marketing: real people, real decisions managing the product chapter 10 lecture slides solomon,...
TRANSCRIPT
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Managing the Product
Chapter 10
Lecture Slides
Solomon, Stuart, Carson, & Smith
Your name here
Course title/number
Date
©Copyright 2003 Pearson Education Canada Inc. 10-2
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Chapter Learning Objectives
When you have completed your study of this chapter, you should be able to:
• Explain the different product objectives and strategies a firm may choose.
• Explain how firms manage products throughout the product life cycle.
• Discuss how branding creates product identity and describe different types of branding strategies.
• Explain the roles packaging and labeling play in developing effective product strategies.
• Describe how organizations are structured for new and existing product management.
©Copyright 2003 Pearson Education Canada Inc. 10-3
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Introduction to the Topic
• This chapter follows up from the previous one to deal with managing
products as they are introduced into the market and start to sell. • Product planning would be
considered part of the firm’s
tactical marketing plans.
• Clearly stated product objectives provide focus and direction for those working on them.
• Product objectives should support the the broader marketing objectives and the mission of the business unit.
• Product objectives need to be measurable and specify a time frame for completion.
Develop product objectives•for individual products•for product lines and mixes
Make tactical product decisions•product branding•packaging and labeling design
Design a product strategy
Figure 10.1
©Copyright 2003 Pearson Education Canada Inc. 10-4
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Product Line Strategies
• Product line: a firm’s total product offering designed to satisfy a single need or desire of target customers. Product lines can vary from
being limited to a few variations, to full with many variations to suit different market segments.
• Product lines can be stretched upwards (more expensive) or
downwards, filled out, or contracted through the addition or deletion of product variations.
• The purpose is to offer products for different segments of the market, without cannibalizing their own profits in the process.
©Copyright 2003 Pearson Education Canada Inc. 10-5
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Product Line Strategies (continued)
• Cannibalization: the loss of sales of an existing product when a new item in a product line or product family is introduced. Companies will do very detailed estimates of potential cannibalization prior to introducing a new product.
• Note that there may be occasions when the company may want to cannibalize its own product, particularly if the new one is more profitable or has greater future potential.
• Product mix: the total set of all products a firm offers for sale.
• As shown in Figure 10.2, a company such as Procter & Gamble have a wide product mix, and long in some product categories, such as fabric and home-care, and beauty care.
©Copyright 2003 Pearson Education Canada Inc. 10-6
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Quality as a Product Objective
• Quality: the level of performance, reliability, features, safety, cost, or other product characteristics that consumers expect to satisfy their needs and wants.
• Quality is perceived by consumers and can also be measured in terms of:
– durability
– versatility
– ease of use, maintenance, and repair
– degree of aesthetic pleasure
• Marketing planners are interested in the level of quality provided and the
consistency in which the product delivers that level.
©Copyright 2003 Pearson Education Canada Inc. 10-7
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Product Life Cycle
• Product life cycle: concept that explains how products go through four distinct stages from birth to death: introduction, growth, maturity, and decline.
• Research & Development is not shown on the chart, but it is definitely a stage of a product’s life cycle, characterized by high expenditures and no revenues.
• This is why the profit curve starts in a loss position below the x-axis.
Figure 10.3
©Copyright 2003 Pearson Education Canada Inc. 10-8
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Product Life Cycle (continued)
• Introduction: the first stage of the product lice cycle, in which slow growth follows the introduction of a new product in the marketplace.
• The objective at introduction is to promote the product to encourage trial by consumers and to secure distribution.
• Rate of growth will depend on the factors affecting adoption of innovation as discussed in Chapter 9.
• Exactly when the profit curve breaks through will depend on how much has been spent.
Figure 10.3
©Copyright 2003 Pearson Education Canada Inc. 10-9
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Product Life Cycle (continued)
• Growth stage: the second stage in the product life cycle, during which the product is accepted and sales rapidly increase. This is the stage at which competitors notice and rush their versions to market.
• Maturity stage: the third and longest stage in the product life cycle, in which sales peak and profit margins narrow. Competition is most intense during this stage.
• Decline stage: the final stage in the product life cycle, in which sales decrease as customer needs change. Figure 10.3
©Copyright 2003 Pearson Education Canada Inc. 10-10
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Summary of the Product Life Cycle
R & D Introduction Growth Maturity DeclineMarketing Gain Stess Maintain Harvesting,
objective awareness differentiation brand loyalty deletion
Competition None Growing Many Reduced
Product In development One More versions Full product line Best sellers
Price tbd Skimming or Gain market Defend market Stay
penetration share; deal share and profit profitable
Promotion tbd Inform and Stress product Reminder Minimal
educate differences oriented promotion
Place tbd Limited More outlets Maximum # Fewer outlets
©Copyright 2003 Pearson Education Canada Inc. 10-11
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Branding Decisions
• Brand: a name, term, symbol, or any other unique element of a product, which identifies one firm’s product(s) and sets them apart from the competition.
• Trademark: the legal for a brand name, brand mark, or trade character; a trademark legally registered by a government obtains protection for exclusive use in that country.
• Brand names and trademarks can be valuable assets that need to be protected. Click on the link for a discussion of why trademarks should be used properly, courtesy of Rollerblade, Inc.
• Family brand: a brand that a group of individual products or individual brands share.
©Copyright 2003 Pearson Education Canada Inc. 10-12
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Branding Decisions (continued)
• Brand equity: the value of a brand to an organization. Brand equity is measured in terms of brand loyalty, perceived quality, and brand name awareness. Firms can use this equity when introducing new products, as it facilitates adoption.
• Brand extension: a new product sold with the same brand name as a strong existing brand. To avoid damaging brand equity, brand extensions need to be consistent with existing products.
• McDonald’s offering pizza did not seem to fit and it was not a success, while Black & Decker has successfully branched out into home appliances using its own name.
©Copyright 2003 Pearson Education Canada Inc. 10-13
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Branding Decisions (continued)
• National or manufacturer brands: brands that the manufacturer of the product owns. These tend to be promoted on a national basis and are sold by many different retailers.
• Store or private-label brands: brands that are owned and sold by a specific retailer or distributor.
• Licensing: an agreement in which one firm sells another firm the right to use a brand name for a specific purpose and for a specific period of time.
• Co-branding: an agreement between two brands to work together in marketing new or existing products.
©Copyright 2003 Pearson Education Canada Inc. 10-14
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Packaging the Product
• Package: the covering or container for a product, which provides product protection, facilitates product use and storage, and supplies important marketing communications. Figure 10.4
©Copyright 2003 Pearson Education Canada Inc. 10-15
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Effective Product Management
• Brand manager: a manager who is responsible for developing and implementing the marketing plan for a single brand.
• Brand managers are responsible for coordinating all marketing activities for their brand.
• Brand managers and their teams need to act both independently to achieve their product objectives, but also co-operatively with other company brands to avoid short-term actions that could hurt long-term profitability.
• Product category manager: a manager who is responsible for developing and implementing the marketing plan for all brands and products within a product category.
©Copyright 2003 Pearson Education Canada Inc. 10-16
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Effective Product Management
• Market manager: a manager who is responsible for developing and implementing the marketing plans for products sold to specific customer group.
• Venture teams: groups of people within an organization who work together focusing exclusively on the development of a new product.
• Also known as skunk works, these special teams are formed and operated independently for greater creativity, security, and speed of development.
• The problem for most companies is not creating new products, but what happens when the financial people get a hold of them!
©Copyright 2003 Pearson Education Canada Inc. 10-17
Mar
ket
ing:
Rea
l Peo
ple
, Rea
l Dec
isio
ns
Famous Last Words…
• Managing products and brands through their useful life is an important function.
• Marketing strategy will change as a product moves through its life, and it is up to product managers to stay ahead of it, to be successful.