Transcript Foundations of Marketing

of
MARKETING
Chapter
11
Product
Strategy
Copyright © 2003 by Nelson, a division of Thomson Canada Limited.
Product Strategy
Chapter
11
Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
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Product Strategy
Chapter
11
Product Mix
• The assortment of product lines and
individual offerings available from a
company.
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Product Strategy
Chapter
11
Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.
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Product Strategy
Chapter
11
Table 11.1
The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT
Meats
Groceries
Nonedible
Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry
Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams
By-products
Hides
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Product Strategy
Chapter
11
Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.
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Product Strategy
Chapter
11
Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.
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Product Strategy
Chapter
11
Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle
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Product Strategy
Chapter
11
Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.
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Product Strategy
Chapter
11
Figure 11.1
Stages in the Product Life Cycle
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Product Strategy
Figure 11.2
Chapter
11
Overlap of Life Cycle for Products A and B
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Product Strategy
Chapter
11
Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.
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Product Strategy
Figure 11.3
Chapter
11
Alternative Product Life Cycles
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Product Strategy
Chapter
11
Figure 11.4
Fad Cycles
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Product Strategy
Chapter
11
Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
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Product Strategy
Figure 11.5
Chapter
11
Decay Curve of New-Product Ideas
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Product Strategy
Chapter
11
Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
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Product Strategy
Chapter
11
Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
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Product Strategy
Chapter
11
Table 11.3
Forms of Product Development
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Old Product
New Product
Old Market
Product improvement
Product development
New Market
Market development
Product diversification
Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.
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Product Strategy
Chapter
11
Structure for New-Product
Development
1.
2.
3.
4.
Committee
Department
Product/Brand Manager
Venture Team
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Product Strategy
Chapter
11
Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.
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Product Strategy
Chapter
11
Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.
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Product Strategy
Figure 11.6
Chapter
11
Seven Stages of the New-Product
Development Process
Business
Strategy
Develop
new-product
strategy
Develop
Generate
ideas/
concepts
Test
Screen
and evaluate
Conduct business
analysis
Commercialize
Commercialized
Product
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Product Strategy
Chapter
11
Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.
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Product Strategy
Table 11.4
Chapter
11
Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.
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Adapted from Robert Cooper, “The New Prod System: The Industry Experience,” Journal of Product Innovation Management (June 1992), pp.
125-26. Copyright © 1992, with permission from the Elsevier Science.
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Product Strategy
Chapter
11
Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.
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Product Strategy
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11
Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.
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Product Strategy
Chapter
11
Consumer Adoption Process
1.
2.
3.
4.
5.
Awareness
Interest
Evaluation
Trial
Adoption/Rejection
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Product Strategy
Figure 11.7
Chapter
11
Categories of Adopters on the Basis of
Relative Time of Adoption
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Product Strategy
Chapter
11
Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.
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Product Strategy
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11
Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.
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Product Strategy
Chapter
11
What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.
Relative Advantage
Compatibility
Complexity
Divisibility
Communicability
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Product Strategy
Chapter
11
Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
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Product Strategy
Chapter
11
Table 11.5
Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.
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