Product Strategy and Marketing through the

Life Cycle

Key Concepts

Product Levels

Product Classifications

Consumer-goods classificationConsumer-goods classification

Durability and tangibility

Durability and tangibility

Industrial-goods

classification

Industrial-goods

classification

Durability and Tangibility

Nondurable goods

Nondurable goods

Durable goods

Durable goods

ServicesServices

Consumer-Goods Classification

Convenience goodsConvenience goods

Shopping goodsShopping goods

Specialty goodsSpecialty goods

Unsought goodsUnsought goods

Industrial-Goods Classification

Capital itemsCapital items

Materials and parts

Materials and parts

Supplies and services

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

Down-marketDown-market

Up-marketUp-

market

Two-wayTwo-way

Co-Branding

Two or more well-known brands are combined into a joint product and/or marketed together in some fashion.Same-companyJoint-ventureRetailMultiple-sponsor

PackagingRefers to all the activities of designing and producing a product’s container.

Package levels:

PrimarySecondaryShipping

Influenced by:

Self-serviceConsumer affluence

Company and brand image

Innovation opportunity

Functions of Labeling

IdentifiesIdentifies

GradesGrades

DescribesDescribes

PromotesPromotes

PackagingRefers to all the activities of designing and producing a product’s container.

Package levels:

PrimarySecondaryShipping

Influenced by:

Self-serviceConsumer 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.GeneralSpecific

The New-Product Development Decision

Process

Marketing Skills: Finding New Product IdeasWhere does Procter & Gamble get new ideas?Customers, organizations, experts, government, private labs, research institutions, suppliers, retailers, partners, and entrepreneurs.

Stages in the Adoption Process

AwarenessAwareness

InterestInterest

EvaluationEvaluation

AdoptionAdoption

TrialTrial

Diffusion Process for New ProductsAdopter Categories

Factors Influencing Adoption

Relative advantageRelative advantage

Compatibility

Compatibility ComplexityComplexity

Communicability

Communicability

Divisibility

Divisibility

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 SuccessfulFactors in SuccessfulNew ProductsNew Products

Match between product and market needs

Different from substitute products

Benefit to large number of people

Success Factors

Listening to customers

Producing the best product

Vision of future market

Strong leadership

Commitment to new-product development

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

Inform potential consumers

Induce product trial

Induce product trial

Secure retail distributionSecure 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 productsEnter new segmentsIncrease distribution coverage and enter new channels

Shift from product-awareness to product-preference advertising

Lower prices to attract the next layer of price-sensitive 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 modificati

on

Market modificati

on

Product modification

Product modification

Marketing program

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

HarvestHarvest

DivestDivest

LiquidateLiquidate

Strategies at Different Stages of the Product Life Cycle

Time

INTRODUCTION GROWTH MATURITY DECLINE

ProductStrategy

Distribution

Strategy

PromotionStrategy

PricingStrategy

Limited modelsFrequent changes

More modelsFrequent changes.

Large number of models.

Eliminate unprofitable

models

LimitedWholesale/

retail distributors

Expanded dealers. Long-term relations

Extensive.Margins drop.Shelf space

Phase out unprofitable

outlets

Awareness. Stimulate

demand. Sampling

Aggressive ads.Stimulatedemand

Advertise. Promote heavily

Phase outpromotion

High to recoupdevelopment

costs

Fall as result ofcompetition &

efficient production.

Prices fall (usually).

Prices stabilize at low level.

Sa

les