The Product and Its Management Over Its Life Cycle

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The Product and Its Management Over Its Life Cycle

• Professor Charles D. Schewe

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What is a Product?

• A Product is anything that can be offered to a
  market for attention, acquisition, use, or
  consumption and that might satisfy a want or a
  need.
• Includes
• Physical Objects
• Services
• Persons
• Places
• Organizations
• Ideas
• Combinations of the above

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What is a Service?

• A Service is a form of product that consists of
  activities, benefits, or satisfactions offered
  for sale that are essentially intangible and
  dont result in the ownership of anything.
• Examples include
• Banking
• Hotels
• Tax Preparation
• Home Repair Services

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The Nature of a Product

• Tangible and Intangible Features
• Generic Product
• Bundle of Benefits
• Solution to a Problem
• Total Consumption System

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Five Product Levels
Core benefit
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The Marketing Management Exchange Equation
Revisited

• Product
• Place
• Promotion

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Consumer-Goods Classification

• Buy frequently immediately
• Low priced
• Many purchase locations
• Includes
• Staple goods
• Impulse goods
• Emergency goods

• Buy less frequently
• Gather product information
• Fewer purchase locations
• Compare for
• Suitability Quality
• Price Style

• Special purchase efforts
• Unique characteristics
• Brand identification
• Few purchase locations

• New innovations
• Products consumers dont want to
  think about.
• Require much advertising
• personal selling

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Categories of Service Mix
Tangible Good w/ Services
Major Service w/ Goods
Hybrid
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Four Service Characteristics
Services
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Overcoming Service Challenges
Services
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Service-Quality Model
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New Product Development
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New Product Strategies

• New to the World Products
• New Product Lines
• Additions to Existing Lines
• Improvements In/Revisions of Existing Products
• Repositionings
• Cost Reductions

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Why New Products Fail

• Over Championing
• Overestimated Demand
• Poor Design
• Poor Marketing Execution
• High Development Costs
• Strong Competitive Reaction

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New Product Development Process
Idea Generation
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New Product Development ProcessStep 1. Idea
Generation
Idea Generation is the Systematic Search for New
Product Ideas Obtained Internally From Employees
and Also From
Distributors
Suppliers
Customers
Competitors
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Concept Development Testing
1. Develop Product Ideas into Alternative
Product Concepts
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New Product Development ProcessStep 4.
Marketing Strategy Development
Marketing Strategy Statement Formulation
Part One Describes Overall Target
Market Planned Product Positioning Sales Profit
Goals Market Share
Part Two Describes Short-Term Products Planned
Price Distribution Marketing Budget
Part Three Describes Long-Term Sales Profit
Goals Marketing Mix Strategy
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Business Analysis Review of Product Sales,
Costs, and Profits Projections to See if They
Meet Company Objectives
New Product Development ProcessStep 5. Business
Analysis Step 6. Product Development
If No, Eliminate Product Concept
If Yes, Move to Product Development
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New Product Development ProcessStep 7. Test
Marketing
Test Marketing is the Stage Where the Product and
Marketing Program are Introduced into More
Realistic Market Settings.
Elements that May be Test Marketed by a Company
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Commercialization
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Speeding Up Development
Sequential
Simultaneous (Team-Based)
Step 1
Step 2
Step 3
Step 4
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Sales Profit Life Cycles
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Introduction Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
Sales
Low sales
Costs
High cost per customer
Profits
Negative or low
Marketing Objectives
Create product awareness and trial
Product
Offer a basic product
Price
Usually is high use cost-plus formula
Distribution
High distribution expenses
Advertising
Build product awareness among early adopters and
dealers
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Four IntroductoryMarketing Strategies
Rapid- skimming strategy
Slow- skimming strategy
Rapid- penetration strategy
Slow- penetration strategy
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Growth Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Product
Offer new product features, extensions, service,
and warranty
Price
Price to penetrate market
Distribution
Increase number of distribution outlets
Advertising
Build awareness and interest in the mass market
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Maturity Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits, then lower profits
Marketing Objectives
Maximize profits while defending market share
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits
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Maturity Stage of the PLC
Maturity Stage Product Defense Strategies
Product Modification
Market Modification
Marketing Mix Modification
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Decline Stage of the PLC
Summary of Characteristics, Objectives,
Strategies
Sales
Declining sales
Costs
Low cost per customer
Profits
Declining profits
Marketing Objectives
Reduce expenditure and maintain, reposition,
harvest or drop the product
Product
Phase out weak items
Price
Cut price
Distribution
Go selective phase out unprofitable outlets
Advertising
Reduce to level needed to retain hard-core loyal
customers
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Decline Stage

• Increase investment
• Resolve uncertainties - stable investment
• Selective niches
• Harvesting
• Divesting

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Product Strategies
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Product Mix
Width - number of different product lines
Length - total number of items within the lines
Depth - number of versions of each product
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Product-Line Length

• Line Stretching
• Downmarket
• Upmarket
• Two-way

• Line Filling

• Line Modernization

• Line Featuring Line Pruning

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Degree of Fit

• Core Fit
• Fringe Fit
• Zone of Indifference

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Product Strategies

• Limited I and Full Line G, M Strategy

• Line and Brand Extension Strategies G,
• M

• Line Stretching Strategy G, M

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Two-Way Product-Line Stretch Marriott Hotels
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Product Strategies

• Limited I and Full Line G, M Strategy
• Line and Brand Extension Strategies G, M
• Line Stretching Strategy G, M

• Repositioning Strategy G, M

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Product Brand Positioning
(a) Product-positioning map (breakfast market)
b) Brand-positioning map (instant breakfast
market)
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Product Strategies

• Limited I and Full Line G, M Strategy
• Line and Brand Extension Strategies G, M
• Line Stretching Strategy G, M
• Repositioning Strategy G, M

• Planned Obsolescence Strategy G, M

• Product Deletion Strategy D
• Continuation Strategy
• Milking Strategy
• Concentration Strategy

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What is a Brand?
User
Culture
Personality
Attributes
Benefits
Values
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Brands
Consistency
Quality Value
Attributes
Identification
Advantages of Brand Names Brand Equity
Defense Against Competition
Loyalty
Awareness
Credibility
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An Overview ofBranding Decisions
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Brand Strategies
New Brands
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Good Brand Names
Distinctive
Lack Poor Foreign Language Meanings
Suggest Product Benefits
Suggest Product Qualities
Easy to Pronounce Recognize Remember
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Why Package is Crucial as a Marketing Tool

• Self-service
• Consumer affluence
• Company brand image
• Opportunity for innovation

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Labels
Promote
Describe
Identify
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Some Actual Packaging Labels

• On a Sears Hair Dryer DO NOT USE WHILE SLEEPING
• On a Bag of Fritos YOU COULD BE A WINNER! NO
  PURCHASE NECESSARY. DETAILS INSIDE.
• On a Bar of Dial Soap DIRECTIONS USE LIKE
  REGULAR SOAP.

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Some Actual Packaging Labels

• On Tescos Tiramisu Dessert DO NOT TURN UPSIDE
  DOWN. PRINTED ON BOTTOM OF BOX.
• On packaging for a Rowneta Iron DO NOT IRON
  CLOTHES ON BODY.
• On Nytol a Sleeping Aid WARNING MAY CAUSE
  DROWSINESS

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Some Actual Packaging Labels

• On a Korean Kitchen Knife WARNING KEEP OUT OF
  CHILDREN.
• On a String of Chinese-Made Christmas Lights FOR
  INDOOR OR OUTDOOR USE ONLY.
• On an American Airlines Packet of Nuts
  INSTRUCTIONS OPEN PACKET. EAT NUTS.
• On a Swedish Chainsaw DO NOT ATTEMPT TO STOP
  CHAINSAW WITH YOUR HANDS.