Chapter Eight Product Strategies

Chapter Objectives Define and classify products. Issues related to branding Address product packaging and labeling issues. Analyze dimensions of the product mix. Describe the new product development process. Examine the new product diffusion process. Address the stages of the product life cycle. Examine product portfolio management challenges.

Product Definition* Product Durability Durable goods Nondurable goods A product is any offering that can satisfy consumer needs and wants. Goods Services Ideas Product Durability Durable goods Nondurable goods

The Product Mix The product mix is the complete assortment of the products that a company offers to its target mkt. Dimensions of the Product Mix: Product item*: An individual, unique brand offering Product line: Related brands in the same product category Product length: Total number of brands in the product mix Product width: Total number of product lines a company offers Product depth: Number of different offerings for a product category Product consistency: Extent to which the different product lines are related, use the same distribution channels, and have the same consumers

Product Classification* Convenience goods Impulse goods Staples Emergency goods Shopping goods Homogeneous shopping goods Heterogeneous shopping goods Specialty goods Low Willingness to Search* High

Branding Branding—adds value to products Cool Hunting #2 Branding—adds value to products A brand (Brand name, Brand mark, Trademark) Name, design, symbol, or a combination Used to differentiate the product from competitors’ offerings Brand Equity: Brand Acceptance* Awareness - Rejection Perceived Quality - Non-recognition Loyalty - Recognition Association - Preference - Insistence Brand Image: Consumers’ perception of a particular brand

Brand Identity Brand Name Protecting the Brand Easy to pronounce Memorable Distinctive Suggest product traits and/or benefits Easy to translate into other languages Protecting the Brand Design counterfeiting Brand Name counterfeiting The OCSE estimates the value of counterfeit goods alone at more than $ 450,000,000,000, approximately 10% of the world’s GDP, and growing. Many industries are affected by this phenomenon, among them luxury items, fashion, pharmaceuticals, food products, toys and mechanical components.

Brand Sponsor Decisions How should a brand be sold? Manufacturers’ brand Private label (Dealer*, Private*) brands Generic brands* Branding Strategies* Individual branding Family branding Licensing, Co-Branding Minute Maid, a national brand, is offered side-by-side with the Ukrop’s private brand.

Packaging and Labeling Package design considerations: Uniqueness Shipping and storage Shelf appearance Appealing to consumers Theft and tamper proofing Label . . . Identifies the brand Describes the ingredients or components Contains an expiration date Identifies the manufacturer and/or distributor Promotes the product Directs the consumer on product use Benefits* - Traditional Communication Perception Function

New Product Development: Stages get happy Idea generation Screening new product ideas Developing & evaluating product concepts Performing product business analyses Designing and developing new product Test marketing Launch (commercialization) 2008 New Products

New Product Diffusion Factors Influencing Diffusion of Innovation* 1. Relative Advantage 2. Compatibility 3. Complexity 4. Possibility of Trial 5. Observability/Communicability Explanations (Media, People)* Description (Adopter Categorization) 1. Innovators 4. Late Majority 2. Early Adopters 5. Laggards 3. Early Majority Coming Soon

Product Life Cycle: Strategy Length and Shape* Product/Service Features Managerial Actions* Stage Management* Note “Extending the Product Life Cycle”

Managing the Product Portfolio The product portfolio is defined as the totality of products managed by the company as separate businesses. Strategic Frameworks* Product Portfolio Analysis Build, Hold, Entrench, Harvest, Divest, Abandon Product-Market Opportunity Matrix Profit Impact of Market Strategy (PIMS) Others

Product Portfolio Analysis High Market Share Low High Star Question Mark  Industry growth rate  Dog Cash Cow Low

Product-Market Opportunity Matrix Old New Old Product Development Market Penetration Market Market Development New Diversification