Transcript Product Strategy and Marketing through the Life Cycle

Product Strategy and
Marketing through the Life
Cycle
Key Concepts
Product Levels
Product Classifications
Durability and
tangibility
Consumer-goods
classification
Industrial-goods
classification
Durability and Tangibility
Nondurable
goods
Durable
goods
Services
Consumer-Goods Classification
Convenience goods
Shopping goods
Specialty goods
Unsought goods
Industrial-Goods Classification
Materials and parts
Capital items
Supplies and services
Product-Line Analysis
* Evaluate sales and profits associated with each item in
product line.
 Evaluate line positioning relative to competition.
 Decide whether to build, maintain, harvest, or divest.
Line Stretching
Downmarket
Up-market
Two-way
Co-Branding
 Two or more well-known brands are combined into a
joint product and/or marketed together in some
fashion.




Same-company
Joint-venture
Retail
Multiple-sponsor
Packaging
 Refers to all the activities of
designing and producing a
product’s container.
 Package levels:
 Primary
 Secondary
 Shipping
 Influenced by:
 Self-service
 Consumer
affluence
 Company and
brand image
 Innovation
opportunity
Functions of Labeling
Identifies
Grades
Describes
Promotes
Packaging
 Refers to all the activities of
designing and producing a
product’s container.
 Package levels:
 Primary
 Secondary
 Shipping
 Influenced by:
 Self-service
 Consumer
affluence
 Company and
brand image
 Innovation
opportunity
Warranties and Guarantees
 Warranties—formal statements of expected
product performance by the manufacturer.
 Expressed or implied—both legally enforceable.
 Guarantees—purpose is to reduce the
buyer’s perceived risk and provide
assurance that the company and its
offerings are dependable.
 General
 Specific
The New-Product Development
Decision Process
Marketing Skills: Finding New
Product Ideas
Where does Procter
& Gamble get new
ideas?
Customers,
organizations, experts,
government, private
labs, research
institutions, suppliers,
retailers, partners, and
entrepreneurs.
Stages in the Adoption Process
Awareness
Interest
Evaluation
Trial
Adoption
Diffusion Process for New Products
Adopter Categories
Factors Influencing Adoption
Relative
advantage
Compatibility
Divisibility
Complexity
Communicability
Product Life Cycles for
Styles, Fashions, and Fads
Sales of New Audio Products
Why New Products Fail
 No discernible benefits
 Poor match between features and
customer desires
 Overestimation of market size
 Incorrect positioning
 Price too high or too low
 Inadequate distribution
 Poor promotion
 Inferior product
Success Factors
Factors in Successful
New Products
Match between product and market needs
Different from substitute products
Benefit to large number of people
Success Factors
Listening to customers
Strong leadership
Producing the best
product
Commitment to newproduct development
Vision of future market
Project-based team
approach
Getting every aspect right
Product Life Cycle
Introductory Stage

High failure rates

Little competition

Frequent product modification

Limited distribution

High marketing and production costs

Negative profits with slow sales increases

Promotion focuses on awareness and information

Communication challenge is to stimulate primary
demand
Marketing Strategies: Introduction Stage and
the Pioneer Advantage
Inform potential
consumers
Induce product trial
Secure retail
distribution
Growth Stage
 Increasing rate of sales
 Entrance of competitors
 Market consolidation
 Initial healthy profits
 Aggressive advertising of the
differences between brands
 Wider distribution
Marketing Strategies: Growth
Stage
 Improve quality, add new features, and
improve styling
 Add new models and flanker products
 Enter new segments
 Increase distribution coverage and enter new
channels
 Shift from product-awareness to productpreference advertising
 Lower prices to attract the next layer of pricesensitive buyers
Maturity Stage
 Sales increase at a decreasing rate
 Saturated markets
 Annual models appear
 Lengthened product lines
 Service and repair assume important roles
 Heavy promotions to consumers and dealers
 Marginal competitors drop out
 Niche marketers emerge
Marketing Strategies: Maturity
Stage
Market
modification
Product
modification
Marketing
program
modification
Decline Stage
 Long-run drop in sales
 Large inventories of
unsold items
 Elimination of all nonessential
marketing expenses
 “Organized abandonment”
Marketing Strategies: Decline
Stage
Harvest
Divest
Liquidate
Strategies at Different Stages of the
Product Life Cycle
INTRODUCTION
Sales
Product
Strategy
Limited models
Frequent
changes
GROWTH
More models
Frequent
changes.
Distribution
Strategy
Limited
Expanded
Wholesale/
dealers. Longretail distributors term relations
Promotion
Strategy
Awareness.
Aggressive ads.
Stimulate
Stimulate
demand. Sampling
demand
Pricing
Strategy
High to recoup
development
costs
Fall as result of
competition &
efficient
production.
Time
MATURITY
DECLINE
Eliminate
Large number
unprofitable
of models.
models
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Advertise.
Promote
heavily
Phase out
promotion
Prices fall
(usually).
Prices
stabilize at
low level.