Chapter 7: Product Planning and Strategies

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Chapter 7Product Planning and Strategies
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What is a Product?

• a set of tangible and intangible attributes,
  including packaging, colour, price, quality, and
  brand, plus service and reputation, that provides
  a set of perceived benefits to consumers
• it is more than physical products includes
  services, places, persons, and ideas

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Product Attributes
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Consumer and Business Products

• depends on the intended target market how it is
  used and by whom
• Some products are sold only to consumers, others
  are sold to organizations for use in the
  business, for resale, or to provide services.

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Classifying Consumer Products

• convenience low price, low risk, no need to shop
  around, widely available
• shopping want to compare quality and price, risk
  and price are higher, available in selected
  retail outlets
• specialty strong brand preferences, risk is
  high, prepared to seek out exclusive retail
  outlets

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Classifying Business Products

• raw materials unprocessed, become part of other
  manufactured products
• manufactured parts and materials processed
  products that become part of other products
• installations major buildings and equipment
• accessory equipment used in operations, include
  computers, desks, tools
• operating supplies low value, used by most
  firms, convenience products for businesses

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Deciding on the Product Mix

• the product mix is a collection of product lines
  it has both breadth and depth
• product line is a group of related products
• breadth is the number of product lines within the
  mix
• depth is the variety of sizes, models, or items
  within each product line

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Product Mix Breadth and Depth
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Product Positioning

• Product position refers to the image that it
  projects in the minds of consumers
• a product may be positioned
• in relation to a competitor by drawing
  comparisons
• in relation to a product class or attribute by
  stressing certain characteristics
• to appeal to a specific target market
• on price, quality or value.

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Expanding the Product Mix

• expansion is accomplished by increasing the depth
  of lines or by adding lines
• increasingly, this involves line extensions
• related products under the same brand
• unrelated products under the same brand
• or unrelated products under a different brand
• or related products under a different brand

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Other Product-Mix Strategies

• trading-up adding a higher-priced product to
  reach a broader market
• trading-down adding a lower-priced product to a
  line to attract people who can not afford the
  higher-priced original
• occasionally, a product will be altered to
  improve it or to allow for its repositioning
• new products or variations on current ones

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Adoption-Diffusion Process

• different new products are adopted by consumers
  at different rates
• the individual consumer goes through certain
  stages before adopting a new product

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Stages in the Adoption Process

• awareness
• interest
• evaluation
• trial
• adoption
• confirmation

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The Product Life Cycle

• applies to product categories, not to brands
  (related to diffusion of innovation concept)
• a product is normally perceived to pass through
  four stages over its life cycle introduction,
  growth, maturity, and decline
• different products will have differently-shaped
  life cycle curves will diffuse at different
  rates
• each stage requires different marketing
  strategies

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Typical Life Cycle of a Product Category
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Characteristics of the Stages

• introductory stage developing the market,
  creating awareness, reaching the innovators
• growth stage competition begins, sales grow
  quickly, profits peak, market penetration
• maturity stage competition is intense, sales
  slow down, differentiated product offerings,
  customers are brand loyal, few new entrants
• decline stage customers move to other options,
  competitors leave, profits are low, consider exit

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Characteristics of Life Cycles

• length of the life cycle will vary
• some products do not make it through all four
  stages they may fail in introduction
• the life cycle must be considered in relation to
  a market stage may vary across segments

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Product Life Cycle Variations
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Managing the Life Cycle

• successful life-cycle management requires
  predicting the shape of the curve and then
  successfully adapting strategies at each stage
• when to consider entering the market
• how to manage to capitalize on growth
• it is possible to develop strategies that will
  extend the maturity stage modify the product,
  devise new uses, or design new appeals
• greatest challenge comes at the decline stage

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For next class...

• Read Chpt. 8