Chapter 7: Product Planning and Strategies. What is a Product? It is a set of tangible and...
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Transcript of Chapter 7: Product Planning and Strategies. What is a Product? It is a set of tangible and...
![Page 1: Chapter 7: Product Planning and Strategies. What is a Product? It is a set of tangible and intangible attributes, including packaging, colour, price,](https://reader036.fdocuments.in/reader036/viewer/2022062315/5697c00b1a28abf838cc7ff4/html5/thumbnails/1.jpg)
Chapter 7:Product Planning and Strategies
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What is a Product?
It is 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
it is easy to visualize the products of Esso, but more difficult to describe those of an art gallery, UNICEF, or the Salvation Army
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Figure 7-1 Product Attributes
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Consumer and Business Products
Whether a product is considered a consumer or business product depends on the intended target market; how it is used and by whom
Some products are sold only to consumers and households for non-business purposes; others are sold to organizations for use in the business, for resale, or to provide services
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Classifying Consumer Products
convenience products: low price, low risk, consumer is not prepared to shop around, widely available in a variety of retail stores
shopping products: consumer will want to compare quality and price, risk and price are higher, available in selected retail outlets
specialty products: consumer has 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
the breadth is explained by the number of product lines within the mix
the depth refers to the variety of sizes, models, or items within each product line
a product line is a group of related products some companies carry a wide product mix,
while others maintain a narrow mix
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Figure 7-2 Product Mix – Breadth and Depth
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Product Positioning
a product’s 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
or in relation to a product class or an attribute by stressing certain attractive characteristics
or to appeal to a specific target market segment or by stressing that it offers attractive prices or
superior 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 may add related products under the same brand or 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 refers to the addition of a higher-priced product to reach a broader market
trading-down involves 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
companies will also eliminate products or entire product lines which are unprofitable
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New Product Development
companies must be constantly modifying existing products/services and developing new ones; the marketplace demands it
how new is new? most new products are modifications of or extensions to existing ones
the introduction of a new product is a strategic decision which should be guided by the company’s goals and a new product introduction strategy
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Criteria for New Products
there must be adequate market demand: necessary but not sufficient for success
must satisfy key financial criteria must be compatible with environmental standards must fit with the company’s marketing structure should also be compatible with production
capabilities, satisfy legal requirements, and fit with corporate goals and objectives
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New-Product Development Process
generate ideas from a number of sources screen ideas to identify those to pursue conduct a business analysis to determine
likelihood of commercial success develop prototype for initial internal testing conduct market tests with prospective customers if business case and market tests are favourable,
proceed with commercialization
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Figure 7-3 Major Stages in the New-Product Development Process
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New-Product Organization
companies take a variety of approaches to organizing the new product function
product-planning committees new-product departments cross-functional new venture teams product managers many larger firms are replacing the product
manager with category managers
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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
marketers must be interested in first creating awareness, then interest, then trial, before the consumer is considered an adopter
some people are genuine innovators, while others wait and try later; some never adopt
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Stages in the Adoption Process
awareness: customer is exposed to the product interest: interest and information seeking evaluation: assessment of the advantages and
disadvantages of the new product trial: customer tries the product in low-risk
situation; may be a sample or test drive adoption: customer decides to buy the product confirmation: customer decides to stay with the
product; attempts dissonance reduction
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Factors Affecting Adoption Rate
why are some products accepted more readily? some have obvious relative advantages over
existing alternatives some are more compatible with current values increased complexity slows the adoption rate it helps if a new product can be sampled before a
commitment is made to buy it also helps if the benefits of the new product can
be easily observed
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The Product Life Cycle the concept of the product life cycle applies to
product categories, not to brands; it is related to the concept of diffusion of innovation
different products will have differently-shaped life cycle curves; will diffuse at different rates
a product is normally perceived to pass through four stages over its life cycle; introduction, growth, maturity, and decline
each stage requires different marketing strategies
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Figure 7-4 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 are quite short and may be getting shorter
some fads have very short life cycles, while other products stay at maturity for years
in high-tech markets, life cycles are very short 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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Figure 7-5 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