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Product Strategy and Marketing through the Life Cycle Key Concepts Product Levels Product Classifications Durability and tangibility Consumer-goods classification 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 Materials and parts Capital items 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 Downmarket 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 Trial Adoption Diffusion Process for New Products Adopter Categories Factors Influencing Adoption Relative advantage Compatibility Divisibility Complexity Communicability 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 Strong leadership Producing the best product Commitment to newproduct development Vision of future market 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 productpreference advertising Lower prices to attract the next layer of pricesensitive 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 INTRODUCTION Sales Product Strategy Limited models Frequent changes GROWTH More models Frequent changes. Distribution Strategy Limited Expanded Wholesale/ dealers. Longretail distributors term relations Promotion Strategy Awareness. Aggressive ads. Stimulate Stimulate demand. Sampling demand Pricing Strategy High to recoup development costs Fall as result of competition & efficient production. Time MATURITY DECLINE Eliminate Large number unprofitable of models. models Extensive. Margins drop. Shelf space Phase out unprofitable outlets Advertise. Promote heavily Phase out promotion Prices fall (usually). Prices stabilize at low level.