Chapter 5 Product

The Best Way to hold customers is to constantly figure out how to give them more or less.

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 the Market Offering

Value-based prices

Attractiveness of the market offering

Product features and quality

Services mix and quality

Service and Experience

ServiceAny activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

Discussion

Disney starbucks

Five Product Levels

Potential product

Augmented product
Expected product Basic product Core benefit

Levels of Product

Core product Actual product Augmented product

Core product

Core benefit or service

Actual product

Quality level Features Design Package Brand name

Augmented product

Installation After-sale service Warranty Delivery and credit Attached benefit

2. Product classifications

Consumer products Industrial product Organizations, persons, places, and ideas

Consumer product

Convenience products Shopping products Specialty unsought

Consumer-Goods Convenience Products

Buy frequently & immediately > Low priced > Many purchase locations > Includes: Staple goods Impulse goods Emergency goods

Classification Shopping Products

Buy less frequently > Gather product information > Fewer purchase locations > Compare for: Suitability & Quality Price & Style

Specialty Products
Special purchase efforts > Unique characteristics > Brand identification > Few purchase locations

Unsought Products
New innovations > Products consumers dont want to think about. >Require much advertising & personal selling

Industrial Product

Material and parts Capital items Supplies and services

3.Product Life Cycles (PLC)

The course of a products sale and profit over it lifetime.It involves five distinct stages:product development,introduction,growth,maturity,and decline.

Sales & Profit Life Cycles Sales & profits ($)

Introduction

Growth

Maturity

Decline

Time

Introduction stage

The product life-cycle stage in which the new product is first distributed and made available for purchase.

Sales & Profit Life Cycles Sales & profits ($)

Introduction

Growth

Maturity

Decline

Time

Four Introductory Marketing Strategies

Promotion
High Low Slowskimming strategy Rapidskimming strategy

High

Price
Low Rapidpenetration strategy Slowpenetration strategy

Growth stage

The product life-cycle stage in which a products sales start climbing quickly.

Maturity stage

The stage in the product life cycle in which sales growth slows or levels off. Modify the market,the product,and the marketing mix.

Decline Stage

The product life cycle stage in which a products sales decline

Discussion

Please list the marketing objectives and strategies for each stage. 2.what strategic option are open to the marketers of products in the mature stage of the product life cycle? 3.which product life-cycle stage, if any,is the most important?which stage is riskiest?which stage appears to hold the greatest profit potential? Be certain to explain the thinking behind each of your answer.

4.The international PLC

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

Marketing Strategy Development Concept Development and Testing Idea Screening Idea Generation Business Analysis Product Development

Market Testing

Commercialization

Probability of Success

Overall probability of success

Probability of technical completion

Probability of commercialization given technical completion

Probability of economic success given commercialization

Concept Development & Testing

1. Develop Product Ideas into Alternative Product Concepts

2. Concept Testing - Test the Product Concepts with Groups of Target Customers

3. Choose the Best One

Product & Brand Positioning

(a) Product-positioning map (breakfast market) b) Brand-positioning map (instant breakfast market)

Expensive

High price/oz.

High in calories

Low in calories

Slow

Bacon and eggs Pancakes Hot cereal

Cold cereal

Brand C

Quick

Instant breakfast

Brand B
Brand A

Inexpensive

Low price/oz.

1.0 -----| 0 K2R Utility

Brand name Analysis Retail Price Conjoint 1.0 -----| | | | 0 $1.19 $1.39 Glory Bissell Good Housekeeping Seal? 1.0-----| | 0 No Yes Utility Utility

$1.59

Money-Back Guarantee? 1.0-----| | 0 No Yes Utility

Consumer-Goods Market Testing

Simulated Test Market
Test in a simulated shopping environment to a sample of Sales- consumers.

Controlled Test Market

A few stores that have agreed to carry new products for a fee.

Wave Research
Test offering trail to a sample of consumers in successive periods.

Standard Test Market

Full marketing campaign in a small number of representative cities.

Adopter Categorization of the Basis of Relative Time of Adoption of Innovations

34% Early majority 2 1/2% Innovators 13 1/2% Early adopters

34% Late majority

16% Laggards

Time of adoption innovations

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 companys product mix has a certain width,length,depth, and consistency.

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
Width - number of different product lines Length - total number of items within the lines
Depth - number of versions of each product Product Mix all the product lines offered

Product-line analysis

Sales and profit Market profile

Product-Line Length

Line Stretching

Downmarket Upmarket Two-way

Line Filling Line Modernization Line Featuring & Line Pruning

Line stretching

Downmarket stretch Upmarket stretch Two-way stretch

Two-Way Product-Line Stretch: Marriott Hotels

Quality
Economy High Standard Good Superior
Marriott Marquis (Top executives) Marriott (Middle managers)

Price

Above average

Average
Fairfield Inn Low (Vacationers)

Courtyard (Salespeople)

Line filling

Qualityprice analysis

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?
User

Culture

Personality

Attributes

Benefits

Values

discussion

What is difference between product and brand? How to define the line cycle of a brand?

An Overview of Branding Decisions

Branding Decision

BrandSponsor Decision
Manufacturer brand

BrandName Decision
Individual brand names Blanket family name Separate family names Companyindividual names

BrandBrandStrategy Repositioning Decision Decision

Line extension Brand extension Multibrands New brands Cobrands

Brand

No brand

Distributor (private) brand Licensed brand

Repositioning No repositioning

Brand decision

1.to brand or not to brand? 2.brand-sponsor decision 3.Brand-name decision 4.brand-strategy decision 5.brand-reposition decision

brand-sponsor decision

Manufacturer brand Distributor brand Licensed brand

Brand-name decision

Individual Blanket family Separated family Company-individual family

Good Brand Names:

Distinctive Lack Poor Foreign Language Meanings Easy to: Pronounce Recognize Remember

Suggest Product Qualities

Suggest Product Benefits

Brand Strategies
Product Category
Existing New

Brand Name

Existing

Line Extension Multibrands

Brand Extension New Brands

New

brand-strategy decision

Line extensions Brand extensions New brands cobrands

brand-reposition decision

Reposition No reposition

Why Package Crucial as a Marketing Tool

Self-service Consumer affluence Company & brand image Opportunity for innovation

Labels

Promote Describe Identify

Assignment

Case study : P425