Download Chapter 11

CHAPTER
MANAGING
PRODUCTS,
SERVICES,
AND BRANDS
Product Life Cycle
Introductory
Stage
Growth
Stage
Maturity
Stage
Decline
Stage
Sales
Profits
Dollars
0
Time
Introductory Stage
•
•
•
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•
•
•
•
Full-Scale Launch
of New Products
High failure rates
Little competition
Frequent product modification
Limited distribution
High marketing and production
costs
Negative profits
Promotion focuses on awareness
and information
Intensive personal selling to
channels
Growth stage
•
•
•
•
•
•
•
•
Offered in more
Increasing rate of sales
sizes,
Entrance of competitors
flavors, options
Market consolidation
Initial healthy profits
Promotion emphasizes brand ads
Goal is wider distribution
Prices normally fall
Development costs are recovered
Maturity Stage
•
•
•
•
•
•
•
•
Many consumer
products are in
Maturity Stage
Declining sales growth
Saturated markets
Extending product line
Stylistic product changes
Heavy promotions to dealers and consumers
Marginal competitors drop out
Prices and profits fall
Niche marketers emerge
Decline Stage
• Long-run drop in sales
• Large inventories of
unsold items
• Elimination of all nonessential
marketing expenses
Rate of decline depends on
change in tastes or
adoption of substitute products
How stages of the product life cycle relate to firm’s
marketing objectives & marketing mix actions
INTRODUCTION
Product
Strategy
Limited models
Frequent
changes
GROWTH
MATURITY
DECLINE
More models
Frequent
changes.
Large number
of models.
Eliminate
unprofitable
models
Distribution
Strategy
Limited
Expanded
Wholesale/
dealers. Longretail distributors term relations
Extensive.
Margins drop.
Shelf space
Phase out
unprofitable
outlets
Promotion
Strategy
Awareness.
Aggressive ads.
Stimulate
Stimulate
demand.Sampling
demand
Pricing
Strategy
Higher/recoup
development
costs
Fall as result of
competition &
efficient production.
Advertise.
Promote
heavily
Prices fall
(usually).
Phase out
promotion
Prices
stabilize at
low level.
MANAGING THE PRODUCT LIFE CYCLE
• Modifying the Product
Alter product quality
Enhance performance
Change appearance
• Modifying the Market
 Finding New Users
 Increase use
 Create new use situations
EXTENDING THE PRODUCT LIFE CYCLERepositioning
 Reacting to a Competitor’s Position-never compete
head on
 Catching a Rising Trend-baby aspirin is now low dose
aspirin to reduce heart attacks
 Changing the Value Offered
• Trading Up-add bells & whistles to raise price
• Trading Down- remove bells & whistles to lower price
• Downsizing-reduce contents but maintain price
FIGURE 11-3 Alternative product life cycles
Why the different shapes?
Five categories of product adopters
Percentage of Adopters
Early
Majority
34%
Late
Majority
34%
Early
Adopters
13.5%
Laggards
16%
Innovators
2.5%
Time
Five Profiles of Product Adopters
BRANDING
Brand
Name
That part of a brand that can be spoken,
including letters, words, and numbers.
Brand
Mark
The elements of a brand that
cannot be spoken.
Brand
Equity
The value brand names give to a product
beyond the functional benefits provided.
i.e.-why you pay more for Versache
Value of Brand Equity
1) Listed as an intangible asset when computing
company worth. Makes brand name companies sell
for more than unbranded companies
2) Can command larger licensing fees because the
product is a definite seller
3) Can sell the use brand name on non-core products
like Ralph Lauren paint or Harley Davidson
clothing
BRANDING AND
BRAND MANAGEMENT
Brand
Manufacturer’s
Brand
Individual
Brand
Multi-brand
No Brand
Private Brand
Family
Brand
Individual
Brand
Family
Brand
multi-product
multi-brand
multi-product
Branding Strategies
Multiproduct
Toro makes snow blowers, Toro lawn
mowers and Toro garden hoses
Multibrand
Proctor and Gamble makes Tide, Cheer,
Ivory Snow and Bold
Mixed
brand
Michelin makes Michelin tires and Sears
tires
BRANDING AND
BRAND MANAGEMENT
• Picking a Good Brand Name
 Suggest the Product Benefits
 Be Memorable, Distinctive, and Positive
 Fit the Company or Product Image
 Have No Legal or Regulatory Restrictions
 Be Simple and Emotional
 International: Be Nonmeaningful
CREATING CUSTOMER VALUE THROUGH
PACKAGING AND LABELING
Contain and Protect
Inform – nutrition
and instructions for use
Facilitate Storage, Use,
and Convenience
Create perception of itemGold bow on perfume bottle
Functions
of
Packaging
Product Life Cycle
The product life cycle describes the
stages a new product goes through in the
marketplace: introduction, growth,
maturity, and decline.
Private Brand
Often called store brand, a private brand
is a manufacturer brand of product sold
under the name of the retailer.
Manufacturer Brand
Manufacturer brands are often called
national brands and are carry the
brand name of a maker of the goods.