7-1 Product Decisions Product is critical element of marketing mix; Anything that can be offered to a market for attention, acquisition, use or consumption.

7-1

Product Decisions

• Product is critical element of marketing mix; Anything that can be offered to a market for attention, acquisition, use or consumption and that might satisfy a want or need.– Physical object, service,

person, place, organization, idea

7-2

Unique Characteristics of Servicesand Resulting Marketing Challenges

Exhibit 7.6

7-3

Product Decisions Involve…

• Product mix- total group of products offered by company

• Product lines-group of closely related product items– Depth-number of items in line

• Brands-combination of name, symbol, term, or design that identifies specific product

• Packaging and labeling• Positioning

7-4

Positioning Decision

• Positioning is the act of designing the company’s offering and image to occupy a distinctive place in the target market’s mind.

7-5

Steps In The Positioning Process

1. Identify relevant set of competitive products serving target market2. Identify the set of determinant attributes that define the “product

space”.3. Collect information from a sample of customers and potential customers

about perceptions of each product on the determinants4. Determine the product’s current positioning.5. Determine the customers’ most preferred combination of determinant

attributes.6. Examine the fit between preferences of market segments and current

position of products.7. Write positioning statement to guide development of marketing strategy.

7-6

Positioning Map: Automobiles For Generation Yers

More “Edgy”

Less “Edgy”

ExpensiveInexpensive

Scion

Kia Sorrento

$13k

Cube

Civic$20K

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Trout and Ries suggest a six-step question framework for successful

positioning:1. What position do you currently

own?2. What position do you want to

own? 3. Whom you have to defeat to own

the position you want. 4. Do you have the resources to do

it? 5. Can you persist until you get

there? 6. Are your tactics supporting the

positioning objective you set?

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• How is the Ford Mustang positioned? How has Ford achieved this positioning? Has its positioning changed over time?

7-9

• Differentiation Strategies – Create differences in the firm’s product offering that sets it apart from competing offerings based on– Product features– Advantages– Benefits

Product Differentiation

7-10

Using Product Descriptorsfor Product Differentiation

Exhibit 6.7

7-11

How is Venus positioned/differentiated from other razors?

7-12

Stages of the Product Life Cycle

Exhibit 7.2

7-13

Marketing Strategy Duringthe Product Life Cycle

Exhibit 7.3

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• Begins when development is complete• Ends when customers widely accept the product• Marketing strategy goals during this stage:

– Attract customers by raising awareness and interest– Induce customers to try and buy– Engage in customer education activities– Strengthen or expand channel and supply

relationships– Build on availability and visibility– Set pricing objectives

Introduction Stage

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• Be ready for sustained sales increases

• Rapid increase in profitability early in the growth stage that decreases at the end of this stage

• Length depends on nature of product and competitive reactions

• Two strategies:– (1) Establish a strong, defensible marketing position– (2) Achieve financial objectives

Growth Stage (1 of 2)

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• Marketing strategy goals in this stage:– Leverage the product’s perceived differential advantages

– Establish a clear product and brand identity

– Create unique positioning

– Maintain control over product quality

– Maximize availability of the product

– Maintain or enhance the product’s profitability to partners

– Find the ideal balance between price and demand

– Keep an eye focused on the competition

Growth Stage (2 of 2)

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• Few, if any, new firms will enter the market

• Still an opportunity for new product features and variations

• Typically the longest stage in the product life cycle

Maturity Stage (1 of 2)

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• Four general goals in this stage:– (1) Generate Cash Flow– (2) Hold Market Share– (3) Steal Market Share– (4) Increase Share of Customer

• Four options to achieve these goals:– (1) Develop a new product image– (2) Find and attract new users to the product– (3) Discover new applications for the product– (4) Apply new technology to the product

Maturity Stage (2 of 2)

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• Two options:– (1) Attempt to postpone the decline– (2) Accept its inevitability

• Harvesting• Divesting

• Factors to be considered during this stage:– Market segment potential– The market position of the product– The firm’s price and cost structure– The rate of market deterioration

Decline Stage

7-20

Product-Mix Width Procter & Gamble Example

Disposable Diapers

Detergents Bar Soap

Toothpaste

Paper Tissue

Pampers Ivory Snow Ivory Gleem Charmin

Luvs Dreft Kirk’s Crest Puffs

Tide Lava Banner

Cheer Camay Summit 1100’s

Oxydol Zest

Dash Safeguard

Bold Coast

Gain Olay

Era

7-21

Product Lines andProduct Mixes at Gillette

Exhibit 7.1

7-22

Product Mix Decisions

• Def.: Set of all products and items that a particular seller offers to buyers.

• Decisions include selection of width, length, depth, and consistency

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Product Line Decisions

• Line stretching– Downward – enter on the low end– Upward – enter on the high end– Two-way – enter both directions– Line-filling – add more items

• Line Modernization – update to reflect current trends, themes

• Line-Featuring-select one or a few items in the line to feature

• Line-Pruning – select item(s) to cut

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What is a Brand?

• A 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 to differentiate them from those of competitors.

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7-26

The World’s Twenty-FiveMost Valuable Brands

Exhibit 7.5

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Branding Decisions

• Brand Name– Individual (General Mills- Bisquick, Gold Medal, Betty Crocker;

P&G)

– Blanket family name (Heinz, Campbell)

– Separate family names (Sears-Kenmore for appliances, Craftsman for tools)

– Company plus individual names (Kellogg Rice Krispies)

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Product Category

Line Category

Existing New

Existing Line Extension – additional items in the same product category under the same brand name, new flavors, package sizes, added ingredients, e.g. Heinz Green Ketchup

Brand Extension – Use existing brand name to launch new products in other categories, e.g. Hondo lawn mowers, marine engines

New Multibrands – Additional brand in the same product category, Pampers, Luvs

New Brands – launches new products in new categories, e.g. Barbie Bedding

Branding Decisions

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Good Brand Names

• Distinctive• Lack Poor Foreign Language Meanings• Suggest Product Qualities• Suggest Product Benefits• Easy to Pronounce, Recognize, Remember

– Zit (Chocolate from Germany)– Koff (Beer)

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Packaging Decisions

• Design, materials, size

• Critical as marketing tool– Self-service– Company & brand image– Opportunity for brand innovation

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Factors Influencing Product Strategy Decisions

• Classification of Products– Convenience– Shopping– Specialty– Unsought Products

• Product Life Cycle

7-32

Product Classification (1 of 3)

• Consumer Product Classifications– Convenience Products

• Routinely purchased, require little or not time searching

• Make them widely available

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– Shopping Products• Spend considerable time making the purchase; seek info on

price, features, service• Product differentiation very important• Have strategy to guarantee and reduce consumer

satisfaction

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– Specialty Products • Unique, shoppers expend considerable time,

effort, money to acquire; accept no substitutes

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– Unsought Products• (1) Products of which consumers are

unaware

• (2) Products that consumers do not consider purchasing until a need or emergency arises

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New Product Development

• Six strategic product development options:– (1) New-to-the-world products (discontinuous

innovations)– (2) New product lines– (3) Product line extensions– (4) Improvements or revisions of existing

products– (5) Repositioning– (6) Cost reductions

• Customer perception of differentiation is critical

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• No sales revenue during this stage

• Components of the product concept:– An understanding of desired uses and benefits– A description of the product– The potential for creating a complete product line– An analysis of the feasibility of the product concept

• Customer needs should be discerned before developing marketing strategy

Development Stage