Download 10-7 Marketing: Real People, Real Decisions Product Life Cycle

Marketing: Real People, Real Decisions
Managing the Product
Chapter 10
Lecture Slides
Solomon, Stuart,
Carson, & Smith
Your name here
Course title/number
Date
Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter,
you should be able to:
• Explain the different product objectives
and strategies a firm may choose.
• Explain how firms manage products
throughout the product life cycle.
• Discuss how branding creates product
identity and describe different types of
branding strategies.
• Explain the roles packaging and labeling
play in developing effective product
strategies.
• Describe how organizations are structured
for new and existing product management.
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Marketing: Real People, Real Decisions
Introduction to the Topic
• This chapter follows up from the previous one to deal with managing
products as they are introduced into the market and start to sell.
• Product planning would be
considered part of the firm’s
Develop product objectives
tactical marketing plans.
•for individual products
•for product lines and mixes
• Clearly stated product objectives
provide focus and direction for those
working on them.
Design a product strategy
• Product objectives should support the
the broader marketing objectives and
Make tactical product decisions
the mission of the business unit.
•product branding
• Product objectives need to be
•packaging and labeling design
measurable and specify a time frame
for completion.
Figure 10.1
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Marketing: Real People, Real Decisions
Product Line Strategies
• Product line: a firm’s total product offering designed to satisfy a
single need or desire of target customers. Product lines can vary from
being limited to a few variations, to full with many variations to
suit different market segments.
• Product lines can be stretched
upwards (more expensive) or
downwards, filled out, or
contracted through the addition or
deletion of product variations.
• The purpose is to offer products for
different segments of the market,
without cannibalizing their own profits
in the process.
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Marketing: Real People, Real Decisions
Product Line Strategies (continued)
• Cannibalization: the loss of sales of an existing product when a
new item in a product line or product family is introduced. Companies
will do very detailed estimates of potential cannibalization prior to
introducing a new product.
• Note that there may be occasions when the
company may want to cannibalize its own
product, particularly if the new one is more
profitable or has greater future potential.
• Product mix: the total set of all products
a firm offers for sale.
• As shown in Figure 10.2, a company such as
Procter & Gamble have a wide product mix,
and long in some product categories, such as
fabric and home-care, and beauty care.
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Marketing: Real People, Real Decisions
Quality as a Product Objective
• Quality: the level of performance, reliability, features, safety, cost,
or other product characteristics that consumers expect to satisfy their
needs and wants.
• Quality is perceived by consumers
and can also be measured in terms of:
– durability
– versatility
– ease of use, maintenance, and repair
– degree of aesthetic pleasure
• Marketing planners are interested in the
level of quality provided and the
consistency in which the product
delivers that level.
©Copyright 2003 Pearson Education Canada Inc.
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Marketing: Real People, Real Decisions
Product Life Cycle
• Product life cycle: concept that explains how products go through
four distinct stages from birth to death: introduction, growth, maturity,
and decline.
• Research &
Development is not
shown on the chart, but it is
definitely a stage of a
product’s life cycle,
characterized by high
expenditures and no
revenues.
• This is why the profit curve
starts in a loss position
below the x-axis.
Figure 10.3
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Marketing: Real People, Real Decisions
Product Life Cycle (continued)
• Introduction: the first stage of the product lice cycle, in which slow
growth follows the introduction of a new product in the marketplace.
• The objective at introduction
is to promote the product to
encourage trial by consumers
and to secure distribution.
• Rate of growth will depend
on the factors affecting
adoption of innovation as
discussed in Chapter 9.
• Exactly when the profit
curve breaks through will
depend on how much has
been spent.
Figure 10.3
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Marketing: Real People, Real Decisions
Product Life Cycle (continued)
• Growth stage: the second stage in the product life cycle, during
which the product is accepted and sales rapidly increase. This is the
stage at which competitors notice and rush their versions to market.
• Maturity stage: the third
and longest stage in the
product life cycle, in which
sales peak and profit margins
narrow. Competition is most
intense during this stage.
• Decline stage: the final
stage in the product life
cycle, in which sales
decrease as customer needs
change.
Figure 10.3
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Marketing: Real People, Real Decisions
Summary of the Product Life Cycle
R&D
Introduction
Growth
Maturity
Decline
Gain
Stess
Maintain
Harvesting,
awareness
differentiation
brand loyalty
deletion
None
Growing
Many
Reduced
In development
One
More versions
Full product line
Best sellers
tbd
Skimming or
Gain market
Defend market
Stay
penetration
share; deal
share and profit
profitable
Inform and
Stress product
Reminder
Minimal
educate
differences
oriented
promotion
Limited
More outlets
Maximum #
Fewer outlets
Marketing
objective
Competition
Product
Price
Promotion
Place
tbd
tbd
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Marketing: Real People, Real Decisions
Branding Decisions
• Brand: a name, term, symbol, or any other unique element of a
product, which identifies one firm’s product(s) and sets them apart
from the competition.
• Trademark: the legal for a brand name,
brand mark, or trade character; a trademark
legally registered by a government obtains
protection for exclusive use in that country.
• Brand names and trademarks can be valuable
assets that need to be protected. Click on the
link for a discussion of why trademarks
should be used properly, courtesy of
Rollerblade, Inc.
• Family brand: a brand that a group of
individual products or individual brands share.
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Marketing: Real People, Real Decisions
Branding Decisions (continued)
• Brand equity: the value of a brand to an organization. Brand
equity is measured in terms of brand loyalty, perceived quality, and
brand name awareness. Firms can use this equity when introducing
new products, as it facilitates adoption.
• Brand extension: a new product
sold with the same brand name as a
strong existing brand. To avoid
damaging brand equity, brand
extensions need to be consistent with
existing products.
• McDonald’s offering pizza did not seem
to fit and it was not a success, while
Black & Decker has successfully
branched out into home appliances
using its own name.
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Marketing: Real People, Real Decisions
Branding Decisions (continued)
• National or manufacturer brands: brands that the
manufacturer of the product owns. These tend to be promoted on a
national basis and are sold by many different retailers.
• Store or private-label brands:
brands that are owned and sold by a
specific retailer or distributor.
• Licensing: an agreement in which one
firm sells another firm the right to use a
brand name for a specific purpose and for a
specific period of time.
• Co-branding: an agreement between
two brands to work together in marketing
new or existing products.
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Marketing: Real People, Real Decisions
Packaging the Product
• Package: the
covering or
container for a
product, which
provides product
protection,
facilitates
product use and
storage, and
supplies
important
marketing
communications.
©Copyright 2003 Pearson Education Canada Inc.
Figure 10.4
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Marketing: Real People, Real Decisions
Effective Product Management
• Brand manager: a manager who is responsible for developing
and implementing the marketing plan for a single brand.
• Brand managers are responsible for
coordinating all marketing activities for their
brand.
• Brand managers and their teams need to act
both independently to achieve their product
objectives, but also co-operatively with other
company brands to avoid short-term actions
that could hurt long-term profitability.
• Product category manager: a
manager who is responsible for developing
and implementing the marketing plan for all
brands and products within a product
category.
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Marketing: Real People, Real Decisions
Effective Product Management
• Market manager: a manager who is responsible for developing
and implementing the marketing plans for products sold to specific
customer group.
• Venture teams: groups of people
within an organization who work together
focusing exclusively on the development
of a new product.
• Also known as skunk works, these special
teams are formed and operated
independently for greater creativity,
security, and speed of development.
• The problem for most companies is not
creating new products, but what happens
when the financial people get a hold of
them!
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Marketing: Real People, Real Decisions
Famous Last Words…
• Managing products and
brands through their useful
life is an important function.
• Marketing strategy will
change as a product moves
through its life, and it is up
to product managers to stay
ahead of it, to be successful.
©Copyright 2003 Pearson Education Canada Inc.
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