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MANAGING PRODUCTS, SERVICES,
AND BRANDS
CHAPTER
Time
Profits
Sales
IntroductoryIntroductoryStageStage
GrowthGrowthStageStage
MaturityMaturityStageStage
DeclineDeclineStageStage
0
Product Life Cycle
Dollars
Introductory Stage
• High failure rates• Little competition• Frequent product
modification• Limited distribution• High marketing and
production costs• Negative profits• Promotion focuses on
awareness and information• Intensive personal selling
to channels
Full-Scale Launch of New Products
Full-Scale Launch of New Products
• Increasing rate of sales• Entrance of competitors• Market consolidation• Initial healthy profits• Promotion emphasizes brand ads• Goal is wider distribution• Prices normally fall• Development costs are recovered
Offered in more sizes,
flavors, options
Offered in more sizes,
flavors, options
Growth stage
• Declining sales growth• Saturated markets• Extending product line• Stylistic product changes• Heavy promotions to dealers and
consumers• Marginal competitors drop out • Prices and profits fall• Niche marketers emerge
Many consumer products are in Maturity Stage
Many consumer products are in Maturity Stage
Maturity Stage
• Long-run drop in sales
• Large inventories of unsold items
• Elimination of all nonessential marketing expenses
Rate of decline depends on change in tastes or
adoption of substitute products
Rate of decline depends on change in tastes or
adoption of substitute products
Decline Stage
How stages of the product life cycle relate to firm’s marketing objectives & marketing mix actions
INTRODUCTION GROWTH MATURITY DECLINE
ProductStrategy
DistributionStrategy
PromotionStrategy
PricingStrategy
Limited modelsFrequent changes
More modelsFrequent changes.
Large number of models.
Eliminate unprofitable
models
LimitedWholesale/
retail distributors
Expanded dealers. Long-term relations
Extensive.Margins drop.Shelf space
Phase out unprofitable
outlets
Awareness. Stimulate
demand.Sampling
Aggressive ads.Stimulatedemand
Advertise. Promote heavily
Phase outpromotion
Higher/recoupdevelopment
costs
Fall as result ofcompetition &
efficient produc-tion.
Prices fall (usually).
Prices stabilize at low level.
MANAGING THE PRODUCT LIFE CYCLE
Alter product quality
Enhance performance
Change appearance
• Modifying the Product
• Modifying the Market
Finding New Users
Increase use
Create new use situations
EXTENDING THE PRODUCT LIFE CYCLE- Repositioning
• Trading Up-add bells & whistles to raise price
• Trading Down- remove bells & whistles to lower price
• Downsizing-reduce contents but maintain price
Reacting to a Competitor’s Position-never compete head on
Catching a Rising Trend-baby aspirin is now low dose aspirin to reduce heart attacks
Changing the Value Offered
FIGURE 11-3 FIGURE 11-3 Alternative product life cycles
Why the different shapes?
Pe
rce
nta
ge
of
Ad
op
ters
Time
Innovators2.5%
EarlyAdopters
13.5%
LateMajority
34%
EarlyMajority
34%
Laggards16%
Five categories of product adopters
Five Profiles of Product Adopters
BRANDING
Brand Name
Brand Name
BrandMark
BrandMark
Brand EquityBrand Equity
That part of a brand that can be spoken, including letters, words, and numbers.
That part of a brand that can be spoken, including letters, words, and numbers.
The elements of a brand that cannot be spoken.
The elements of a brand that cannot be spoken.
The value brand names give to a product beyond the functional benefits provided. i.e.-why you pay more for Versache
The value brand names give to a product beyond the functional benefits provided. i.e.-why you pay more for Versache
Value of Brand Equity
1) Listed as an intangible asset when computing company worth. Makes brand name companies sell for more than unbranded companies
2) Can command larger licensing fees because the product is a definite seller
3) Can sell the use brand name on non-core products like Ralph Lauren paint or Harley Davidson clothing
BRANDING ANDBRAND MANAGEMENT
BrandBrand No BrandNo Brand
Manufacturer’s Brand
Manufacturer’s Brand Private BrandPrivate Brand
IndividualBrand
IndividualBrand
Family Brand
Family Brand
IndividualBrand
IndividualBrand
Family Brand
Family Brand
Multi-brand multi-product multi-brand multi-product
Multi-productMulti-
product
Multi-brandMulti-brand
Mixed brand
Mixed brand
Toro makes snow blowers, Toro lawn mowers and Toro garden hoses
Toro makes snow blowers, Toro lawn mowers and Toro garden hoses
Proctor and Gamble makes Tide, Cheer, Ivory Snow and Bold
Proctor and Gamble makes Tide, Cheer, Ivory Snow and Bold
Michelin makes Michelin tires and Sears tiresMichelin makes Michelin tires and Sears tires
Branding Strategies
BRANDING ANDBRAND MANAGEMENT
• Picking a Good Brand Name
Suggest the Product Benefits
Be Memorable, Distinctive, and Positive
Fit the Company or Product Image
Have No Legal or Regulatory Restrictions
Be Simple and Emotional
International: Be Nonmeaningful
CREATING CUSTOMER VALUE THROUGH PACKAGING AND LABELING
FunctionsFunctionsofof
PackagingPackaging
FunctionsFunctionsofof
PackagingPackaging
Contain and ProtectContain and Protect
Inform – nutrition and instructions for use
Inform – nutrition and instructions for use
Facilitate Storage, Use, and Convenience
Facilitate Storage, Use, and Convenience
Create perception of item-Gold bow on perfume bottleCreate perception of item-
Gold bow on perfume bottle
Product Life Cycle
The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.
The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.
Private Brand
Often called store brand, a private brand is a manufacturer brand of product sold under the name of the retailer.
Often called store brand, a private brand is a manufacturer brand of product sold under the name of the retailer.
Manufacturer Brand
Manufacturer brands are often called national brands and are carry the brand name of a maker of the goods.
Manufacturer brands are often called national brands and are carry the brand name of a maker of the goods.
