Product Strategy

Fall - 2014

Important Announcement and

lets Breathe !!!

X X X

Todays Agenda
What is a New Product ?
Approaches to Developing new
Products
The Product Life Cycle
Product Failures
Services Perspective
Branding
PLC vs BCG and Ansoff

Approaches
Products...

to

Developing

Innovation
New product lines
Product line extensions
Repositioning
Cost reductions
Improvements or changes in existing
products

New

Product Lines and

Product Mixes at Gillette

7-7

Elements to Consider in Developing

Marketing Strategies

Must consider mission, goals, & objectives in light

of the firms 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

failnot enough financial resources devoted in
implementation

THE PLC STRATEGIES

CONSIDERATIONS

AND

Development Stage
No sales revenue during this stage
Components of the product concept:

An understanding of desired uses and benefits

A description of the product
The potential for creating a complete product
line
An analysis of the feasibility of the product
concept

Customer needs should be discerned before

developing marketing strategy

Introduction Stage

Begins when development is complete

Ends when customers widely accept the product
Marketing strategy goals during this stage:

Attract customers by raising awareness and interest

Induce customers to try and buy
Engage in customer education activities
Strengthen or expand channel and supply
relationships
Build on availability and visibility
Set pricing objectives

Growth Stage

(1 of 2)

Be ready for sustained sales increases

Rapid increase in profitability early in the
growth stage that decreases at the end of
this stage
Length depends on nature of product and
competitive reactions
Two strategies:

(1) Establish a strong, defensible marketing

position
(2) Achieve financial objectives

Growth Stage

(2 of 2)

Marketing strategy goals in this stage:

Leverage the products perceived differential advantages

Establish a clear product and brand identity
Create unique positioning
Maintain control over product quality
Maximize availability of the product
Maintain or enhance the products profitability to partners
Find the ideal balance between price and demand
Keep an eye focused on the competition

Maturity Stage
Few,

(1 of 2)

if any, new firms will enter the

market
Still an opportunity for new product
features and variations
Typically the longest stage in the
product life cycle

Maturity Stage

Four general goals in this stage:

(1)
(2)
(3)
(4)

(2 of 2)

Generate Cash Flow

Hold Market Share
Steal Market Share
Increase Share of Customer

Four options to achieve these goals:

(1)
(2)
(3)
(4)

Develop a new product image

Find and attract new users to the product
Discover new applications for the product
Apply new technology to the product

Decline Stage

Two options:
(1) Attempt to postpone the decline
(2) Accept its inevitability

Harvesting

Divesting

Factors to be considered during this stage:

Market segment potential
The market position of the product
The firms price and cost structure
The rate of market deterioration

7-16

Market Share

Market Growth

Total Sales
Total Market Sales

Current years market Segment Sales

Last Years Market Segment Sales

15 Mins Break

An example of NPD:
The Sinclair C5

The
Product

2' 7"
(795 mm)

C5
5' 9"
(1744 mm)

Basic Package = C5 + Battery + Charger + Handbook

The Price 399 + 29 delivery/packing

plus indicators; 19.95
wing mirrors 14.95
Total so far = 469.85
horn
6.95
also weather jacket
34.95
side panels 19.95
tonneau 7.95 etc

2' 5"
(744 mm)

Main Stages of Development

Sir Clives Idea (1973+)
1980

Government abolishes motor tax on electric vehicles

1982

More interest in electric vehicle idea at Sinclair Research Ltd.

1983

Government legislation defines an Electrically Assisted Pedal Cycle

Product Concept Developed

Late 1983

Contract placed with Lotus Cars Ltd. to develop C5 Prototype

Testing & modifications

April 1984 Agreed with Hoover Ltd. to produce C5

Decided to sell initially by mail-order

Nov 1984
Jan 1985

Production started (stockpiled at 3 centres)

Product Launch

Launch Results
Jan 1985
Feb 1985
Mar 1985
Apr 1985
May 1985

Officially launched - huge publicity

Hired unemployed teenagers to drive C5s around Britains cities
Production halted for 3 weeks to modify a gearbox component
Production cut by 90% 100 vehicles per week
Stock levels of 6,000

June 1985
July 1985
on
Aug 1985
Sept 1985
Oct 1985

Consumers Association produces condemning report on C5

Advertising Standards Authority reports 17 separate complaints
adverts
Comet slashes price to 189 inc. accessories
Production of C5 stops
Receivers called in

- Company has debts of 7.75 million - 14,000 C5s were produced, of which 4,000 were sold at a
reduced price -

Sinclairs
C5
Consumers Association Complaints

Height of C5: Risk of injury

Dazzled by headlights
Inhale exhaust fumes
Basic model with no mirrors or indicators
Horn ineffective
No reverse gear
Body of C5 offers little protection in collision
Max Speed 15mph

Consumers Association Complaints

1 Height of C5
-

easily hidden
risk of injury (bumper height)
dazzled by headlights
inhale exhaust fumes
hit by spray
2. Basic model has no mirrors or indicators
3. Horn ineffective and headlight beam insufficient
4. No reverse gear - hazardous on busy roads
5. Max speed 15 mph - hazardous on busy roads
6. Body of C5 offers little protection in collision
Also -Range?
Sinclair claimed 20 miles
They say 14.2 (no stops or hills)
or 5-10 miles (normal urban driving)
Problems on hills

SERVICES MARKETING

Marketing Strategies for Services...

Must consider the unique aspects of

services
Intangibility (Cannot Touch Services)
Inseparability (Cannot separate production
and consumption)
Variability (Cannot duplicate services)
Perishability (Cannot Store services)
Ownership (Ownership cannot be transferred)

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

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

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

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

Branding Strategy...

Branding is the identification a product maintains

through name, symbol or design
differentiates one manufacturers 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

Other Elements of Brands...

Brand loyalty
Brand recognition
Brand preference
Brand equity
Co-branding
Brand licensing

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

The Worlds Most Valuable Brands...

See you next week!!!