Product Strategy

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MARKETING STRATEGYO.C. FERRELL MICHAEL D.
HARTLINE
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Product Strategy
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Product Decisions

• Product is critical element of marketing mix
  Anything that can be offered to a market for
  attention, acquisition, use or consumption and
  that might satisfy a want or need.
• Physical object, service, person, place,
  organization, idea

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Product Decisions Involve

• Product mix- total group of products offered by
  company
• Product lines-group of closely related product
  items
• Depth-number of items in line
• Brands-combination of name, symbol, term, or
  design that identifies specific product
• Packaging and labeling
• Positioning

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Product Lines andProduct Mixes at Gillette
Exhibit 7.1
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Product Mix Decisions

• Def. Set of all products and items that a
  particular seller offers to buyers.
• Decisions include selection of width, length,
  depth, and consistency

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Product Line Decisions

• Line stretching
• Downward enter on the low end
• Upward enter on the high end
• Two-way enter both directions
• Line-filling add more items
• Line Modernization update to reflect current
  trends, themes
• Line-Featuring-select one or a few items in the
  line to feature
• Line-Pruning select item(s) to cut

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What is a Brand?

• A brand is a name, term, sign, symbol, or design,
  or a combination of them intended to identify the
  goods or services of one seller or group of
  sellers and to differentiate them from those of
  competitors.

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The Worlds Twenty-FiveMost Valuable Brands
Exhibit 7.5
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Branding Decisions

• Brand Name
• Individual (General Mills- Bisquick, Gold Medal,
  Betty Crocker PG)
• Blanket family name (Heinz, Campbell)
• Separate family names (Sears-Kenmore for
  appliances, Craftsman for tools)
• Company plus individual names (Kellogg Rice
  Krispies)

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Branding Decisions
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Good Brand Names

• Distinctive
• Lack Poor Foreign Language Meanings
• Suggest Product Qualities
• Suggest Product Benefits
• Easy to Pronounce, Recognize, Remember
• Zit (Chocolate from Germany)
• Koff (Beer)

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Packaging Decisions

• Design, materials, size
• Critical as marketing tool
• Self-service
• Company brand image
• Opportunity for brand innovation

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Positioning Decision

• Positioning is the act of designing the companys
  offering and image to occupy a distinctive place
  in the target markets mind.

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Steps In The Positioning Process

• Identify relevant set of competitive products
  serving target market
• Identify the set of determinant attributes that
  define the product space.
• Collect information from a sample of customers
  and potential customers about perceptions of each
  product on the determinants
• Determine the products current positioning.
• Determine the customers most preferred
  combination of determinant attributes.
• Examine the fit between preferences of market
  segments and current position of products.
• Write positioning statement to guide development
  of marketing strategy.

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Positioning Map Automobiles For Generation Yers
More Edgy
Kia Sorrento
Scion
Cube
Expensive
Inexpensive
13k
20K
Civic
Less Edgy
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Trout and Ries suggest a six-step question
framework for successful positioning 1. What
position do you currently own? 2. What position
do you want to own? 3. Whom you have to defeat
to own the position you want. 4. Do you have the
resources to do it? 5. Can you persist until you
get there? 6. Are your tactics supporting the
positioning objective you set?
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• How is the Ford Mustang positioned? How has Ford
  achieved this positioning? Has its positioning
  changed over time?

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How is Avis positioned? How does Avis achieve
this positioning? Has this positioning changed
over time?
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Product Differentiation

• Differentiation Strategies Create differences
  in the firms product offering that sets it apart
  from competing offerings based on
• Product features
• Advantages
• Benefits

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Using Product Descriptorsfor Product
Differentiation
Exhibit 6.7
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How is Venus differentiated from other razors?
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Factors Influencing Product Strategy Decisions

• Classification of Products
• Convenience
• Shopping
• Specialty
• Unsought Products
• Product Life Cycle

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Product Classification (1 of 3)

• Consumer Product Classifications
• Convenience Products
• Routinely purchased, require little or not time
  searching
• Make them widely available

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• Shopping Products
• Spend considerable time making the purchase seek
  info on price, features, service
• Product differentiation very important
• Have strategy to guarantee and reduce consumer
  satisfaction

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• Specialty Products
• Unique, shoppers expend considerable time,
  effort, money to acquire accept no substitutes

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• Unsought Products
• (1) Products of which consumers are unaware
• (2) Products that consumers do not consider
• purchasing until a need or emergency
• arises

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Stages of the Product Life Cycle
Exhibit 7.2
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Marketing Strategy Duringthe Product Life Cycle
Exhibit 7.3
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New Product Development

• Six strategic product development options
• (1) New-to-the-world products (discontinuous
• innovations)
• (2) New product lines
• (3) Product line extensions
• (4) Improvements or revisions of existing
• products
• (5) Repositioning
• (6) Cost reductions
• Customer perception of differentiation is critical

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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

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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

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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

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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

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Maturity Stage (1 of 2)

• Few, 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

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Maturity Stage (2 of 2)

• Four general goals in this stage
• (1) Generate Cash Flow
• (2) Hold Market Share
• (3) Steal Market Share
• (4) Increase Share of Customer
• Four options to achieve these goals
• (1) Develop a new product image
• (2) Find and attract new users to the product
• (3) Discover new applications for the product
• (4) Apply new technology to the product

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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

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Product Strategy for Services

• Characteristics of Services
• Marketing Strategy for Services
• Product Issues
• Pricing Services
• Promoting Service Benefits
• Distributing Services

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Unique Characteristics of Servicesand Resulting
Marketing Challenges
Exhibit 7.6
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Product Classification (2 of 3)

• Business Product Classifications
• Raw Materials
• Component Parts
• Process Materials
• MRO Supplies
• Accessory Equipment
• Installations
• Business Services