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The learning objectives
Product Product classification Product life-cycle strategies New-product Development Product-line decision Brands decisions
1. What is product?
Anything that can be offered to a market for attention,acquisition,use,or consumption that might satisfy a want or need.
Components of theMarket Offering
Value-based prices
Services mixand quality
Product featuresand quality
Attractiveness ofthe market offering
2. Product classifications
Consumer products Industrial products
Consumer product
Convenience products Shopping products Specialty products Unsought products
Specialty ProductsSpecialty Products Unsought ProductsUnsought Products
Shopping Shopping ProductsProducts
Buy less frequently> Gather product information> Fewer purchase locations> Compare for:
• Suitability & Quality • Price & Style
Convenience ProductsConvenience Products
Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations
Products consumers don’t demand normally. Require much advertising &personal selling
Buy frequently & immediately> Low priced> Many purchase locations> Includes:
• Staple goods• Impulse goods• Emergency goods
Consumer-Goods Classification
Industrial Product
Material and parts Capital items Supplies and services
6.Product-line decision
Product mix Product-line analysis Product –line length
Product mix(assortment)
The set of all products and items that a particular seller offers for sale.
A company’s product mix has a certain width,length,depth, and consistency.
Product Mix Concepts:
Width:how many different product lines.
Length:the total number of items.
Depth:how many variants are offered of each product in the line.
Consistency:how closely related the various product lines are in end use,production requirement,distribution channels, or some other way.
Product Mix & Product Line- HUL
Personal wash Personal wash : Lux , lifebuoy , Liril , Hamam , Breeze , Dove ,
Pears , Laundry Laundry : Surf Excel , Rin , Wheel Skin Care Skin Care : Fair and Lovely , Ponds Hair Care Hair Care: Sunsilk , Clinic Plus Oral care Oral care : Pepsodent , Close Up Color Cosmetic Color Cosmetic : Lakme Beverage Tea : Broke Bond , Lipton Coffee: Bru Foods Foods: Kissan , Knorr Annapurna Ice-Cream Quality Walls
Product Mix
WidthWidth - number of different
product lines
WidthWidth - number of different
product lines
LengthLength - total number of itemswithin the lines
LengthLength - total number of itemswithin the lines
Depth Depth - number of versions of each product
Depth Depth - number of versions of each product
Product Mix - Product Mix - all the product
lines offered
Product Mix - Product Mix - all the product
lines offered
Co
nsi
sten
cy
Product-line analysis
Sales and profit Market profile
Product-Line Length
Line Stretching Downmarket (TATA Nano) Upmarket (Maruti 800 to Maruti SX4) Two-way
Line Filling Line Modernization Line Featuring & Line Pruning
Trading Up and Trading Down
Trading up:Trading up: Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products.
Trading down:Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status.
3.Product Life Cycles (PLC)
The course of a product’s sale and profit over it lifetime.It involves five distinct stages:product development,introduction,growth,maturity,and decline.
Sales & Profit Life Cycles
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
TimeTimeSal
esS
ales
&& p
rofi
tsp
rofi
ts
Product Life Cycle Stages
IntroductionIntroduction—most risky and expensive.
GrowthGrowth—both sales and profits rise, often rapidly.
MaturityMaturity—sales increase at a decreasing rate and profits decline.
DeclineDecline—demand drops, often because of another product development.
Strategic Implications of the Stages
introductory stage:introductory stage: developing the market, creating awareness, reaching the innovators
growth stage:growth stage: competition begins, sales grow quickly, profits peak, market penetration
maturity stage:maturity stage: competition is intense, sales slow down, differentiated product offerings, customers are brand loyal, few new entrants
decline stage:decline stage: customers move to other options, competitors leave, profits are low, consider exit
Characteristics of Introduction Stage
Low sales High cost per customer Zero or Negative profits Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Awareness building advertising
Four IntroductoryPrice-Promotion Strategies
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
PricePrice
LowLow
HighHigh
PromotionPromotionHighHigh LowLow
Characteristics of the Growth Stage
Rapidly rising sales
Average cost per customer
Rising profits
Offer product extensions
Target new market segments
Characteristics of Maturity stage Peak sales and profits
Increased advertising and trade and consumer promotion.
Frequent markdowns
Market nicher develops.
Market Modification Strategy
Marketing Mix Modification Strategy
Characteristics of Declining Stage
Declining sales& Profits
Phase out unprofitable outlets
Cut on promotional expenditure
Liquidating, Divesting and Harvesting the business
Special categories of PLC (Style, Fashion, Fad)
Style is a basic/distinctive mode of expression appearing in a field of human endeavors.-Once a style is invented, it can last for generations.
Fashion is a currently accepted/popular style in a given field.
Fads are fashion that comes quickly into the public eye, are adopted with great zeal, peak easily and decline fast
5.new-product development
What is new product? Major stages in new product
development
What is new product?
Original products Product improvements Product modifications New brands that the firm develops
through its own research and development efforts
Major stages in new product development Idea generation Idea screening Concept development and testing Marketing strategies Business analysis Product development Test marketing Commercialization
New Product Development
Process
IdeaIdeaGenerationGeneration
ConceptConceptDevelopmentDevelopmentand Testingand Testing
MarketingMarketingStrategyStrategy
DevelopmentDevelopment
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProductDevelopmentDevelopment
MarketMarketTestingTesting
CommercializationCommercialization
Probability of Success
ProbabilityProbabilityof technicalof technicalcompletioncompletion
OverallOverallprobabilityprobabilityof successof success==
Probability ofProbability ofcommercializationcommercialization
given technicalgiven technicalcompletioncompletion
XXProbability ofProbability of
economiceconomicsuccess givensuccess given
commercializationcommercializationXX
Concept Development & Testing
1. Develop Product Ideas into Alternative Product Concepts
1. Develop Product Ideas into Alternative Product Concepts
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
3. Choose the Best One3. Choose the Best One
High price/ozHigh price/oz..
Lo
w in
Lo
w in
cal
ori
esca
lori
es
LowLow price/oz.price/oz.
Hig
h in
calories
Hig
h in
calories
Product & Brand Positioning
((a)a) Product-positioningProduct-positioningmapmap
(breakfast market)(breakfast market)
ExpensiveExpensive
Slo
wS
low
InexpensiveInexpensive
Qu
ickQ
uick
Baconandeggs
Pancakes Instantbreakfast
Coldcereal
Hotcereal
b)b) Brand-positioningBrand-positioningmapmap
(instant breakfast market(instant breakfast market))
Brand C
Brand B
Brand A
Conjoint AnalysisBrand nameBrand name
----------
Uti
lity
Uti
lity
1.01.0
00 | | |K2R Glory BissellK2R Glory Bissell
Retail PriceRetail Price
Uti
lity
Uti
lity
----------
1.01.0
0| | |
$1.19 $1.39 $1.59$1.19 $1.39 $1.59
Good Housekeeping Seal?Good Housekeeping Seal?
Uti
lity
Uti
lity
1.01.0----------
00 | |No YesNo Yes
Uti
lity
Uti
lity
Money-BackMoney-BackGuarantee?Guarantee?
1.01.0----------00
| |No YesNo Yes
Consumer-Goods Market Testing
Sales-Wave
ResearchTest offering trail to
a sample of consumers in
successiveperiods.
Sales-Wave
ResearchTest offering trail to
a sample of consumers in
successiveperiods.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
StandardTest Market
Full marketing campaignin a small number of representative cities.
StandardTest Market
Full marketing campaignin a small number of representative cities.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
2 1/2%Innovators
13 1/2%Early
adopters
34%Early
majority
34%Late
majority
16%Laggards
Time of adoption innovations
Adopter Categorization of the Basis of Relative Time of Adoption of Innovations
6.Brand Decision
What is brand? Band decision
What is brand?
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 differentiate them from those of competitors.
What is a Brand?
Attributes Benefits Values
Culture
User
Personality
An Overview ofBranding Decisions
BrandingDecision
•Brand
•No brand
Brand-SponsorDecision
•Manu-facturerbrand
•Distribu-tor(private)brand
•Licensedbrand
Brand-Name
Decision
•Individualbrandnames
•Blanketfamilyname
•Separatefamilynames
Brand-Repositioning
Decision
•Reposi-tioning
•Noreposi-tioning
Brand-StrategyDecision
•Lineextension
•Brandextension
•Multi-brands
•Newbrands
•Cobrands
Good Brand Names:
SuggestProductBenefits
Distinctive
Lack PoorForeign
LanguageMeanings
SuggestProductQualities
Easy to:PronounceRecognizeRemember
Brand Strategies
BrandExtension
New
Bra
nd
Nam
e
Product Category
LineExtension
Existing
Existing
MultibrandsNew NewBrands
Why Package Crucial as a Marketing Tool
Self-service Consumer affluence Company & brand image Opportunity for innovation
Labels
IdentifyIdentifyIdentifyIdentify
DescribeDescribeDescribeDescribe
PromotePromotePromotePromote