MarketingManagement
Unit8
Unit8
ProductManagement:Decisions,DevelopmentAnd
LifecycleStrategies
Structure
8.1. Introduction 8.2. Levelsofproduct 8.3.
Classificationofproducts 8.4. 8.5. 8.6. 8.7. 8.8. 8.9.
Producthierarchy Productlinestrategies Productmixstrategies
Packagingandlabeling Newproductdevelopment Productlifecycle
Terminalquestions AnswerstoSAQsandTQs
8.10. Summary
8.1. Introduction Product:
Agood,service,person,place,eventsororganizationsofferedtoconsumerstosatisfyhis
needorwant.
Agoodisatangibleproduct,whichcanbeseenandtouch.Thesetangibleitemscanbeproducedin
bulkandinventoried.ForExample,SwitchesfromBajajElectricalsaregoods.
Aserviceisanintangibleproduct,whichrequiressimultaneousconsumptionandproduction.These
are also perishable in nature. For example, A Wockhard hospital
offers heart surgery, which consumers can not see but need to
undergo when there is a pain in the heart. Hence surgery a
service,isperishableinnature,needtobeproducedandconsumedsimultaneously.
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Differencesbetweengoodsandservices: Table8.1 Goods 1. Tangible
2. Inventoried 3. Nonperishable 4. Homogeneous Services Intangible.
Simultaneousproductionandconsumption. Perishable Heterogeneous
Aproductmaybepersonalso.Heremarketertriestobuyandsellthecelebritiesorsportspersonsof
aleagueorclubetcFor,example,BoardofcricketcontrolinIndia(BCCI)asksitsIndianpremier
league(IPL)teamstobuyIconicplayersandforeignplayersforcertainprice.
Aneventisalsoconsideredasproduct.Manyeventmanagementcompaniesearntheirrevenueby
sellingticketsandadvertisementspaceattheevent.Thefollowingexampleexplainshowanevent
canbemarketed. Figure8.1
Anorganizationisalsoconsideredasaproduct.Itcanbeboughtandsoldonthebasisofvalueof
th thefirm.TomakeitmoreclearTatasboughtTetleyfor271mnon27
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Many state governments and central governments sell their places
to get the pie in the tourism market. Here governments provides
advertisements of a place to attract tourists from India and
abroad. For example, Karnataka government under one state many
world campaign highlighted historical places, wildlife, waterfalls
etc... In the following advertisement it provides the inputs on
Hampitotourists,ahistoricalplaceinKarnataka. Figure8.2
LearningObjectives Afterstudyingthisunit,youwillbeableto 1.
Analyzehowproductsareclassified. 2.
Discusstheproductlineandproductmixstrategies. 3.
Describetheproductlifecycle. 4.
Assessthestagesinvolvedinthenewproductdevelopment.
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8.2.LevelsOfProduct 1. Core product: This is the fundamental
goods or service offered to the consumer. E.g. Hospital services 2.
Genericproduct:Thisisthebasicversionoftheproduct.E.g.Hospitalhavingdoctors,nurses,
bedsandlaboratories. 3.
Expectedproduct:Theminimumattributesconsumerexpectsintheproduct.E.g.Hospitalshould
havequalifieddoctors,goodserviceandproperamenities. 4. Augmented
product: Inclusionof valueadded services to
theexpectedproducttodistinguish it from competitors. E.g. Online or
tele medicine facilities, expert knowledge sharing, 24 hour
ambulanceserviceetc... 5. Potential product: these are future
products provided by the company which customer didnt
anticipate.Ultimatelyconsumerwillbedelightedbythisproduct.E.g.Medicalinsurancefromthe
hospital,afterservicecareetc 8.3.ClassificationOfProducts
Table8.2
Product ConsumerProducts Businessproducts Materialsandparts
Conveniencegoods
Shoppingproducts
Capitalitems
Specialtyproduct
Suppliesandservices
Unsoughtgoods
Products are classified into two broad categories. They are
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Consumerproductsarepurchasedbytheconsumerforhispersonalconsumption.
Business products: These products are purchased by business concern
for further product development 8.3.1.ConsumerProducts
Astheseproductsarepurchasedbythefinalconsumerforhisownconsumption,themarketisvery
big.Thelargemarketneedtoservedifferentneedsofconsumer.Thereforecompanyshouldcreate
different types of products. Hence consumer products are classified
into four different categories. Theyare a. Conveniencegoods. b.
Shoppinggoods c. Specialtygoods d. Unsoughtgoods. a. Convenience
goods: The fast moving consumer goods, which are purchased
regularly with lessamountofeffort.
1. Thesearepurchasedfrequently. 2. Customerinvolvementisverylow.
3. Priceoftheproductisverylow. 4.
Intensivedistributionisusedtoreachtheconsumer. 5.
Thestockturnoverishigh. 6. Aggressivepromotionisrequiredi.
Example:soapsanddetergents. b. Shopping goods: High consumer
involvement products in which consumer process the
informationofproductsuitability,qualityandprice.
Comparingwithconveniencegoods,shoppinggoodsarepurchasedlessfrequently.Consumertakes
lotoftimetosearchandevaluatetheinformation.Theseproductsareavailableinselectedoutlets.
Thepriceoftheproductisveryhigh.Forexample,aconsumerwanttopurchasewashingmachine
willcollecttheinformationontypeofwashingmachine,typeofcontrol,loading,washmethod,pre
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c.
Specialtygoods:Atangibleproductforwhichaconsumerposseshighbrandloyaltyandready
towait,orspendtime i. ii. iii.
Consumersarehavingstrongbrandloyalty.
Usuallycompaniesadoptpremiumpricingstrategy.
Exclusivedistributionandselectivecommunicationstrategiesareadopted.
To illustrate, a consumer is willing to pay Rs 32000 for Bose
Digital home theater though
competitorsproductsareavailableatRs15,000toRs25000. d. Unsought
goods: These productsare called unsoughtbecause consumer usually
unawareor ignorant to purchase. Marketers need heavy promotion
activities to educate and sell their products.
Insuranceistheproductwhichmostoftheconsumerareawarebutveryfewarewillingtopurchase.
LifeInsuranceCorporationtrainsitsagentstopromoteandsellaggressively.Theseagentsprovide
lotofinputsregardinginsurancetoconsumers.
8.3.2.BusinessProductsClassification Business products are
purchased by the business consumer who uses this product as a
material, part, capital item or service in producing his/her final
product. For example, CET offers range of services to Birla copper,
Jindal vijayanagar steel and Mukund limited. These services are
used to developthefinalproductsofthesecompanies. Table8.3
CentreforEngineering&Technology Center for Engineering &
Technology (CET), an ISO: 9001 certified organization is the
design, engineering & consultancy unit of SAIL. It has its Head
Office at Ranchi, Sub Centers at Bhilai,
Durgapur,Rourkela,Bokaro,Burnpur&Bhadravati,UnitOfficesatBangalore,andNewDelhifor
formulationofInterplantStandardsforSteelIndustry.Asasolutionproviderforallprojectneeds,
CEThadbeenrenderingcompleterangeofservicesnotonlytotheSteelPlantsunderSAILbut
alsotovariousclientsotherthanSAILbothwithinandoutsidethecountry.Someoftheimportant
clients other than SAIL include EGITALEC (Egypt), Ashok Steel
(Nepal), Chittagong Steel Mills
(Bangladesh),BirlaCopper,MukandLtd.,JindalVijayanagarSteelsLtd.,NationalIron&SteelCo.,
Hindustan Zinc Ltd., National Mineral Development Corporation and
Romelt SAIL (India) Ltd.,
CETisalsothenodalagencyforacquisitionandlateraltransferoftechnologieswithinSAILplants.
The range of services includes conceptualization, project
evaluation & appraisal, project
consultancy,design&engineeringandprojectmanagementintheareasofironandsteelmaking.
Apartfrom this, CET hasbeen providing its services in the related
areas like mineplanningand development, infrastructure development,
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handlingsystem,industrialpollutioncontrolandenvironmentmanagementsystems,watersupply
andsanitation,townplanning,powerprojects,etc
(Source:www.sail.co.in)
Businessproductsareclassifiedintothreecategories.Theyare a.
Materialsandparts. b. Capitalitems c. Suppliesandservices. a.
Materialsandparts:Theseproductsarefurtherclassifiedasrawmaterialsandmanufactured
materialandparts.
Materialsandparts. Rawmaterials manufacturedmaterials& parts
1.componentmaterials 2.Componentparts
1.Naturalproducts 2.Farmproducts
Materialsareclassifiedintorawmaterialsandmanufacturedmaterialsandparts.
Rawmaterialsareoftwotypesfirstly,Naturalproductsandsecondly,Farmproducts.
Natural products are extracted and used for further product
development. For example, Orex minerals private limited supplies
iron ore to Adani exports limited, Nobel resources and trading
privatelimitedandSinosteelIndiaprivatelimited. Farm products are
also used in further product development. For example, Parle agro
division suppliesrequiredwheatfortheproductionofbiscuits.
Manufactured materials are further classified into two types. They
are component parts and componentmaterials. Component parts. For
example, Melco Precisions private limited supplies Heat resistant
steel to Grasim,NTPCandNFLforfurtherproductdevelopment.
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Component materials These are also called as original equipment
manufacturer products. These
companiesproductsaredirectlyfittedinthefinalproduct.Forexample,MRFtyresaredirectlyfitted
inMarutiUdyogLimitedcars. b. Capital items includes developing the
building( for example, L & T and Siemens developing
BangaloreInternationalAirport)Fixedequipments(forexample,Lenovosupplyingcomputersto
Manipaluniversity)Accessoryequipments(forexample,HindustanEveresttoolslimitedsellsits
spannersandplierstoindustrialcustomers)andofficeequipments(HPsupplyingfaxmachineto
Shristiautomationprivatelimited) c.
Suppliersandservices:Suppliesincludesoperatingsupplies(CastrolsellsitslubricantstoVRL
limited)maintenanceandrepairservices(Eaglesecuritiesservicetocorporateclients)
1.4.
ProductHierarchyThedifferentstagesintheproductandtheirattributesarelistedbelow
Table8,3 1.Needfamily : 2.Productfamily :
Thecoreneedthatunderliestheproductfamily All the product classes
that can satisfy a core need with reasonable effectiveness.
Agroupofproductswithintheproductfamilyrecognizedashavinga
certainfunctionalcoherence 4.Productline : A group of products
within a product class that are closely related because they
function in a similar manner or are sold to the same
customergroupsoraremarketedthroughthesametypesofoutletsor
fallwithingivenpriceranges. 5.Producttype : Those items within a
product line that share one of several possible formsoftheproducts.
6.Brand : Thenameassociatedwithoneormoreitemsintheproductlinethatis
usedtoidentifythesourceorcharacteroftheitem 7.Item : A distinct
unit within a brand or product linethat is distinguishable by
size,price,appearance,orsomeotherattribute.
3.Productclass
:
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8.5.Productlinestrategies Product line: The group of related
products which uses same marketing effort to reach the consumer.
Theproduct line identifiesprofitable and unprofitableproducts
andhelps inallocation of resources according to that. The product
line understanding helps the marketer to take line extension, line
pruningandlinefillingstrategiesofthecompany.
Pidiliteindustries,theadhesivesandchemicalcompanyhavefollowinggroupofrelatedproducts(or
productlines)inconsumerandbusinessmarkets. Consumermarket.
1. Adhesivesandsealants. 2. Artmaterialsandstationeries. 3.
Constructionchemicals. 4. Automotivechemicals 5.
FabriccareBusinessmarket.
1. Industrialadhesives. 2. Textilechemicals. 3.
Organicpigmentpowders. 4. Industrialresinsand 5.
Leatherchemicals.PRODUCTLINEDECISIONS:
Themajorproductlinedecisionsare a. b. c. Productlinelength:
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d.
Productlinepruning.
a. Product line length: The number of items in the product line
is called the product line length.
Companyshoulddecidewhetheritrequireslongerchainorshorterlength.Thedecisiondepends
upontheobjectiveofthecompany,competitiveenvironmentandprofitability.Ifthechainisshort
companycanaddnewproductsandifitislengthycompanycanreducethenumberofproducts.
For example, Pidilites adhesives and sealants line has following 11
items in the product line. Hencethelengthofproductlineis11
1. WhiteGlue 3. GlueStick 5. EpoxyPutty 7. PVCInsulationTape 9.
ContactGlue 11. MaintenanceSpray
2. PaperGlue 4. InstantAdhesive 6. EpoxyAdhesive 8.
SiliconeSealants 10. AllPurposeGlue
b.
Productlinestretching:Companylengthensitsproductslineeitherbystretchingupwardsor
downwardsorbothways.Linestretchingdecisiondependsonthreesituation
i. Company which operates in high end market may come up with mid
class or low class targetedproducts. ii. The company which operates
in lower end of market may come up with high end market products.
iii.
Ifthecompanyoperatesinmidsegmentandcomesoutwithlowendproductaswellashigh
endproductthenitisstretchingbothways. To explain let me take an
example of Maruti Suzuki limited. Company launched its first
product
Maruti800intheyear1983andintheyear1985itlaunchedMarutiGypsy.Gypsyiscostlierthan
Maruti 800 and targeted for higher segment. This shows that company
extended its product line upwardsorinshort,upwardstretch.
ATatamotorisplanningtolaunchtheirRs1LakhcarNANOintheyear2008.Thecompanywhich
was targeting upper class and middle class with their products SUMO
and Indica respectively has
stretcheddownwardstoreachanothersegment.Thisillustratesthedownwardstretch.SikkimManipalUniversity
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Toyota Kirloskar limited which extended their line from Qualis
and Corolla to Innova and Camry, is planning to come out with small
car in India. This clearly illustrate the two way
stretchoftheproductline. c. Product line filling: Adding more items
in the present line. For example, in the year 2000 Maruti Suzuki
launched Alto. This product was between Maruti 800 and Maruti Zen.
Here
companywastryingtofillthegapexistedinthesegmentbyintroducingALTOi.e.linefilling.
d. Product line pruning: removing the unprofitable products form
the product line. Toyota
KirloskarphasedouttheirwellknownbrandQualiswhenitthoughtthebrandisnotadding
valuetotheproductline. 8.6.Productmixstrategies
Productmix:Thenumberofproductlineanditemsofferedbymarketertotheconsumer
Acompanysproductmixhasfourdifferentdimensions.Theyareproductmixwidth,productmix
length,andproductmixdepthandproductmixconsistency. Table8.4
Fabriccare House hold Utensil insecticide cleaners Maxo cyclothrin
coil Fragrances Personal care Allied business
Ujala supreme
(9ml, 30ml, 75ml, (8hr, 125ml,250ml) 12hr)
Exo dish Maya washbar (8, 15, 20, 40 (100g, 200g and 100 10hr,
380g) sticks.)
JeevaNatural Continental special (Coconut Milk with Milk
Protein, Coconut Milk with Jasmine and Coconut Milk with Kasturi
Manjal,andis presented in 75gm packs. ) Marketing of godrejTea
Ujala washing powder (25g, 500g,
Max vaporizer (30ml,45ml)
Exo dish washliquid (500ml,
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1Kg) Stiff&shine Maxaerosol
125ml) Marketing of Ektadhoop
(20gm (150ml,300ml) sachets, 100ml and 200ml bottles)
Productmixwidth:Thetotalnumberofproductlinethatcompanyofferstotheconsumers.
Forexample,Jyothylaboratoriesproductmixhassixlines.Hencewidthis6
Fabriccare
House hold Utensil insecticide cleaners
Fragrances
Personal care
Allied business
Productmixlength:Thetotalnumberofitemsthatcompanycarrieswithinitsproductline.
Forexample,Jyothylaboratoriesfabriccaredivisionhasthreeitems
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Stiff&shine
Productlinedepth:Thenumberofversionsofferedofeachproductintheline.
For example, Jyothy laboratories Jeeva Natural is offered in three
versions i.e. Coconut Milk with
MilkProtein,CoconutMilkwithJasmineandCoconutMilkwithKasturiManjal,andispresentedin
75gmpacks. Product mix consistency: If companys product lines
usage, production and marketing are related
thenproductmixisconsistentelseitisunrelated.
IncaseofJyothylaboratories,allsixproductlinesareFMCGs.Henceitishavingconsistentproduct
mix.ButITCCompanyscigaretteandclothproductlinearetotallyunrelated.
8.7.Packagingandlabeling.
Packaging:Theprocessofdesigningandproducingthecontainerorwrapperforaproduct.
Packagingplaysvitalroleinmarketingaproduct.Someruralconsumersidentifyandbuytheproduct
onthedesignorcoveroftheproduct.Packaginghasotherbenefitstotheconsumersalso.Theyare
1. Itgivesproperprotectiontotheproduct. 2. Ithelpsinbulkbreaking.
3. Enticesthecustomertobuytheproduct.
Companiesthosenotgivemuchimportancefacessevereproblemsinthemarket.
Table8.5 WormturnsforCadbury(www.domain_b.com) MohiniBhatnagar
28November2003
Hyderabad:ThewormsinthechocolatebarscontroversyhashitCadburyIndiawhereithurtsmost
andthatisinsales.Thecompanytodayfacestoughtimesaheadasthebusinessenvironmentforits
chocolates becomes increasingly negative with rising raw material
prices and low consumer sentiments, post the worms controversy in
October this year. While the sales of chocolates
(institutionalandretail)fellby3to4percentlastmonthandarepredictedtobedownby10percent
in November by the trade, Cadbury Indiahas had to incuradditional
costs in upgradingpackaging
anddamagecontrolpromotionalefforts.Toaddtoallthis,pricesofmilkandcocoahavebeenontheSikkimManipalUniversity
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upwardpathinrecentmonths,addingfurthertothecosts.Thelargestimpactonsaleshasbeenin
Maharashtra,andspecificallyinMumbai,whichiswherethewholecontroversyaroseaswormswere
foundinCadburychocolatesinallegedlyeightoutletsacrossthestate.Ifitweren'tbadenoughthat
the controversy blew up at the festival season when the chocolates
sales are at their peak, the
companymayalsojusthavetoshelveplansofbecomingamajorsourcinghubforBritishchocolates
and beverages giant Cadbury Schweppes. As part of a global
realignment of its supply chain management, the company was giving
finishing touches to a plan that might have seen Cadbury
IndiaemergeasamajorsupplierofchocolatestotheAsiaPacificregionandtheMiddleEast.The
outsourcing model couldhave resulted in significant revenue
generationfor Cadbury India. Initially
thecompanyblamedretailersfornotstoringtheproductsproperlybutisnowengagedinputtingin
placearegularmonitoringandcheckingsystemofthestorageofthechocolates.
CadburyIndiamanagingdirectorBharatPurisaysthecompanyhasmadesubstantialinvestmentsin
packaginginordertomaintainproductqualityfromthemanufacturertothecustomer.Andnowitis
making all attempts to reassure the consumer and win back their
confidence and interest in the
category.IthasinitiatedProjectVishwas,athreestepprogrammeinvolvingwholesalersandretailers
in which the company partners with the tradersona warfooting to
buildawareness about storage
requirementsforCadburyproducts.InMaharashtrawherethemaximumdamagehasbeendonethe
companyhas involveda teamofqualitycontrolmanagersalong with 300
salespeople to carryout checks of over 50,000 retail outlets which
retail Cadbury products. The products in upgraded
packagingareexpectedtohitretailstoresearlynextyear.Analystssayinthepastcoupleofyearsin
the face of increasing competition from Swiss chocolates major
Nestle India and the homegrown Amul, Cadbury has been pushing its
products aggressively and targeting the adult audience
especiallytoexpandthemarket. Packagingstrategies: 1.
Adoptingasamepackageforentireproductline. 2.
Multiplepacksformultipleproducts 3.
Changingthepackagescontinuously. Labeling:
Labeling:itcarriestheinformationabouttheproductandtheseller.
Typesoflabel: a.
Brandlabel:onlybrandnameismentionedonthepackaging.Forexample,Dharawadmangoes
pack,onlybrandnameishighlighted. b. Grade label: Identifies the
products judged quality with a letter, number or word. For example,
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c.
Adescriptivelabel:givestheentireinformationabouttheproduct,use,andcare.Forexample,
vasemol hair dye packet contains brochure in which it tells how to
use product, what are the precautionsoneshouldtakeetc
SelfAssessmentQuestions1: 1. Aplaceisaproduct a. true b.False 2.
Insuranceistypeofconsumergood 3.
Phasingoutofthebrandformtheproductlineiscalledas 4.
Thenumberofversionsofferedofeachproductinthelineisknownas 5.
arecalledasoriginalequipmentmanufacturerproducts.
8.8.NewProductDevelopment
Newproductsareessentialforexistingfirmstokeepthemomentumandfornewfirmstheyprovide
the differentiation. New product doesnt mean that absolutely new to
the world. It may be modification, or offered in the new market, or
differentiate from existing products. Therefore it is
necessarytounderstandwhatarenewproducts? NewProductsare a. They are
really innovative: Googles Orkut a networking site which
revolutionized social
networking.Inthissitepeoplecanmeetlikemindedpeopletheycanformtheirowngroupsand
manymore. b. They are very different from the others:
Haierlaunchespathbreaking4DoorRefrigeratorsFirsttimein India c.
They are imitative these products are not new to the market but new
to the company. For example, cavin Kare launched ruche pickles.
This product is new to cavin kare but not to the market.
Newproductdevelopmentprocess: Stage 1: Idea generation: new product
idea can be generated either from the internal sources or
externalsources.Theinternalsourcesincludeemployeesoftheorganizationanddatacollectedfrom
the market. The external source includes customers, competitors and
supply chain members. For
example,IngersollrandwelcomesnewideasfromtheGeneralpublic
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.
Stage2:Ideascreening:Organizationmayhavevariousideasbutitshouldfindoutwhichofthese
ideas canbe translated into concepts. In an interview to Timesof
India, Mr. Ratan Tata, chairman TATA group discussed how his idea
saw many changes from the basic version. He told that he
wantedtodevelopcarwithscooterengine,plasticdoorsetc...Butwhenheunveiledthecarsomany
changewerethereintheproduct.Thisshowsthatinitialideawillbechangedonthebasisofmarket
requirements. Stage3:conceptdevelopment:
ConceptsusedforTataNanocarare
Concept1:lowend'ruralcar,'probablywithoutdoorsorwindowsandwithplasticcurtainsthatrolled
down,afourwheelversionoftheautorickshaw Concept 2: a car made by
engineering plastics and new materials, and using new technology
like aerospaceadhesivesinsteadofwelding.
Concept3:Indigenous,inhousecarwhichmeetsalltheenvironmentstandards
Stage4concepttesting:atthisstageconceptwastestedwiththegroupoftargetcustomers.
Stage5:Marketingstrategydevelopment:Themarketingstrategydevelopmentinvolvesthreeparts.
Thefirstpartfocusesontargetmarket,sales,marketshareandprofitgoals.TATAsinitialbusiness
planconsistedsalesof2Lakhcarsperannum.Thesecondpartinvolvesproductprice,distribution
andmarketingbudgetstrategies.TATAsfixedRs1Lakhasthecarprice,andfindingselfemployed
personwhoworkslikeagenttodistributethecars.Thefinalpartcontainsmarketingmixstrategyand
profitgoals.
Stage6:businessanalysis:itistheanalysisofsales,costsandprofitestimatedforanewproductto
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Stage7:Productdevelopment:
TATAnanocardevelopment(sourcebusinessworldnanolution) 1.
Triedtooutsourcetheproductfromallovertheworld. 2.
Developmentofmuleorprototypewith20bhp. 3. Designingthesmallengine
4. Thermodynamicsimulationsandfinalengine 5.
DevelopmentofMPFIwithhelpofBosch. 6.
Costreductionandnegotiatingwithvendors. 7.
SonaKoyoandRaneGroupcameupwithhollowsteeringshafts,savingcostandcuttingweight.
Sharda Motors and Emcon designed the exhaust system and MRF tweaked
the tyres to bear extraweightonrearwheels. Stage8:testmarketing: 1.
Theproductisintroducedintotherealisticmarket 2.
The4Psofmarketingaretested. 3.
Thecostoftestmarketingvarieswiththetypeofproduct.
Stage9:commercialization:Inthisstageproductiscompletelyplacedinthemarketandaggressive
communicationprogramiscarriedouttosupportit.
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8.9.Productlifecyclemanagement:
Theproductwhichisintroducedintothemarketwillundergosomemodificationsovertheperiod.Its
salesalsofluctuate.ThereforemarketerisinterestedinfindingoutHowsaleschangesoverperiod?
And what strategies best suits at that point? A product life cycle
can be graphed by plotting
aggregatesalesvolumeforaproductcategoryovertime.Generallythecurveresemblesbellshaped
curvebutitisnottheonlyonetypeofcurve.Wecanobtainstyle,fashionorfadstyleofproductlife
cyclesalso.
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Productlifecycle(bellshapedcurve)
Accordingtothistypeofcycleaproductpassesthroughfivestages: 1.
Productdevelopmentstage:Inthisstagecompanyidentifiestheviableideaanddevelopsit.
Sales in this stage are zerobut require huge researchand
developmentbudget. Therefore companyincurslossesatthisstage. 2.
Introductionstage:Companyintroducestheproductintothemarket.Astheproductisnewto
themarket,awarenessisusuallyverylow.Herecompanyadoptsheavysalespromotionand
productawarenessprograms.Thecostofproductisveryhighandasaleisverylow.Atthis
juncturecompanychargeshighpricetothecustomer. 3.
Growthstage:Companygetsexperienceovertheperiodandnowtriestogetthemaximum
marketshare(takefirstmoveradvantage).Saleswillgrowrapidlyresultinginlessercostand
betterprofit.Companyreducesthepriceoftheproductandoffersvarietiesandvaluesinit.It
focusesonbuildingbetterdistributionnetworkandpushestheproductthroughit.Therefore
companyneedslesssalespromotion.Numberofcompetitorswillgrowanditforcescompany
tokeeptabonthem. 4. Maturitystage: a. b. c. d. e. f. g. h.
Peaksales. Lowcostpercustomer. Highprofits. Competitionbasedpricing
Communicatingtheproductdifferentiationtoconsumer.
Improvingsupplychainefficiency. Defendthemarketshare
Industryexperiencestheconsolidation.
5. Decline stage: In this stage, product sales and profit
declines. Company should phase out weak items from their product
mix. The advertisement budget of the company also comes down.
Otherproductlifecycles: 1. Style: a style is a basic and
distinctive mode of expression appears in thefield of human
behavior.Forexample,styleappearsinhomes,art,andclothing.Oncethestyleisinventedit
willlostforlongerperiod. 2.
Fashion:currentlyacceptedorpopularstyleinagivenfieldforexample,cargojeansarenow
fashionwithcollegegoingstudents. 3.
Fad:afashionthatentersquickly,adoptedwithgreatzeal,peaksearly,anddeclineveryfast
for example, when the pager is introduced, every body would like to
have the product. But
whenpeoplefoundmobileasalternativesthedemandfortheproductwentdowndrastically.
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SelfAssessmentQuestions2 1.
Inlifecycleproductsalesreachpeakveryquicklyanddeclinesveryquickly.
2.
Maximizingthemarketshareistheobjectiveofcompanyinstageofproductlifecycle.
3. Inproductdevelopmentstageofproductlifecyclesalesare 4.
Imitativeproductsarealsoconsideredasanewproduct a. True b.false. 5.
Marketingmixstrategyofthecompanydecidedin
stageofnewproductdevelopment. 8.10 Summary
1.
Product:Agood,service,person,place,eventsororganizationsthatareofferedtoconsumerstosatisfyhisneedorwant.
2.
Aproductishavingfivelevelsi.e.Coreproduct,genericproduct,expectedproduct,augmentedproduct,andpotentialproduct.
3.
Aproductcanbeclassifiedasconsumerproductsandindustrialproducts. 4.
Productlinelength:Thenumberofitemsintheproductlineiscalledtheproductlinelength.
5.
Productmixwidth:Thetotalnumberofproductlinethatcompanyofferstotheconsumers.
6.
Newproductsmaybereallyinnovative,differentformothersorimitativeone.
7.
Inthegrowthstagesalesandprofitofthecompanyincreases.Terminalquestions:
1. Howdoyouclassifyconsumerproducts? 2.
Bringoutthedifferencebetweengoodsandservices. 3.
Describethenewproductdevelopmentprocess. 4.
Discussthedifferentstrategiesadoptedbymarketerinproductlifecycle.
5. Writeanoteonproductmixstrategies.
AnswerstoSelfAssessmentQuestions SelfAssessmentQuestions1 1. True.
2. Unsought.SikkimManipalUniversity
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MarketingManagement
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3. Linepruning. 4. Productlinedepth. 5. Componentmaterial
SelfAssessmentQuestions2 1. Fad 2. Growth. 3. Zero 4. True 5.
Marketstrategydevelopment. AnswertoTerminalQuestions 1. Refer8.3.1.
2. Refer8.1. 3. Refer8.8. 4. Refer8.9. 5. Refer8.6.
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