Product Strategy and Marketing through the Life Cycle Key Concepts

Product Levels

Product Classifications Consumer-goods classification Durability and tangibility Industrial-goods classification

Durability and Tangibility Nondurable goods Durable goods Services

Consumer-Goods Classification Convenience goods Shopping goods Specialty goods Unsought goods

Industrial-Goods Classification Capital items Materials and parts 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- market Up-market Two-way

Co-Branding Two or more well-known brands are combined into a joint product and/or marketed together in some fashion. Same-company Joint-venture Retail Multiple-sponsor

Packaging Refers to all the activities of designing and producing a product’s container. Package levels: Primary Secondary Shipping Influenced by: Self-service Consumer affluence Company and brand image Innovation opportunity

Functions of Labeling Identifies Grades Describes Promotes

Packaging Refers to all the activities of designing and producing a product’s container. Package levels: Primary Secondary Shipping Influenced by: Self-service Consumer 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. General Specific

The New-Product Development Decision Process

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

Stages in the Adoption Process Awareness Interest Evaluation Adoption Trial

Diffusion Process for New Products Adopter Categories

Factors Influencing Adoption Relative advantage Compatibility Complexity Communicability 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 Successful New 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 Induce product trial Secure 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 products Enter new segments Increase 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 modification Product 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 Harvest Divest Liquidate

Strategies at Different Stages of the Product Life Cycle Time INTRODUCTION GROWTH MATURITYDECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand. Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion High to recoup development costs Fall as result of competition & efficient production. Prices fall (usually). Prices stabilize at low level. Sales