to differentiate it from the
competition.
• Brand Equity – value of brand
– Relates to the price premium the brand commands
times the extra volume it moves over an average brand.
– High brand equity can mean lower marketing costs due
to customers’ awareness and loyalty, more leverage
with channel, customers willing to pay price premiums,
less vulnerability to competitors’ pricing, and less
difficulty with expanding product mix.
Chp 13/Obj 2: Discuss/apply the issues
involved in branding a product.
• Branding Challenges – utilize a generic, private
label or manufacturer brand
• Brand-Name Decisions
– Individual, blanket family name, separate family
names, company name with individual product name.
– Brand name should suggest product benefits; product
qualities; be easy to pronounce, recognize, and
remember; be distinctive; and not carry poor meanings
in other languages/culture.
Chp 13/Obj 2: Discuss/apply the issues
involved in branding a product.
• Brand Strategy Decisions
– Line extensions – existing brand name extended to new
sizes/flavors in existing product category (most
common strategy)
– Brand extensions – brand name used for new product
category
– Multibrands – new names in same product category
– New brands – new names in new product category
– Cobrands – brands bearing two or more well known
brand names.
Module 6: Product Management
Summary
• Product key variable in marketing mix.
• Need to determine what is unique about your firm/product
compared to competition and how to effectively utilize that
difference in positioning your firm/product in the
customer’s mind.
• There is a need for new products, as PLC shows product
categories will eventually reach maturity and decline. New
products though are expensive and risky so firms need to
develop a process to effectively develop new products for
long run success considering the current product mix.
• Branding is key in establishing a product’s identity and
high brand equity has many rewards.
• ANY QUESTIONS?