1. 11
Product Strategy

2. 11 Objectives Product Strategy
1. Explain the concept of the product mix, and indicate various mix decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their success.
8. Describe various organizational arrangements for new-product development.
9. Examine the stages in the product development process.
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3. 11
Product Strategy
Product Mix
The assortment of product lines and individual offerings available from a company.
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4. Product Line and Individual Offering11
Product Strategy
Product Line and Individual Offering
Product Line
A series of related products.
Individual Offering
Single product within a product line.
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5. The Maple Leaf Foods International Mix11
Product Strategy
Table 11.1
The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT
Meats Groceries Nonedible
Fresh and frozen meats Peanut butter By-products
Bacon Canned vegetables & fruit Hides
Sausages Vegetable oils
Wieners Lard
Luncheon meats Shortening
Canned meat French fries
Poultry Maple syrup
Jams
DEPTH OF ASSORTMENT
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6. 11
Product Strategy
Cannibalizing
Situation involving one product taking sales from another offering in a product line.
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7. 11
Product Strategy
Line Extension
The development of individual offering that appeal to different market segments but are closely related to the existing product line.
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8. Importance of Product Lines11
Product Strategy
Importance of Product Lines
Desire to grow
Optimal use of company resources
Increasing company importance in the market
Exploiting product life cycle
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9. 11
Product Strategy
Product Life Cycle
A product’s progress through introduction, growth, maturity, and decline stages.
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10. Stages in the Product Life Cycle11
Product Strategy
Figure 11.1
Stages in the Product Life Cycle
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11. Overlap of Life Cycle for Products A and B11
Product Strategy
Overlap of Life Cycle for Products A and B
Figure 11.2
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12. 11
Product Strategy
Fashions
Currently popular products that tend to follow recurring life cycles.
Fads
Fashions with abbreviated life cycles.
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13. Alternative Product Life Cycles11
Product Strategy
Alternative Product Life Cycles
Figure 11.3
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14. 11
Product Strategy
Figure 11.4
Fad Cycles
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15. Extending the Product Life Cycle11
Product Strategy
Extending the Product Life Cycle
1. Increase frequency of use by present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or packaging.
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16. Decay Curve of New-Product Ideas11
Product Strategy
Decay Curve of New-Product Ideas
Figure 11.5
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17. Product Improvement Strategy and Market Development Strategy11
Product Strategy
Product Improvement Strategy and Market Development Strategy
Product Improvement Strategy
A modification in existing products.
Market Development Strategy
Finding new markets for existing products.
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18. Product Development Strategy and Product Diversification Strategy11
Product Strategy
Product Development Strategy and Product Diversification Strategy
Product Development Strategy
Introducing new products into identifiable or established markets.
Product Diversification Strategy
The development of new products for new markets.
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19. Forms of Product Development11
Product Strategy
Table 11.3
Forms of Product Development
Old Product
New Product
Old Market
New Market
Product diversification
Market development
Product improvement
Product development
Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13, 1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for Diversification,” Harvard Business Review (September - October 1957), pp ; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs, NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.
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20. Structure for New-Product Development11
Product Strategy
Structure for New-Product Development
1. Committee
2. Department
3. Product/Brand Manager
4. Venture Team
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21. Product Managers (Brand Managers)11
Product Strategy
Product Managers (Brand Managers)
Individuals assigned one product or product line and given responsibility for determining its objectives and marketing strategies.
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22. 11
Product Strategy
Venture-Team Concept
An organizational strategy for developing new products through combing the management resources of marketing, technology, capital, and management expertise in a team.
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23. Seven Stages of the New-Product Development Process11
Product Strategy
Figure 11.6
Seven Stages of the New-Product Development Process
Business
Strategy
Develop
new-product
strategy
Generate
ideas/
concepts
Screen
and evaluate
Conduct business analysis
Commercialized
Product
Develop
Test
Commercialize
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24. 11
Product Strategy
Concept Testing
A marketing research project that attempts to measure consumer attitudes and perceptions relevant to a new-product idea.
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25. Basic Criteria for New-Product Screening11
Product Strategy
Basic Criteria for New-Product Screening
Table 11.4
1. Company’s resources and abilities. Financial resources, R& D skills, engineering skills, marketing research, management, production, sales force and distribution resources and skills, advertising and promotion resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how completely the product has actually been planned and technical issues dealt with, fit with current product line, superiority in meeting customer needs, quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of competition, presence of price bases competition, number and size of competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of customers.
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26. 11
Product Strategy
Test Marketing
Selecting areas considered reasonably typical of the total market, and introducing a new product to these areas with a total marketing campaign to determine consumer response before marketing product nationally.
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27. 11
Product Strategy
Adoption Process
A series of stages consumers go through, from learning of a new product to trying it and deciding to purchase it regularly or to reject it.
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28. Consumer Adoption Process11
Product Strategy
Consumer Adoption Process
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption/Rejection
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29. Categories of Adopters on the Basis of Relative Time of Adoption11
Product Strategy
Categories of Adopters on the Basis of Relative Time of Adoption
Figure 11.7
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30. 11
Product Strategy
Consumer Innovators
The first purchasers -- those who buy a product at the beginning of its life cycle.
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31. 11
Product Strategy
Diffusion Process
The filtering and acceptance of new products and services by the members of a community or social system.
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32. What Determines the Rate of Adoption?11
Product Strategy
What Determines the Rate of Adoption?
1. Relative Advantage
2. Compatibility
3. Complexity
4. Divisibility
5. Communicability
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33. Hazardous Products Act11
Product Strategy
Hazardous Products Act
A major piece of legislation that consolidated previous legislation and set significant new standards for product safety; defines a hazardous product as any product that is included in a list (called a schedule) compiled by Consumer and Corporate Affairs Canada or Health and Welfare Canada.
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34. Some Hazardous Products Act Regulations11
Product Strategy
Table 11.5
Some Hazardous Products Act Regulations
Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability standards.
Children’s toys or equipment may not contain toxic substances (such as lead pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.
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