Product PlanningProduct PlanningProduct PlanningProduct PlanningInvolves making decisions about Involves making decisions about

those features that are needed to sell those features that are needed to sell a business’s products, services, or a business’s products, services, or

ideasideas

Product MixProduct MixProduct MixProduct Mix

Includes all the different Includes all the different products that a company makesproducts that a company makes

10 - 3

Expanding the Product Mix

Mix-extension strategiesMix-extension strategies include:– Same brand, related product (Tim

Horton coffeemaker)– Same brand, unrelated product

(Swiss Army watch)– Different brand, unrelated

product (Pepsi & KFC)– Different brand, related product

(P&G adds Luvs diapers; already makes Pampers)

10 - 4

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.

10 - 5

Other Product Mix Strategies

• Alteration of Existing Products:Alteration of Existing Products: – Improve an established product with

new design, new package, new uses.

• Product-Mix Contraction:Product-Mix Contraction: – Eliminate an entire line or reduce

assortment within it. – Pruning to reduce similar brands.– Dump unprofitable or indistinct

brands.

Product Mix• Product width – the number of

different product lines a company has

• Product depth – number of product items offered within each product line

Product Mix Cont.

• Product line – group of closely related products made by a company

• Product item - specific model, brand, or size of a product

Product Development Steps

1. Generating ideas2. Screening ideas3. Developing a business proposal4. Develop product (prototype)5. Test the product6. Introduce the product (Marketing)7. Evaluate customer acceptance

Developing Existing Products

• Line extensions – new product lines, ex. Various lines of Tylenol products

• Product modifications – alteration in a company’s existing products– Ex Coke story

Deleting a Product or Product Line

• Obsolescence• Loss of Appeal• Conflict with objectives• Replacement with newer products• Lack of profit• Conflict with other products in the

line

Product Mix Width

Product line-1 Skin Care

• Vaseline• Fair and lovely• Lakme• Ponds• Dove

Product line-2 Bath Soaps• Lux• Lux International• Lifebuoy• Pears• Liril• Dove• Breeze• Rexona

Product Mix Width

Product line-3 Toothpaste

• Pepsodent

• Close up

Product line-4 Detergent Powder

• Wheel• Surf• Surf Excel• Rin

Supreme• Ala

Product Mix WidthProduct line-5 Beverages• Lipton Green

Label• Brooke Bond

Red Label• Bru• Taj Mahal• Taaza• Super Dust

The Product Life Cycle

• the concept of the product life cycle applies to product categories, not to brands; it is related to the concept of diffusion of innovation

• different products will have differently-shaped life cycle curves; will diffuse at different rates

• a product is normally perceived to pass through four stages over its life cycle; introduction, growth, maturity, and decline

• each stage requires different marketing strategies

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.

10 - 16

Do

llars

Time in yearsLoss

0

Profit

Sales Volume

INTRODUCTION GROWTH MATURITY DECLINE

Product Life Cycle Curve

10 - 17

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

10 - 18

Characteristics of Life Cycles

• length of the life cycle will vary across markets; some are quite short and may be getting shorter

• some fads have very short life cycles, while other products stay at maturity for years

• in high-tech markets, life cycles are very short

• some products do not make it through all four stages; they may fail in introduction

• the life cycle must be considered in relation to a specific market; stage may vary across markets

10 - 19

Managing the Life Cycle

Successful life-cycle management requires predicting the shape of the curve and thensuccessfully adapting strategies at each stage.• when to consider entering the market• how to manage to capitalize on growth• it is possible to develop strategies that will

extend the maturity stage; modify the product, devise new uses, or design new appeals– greatest challenge comes at the decline stage

which may result in product abandonment

10 - 20

Part a - Extendedintroduction stage

Part b - Fad

Part c - Indefinitematurity stage

Time in years Time in years

Time in years

Ag

gre

gat

es

ale

sA

gg

reg

ate

sal

es

Different Life Cycles

10 - 21

Planned Obsolescence Fashion and Style

Planned Planned Obsolescence:Obsolescence: – Technological or

functional obsolescence; other things do it better now.

– Style obsolescence: Still serviceable, but looks out of date now.

Style:Style: – A distinctive manner

of construction or presentation in any art, product or endeavour.

Fashion:Fashion: – Any style that is

accepted and purchased by successive groups of people over a long period of time.

10 - 22

Fashion-Adoption Process• Series of buying waves as a given style is

popularly accepted by one group after another.

• Three theories of fashion adoption:– Trickle-downTrickle-down—a given fashion flows

down through several socioeconomic levels.

– Trickle-acrossTrickle-across—the fashion moves horizontally and simultaneously within several socioeconomic levels.

– Trickle-upTrickle-up—a style first becomes popular at lower levels and then flows upward.

10 - 23

TRICKLE-UP

Productadoptedfirst bylowersocio-economicgroup

TRICKLE-DOWN

Productofferedfirst touppersocio-economicgroup

Product introduced at same timein all three types of stores:

TRICKLE-ACROSSExclusive high-priced specialty stores (boutiques)

TRICKLE-ACROSSMedium-priced departmentstores and specialty stores

TRICKLE-ACROSSDiscount stores

Fashion Adoption Theories in Action