Chapter f o u n d a t i o n s o f Chapte r M A R K E T I N G Product Strategy 11
Chapter foundations of Chapter M A R K E T I N G Product Strategy 11.
Dec 22, 2015
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Chapterfo
unda
tions
of ChapterM A R K E T I N G
ProductStrategy
11
Chapter
Objectives1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their success.
8. Describe various organizational arrangements for new-product development.
9. Examine the stages in the product development process.
Product Strategy 11
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Chapter
Product Mix
• The assortment of product lines and individual offerings available from a company.
Product Strategy 11
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Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.
Product Strategy 11
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The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT
Meats Groceries NonedibleFresh and frozen meats Peanut butter By-products
Bacon Canned vegetables & fruit Hides
Sausages Vegetable oils
Wieners Lard
Luncheon meats Shortening
Canned meat French fries
Poultry Maple syrup
Jams
Product Strategy 11Table 11.1
DEPTH OF ASSORTMENT
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Cannibalizing
• Situation involving one product taking sales from another offering in a product line.
Product Strategy 11
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Line Extension
• The development of individual offering that appeal to different market segments but are closely related to the existing product line.
Product Strategy 11
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Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the market
• Exploiting product life cycle
Product Strategy 11
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Product Life Cycle
• A product’s progress through introduction, growth, maturity, and decline stages.
Product Strategy 11
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ChapterProduct Strategy 11
Figure 11.1
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Stages in the Product Life Cycle
Chapter
Overlap of Life Cycle for Products A and B
Product Strategy 11Figure 11.2
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Fashions
• Currently popular products that tend to follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.
Product Strategy 11
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ChapterProduct Strategy 11
Figure 11.3
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Alternative Product Life Cycles
Chapter
Fad Cycles
Product Strategy 11Figure 11.4
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Extending the Product Life Cycle
1. Increase frequency of use by present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or packaging.
Product Strategy 11
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ChapterProduct Strategy 11
Figure 11.5
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Decay Curve of New-Product Ideas
Chapter
Product Improvement Strategy and Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing products.
Product Strategy 11
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Product Development Strategy and Product Diversification Strategy
Product Development Strategy
• Introducing new products into identifiable or established markets.
Product Diversification Strategy
• The development of new products for new markets.
Product Strategy 11
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Forms of Product Development
Product Strategy 11Table 11.3
Old Product New Product
Old Market
New Market Product diversificationMarket development
Product improvement Product development
Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13, 1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs, NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.
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Structure for New-Product Development
1. Committee
2. Department
3. Product/Brand Manager
4. Venture Team
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Product Managers(Brand Managers)• Individuals assigned one product or
product line and given responsibility for determining its objectives and marketing strategies.
Product Strategy 11
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Venture-Team Concept
• An organizational strategy for developing new products through combing the management resources of marketing, technology, capital, and management expertise in a team.
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Seven Stages of the New-Product Development Process
Product Strategy 11Figure 11.6
Business Strategy
Developnew-product
strategy
Generate ideas/
concepts
Screen and evaluate
Conduct business analysis
Develop Test Commercialize
CommercializedProduct
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Concept Testing
• A marketing research project that attempts to measure consumer attitudes and perceptions relevant to a new-product idea.
Product Strategy 11
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Basic Criteria for New-Product Screening1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales force and distribution resources and skills, advertising and promotion resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how completely the product has actually been planned and technical issues dealt with, fit with current product line, superiority in meeting customer needs, quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of competition, presence of price bases competition, number and size of competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of customers.
Product Strategy 11Table 11.4
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Test Marketing
• Selecting areas considered reasonably typical of the total market, and introducing a new product to these areas with a total marketing campaign to determine consumer response before marketing product nationally.
Product Strategy 11
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Adoption Process
• A series of stages consumers go through, from learning of a new product to trying it and deciding to purchase it regularly or to reject it.
Product Strategy 11
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Consumer Adoption Process
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption/Rejection
Product Strategy 11
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ChapterProduct Strategy 11
Figure 11.7
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Categories of Adopters on the Basis of Relative Time of Adoption
Chapter
Consumer Innovators
• The first purchasers -- those who buy a product at the beginning of its life cycle.
Product Strategy 11
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Diffusion Process
• The filtering and acceptance of new products and services by the members of a community or social system.
Product Strategy 11
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What Determines the Rate of Adoption?
1. Relative Advantage
2. Compatibility
3. Complexity
4. Divisibility
5. Communicability
Product Strategy 11
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Chapter
Hazardous Products Act
• A major piece of legislation that consolidated previous legislation and set significant new standards for product safety; defines a hazardous product as any product that is included in a list (called a schedule) compiled by Consumer and Corporate Affairs Canada or Health and Welfare Canada.
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Some Hazardous Products Act Regulations• Bedding may not be highly flammable.• Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.• Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.• Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.• Hockey helmets must meet safety standards to protect young hockey players.• Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.• Matches must meet safety standards for strength and packaging.• Safety glass is mandatory in domestic doors and shower enclosures.• Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.• Toys and children’s playthings must comply with safety standards.• Crib regulations provide for increased child safety.
Product Strategy 11Table 11.5
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Chapterfo
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