Module 6 Developing and Utilizing a Marketing Mix: Product Management Kotler’s Chapters 10, 11, and 13.

Module 6

Developing and Utilizing a Marketing Mix: Product

Management

Kotler’s Chapters 10, 11, and 13

Chapter 10: Positioning the Market Offering Through the Product Life Cycle

• Learning Objectives– 1. Describe and apply how a firm can utilize

product, service, personnel, channel, or image differentiation.

– 2. Describe and apply how to develop and communicate a positioning strategy.

– 3. Describe the Product Life Cycle and apply what it means for marketers.

Chapter 10/Objective 1: Describe/apply how a firm can utilize differentiation.

• Differentiation – the act of designing a set of meaningful differences to distinguish the company’s offering from competitive offerings. What these are may change over time given the environment.

• Anything a customer sees as offering value can be used to differentiate a product.

• Product, Service, Personnel, Channel, and/or image.

Chapter 10/Objective 1: Describe/apply how a firm can utilize differentiation.

• Product – Form, features, performance quality, conformance

quality, durability, reliability, repairability, style, and design (the totality of features that affect how a product looks and functions in terms of customer requirements).

• Service – Ordering ease, delivery, installation, customer

training/consulting (ex. Technical support), maintenance and repair, and miscellaneous (ex. Extended warranty, loyalty programs).

Chapter 10/Objective 1: Describe/apply how a firm can utilize differentiation.

• Personnel– Competence, Courtesy, Credibility, Reliability,

Responsiveness, and Communication.

• Channel– Coverage, Expertise, and performance.

• Image (how public perceives firm/products)– Symbols, media, atmosphere, and events.– Image needs to convey character/value proposition in a

distinctive but consistent manner with emotional power that is conveyed in all of its communication/contacts.

Chapter 10/Objective 2: Describe/apply how to develop and communicate a

positioning strategy.• Firms need to focus on those meaningful

differences to consumers that are – Important (highly valued customer benefits)– Distinctive (differences memorable/unique)– Superior (better than competition)– Preemptive (hard to copy)– Affordable (consumers can pay for difference)– Profitable (must result in more profit for firm).

Chapter 10/Objective 2: Describe/apply how to develop and communicate a

positioning strategy.• Positioning

– The act of designing the company’s offering/image to occupy a distinctive place in the target’s mind. End result should be a market-focused value proposition.

– A firm can try to strengthen its own current position in the consumer’s mind; grab an unoccupied position; deposition/reposition the competitor; or focus on being part of an exclusive club.

– The entire marketing mix needs to support the positioning.

Chapter 10/Objective 2: Describe/apply how to develop and communicate a

positioning strategy.• Unique Selling Proposition – focus on one

consistent positioning message. Must be something that customers care about and understand. Focus all communication.

• Different positioning strategies include: attribute, benefit, use/application, user, competitor, product category, and quality/price positioning.

Chp 10/Obj 3: Describe the PLC and apply what it means for marketers.

• See Figure 10-4 (p. 304) and Table 10-5 (p. 316).• Introduction

– Profits negative due to heavy costs of introduction and sales are slow. Promotional expenditures at their highest ratio to sales due to need to inform, induce trial, and secure distribution. Pricing can focus on skimming or penetration. There can be a pioneer advantage by introducing product first in the market.

• Growth– Rapid market acceptance and profit improvement as costs

spread out over a larger volume of sales. May face a trade off between market share and profit.

Chp 10/Obj 3: Describe the PLC and apply what it means for marketers.

• Maturity– Slowdown in sales and profits stabilize/decline. Most

products are in the mature stage. May need to focus on market modification (increase number of users or amount used), product modifications (ex. quality, feature, style improvements), or modifying marketing mix.

• Decline– Sales decline and profits erode due to technological

advances, changes in consumers’ tastes, or competition. Can increase investment, maintain investment, decrease investment selectively, harvest investment, or divest.

Chapter 11: Developing New Market Offerings

• Learning Objectives– 1. Describe and apply the eight stages of new

product development.

Chp 11/Obj 1: Describe/apply the eight stages of new product development.

• 1. Idea Generation• 2. Idea Screening• 3. Concept Development and Testing• 4. Marketing Strategy Development• 5. Business Analysis• 6. Product Development• 7. Market Testing• 8. Commercialization

Chp 11/Obj 1: Describe/apply the eight stages of new product development.

• 1. Idea Generation– Good ideas can come from anywhere, consumers,

employees, management, suppliers, competition, etc… The firm needs to encourage the flow of new ideas.

• 2. Idea Screening– Given the high cost of new product development and

the high rate of failure, one needs to be able to weed out the bad ideas before too many resources are devoted to it. Most firms utilize a idea/new product committee that screens initial ideas/estimates against key criteria.

Chp 11/Obj 1: Describe/apply the eight stages of new product development.

• 3. Concept Development and Testing– Firms need to test product concepts (elaborated version

of the idea expressed in meaningful consumer terms) with appropriate targets.

• 4. Marketing Strategy Development– Describe the target market’s size, structure, behavior;

the product’s positioning; and estimated sales, market share, and profit for first few years.

– Outline marketing mix and marketing budget for first year.

– Project long run sales, profit, and marketing strategy.

Chp 11/Obj 1: Describe/apply the eight stages of new product development.

• 5. Business Analysis – Determine if product meets firm’s objectives. Estimate

total sales, costs, and profits. Consider break even and risk analysis. Cross functional teams are very useful here.

• 6. Product Development – expensive– Company produces a safe, affordable, prototype that

embodies the features customers’ value. Prototype must go through rigorous consumer and functional tests. Time is of the essence but have to be careful not to miss key problems with new product

Chp 11/Obj 1: Describe/apply the eight stages of new product development.

• 7. Market Testing – dress rehearsal– For Consumer Goods: sales wave research, simulated test

marketing (lab), controlled test marketing, full test markets. Trying to estimate trial, first repeat buy, adoption, and purchasing frequency.

– For Business Goods – alpha/beta testing, trade shows, distributor/dealer displays, full test markets.

• 8. Commercialization– Address when (timing), where (geographic strategy – single

location, region, several regions, national, international), to whom (target market prospects – innovators/early adopters, heavy users, opinion leaders), and how (introductory market strategy).

Chapter 13: Managing Product Lines and Brands

• Learning Objectives– 1. Describe and apply what is meant by

product levels, product classification, and the product mix.

– 2. Discuss and apply the issues involved in branding a product.

Chp 13/Obj 1: Describe/apply what is meant by product levels, product

classification, and the product mix.• Product

– Anything that can be offered to a market to satisfy a want or need. Includes physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

• Product Level – 5 levels and each level adds more customer value. The 5

levels constitute the customer value hierarchy.– (1) core benefit, (2) basic product, (3) expected product, (4)

augmented product – exceeds expectations, and (5) potential product – transformations/new ways to satisfy customers.

Chp 13/Obj 1: Describe/apply what is meant by product levels, product

classification, and the product mix.• Product Classification

– Durability and Tangibility: nondurable, durable, and services

– Consumer Goods: convenience, shopping, specialty, and unsought

– Industrial Goods: materials and parts, capital items, supplies and business services

• Product Mix – product assortment– Consider width, length, depth, and consistency.

Chp 13/Obj 2: Discuss/apply the issues involved in branding a product.

• Brand – A name, term, sign, symbol, and/or design intended to

identify a product and to differentiate it from the competition.

• Brand Equity – value of brand– Relates to the price premium the brand commands times the

extra volume it moves over an average brand. – High brand equity can mean lower marketing costs due to

customers’ awareness and loyalty, more leverage with channel, customers willing to pay price premiums, less vulnerability to competitors’ pricing, and less difficulty with expanding product mix.

Chp 13/Obj 2: Discuss/apply the issues involved in branding a product.

• Branding Challenges – utilize a generic, private label or manufacturer brand

• Brand-Name Decisions– Individual, blanket family name, separate family

names, company name with individual product name.

– Brand name should suggest product benefits; product qualities; be easy to pronounce, recognize, and remember; be distinctive; and not carry poor meanings in other languages/culture.

Chp 13/Obj 2: Discuss/apply the issues involved in branding a product.

• Brand Strategy Decisions– Line extensions – existing brand name extended to new

sizes/flavors in existing product category (most common strategy)

– Brand extensions – brand name used for new product category

– Multibrands – new names in same product category– New brands – new names in new product category– Cobrands – brands bearing two or more well known

brand names.

Module 6: Product Management Summary

• Product key variable in marketing mix.• Need to determine what is unique about your firm/product

compared to competition and how to effectively utilize that difference in positioning your firm/product in the customer’s mind.

• There is a need for new products, as PLC shows product categories will eventually reach maturity and decline. New products though are expensive and risky so firms need to develop a process to effectively develop new products for long run success considering the current product mix.

• Branding is key in establishing a product’s identity and high brand equity has many rewards.

• ANY QUESTIONS?