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Chapter 6
Product Strategy
Approaches to Developing New
Products...
Innovation
New product lines
Product line extensions
Repositioning
Cost reductions
Improvements or changes in existing products
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Elements to Consider in
Developing Marketing Strategies
Must consider mission, goals, & objectives in light
of the firm’s strengths, weaknesses, opportunities &
threats
The best marketing strategy should be:
differentially advantageous, sustainable (not easily
copied), timely (strategic window), feasible (skills,
experience & resources) & affordable
– one of the primary reasons marketing plans fail…not
enough financial resources devoted in implementation
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Life Cycle Considerations…
Development Stage:
– usually begins with a product concept
– no sales revenue during product development
– innovations require financial resources & time as
well as the assumption of risk
– there is no guarantee of success & many new
products fail
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Product Concept Stage…
Requires an understanding of target market needs
& benefits sought
Involves consideration of product line extensions to
provide synergies in sales & income
Produces feasibility studies including anticipated
sales, return on investment, time of introduction,
length of time to repay investment
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Introduction Stage…
Marketing strategy should be fully implemented
Attract customers through advertising, public
relations, & publicity promoting features & benefits
– where to find the product & its uses
Encourage trial and repurchase
Induce trial through price concessions & sales tools
Strengthen channel relationships
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Growth Stage…
Must establish a strong market position & defend it
from competitors
Must achieve financial objectives & repay investment
– make a long term product commitment
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Marketing Strategy
Considerations in the Growth Stage
Use perceived differential advantage (price, quality,
value) to secure market position
Clarify product/brand identity through image-oriented
advertising & personal selling
Maximize availability through trade promotions
Find the ideal balance between price & demand
Maintain control over product quality
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Other Growth Stage
Considerations…
Generate repeat purchases & build brand loyalty
Keep in mind, the growth stage is the most
expensive (marketing expenditures)
Increased competition is to be expected in this
stage as your success invites competitor’s
product entries
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Maturity Stage…
Longest stage in the typical product life cycle
Few new competitors are entering the market
Best way to gain market share: ‘steal it from the
competition’
Key goals: generate cash flow & hold market share
–
–
–
–
develop a new product image
find & attract new users to the product
discover new product uses
apply new technology
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Other Maturity Stage
Considerations…
Requires heavy spending on advertising &
promotion
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Decline Stage…
Popular brands can delay this stage longer than
weak brands
Ends with product termination
Two key options:
– harvesting-gradual reduction in marketing expenditures
– divesting-total withdrawl of marketing support
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Marketing Strategies for
Services...
Must consider the unique aspects of services
–
–
–
–
–
–
intangibility
inseparability of production & consumption
customer contact
perishability
heterogeneity
client-based relationships
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Product Considerations for
Services...
Provide satisfaction guarantees to customers
Standardization & service quality are difficult to
control
Services can be customized to
meet consumers specific needs
Customized services tend to be
very expensive
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Pricing Considerations for
Services...
Pricing conveys quality to many consumers
Determining the cost of productivity & delivering a
service is difficult
Pricing tactics can help a firm balance peak & off
peak demand
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Promotion Considerations for
Services...
Services are difficult to explain to customers
Service advertising typically focuses on tangible
cues that symbolize the service
Endorsements from satisfied customers are often
used
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Distribution Considerations for
Services...
Consumers cannot take physical possession of
services
Services must be provided in a convenient manner
– often requires multiple outlets to increase convenience
Production & consumption may need to be
separated by creating a tangible representation of
the service
– i.e.-a credit card represents a line of credit offered by a
bank
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Branding Strategy...
Branding is the identification a product maintains
through name, symbol or design
– differentiates one manufacturer’s products from another
Brand name is the spoken part of the brand
Brand mark is the symbol or design
Trade mark is the legal description indicating that
owner has exclusive use of the brand or part of the
brand & that others are prohibited from using it
Trade name is the full & legal name of the
organization
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Other Elements of Brands...
Brand loyalty
Brand recognition
Brand preference
Brand insistence
Brand equity
Co-branding
Brand licensing
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Advantages of Branding...
Helps buyers identify the brands they support
Speeds up the buying process
Provides status & psycho social identification
Assists in evaluating product quality & price
Reduces the risk in purchasing
Makes repeat purchases easier
Allows for greater acceptance of new products
under that brand name
Generates consumer loyalty
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The World’s Most Valuable
Brands...
Coca-Cola
Microsoft Windows
IBM
Intel
Nokia
General Electric
Ford
Disney
McDonald’s
AT&T
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