managing successful products, services, and … successful products...• pepsico acquired the brand...

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Marketing 3331 Managing Successful Products, Services, and Brands


IN MARKETING NEWS TODAY

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Gatorade: Bringing Science to Sweat

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• Created in 1965 • Rehydration beverage • Coined by an opposing

team coach losing to the Florida Gators in the Orange Bowl



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• More flavors were added • Multiple packet sizes were offered

using different containers • Distribution expanded to convenience

stores, supermarkets and mass merchandisers

• Consistent advertising and promotion • Link to athletic performance benefits • Athletic competition sponsors (NBA, NFL,

NCAA, NHL, NASCAR, MLB etc.) • Entered a global market



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• PepsiCo acquired the brand in 2001 • Gatorade Xtremo – Latin Market in 2002 • Gatorade X-Factor in 2003 • Gatorade Endurance • Serious runners, construction workers,

people involved in long workouts and sweat a lot

• Gatorade Rain – lighter tasting version in 2006

• Gatorade AM – no caffeine alternative for the morning workout consumer

• G2 – low calorie Gatorade in 2008



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“Whether you’re in it for the win, for the thrill or for better health, if your body is moving Gatorade sees

you as an athlete and we’re inviting you to the brand.”


How stages of the product life cycle relate to a firm’s

marketing objectives and marketing mix

actions

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Stages of the product life cycle and its total industry sales and total industry profit

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How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions

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Product Life Cycle • Describes the stages a new product goes through

in the marketplace 1. Introduction 2. Growth 3. Maturity 4. Decline

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Introduction Stage ● The product in introduced to its intended

target market ● Stimulate Trial

○ The objective is to build consumer awareness then stimulate trial; the initial purchase of a product

● Primary Demand ○ Trials stimulate primary demand; the desire for the

product class rather than for a specific brand 11


Introduction Stage ● Selective Demand

○ As competitors’ brands increase and the product progresses along it’s life cycle, the company shifts it’s focus to selective demand; the preference for a single brand

● Skimming Strategy ○ During introduction, pricing can be high or low; a high

initial price is to recuperate costs of development and capitalize on the price sensitivity of early buyers

● Penetration Pricing ○ Price low to discourage competitive entry

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How many blades again? ● Budgeted $200 million in

advertising ● Target market: male shavers ● Over 60% became aware of the

razor ● 26% tried the product within six

months

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Product Life Cycle for the stand-alone fax machine for business use: 1970-2014

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Growth Stage ● New Features

○ Differentiation becomes a way to gain products; features are added, build new versions

● Broad Distribution ○ Start fighting for shelf space and retail space for

displays 15


Maturity Stage ● Slowing of total industry sales or product class

revenue ● Profit Declines

○ Fewer buyers are entering the market for this product and fierce competition

● Product Differentiation ○ Last call for product proliferation and additional

features 16


Decline Stage ● Sales drop; mostly because of environmental changes

○ i.e. Digital music players (iPods) pushed compact discs into extinction

● A company will eventually follow one of two strategies for a declining product ○ Deletion ○ Harvesting

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Decline Stage ● Deletion

○ Dropping the product from the company’s product line; most drastic strategy

● Harvesting ○ A company retains the product but reduces

marketing costs 18


Three Aspects of the Product Life Cycle 1. The length of the life cycle 2. The shape of the sales curve 3. The rate at which consumers adopt

products

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Length of the Product Life Cycle ● There is no set time that it takes a product to

move through it’s life cycle ● Consumer products have much shorter life

cycles than business products 20


Shape of the Product Life Cycle ● High-Learning Product

○ One for which significant customer education is required and there is an extended introductory period ■ i.e. Computers in the 1980s were like this; people

had to be trained to use them; anyone remember MS-DOS?

● Low-Learning Product ○ Sales are higher because little training is required of

the consumer and the benefits are readily understood ■ Since it can be easily imitated by competition, a

broad distribution strategy is the best way to go 21


Shape of the Product Life Cycle ● Fashion Product

○ It’s a style of the times; fashions are introduced, decline and then seem to return. It could take months, years or even decades. ■ i.e. Women’s hosiery by Hanes; loss of sales every

year because women consider it not fashionable ● Low-Learning Product

○ A product that has rapid sales on introduction and then equally rapid decline; mostly novelty items ■ i.e. toys – Furbies, Tamagotchi, Tickle Me Elmo,

Cabbage Patch Kids, Pogs, Slap Bracelets 22


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Alternative product life cycle curves based on product types


Life Cycle and Consumers ● Diffusion of Innovation

○ A product going through the life cycle reaches many types of consumers during the life cycle ■ Innovators ■ Early Adopters ■ Early Majority ■ Late Majority ■ Laggards

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Five categories and profiles of product adopters (diffusion of innovation)


Life Cycle and Consumers ● Barriers to Adoption

○ Usage ■ The product is not compatible with existing habits

○ Value ■ The product provides no incentive to change

○ Risk ■ Physical, economic, or social

○ Psychological ■ Cultural differences or image

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Toyota Prius: Barriers to Adoption ● Usage

○ The car is not compatible with existing driving habits ● Value

○ Consumers do not recognize the superiority of an electric car over internal combustion engines

● Risk ○ Buyer uncertainty when it comes to actual costs of

ownership ● Psychological

○ Electric cars are sometimes deemed fragile, less powerful, and will “run out of battery”

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Role of a Product Manager: Managing the Product Life Cycle ● Product Life Cycle

○ Modify the product ○ Modify the market ○ Reposition the product

● New Product Development ● Marketing Program Implementation ● Data Analysis

○ Category Development Index (CDI) ○ Brand Development (BDI)

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Modifying the product or market ● Product Modification

○ Product Bundling ■ Increasing a product’s value by the sales of more

than one product in a package ○ New characteristics

■ Making changes to a product’s quality, performance, or appearance to increase sales

● Market Modification ○ Finding new customers ○ Increasing a product’s use ○ Creating a new use situation

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Harley Davidson ● Motorcyles with

smaller handgrips, a lower seat and easier- to-pull clutch lever

● Gave women a much more comfortable ride

● Modifying the product

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Repositioning the product ● Product Repositioning

○ Changes the place a product occupies in a consumer’s mind relative to competitive products

● Reacting to a Competitor’s Position ○ A competitor is so entrenched in a position that it’s

affecting sales and market share 31


Repositioning the product ● Reaching a New Market

○ Unilever introduced iced tea in Britain and it failed. The consumer saw it as unused leftover tea that got cold. So they carbonated it and repositioned it as a cold soft drink.

● Catching a Rising Trend ○ Changing consumer trends need to be watched and

capitalized on; healthy organic foods ■ i.e Quaker Oats claims their food reduces heart

disease, Kraft Cheese is “calcium-enriched” 32


● Repositioned its products to focus on fit, durability and comfort rather than competing directly with NIKE or Adidas

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Changing the value offered ● Trading Up

○ Involves adding value to the product (or line) through additional features i.e. Michelin tires increasing mileage

● Trading Down ○ Involves reducing features, quality or price

■ i.e. Airlines offering more seats, yet reducing leg room

● Downsizing ○ Reducing the package content without changing the

package and maintaining or increasing the package price 34


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Get less, pay more: Downsizing


Branding • a marketing decision in which an organization uses a name, phrase,

design, or symbols, or combination of these to identify its products and distinguish them from those of competitors

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Brand Name • any word, device (design, shape, sound, or color), or combination of

these used to distinguish a seller’s goods or services

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Logotype (Logo)

The symbol would soon be dubbed "The Love Symbol" and Prince would be referred to as "The Artist Formerly Known as Prince", "TAFKAP", or simply "The Artist". Later, when he changed his name back to Prince again, he was sometimes called "The Artist Formerly Known as 'The Artist Formerly Known as Prince'"


Brand Personality • a set of human characteristics associated with a brand name

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Brand Equity • the added value a brand name gives to a product beyond the

functional benefits provided\ • Provides a competitive advantage • Consumers are willing to pay a premium

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The strong brand equity for the Louis Vuitton brand name permits the company to charge premium prices

for its products

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The customer-based brand equity pyramid

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Creating brand equity ● Develop positive brand awareness ● Establish a brand’s meaning ● Elicit the proper response ● Create intense brand loyalty

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Valuing brand equity ● Provides a financial advantage ● Brand Licensing

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Picking a brand name • Should suggest product benefits • Should be memorable and positive • Should fit the company or poduct image • Should have no legal or regulatory restrictions • Should be simple and emotional


Multiproduct Branding ● a branding strategy in which a company

uses one name for all its products in a product class ○ Product Line Extensions ○ Subbranding ○ Brand Extension ○ Co-branding

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Product Line Extension • The practice of using a current brand name to enter a new market

segment

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Subbranding • Combines a corporate or family brand with a new brand

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Brand Extension • The practice of using a current brand name to enter different

product class

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C0-branding • The practice of two or more brands using a current brand name to

enter different product class, create a new product or enter a new market

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Multibranding ● Fighting other brands ● It’s sole purpose is to fight other competitor brands

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What branding strategy is used?

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Creating Customer Value and Competitive Advantage

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● Packaging ● Label

○ Communication Benefits ○ Functional Benefits ○ Perceptual Benefits


Packaging and labeling challenges ● Connecting with Customers

○ i.e. nutritional label ● Environmental Concerns

○ i.e aerosol cans ● Health, Safety and Security Issues

○ i.e. shelf life ● Cost Reduction

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Off-Peak Pricing • involves charging different prices during different times of the day or

during different days of the week to reflect variations in demand for the service

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Seven Ps of Marketing Services • an expanded marketing mix for services that includes the four Ps

(product, price, promotion, and place or distribution) as well as people, physical environment, and process

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Marketing Services ● People

○ Customer Experience Management (CEM) ● Physical Environment ● Process

○ Capacity Management ■ integrates the service component of the marketing mix

with efforts to influence consumer demand 57

managing successful products, services, and … successful products...• pepsico acquired the brand...

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