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Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 11, YOU SHOULD BE ABLE TO: LO 11-1 Explain the product life-cycle concept. LO 11-2 Identify the ways that marketing executives manage a product’s life cycle. LO 11-3 Recognize the importance of branding and alternative branding strategies. LO 11-4 Describe the role of packaging, labeling, and warranties in the marketing of a product. 11-2 GATORADE: BRINGING SCIENCE TO SWEAT TO WIN FROM WITHIN Creating the Gatorade Brand Building the Gatorade Brand 11-3 FIGURE 11-1 How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-4 FIGURE 11-1A Stages of the product life cycle and its total industry sales and total industry profit 11-5 FIGURE 11-1B How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-6 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE INTRODUCTION STAGE Product Life Cycle Trial Primary Demand Selective Demand Skimming Pricing Penetration Pricing 11-7 FIGURE 11-2 Product life cycle for the standalone fax machine for business use: 1970-2014 11-8 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE GROWTH STAGE Rapid Sales Growth More Competitors Repeat Purchasers New Features Broad Distribution 11-9 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE MATURITY STAGE Industry/Product Sales Slow Profit Declines Product Differentiation Fewer Competitors 11-10 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE DECLINE STAGE Industry/Product Sales Drop Environmental Changes Deletion Harvesting 11-11 LO 11-1 Chevy Spark and Amazon Kindle Which stage of the product life cycle? 11-12 LO 11-1 Soft Drinks and Fax Machines Which stage of the product life cycle? 11-13 LO 11-1 MARKETING MATTERS Will E-mail Spell Extinction for Fax Machines? 11-14 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE FOUR ASPECTS OF THE PRODUCT LIFE CYCLE Length of the Product Life Cycle Shape of the Product Life Cycle • Generalized Life Cycle • High-Learning Product • Fashion Product • Low-Learning product • Fad Product 11-15 FIGURE 11-3 Alternative product life cycle curves based on product types 11-16 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE FOUR ASPECTS OF THE PRODUCT LIFE CYCLE The Product Level: Class and Form • Product Class • Product Form 11-17 FIGURE 11-4 Prerecorded music product life cycles by product form 11-18 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE FOUR ASPECTS OF THE PRODUCT LIFE CYCLE The Life Cycle and Consumers • Diffusion of Innovation Innovators Late Majority Early Adopters Laggards Early Majority 11-19 FIGURE 11-5 Five categories and profiles of product adopters (diffusion of innovation) 11-20 LO 11-1 CHARTING THE PRODUCT LIFE CYCLE FOUR ASPECTS OF THE PRODUCT LIFE CYCLE The Life Cycle and Consumers • Barriers to Adoption Usage Risk Value Psychological 11-21 LO 11-2 MANAGING THE PRODUCT LIFE CYCLE ROLE OF THE PRODUCT/BRAND MANAGER Responsible for the Following: • Product Life Cycle • New Product Development • Marketing Program Implementation • Data Analysis CDI BDI 11-22 LO 11-2 USING MARKETING DASHBOARDS Knowing Your CDI and BDI Category Development Index (CDI) and Brand Development Index (BDI) æ % of a Product Category's Total U.S. Sales in a Market Segment ö CDI = ç ÷ø ´ 100 % of the Total U.S. Population in a Market Segment è æ % of a Brand's Total U.S. Sales in a Market Segment ö BDI = ç ´ 100 è % of the Total U.S. Population in a Market Segment ÷ø 11-23 LO 11-2 MANAGING THE PRODUCT LIFE CYCLE MODIFYING THE PRODUCT OR MARKET Product Modification • Product Bundling • New Characteristics Market Modification • Finding New Customers • Increasing a Product’s Use • Creating a New Use Situation Dockers Ad 11-24 LO 11-2 MANAGING THE PRODUCT LIFE CYCLE REPOSITIONING THE PRODUCT Product Repositioning Reacting to a Competitor’s Position Reaching a New Market Catching a Rising Trend Changing the Value Offered • Trading Up • Trading Down • Downsizing 11-25 LO 11-2 MAKING RESPONSIBLE DECISIONS Consumer Economics of Downsizing—Got Less, Pay More Price for both is the same! 11-26 LO 11-3 BRANDING AND BRAND MANAGEMENT Branding Brand Name • Logotype (Logo) Trade Name Trademark ® ™ SM • Product Counterfeiting 11-27 LO 11-3 BRANDING AND BRAND MANAGEMENT BRAND PERSONALITY AND BRAND EQUITY Brand Personality Brand Equity • Provides a Competitive Advantage • Consumers Willing to Pay a Higher Price 11-28 FIGURE 11-6 The customer-based brand equity pyramid 11-29 LO 11-3 BRANDING AND BRAND MANAGEMENT BRAND PERSONALITY AND BRAND EQUITY Creating Brand Equity • Develop Positive Brand Awareness • Establish a Brand’s Meaning • Elicit the Proper Consumer Response • Create Intense Brand Loyalty 11-30 LO 11-3 BRANDING AND BRAND MANAGEMENT BRAND PERSONALITY AND BRAND EQUITY Valuing Brand Equity • Provides a Financial Advantage • Brand Licensing 11-31 LO 11-3 BRANDING AND BRAND MANAGEMENT PICKING A GOOD BRAND NAME Should Suggest Product Benefits Should Be Memorable and Positive Should Fit the Company or Product Image Should Have No Legal/Regulatory Restrictions Should Be Simple and Emotional Should Have Positive Phonetics/Semantics 11-32 LO 11-3 MARKETING INSITE Have an Idea for a Brand Name? Check First! 11-33 FIGURE 11-7 Alternative branding strategies 11-34 LO 11-3 BRANDING AND BRAND MANAGEMENT BRANDING STRATEGIES Multiproduct Branding (Family or Corporate Branding) • Product Line Extensions • Subbranding • Brand Extensions • Co-Branding 11-35 LO 11-3 BRANDING AND BRAND MANAGEMENT BRANDING STRATEGIES Multibranding • Fighting Brands Private Branding (Private Labeling or Reseller Branding) Mixed Branding 11-36 LO 11-3 Kimberly-Clark’s Huggies Which branding strategy is used? 11-37 LO 11-3 Black & Decker and Dewalt Tools Which branding strategy does each use? 11-38 LO 11-4 PACKAGING AND LABELING PRODUCTS CUSTOMER VALUE AND COMPETITIVE ADVANTAGE Packaging Label • Communication Benefits • Functional Benefits • Perceptual Benefits 11-39 LO 11-4 MARKETING MATTERS Pez Heads Dispense More Than Candy 11-40 LO 11-4 PACKAGING AND LABELING PRODUCTS CHALLENGES AND RESPONSES Connecting with Customers Environmental Concerns Health, Safety, and Security Issues • Shelf Life Cost Reduction 11-41 LO 11-4 PRODUCT WARRANTY Warranty • Express Warranties • Limited Coverage Warranties • Full Warranties • Implied Warranties 11-42 VIDEO CASE 11 P&G’S SECRET DEODORANT: FINDING INSPIRATION IN PERSPIRATION 11-43