copyright ©2008 by south-western, a division of thomson learning. all rights reserved chapter 10 ...

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 10

Product planning is crucial to the launch and success of new products.

Essential Questions•How does branding impact society?•What makes a product a success or failure?•Why do marketers need to know the lifecycle stage of a product?


Why do marketers need to know the lifecycle stage of a product?

Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter 10 3

Product Concepts


WHAT ARE PRODUCTS AND SERVICES?CLASSIFYING PRODUCTS

Consumer Products

• Convenience Products

• Shopping Products

• Specialty Products

• Unsought Products

10-4


Types of Consumer Products

5

ConvenienceProduct

ShoppingProduct

SpecialtyProduct

UnsoughtProduct

A relatively inexpensive item that merits little shopping effort

A product that requires comparison shopping, because it is usually more expensive and found in fewer stores

A particular item for which consumers search extensively and are reluctant to accept substitutes

A product unknown to the potential buyer or a known product that the buyer does not actively seek

Copyright 2010 by Cengage Learning Inc. All Rights Reserved


How a consumer product is classified affects what products consumers buy and the marketing strategies used

10-6


Rolex WatchWhat type of consumer product?

10-7


Little RemediesHow does an extensive product line benefitboth consumers and retailers?

10-8


Product Items, Lines, and Mixes

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Product ItemProduct Item

Product LineProduct Line

Product MixProduct Mix

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A specific version of a product that can be designated as a distinct offering among an organization’s products.

A group of closely-related product items.

A group of closely-related product items.

All products that an organization sells.

All products that an organization sells.



Product Item

Product Line

Product Mix

• Stock Keeping Unit (SKU)

WHAT ARE PRODUCTS AND SERVICES?PRODUCT ITEMS, LINES, AND MIXES

10-10


Campbell’s Product Lines and Mix

11


Copyright ©2008 by South-Western, a division of Thomson Learning. All rights reserved Chapter10

Product Life Cycles

Explain the concept of product life cycles

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13

ProductLife Cycle

ProductLife Cycle

Product Life Cycle

A concept that provides a

way to trace the stages of a

product’s acceptance, from

its introduction (birth) to its

decline (death).


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

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Growth Stage Increasing rate of

sales

Entrance of competitors

Market consolidation

Initial healthy profits

Aggressive advertising of the differences between brands

Wider distribution15


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

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Decline Stage Long-run drop in

sales

Large inventories of unsold items

Elimination of all nonessential marketing expenses

“Organized abandonment”

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Product Life Cycle

Time

Do

llar

s

Profits

SalesSales

IntroductoryIntroductoryStageStage

GrowthGrowthStageStage

MaturityMaturityStageStage

DeclineDeclineStageStage

0


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Product Life Cycles for Styles, Fashions, and Fads


THE PRODUCT LIFE CYCLEDIMENSIONS

The Life Cycle and Consumers

• Diffusion of Innovation

Innovators

Early Adopters

Early Majority

Late Majority

Laggards


FIGURE 11-4FIGURE 11-4 Five categories and profiles of product adopters (diffusion of innovation)


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REVIEW LEARNING OUTCOMEProduct Life Cycles

Time

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

High to recoupdevelopment

costs

Fall as result ofcompetition &

efficient produc-tion.

Prices fall (usually).

Prices stabilize at low level.

Sal

es


Big Question for Today

How do marketers begin the new product development process?

How do marketers begin the new product development process?


The Importance of New ProductsExplain the importance of developing new products and describe the six categories of new products

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25

MarketDevelopment

Diversification

Increase market share among existing customers

Attract new customers to existing products

Introduce new products into new markets

Create new products for present markets

Categories of New Products

New-to-the-WorldNew-to-the-World

New Product LinesNew Product Lines

Product Line AdditionsProduct Line Additions

Improvements or RevisionsImprovements or Revisions

Repositioned ProductsRepositioned Products

Lower-Priced ProductsLower-Priced Products


The New Product Development Process

Explain the steps in the new-product development process

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New-Product StrategyNew-Product Strategy

Idea GenerationIdea Generation

Idea ScreeningIdea Screening

Business AnalysisBusiness Analysis

DevelopmentDevelopment

Test MarketingTest Marketing

CommercializationCommercialization

New ProductNew Product


Volvo’s YCCHow are new-product ideas generated?

10-28


29

Diversification

Idea Generation

Customers

Employees

Distributors

Competitors

Vendors

R & D

Consultants

Sources ofSources ofNew-ProductNew-Product

IdeasIdeas


30

ScreeningScreening

Idea Screening

The first filter in the product

development process, which

eliminates ideas that are

inconsistent with the

organization’s new-product

strategy or are inappropriate

for some other reason.


THE NEW-PRODUCT PROCESSSCREENING AND EVALUATION

External Approach

Internal Approach

• Customer Experience Management (CEM)

• Concept Tests

10-31


32

Concept Test

Concept TestConcept Test A test to evaluate a

new-product idea, usually

before any prototype has

been created.


33

Business Analysis

Considerations Considerations in in

Business Business Analysis StageAnalysis Stage

Considerations Considerations in in

Business Business Analysis StageAnalysis Stage

Demand

Cost

Sales

Profitability


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Development

Creation of prototype

Marketing strategy

Packaging, branding, labeling

Promotion, price, and distribution strategy

Manufacturing feasibility

Final government approvals if needed


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TestMarketing

TestMarketing

The limited introduction of

a product and a marketing

program to determine the

reactions of potential

customers in a market

situation.

Test Marketing


36

Alternatives to Test Marketing

Single-source research using supermarket scanner data

Simulated (laboratory) market testing

Online test marketing


Speed as a Factor in New-Product Success

• Time to Market (TtM)

THE NEW-PRODUCT PROCESSCOMMERCIALIZATION

10-37


REVIEW LEARNING OUTCOMENew-Product Development Process

38


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


40

Success Factors

Match between product and market needs

Different from substitute products

Factors in SuccessfulFactors in SuccessfulNew ProductsNew Products

Benefit to large number of people


41

REVIEW LEARNING OUTCOMEWhy Products Succeed and Others Fail

copyright ©2008 by south-western, a division of thomson learning. all rights reserved chapter 10 ...

Documents

product items

newproduct ideas

product planning

product concepts

new marketscreate new

campbells product lines

concept of product life

product life cyclea