Download Product Decisions

Foundations of Marketing, Mar/Apr 2007
Session 9 (Product)
Foundations of Marketing
Session #9
Professor Myungwoo Nam
Product
Decisions
THE BIG PICTURE
execute
PLC
Product Line
product Brand Equity
Distinct
STP Profitable
Accessible
segment
Goal Setting
Focus
Benchmarks
Impediment
brand
price
Attractive
Compatible
target
C. Advantage
positionDefine
evaluate
place
Differentiate
Deepen
promotion
Professor Myungwoo Nam
1
Foundations of Marketing, Mar/Apr 2007
Session 9 (Product)
What is a Product?
• A bundle of benefits
• The point of contact between the firm and the customer
• A crucial factor in building brand equity
The Product Life Cycle
Sales and Profits
Introduction
Growth
Mobile
Phones
Maturity
Portable
Phones
Decline
Stationary
Phones
Sales
3G
phones
Profits
Time
Professor Myungwoo Nam
2
Foundations of Marketing, Mar/Apr 2007
Session 9 (Product)
Extending a Product’s Life Cycle
• Delay decline: increase usage; new users; new uses
Growth
Maturity
Industry Sales
Introduction
Time
Extending a Product’s Life Cycle
• New product introduction: improved version; extension
Introduction
Growth
Maturity
Decline
Industry Sales
Brand A
Brand B
Time
Professor Myungwoo Nam
3
Foundations of Marketing, Mar/Apr 2007
Session 9 (Product)
Product Line Extensions: Rationales
• Low cost, low risk way to serve a segmented market
• Adapt to consumer variety seeking and update or
expand the core brand’s image
• Increase shelf-space and thereby attract more
consumer attention
• Offer a broader range of price points and thereby serve
a wider audience of consumers
• Create a barrier to competition by increasing control
over shelf-space
Product Line Extensions: Risks
• Blurring the rationale for each product in the line
• Encouraging variety seeking
• Diluting the core brand image
• Under exploiting a good idea
• Increasing costs without increasing total sales
Professor Myungwoo Nam
4