Professional Documents
Culture Documents
10-3
What is a Product?
A product is anything that can be offered to
a market to satisfy a want or need, including
physical goods, services, experiences,
events, persons, places, properties,
organizations, information, and ideas.
10-4
Five Product Levels
10-5
Product Classifications
Nondurable goods
Durability / Tangibility Durable goods
Services
Convenience goods
Shopping goods
Consumer Goods Specialty goods
Unsought goods
Raw Materials
Manuf. Materials
Industrial Goods
Capital Items
Supplies/Services
10-6
Product Differentiation
Product form
Features
Customization
Performance
Conformance
Durability
Reliability
Repairability
Style
10-7
Service Differentiation
Ordering ease
Delivery
Installation
Customer training
Customer
consulting
Maintenance and
repair
Returns
10-8
The Product Hierarchy
Item
Product type
Product line
Product class
Product family
Need family
10-9
Product-Line Analysis
Convenience
Specialties
items
10-10
Product Systems and Mixes
Product system
Product mix
(Product
assortment)
Depth
Length
Width
Consistency
10-11
Product-Mix Pricing
Product-line pricing
Optional-feature
pricing
Captive-product
pricing
Two-part pricing
By-product pricing
Product-bundling
pricing
10-12
Product-Line Analysis
10-13
Product Map for a Paper-Product
Line
10-14
Product-Line Length:
Line Stretching
Down-Market
Down-Market Stretch
Stretch
Up-Market
Up-Market Stretch
Stretch
Two-Way
Two-Way Stretch
Stretch
10-15
Co-Branding and Ingredient
Branding
Ingredient branding is
a special case of co-
branding that involves
creating brand equity
for materials,
components, or parts
that are necessarily
contained with other
branded products.
10-16
What is the Fifth P?
Primary package
Secondary package
Shipping package
10-17
Factors Contributing to the
Emphasis on Packaging
Self-service
Consumer affluence
Company/brand image
Innovation opportunity
10-18
Packaging Objectives
10-19
Functions of Labels
Identify the product/brand
Demonstrate product grading
Describe the product, use and precautions
Promote the product/brand
10-20
Warranties and Guarantees
General Warranty is a formal or implied
promise of product performance by
manufacturer with remedy to resolve non-
performance.
Guarantees reduce buyer’s perceived risk.
10-21
Categories of New Products
New-to-the-world
Additions
Improvements
Repositionings
Cost reductions
10-22
New-Product Development
Decision Process
10-23
Idea Generation:
Ways to Find Great New Ideas
Run informal sessions with customers
Allow time off for technical people to “play” on pet
projects
Make customer brainstorming a part of plant tours
Set up a keyword search to scan trade publications
Treat trade shows as intelligence missions
Have employees visit supplier labs
Set up an idea vault
Observe customers using product, ask customers about
problems with products and their dream products
Use a customer advisory board or a brand community of
enthusiasts to discuss product
10-24
Idea Generation:
Creativity Techniques
Attribute listing
Forced relationships
Morphological analysis
Reverse assumption analysis
New contexts
Mind mapping
10-25
Lateral Mapping
10-26
Factors That Limit
New Product Development
Shortage of ideas
Fragmented markets
Social and governmental constraints
Cost of development
Capital shortages
Faster required development time
Shorter product life cycles
10-27
Concept
Development
and Testing
Product idea
Product concept
Category concept
Brand concept
Concept testing
10-28
Concept Testing
10-29
Test Market Decisions
10-30
Conjoint Analysis
Conjoint Analysis is a method
for driving the utility values that
consumers attach to varying
levels of a product’s attributes.
10-31
Development of Marketing
Strategy
Target market’s size, structure, and behavior
Planned price, distribution, and promotion for
year 1
Long-run sales and profit goals and
marketing-mix strategy over time
10-32
Product Development
Quality function deployment (QFD)
Desired customer attributes
Engineering attributes
10-33
Prototype and Market Testing
Alpha testing
Beta testing
Rank-order method
Paired-comparison method
Monadic-rating method
Market testing
Sales-Wave Research
Test Markets
10-34
Commercialization:
Timing of Market Entry
First entry
Parallel entry
Late entry
10-35
What is Adoption?
Adoption is an individual’s decision to
become a regular user of a product.
Awareness
Interest
Evaluation
Trial
Adoption
10-36
Adopter Categorization on the
Basis of Relative time of Adoption
10-37
Product Life Cycles
Products have a limited life
Product sales pass through
distinct stages each with
different challenges and
opportunities
Profits rise and fall at different
stages
Products require different
strategies in each life cycle
stage
10-38
Sales and Profit Life Cycles
10-39
Marketing Strategies:
Introduction Stage
Characteristics: Low sales, high cost per customer,
negative profits, few competitors
Objective: Create product awareness and trial
Strategies:
Offer a basic product
Charge cost-plus
Build selective distribution
Build product awareness among early adopters
and dealers
Use heavy sales promotion to induce trial
10-40
Marketing Strategies:
Growth Stage
Characteristics: Rapidly rising sales, average cost
per customer, rising profits, growing competition
Objective: Maximize market share
Strategies:
Offer product extension, service, warranty
Price to penetrate market
Build intensive distribution
Build awareness and interest in the mass market
Reduce sales promotion to take advantage of
heavy consumer demand
10-41
Strategies for Sustaining Rapid
Market Growth
Improve product quality, add new features,
and improve styling
Add new models and flanker products
Enter new market segments
Increase distribution coverage
Shift from product-awareness advertising to
product-preference advertising
Lower prices to attract the next layer of price-
sensitive buyers
10-42
Stages in the Maturity Stage
Decaying
Growth Stable
maturity
10-43
Marketing Strategies:
Maturity Stage
Characteristics: Peak sales, low cost per customer,
high profits, stable competition declining
Objective: Maximize profit while defending market
share
Strategies:
Diversify brands and items
Price to match or best competitors
Build more intensive distribution
Stress brand differences and benefits
Increase sales promotion to encourage brand
10-44
switching
Marketing Strategies:
Maturity Stage
Market modification to expand the market for
the mature brand by increasing the number
of users and usage rate.
Product modification to simulate sales by
improving quality, feature, or style.
Marketing program modification through
prices, distribution, advertising, sales
promotion, personal selling, and services.
10-45
Ways to Increase Sales Volume
Convert non-users
Enter new market segments
Attract competitors’ customers
Have consumers use the product on more
occasions
Have consumers use more of the product on
each occasion
Have consumers use the product in new
ways
10-46
Marketing Strategies:
Decline Stage
Characteristics: Declining sales, low cost per
customer, declining profits, declining competition
Objective: Reduce expenditure and milk the brand
Strategies:
Phase out weak
Cut price
Go selective, phase out unprofitable outlets
Reduce advertising to retain hard-core loyals
Reduce sales promotion to minimal level
10-47
Marketing Strategies:
Decline Stage
Harvesting strategy – cut R&D, plant and
equipment costs to maintain sales, reduce
quality, sales force size, marginal services and
advertising.
Divesting strategy – selling the product to
another firm if the offering has strong
distribution and goodwill.
Liquidate – either quickly or slowly
10-48
Product-Life Cycle Characteristics
and Objectives
Introduction Growth Maturity Decline
Costs High cost per Average cost Low cost per Low cost per
customer per customer customer customer
Product Offer a basic Offer product Diversity brands Phase out weak
product extensions, and items
service,
models
warranty
10-51
Common PLC Patterns:
Growth-Slump-Maturity
(E.g., handheld mixers, bread maker)
10-52
Common PLC Patterns:
Cycle-Recycle
(E.g., a new drug)
10-53
Common PLC Patterns:
Scalloped
(E.g., nylon)
10-54
Style, Fashion, and Fad Life
Cycles
10-55