Title: Product Strategies New Product Development and Life Cycle Strategies
1Product Strategies New Product Development and
Life Cycle Strategies
- Week 6, Bus 352X
- Margaret Cornish
2Creative Introduction PRODUCT STRATEGIE
- Tracey, Vivian, Jodie and Wendi
3June 7 Chapters 8 9Objectives
- Products and their major classifications
- Roles of branding, packaging, labeling and
product support - Development of product lines and mixes
- Development of new product ideas
- Steps in new product development
- Evolution of marketing strategy over product life
cycle
4June 10 Mid-termBUS352 X Room P2067
- Bring student ID
- First 7chapters The detail will come into focus
now that you know more context - Test consists of multiple choice and essays (in
which you apply theory to given scenario) - Exam booklet Quest 1 is followed by space to
answer then Quest 2 and answer space and so
on. Multiple choice is in different section of
booklet. Be sure to answer all questions.
Allocate your time carefully.
5Product StrategiesChapter 8
- Product bundle of benefits
- Offered to a market
- For attention, ownership, use or consumption
- Satisfy a need or want
- Object, service, place, organization or idea
6Product Service Continuum
- Pure tangible good (soap)
- Tangible good augmented by service(s)
- Clothes, camcorder
- Hybrid offer equal parts product/service
(custom suit) - A service with accompanying goods-
- Airplane trip
- An intangible benefit -(doctors appt)
7Product Onion
- Core Product core benefit to buyer
- Actual Product quality level, design, brand
name, packaging - Augmented Product Additional services and
benefits surrounding the product
8Planning a product
- Identify the core consumer need to be satisfied
- Design the actual product to meet these needs
and - Find ways to complete or facilitate consumers
purchase and consumption of product. Most
competition occurs at product augmentation level
9Product Classifications
- Consumer Products
- Industrial Products
- Organizations, Persons, Places and Ideas
- Placesbusiness site marketing and tourism
marketing
10Consumer Product Classifications
- Convenience products
- Staples, impulse and emergency
- Shopping products
- Specialty products
- Unsought products
11Marketing Considerations for Consumer
ProductsTable 8-1
- The pattern of consumer buyer behavior for a
given product influences how it is marketed
128-1 Analytical Dimensions
- Consumer buying behavior frequency, degree of
planning and purchase effort degree of customer
involvement degree of comparison - Price
- Distribution
- Promotion
13Convenience Product
- Buy it often, little planning or comparison, low
involvement - Price low
- Distribution widespread, convenient locations
- Promotion Mass (by the producer)
- Examples toothpaste, detergent
14Shopping Product
- Buy it less often, do plan and do compare brands
on quality, price, style - Price higher (than convenience)
- Distribution Selective but still reasonable
convenient locations - Promotion advertising and personal selling by
producer and reseller - Examples computer, furniture, clothing
15Specialty Products
- Strong brand preference, special purchase effort,
little comparison, low price sensitivity - Price high
- Distribution one or a few outlets
- Promotion carefully targeted by producer and
reseller - Examples luxury and some hobby goods
16Unsought Product
- Little awareness or interest until needed often
negative interest - Price varies
- Distribution varies
- Promotion Aggressive ads and personal selling by
producer/reseller - Ex funeral home, dental services
17Stages in Product Planning
- Product Attributes
- Branding decisions
- Packaging
- Labeling
- Product support services
18Product quality level and consistency
- Level at which it performs its functions
- Consistency or conformance quality reliability
in delivering the described level of performance
paid for and expected by consumer - For marketer investment in quality must be tied
to bottom line return on quality
19Product Features
- Key basis for differentiation
- Firms develop new features by asking what
customers want - Ongoing process of adding new features and
culling products with less features less valued
by consumer - Design changes to improve performance vs style
changes
20Brand
- A brand is a name, sign, symbol or design
intended to identify a good/service of one seller
and to differentiate it from competitors - A brand enables consumer to identify products
with benefits they might want, helps define
quality, gives product or service a personality
(eg perfume)
21Brand
- A promise by the seller to deliver consistency a
specific set of features, benefits and services
22Brands can convey up to 4 levels of meaning
- Attributes of the product durable, prestigious,
fast, safe - Benefits emotional or functional benefit of
attributes - Values suggested by the product which buyer
identifies with - Personality evokes an image consistent with
buyers self-image or desired self-image
23Brand Equity
- Value of a brand
- Extent to which brand attracts high consumer
loyalty name awareness, perceived quality, and
strong brand associations regarding trademarks
(what it looks like), channel relationships
(where it can be found)
24Branding Decisions
- Brand or not to brand
- Brand name selection
- Brand sponsorship
- Brand strategy
- Brand repositioning
25Brand name selection
- Suggest something about product benefit
- Short and easy to pronounce
- Distinctive
- Translate easily into other languages!!!
- Capable or registration and legal protection
26Brand Sponsorship
- Manufacturers brand
- Private label
- Owner by reseller
- Licensed brand
- Eg, fashion, sports names
- from overseas manufacturer
- Co-branding
- Swiss Chalet and Harveys
27Brand Strategies
- New brands
- Line extensions
- Brand extensions
- Multibrands
28Brand Strategies Line extension
- Existing brand extended to new forms, sizes and
flavors in same product category. Objective
capture share from competitors Risk - Risk brand dilution - qualities of new offer not
sufficiently similar to original product
possibility that new offer cannibalizes own line
29Brand Strategies Brand Extension
- Launch new or modified product in new product
category using an existing brand - e.g. Disney Cruises, Objective capture share in
new product market using equity of existing
brand. - Brands associations must fit new product.
- Risk failure of new product damages existing
brand
30Brand Strategies Multi-branding
- Two or more brands in same product category
known as flanker and fighter brands - Offer different features to appeal to different
buying motives - Serve to protect existing brand but filling in
positions which might be taken by competitors - May be adaptations for different geographic or
cultural markets - Risk too many, unprofitable brands
31Brand Strategies New Brand
- New brand appropriate for new product in new
product category - Helps denote different line of products by same
company - If existing brand is weak, may revive sales by
new approach - May be result of an acquisition
- Risk high cost of launching new brand
32Packaging 5 second ad
- Packaging concept what the package can be or do
for the product - Contain and protect product
- Attract attention get shelf space
- Protect user (child proof, tamper resistant)
- Labeling of a package identify, describe,
promote, date and price - Legal requirements must be met
33Product Line
- Product line closely related products, function
in similar way, sold to same customer groups,
through same types of outlets, or fall within
given price ranges
34Product Line DecisionsLength Stretching and
Filling
- If line is too short, stretching can increase
total sales. If too long, pruning increases total
sales - Is desired positioning that of full line?
- Moving to higher growth or higher margin segment
- Stretching downward filling a hole to block a
competitor (Mercedes response following intro of
Toyota Lexus)
35Product Line DecisionsStretching both ways
- Marriott has developed differentiated hotels
(offers) to suit each type of traveler - Marriott Marquis top execs
- Marriotts middle managers
- Courtyards salespeople
- Fairfield Inns vacationers, low budget
36Product Mix Decisions mix or assortment
- Range of product lines a seller has for sale
- Key dimensions width, length, depth and
consistency
37Product Strategy
- Company can seek growth by
- Add product lines to widen mix
- Lengthen existing lines to become full line
- Add more product versions to deepen
- Emphasize consistency by pruning, or not, if firm
seeks to build reputation is several areas
38New Product DevelopmentAlarmingly high failure
rate. Why?
- New Products include
- Original products
- Product improvements
- Product modifications
- New brands
- How do you increase success rate in development
of new products?
39What do successful new products have in common?
- Unique, superior product
- Well-defined product concept prior to development
- Deep understanding of consumer, market and
competitor
40New Product Development Process
- Idea Generation
- Idea Screening (degree of fit, weeding out
losers) - Concept Development expanding idea into various
alternatives - Concept Testing finding out which have
strongest consumer appeal
41Marketing Strategy Development (for a product
concept)
- Describe the target market
- Plan the product positioning
- Model the sales, market share, and profit goals
of first few years (realistically)!!
42Business AnalysisEvaluating attractiveness
- Review, sales, costs and profit projections for a
new product to determine if they meet firms
reqts - Use sales histories (growth rates) of similar
products - Estimate min-max sales range to define risk
- Then estimate costs incl production, marketing,
RD,distribution etc. Estimate profits.
43Product Development
- Move from concept to physical product, usually
several prototypes test models - Prototype must have required functional features
and convey intended psychological characteristics
not as easy as it sounds
44Test Marketing
- Standard test full marketing campaign in a few
representative markets (eg London Ont!) - Controlled Test Markets
- Simulated Test Markets
45Commercialization Introducing product to market
- Establish manufacturing facility
- Launch new product
- Timing now, if cannibalization - postpone
- Where one market, all markets
- Simultaneous intro will strengthen brand
leadership but is costly and logistically complex
46Product Life Cycle
- Product development no sales
- Product introduction costs high, revenues begin
- Growth market acceptance, sharp rise in profits
- Maturity sales growth slows profits may
stabilize or decline - Decline sales fall profits slide
47Mid Term TopicsFirst seven chapters
- Marketing Mgmt
- Macro-environment
- Characteristics of consumer markets
- Consumer buyer behavior
- Characteristics of business markets
- Segmenting, targeting and positioning
48Marketing Philosophies can you name them?
- Production concept
- Product concept
- Selling concept
- Marketing concept
- Societal marketing concept
49Positioning Process
- The claim - undisputable leadership in a given
target segment - The evidence develop evidence to make dispute
unreasonable - Communications identify and address right
audiences with right sequence with right versions
of the message - Feedback and adjustment in response to customer
and competitor efforts to unposition you
50Firms microenvironment
- The company itself (departments)
- Suppliers
- Marketing Intermediaries
- Customers
- Competitors
- Publics media, market, govt, interest groups
51Macro-environment
- Demographics
- Economy
- Natural Environment
- Technology Issues
- Political and legal factors
- Cultural
52Positioning Formula
- For (target customer)
- Who needs ( statement of need or opportunity)
- The (product name) is a ( category)
- That (statement of key benefit the compelling
reason to buy) - Unlike (primary competitive alternative)
- Our product (statement of primary differentiation)
53Finding Competitive AdvantageA Framework p. 252
- Framework for identifying the one advantage that
it makes most sense to develop - Identify key advantages, assess your standing and
that of competitor on each - Grade importance of your improving on each,
affordability and speed of doing so and finally
competitors ability to improve on each
54Next Week June 14
- Pricing Chapt 10
- Pricing Strategies Chapt 11
- Financial Analysis
- Problems 1 2 only
- Case Swatchmobile pp 389. Have it read!
55Research Process Review
- Define problem research objectives
- Develop research plan for collecting data
- Collect and analyze data
- Interpret and report findings
56Review Market ResearchSetting Research
Objectives
- If marketer is unable to narrow definition of
problem satisfactorily the research objective may
be to gather preliminary info to help define the
problem and suggest hypotheses - This is called exploratory research
57Review Setting Research Objectives - Descriptive
- If problem has been defined satisfactorily,
research objective will be either descriptive or
experimental - If the research intended to define or describe
things such as market potential,demographics,
attitudes toward a product, etc - This research objective is descriptive research
58Review Setting Research Objectives - Experimental
- If problem has been defined satisfactorily and
the objective is to determine causal
relationships the research objective will be
experimental - Hypotheses are formed and tested
59Research MethodsObservation
- As part of developing research plan, you consult
primary and secondary sources - Must decide on research method for gathering
primary data. Alternative methods incl
observational, descriptive/survey and
experimental - Observation is useful when info can be observed
readily. Findings more reliable than what people
say they do. Some behaviour difficult/impossible
to observe
60Research Approaches
- Observation feelings, attitudes motives. Adv
reveals what people do rather than what they say
Limitation difficult to observe private,
infrequent and long-term behaviour Remedy use
in conjunction with other collection method
61Research ApproachesSurvey/Descriptive
- Survey best suited to descriptive research
mainstream data collection used for gathering
wide range of info in variety of situations Adv
flexibility simplicity low-cost? Relative to
other methods Limitations resistance
inaccuracy difficulty in reaching target market
62Research ApproachesExperimental
- Experimental suited to gathering causal
information (matched groups, different
treatments, controlling for unrelated factors,
and checking for different relships - Adv reality/behaviour based Limitations costly
and time-consuming
63Research Approaches Which is appropriate?
- Kellog Impact of young children on parental
buying decision - University Bookstore insight into how students
feel about stores merchandise, prices and
service - Swiss Chalet location decision
- Gillette Will new line of deodorant for children
be profitable?
64Research MethodsExperimental/Observational
- Impact of kids on parental buying -
observational or experimental (to test specific
hypothesis) - Location decision secondary data (census data)
primary observational (traffic counting) - Store customer attitudes survey
- Profitability