Product Strategy and Marketing through the Life Cycle

1. Product Strategy and Marketing through the Life Cycle Key Concepts

2. Product Levels

3. Product Classifications Durability and tangibility Consumer-goods classification Industrial-goods classification

4. Durability and Tangibility Nondurable goods Durable goods Services

5. Convenience goods Shopping goods Specialty goods Unsought goods Consumer-Goods Classification

6. Industrial-Goods Classification Materials and parts Capital items Supplies and services

7. Product-Line Analysis * Evaluate sales and profits associated with each item in product line. • Evaluate line positioning relative to competition. • Decide whether to build, maintain, harvest, or divest.

8. Line Stretching Down-market Up-market Two-way

9. Co-Branding • Two or more well-known brands are combined into a joint product and/or marketed together in some fashion. • Same-company • Joint-venture • Retail • Multiple-sponsor

10. Refers to all the activities of designing and producing a product’s container. Package levels: Primary Secondary Shipping Influenced by: Self-service Consumer affluence Company and brand image Innovation opportunity Packaging

11. Identifies Grades Describes Promotes Functions of Labeling

12. Refers to all the activities of designing and producing a product’s container. Package levels: Primary Secondary Shipping Influenced by: Self-service Consumer affluence Company and brand image Innovation opportunity Packaging

13. Warranties and Guarantees • Warranties—formal statements of expected product performance by the manufacturer. • Expressed or implied—both legally enforceable. • Guarantees—purpose is to reduce the buyer’s perceived risk and provide assurance that the company and its offerings are dependable. • General • Specific

14. The New-Product Development Decision Process

15. Marketing Skills: Finding New Product Ideas Where does Procter & Gamble get new ideas? Customers, organizations, experts, government, private labs, research institutions, suppliers, retailers, partners, and entrepreneurs.

16. Stages in the Adoption Process Awareness Interest Evaluation Trial Adoption

17. Diffusion Process for New ProductsAdopter Categories

18. Factors Influencing Adoption Relative advantage Compatibility Complexity Divisibility Communicability

19. Product Life Cycles for Styles, Fashions, and Fads

20. Sales of New Audio Products

21. Why New Products Fail • No discernible benefits • Poor match between features and customer desires • Overestimation of market size • Incorrect positioning • Price too high or too low • Inadequate distribution • Poor promotion • Inferior product

22. Success Factors Factors in SuccessfulNew Products Match between product and market needs Different from substitute products Benefit to large number of people

23. Listening to customers Strong leadership Producing the best product Commitment to new-product development Vision of future market Project-based team approach Getting every aspect right Success Factors

24. Product Life Cycle

25. Introductory Stage • High failure rates • Little competition • Frequent product modification • Limited distribution • High marketing and production costs • Negative profits with slow sales increases • Promotion focuses on awareness and information • Communication challenge is to stimulate primary demand

26. Inform potential consumers Induce product trial Secure retail distribution Marketing Strategies: Introduction Stage and the Pioneer Advantage

27. Growth Stage • Increasing rate of sales • Entrance of competitors • Market consolidation • Initial healthy profits • Aggressive advertising of the differences between brands • Wider distribution

28. Marketing Strategies: Growth Stage • Improve quality, add new features, and improve styling • Add new models and flanker products • Enter new segments • Increase distribution coverage and enter new channels • Shift from product-awareness to product-preference advertising • Lower prices to attract the next layer of price-sensitive buyers

29. Maturity Stage • Sales increase at a decreasing rate • Saturated markets • Annual models appear • Lengthened product lines • Service and repair assume important roles • Heavy promotions to consumers and dealers • Marginal competitors drop out • Niche marketers emerge

30. Marketing Strategies: Maturity Stage Market modification Product modification Marketing program modification

31. Decline Stage • Long-run drop in sales • Large inventories of unsold items • Elimination of all nonessential marketing expenses • “Organized abandonment”

32. Harvest Divest Liquidate Marketing Strategies: Decline Stage

33. GROWTH INTRODUCTION MATURITY DECLINE Product Strategy More models Frequent changes. Limited models Frequent changes Eliminate unprofitable models Large number of models. LimitedWholesale/retail distributors Expanded dealers. Long- term relations Phase out unprofitable outlets Extensive. Margins drop. Shelf space Distribution Strategy Sales Advertise. Promote heavily Phase outpromotion Awareness. Stimulate demand. Sampling Aggressive ads. Stimulatedemand Promotion Strategy Pricing Strategy Fall as result of competition &efficient production. High to recoupdevelopment costs Prices stabilize at low level. Prices fall (usually). Time Strategies at Different Stages of the Product Life Cycle