Chapter EightChapter EightProduct StrategiesProduct Strategies

Chapter ObjectivesChapter Objectives

Define and classify products.Define and classify products. Issues related to brandingIssues related to branding Address product packaging and labeling issues.Address product packaging and labeling issues. Analyze dimensions of the product mix.Analyze dimensions of the product mix. Describe the new product development process.Describe the new product development process. Examine the new product diffusion process. Examine the new product diffusion process. Address the stages of the product life cycle.Address the stages of the product life cycle. Examine product portfolio management challenges.Examine product portfolio management challenges.

Product Definition*Product Definition*

• Goods

• Services

• Ideas

A product is any offering that can satisfy consumer needs and wants.

Product DurabilityProduct DurabilityDurable goodsDurable goodsNondurable goodsNondurable goods

The Product MixThe Product Mix

The The product mixproduct mix is the complete assortment of is the complete assortment of

the products that a company offers to its target mkt.the products that a company offers to its target mkt.

Dimensions of the Product Mix:Dimensions of the Product Mix: Product itemProduct item*: *: An individual, unique brand offeringAn individual, unique brand offering Product lineProduct line:: Related brands in the same product category Related brands in the same product category Product lengthProduct length:: Total number of brands in the product mix Total number of brands in the product mix Product widthProduct width:: Total number of product lines a company offers Total number of product lines a company offers Product depthProduct depth:: Number of different offerings for a product category Number of different offerings for a product category Product consistencyProduct consistency:: Extent to which the different product lines are Extent to which the different product lines are

related, use the same distribution channels, and have the same related, use the same distribution channels, and have the same consumers consumers

Product Classification*Product Classification* Convenience goodsConvenience goods

Impulse goodsImpulse goods StaplesStaples Emergency goodsEmergency goods

Shopping goodsShopping goods Homogeneous shopping goodsHomogeneous shopping goods Heterogeneous shopping goodsHeterogeneous shopping goods

Specialty goodsSpecialty goods

Will

ingn

ess

to S

earc

h*W

illin

gnes

s to

Sea

rch*

LowLow

HighHigh

BrandingBranding BrandingBranding——adds value to productsadds value to products

A A brand (Brand name, Brand mark, Trademark)brand (Brand name, Brand mark, Trademark) Name, design, symbol, or a combinationName, design, symbol, or a combination Used to differentiate the product from competitors’ offeringsUsed to differentiate the product from competitors’ offerings

Brand Equity: Brand Acceptance*Brand Equity: Brand Acceptance*

AwarenessAwareness - Rejection- Rejection Perceived QualityPerceived Quality - Non-recognition- Non-recognition LoyaltyLoyalty - Recognition- Recognition AssociationAssociation - Preference- Preference

- Insistence- Insistence

Brand Image:Brand Image: Consumers’ perception of a particular brand Consumers’ perception of a particular brand

Cool Hunting #2

Brand IdentityBrand Identity Brand NameBrand Name

Easy to pronounceEasy to pronounce MemorableMemorable DistinctiveDistinctive Suggest product traits and/or benefitsSuggest product traits and/or benefits Easy to translate into other languagesEasy to translate into other languages

Protecting the BrandProtecting the Brand Design counterfeitingDesign counterfeiting Brand Name counterfeitingBrand Name counterfeitingThe OCSE estimates the value of counterfeit goods alone at more than $ 450,000,000,000, approximately 10% of the world’s GDP, and growing. Many industries are affected by this phenomenon, among them luxury items, fashion, pharmaceuticals, food products, toys and mechanical components.

Brand Sponsor DecisionsBrand Sponsor Decisions

How should a brand be soldHow should a brand be sold?? Manufacturers’ brand Manufacturers’ brand Private label (Dealer*, Private*) brandsPrivate label (Dealer*, Private*) brands Generic brands*Generic brands*

Branding Strategies*Branding Strategies* Individual brandingIndividual branding Family brandingFamily branding Licensing, Co-BrandingLicensing, Co-Branding

Minute Maid, a national brand, is offered side-by-side with the Ukrop’s private brand.

Packaging and LabelingPackaging and Labeling Package design considerations:Package design considerations:

UniquenessUniqueness Shipping and storageShipping and storage Shelf appearanceShelf appearance Appealing to consumersAppealing to consumers Theft and tamper proofingTheft and tamper proofing

Label . . . Label . . . Identifies the brandIdentifies the brand Describes the ingredients or componentsDescribes the ingredients or components Contains an expiration dateContains an expiration date Identifies the manufacturer and/or distributorIdentifies the manufacturer and/or distributor Promotes the productPromotes the product Directs the consumer on product useDirects the consumer on product use

Benefits*

- Traditional

- Communication

- Perception

- Function

New Product Development: New Product Development: StagesStages

1.1. Idea generation Idea generation 2.2. Screening new product ideasScreening new product ideas3.3. Developing & evaluating product conceptsDeveloping & evaluating product concepts4.4. Performing product business analyses Performing product business analyses 5.5. Designing and developing new productDesigning and developing new product6.6. Test marketingTest marketing7.7. Launch (commercialization) Launch (commercialization)

get happy

2008 New Products

New Product DiffusionNew Product Diffusion

Factors Influencing Diffusion of Innovation*Factors Influencing Diffusion of Innovation*1. Relative Advantage1. Relative Advantage 2. Compatibility 2. Compatibility 3. Complexity3. Complexity

4. Possibility of Trial4. Possibility of Trial 5. Observability/Communicability 5. Observability/Communicability

Explanations (Media, People)*Explanations (Media, People)*

Description (Adopter Categorization)Description (Adopter Categorization)1. Innovators1. Innovators 4. Late Majority 4. Late Majority

2. Early Adopters 5. Laggards2. Early Adopters 5. Laggards

3. Early Majority3. Early Majority

Coming Soon

Length and Shape*Length and Shape* Product/Service FeaturesProduct/Service Features Managerial Actions*Managerial Actions*

Stage Management*Stage Management* Note “Extending the Product Life Cycle” Note “Extending the Product Life Cycle”

Product Life Cycle: StrategyProduct Life Cycle: Strategy

Managing the Product PortfolioManaging the Product Portfolio

The product portfolio is defined as the The product portfolio is defined as the totality of products managed by the totality of products managed by the company as separate businesses.company as separate businesses.

Strategic Frameworks*Strategic Frameworks* Product Portfolio Analysis Product Portfolio Analysis

• Build, Hold, Entrench, Harvest, Divest, AbandonBuild, Hold, Entrench, Harvest, Divest, Abandon Product-Market Opportunity MatrixProduct-Market Opportunity Matrix Profit Impact of Market Strategy (PIMS)Profit Impact of Market Strategy (PIMS) OthersOthers

Market Share

Ind

ustr

y g

row

th r

ate

High

Low

Star Question Mark

Cash Cow

Dog

High Low

Product Portfolio AnalysisProduct Portfolio Analysis

Product-Market Opportunity MatrixProduct-Market Opportunity Matrix

Market

Product

NewOld

Old

New

Market PenetrationProduct

Development

Market Development

Diversification