Product Strategy

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MARKETING STRATEGYO.C. FERRELL MICHAEL D.
HARTLINE
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Product Strategy
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Product Classification (1 of 3)

• Consumer Product Classifications
• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products
• (1) Products of which consumers are unaware
• (2) Products that consumers do not consider
• purchasing until a need or emergency
• arises

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Specialty Products
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Product Classification (2 of 3)

• Business Product Classifications
• Raw Materials
• Component Parts
• Process Materials
• MRO Supplies
• Accessory Equipment
• Installations
• Business Services

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Product Classification (3 of 3)

• Product Lines and Mixes
• Product Line
• Product Mix
• Benefits of offering a wide variety and deep
  assortment of products
• Economies of Scale
• Package Uniformity
• Standardization
• Sales and Distribution Efficiency
• Equivalent Quality Beliefs

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Product Lines andProduct Mixes at Gillette
Exhibit 7.1
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Discussion Question

• Consider the number of product choices that are
  available in the U.S. consumer market. In
  virtually every product category, consumers have
  many, many options to fulfill their needs. Are
  all of these options really necessary? Is having
  this many choices a good thing for consumers? Why
  or why not?

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New Product Development

• Six strategic product development options
• (1) New-to-the-world products (discontinuous
• innovations)
• (2) New product lines
• (3) Product line extensions
• (4) Improvements or revisions of existing
• products
• (5) Repositioning
• (6) Cost reductions
• Customer perception of differentiation is critical

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Avis We Try Harder
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Product StrategyThroughout the Life Cycle

• Development Stage
• Introduction Stage
• Growth Stage
• Maturity Stage
• Decline Stage

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Stages of the Product Life Cycle
Exhibit 7.2
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Marketing Strategy Duringthe Product Life Cycle
Exhibit 7.3
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Development Stage

• No sales revenue during this stage
• Components of the product concept
• An understanding of desired uses and benefits
• A description of the product
• The potential for creating a complete product
  line
• An analysis of the feasibility of the product
  concept
• Customer needs should be discerned before
  developing marketing strategy

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Introduction Stage

• Begins when development is complete
• Ends when customers widely accept the product
• Marketing strategy goals during this stage
• Attract customers by raising awareness and
  interest
• Induce customers to try and buy
• Engage in customer education activities
• Strengthen or expand channel and supply
  relationships
• Build on availability and visibility
• Set pricing objectives

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Growth Stage (1 of 2)

• Be ready for sustained sales increases
• Rapid increase in profitability early in the
  growth stage that decreases at the end of this
  stage
• Length depends on nature of product and
  competitive reactions
• Two strategies
• (1) Establish a strong, defensible marketing
  position
• (2) Achieve financial objectives

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Growth Stage (2 of 2)

• Marketing strategy goals in this stage
• Leverage the products perceived differential
  advantages
• Establish a clear product and brand identity
• Create unique positioning
• Maintain control over product quality
• Maximize availability of the product
• Maintain or enhance the products profitability
  to partners
• Find the ideal balance between price and demand
• Keep an eye focused on the competition

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Maturity Stage (1 of 2)

• Few, if any, new firms will enter the market
• Still an opportunity for new product features
  and variations
• Typically the longest stage in the product life
  cycle

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Maturity Stage (2 of 2)

• Four general goals in this stage
• (1) Generate Cash Flow
• (2) Hold Market Share
• (3) Steal Market Share
• (4) Increase Share of Customer
• Four options to achieve these goals
• (1) Develop a new product image
• (2) Find and attract new users to the product
• (3) Discover new applications for the product
• (4) Apply new technology to the product

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Decline Stage

• Two options
• (1) Attempt to postpone the decline
• (2) Accept its inevitability
• Harvesting
• Divesting
• Factors to be considered during this stage
• Market segment potential
• The market position of the product
• The firms price and cost structure
• The rate of market deterioration

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Marketing Strategy in Action

• Ford has been creative in restyling the 2005
  Mustang with retro styling cues to keep the model
  viable despite decreasing interest in muscle
  cars. What other ways can marketers combat the
  inevitability of the decline stage of the product
  life cycle?

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Discussion Question

• Describe the different product decisions that
  impact each phase of the product life cycle. If
  you were losing money with a product in the
  decline stage, why might you consider retaining
  that product? Why would a firm or brand manager
  become sentimental about a product and hold on to
  it even in the face of monetary losses?

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Branding Strategy

• Key Issues In Branding
• Brand Loyalty
• Brand Equity
• Brand Alliances
• Packaging and Labeling
• Packaging
• Protection, storage, convenience, etc.
• Labeling
• The Nutritional Labeling and Education Act of
  1990
• Food Choking Prevention Act

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Advantages of Branding
Exhibit 7.4
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The Worlds Twenty-FiveMost Valuable Brands
Exhibit 7.5
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Product Strategy for Services

• Characteristics of Services
• Marketing Strategy for Services
• Product Issues
• Pricing Services
• Promoting Service Benefits
• Distributing Services

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Unique Characteristics of Servicesand Resulting
Marketing Challenges
Exhibit 7.6
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Discussion Question

• Given the unique characteristics of services,
  what potential ethical issues could arise in
  service marketing and delivery? How can a
  service marketer prevent ethical challenges and
  convey a sense of trust to customers?