the learning objectives product product classification product life-cycle strategies new-product...
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The learning objectives
Product Product classification Product life-cycle strategies New-product Development Product-line decision Brands decisions
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1. What is product?
Anything that can be offered to a market for attention,acquisition,use,or consumption that might satisfy a want or need.
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Components of theMarket Offering
Value-based prices
Services mixand quality
Product featuresand quality
Attractiveness ofthe market offering
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2. Product classifications
Consumer products Industrial products
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Consumer product
Convenience products Shopping products Specialty products Unsought products
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Specialty ProductsSpecialty Products Unsought ProductsUnsought Products
Shopping Shopping ProductsProducts
Buy less frequently> Gather product information> Fewer purchase locations> Compare for:
• Suitability & Quality • Price & Style
Convenience ProductsConvenience Products
Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations
Products consumers don’t demand normally. Require much advertising &personal selling
Buy frequently & immediately> Low priced> Many purchase locations> Includes:
• Staple goods• Impulse goods• Emergency goods
Consumer-Goods Classification
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Industrial Product
Material and parts Capital items Supplies and services
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6.Product-line decision
Product mix Product-line analysis Product –line length
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Product mix(assortment)
The set of all products and items that a particular seller offers for sale.
A company’s product mix has a certain width,length,depth, and consistency.
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Product Mix Concepts:
Width:how many different product lines.
Length:the total number of items.
Depth:how many variants are offered of each product in the line.
Consistency:how closely related the various product lines are in end use,production requirement,distribution channels, or some other way.
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Product Mix & Product Line- HUL
Personal wash Personal wash : Lux , lifebuoy , Liril , Hamam , Breeze , Dove ,
Pears , Laundry Laundry : Surf Excel , Rin , Wheel Skin Care Skin Care : Fair and Lovely , Ponds Hair Care Hair Care: Sunsilk , Clinic Plus Oral care Oral care : Pepsodent , Close Up Color Cosmetic Color Cosmetic : Lakme Beverage Tea : Broke Bond , Lipton Coffee: Bru Foods Foods: Kissan , Knorr Annapurna Ice-Cream Quality Walls
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Product Mix
WidthWidth - number of different
product lines
WidthWidth - number of different
product lines
LengthLength - total number of itemswithin the lines
LengthLength - total number of itemswithin the lines
Depth Depth - number of versions of each product
Depth Depth - number of versions of each product
Product Mix - Product Mix - all the product
lines offered
Product Mix - Product Mix - all the product
lines offered
Co
nsi
sten
cy
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Product-line analysis
Sales and profit Market profile
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Product-Line Length
Line Stretching Downmarket (TATA Nano) Upmarket (Maruti 800 to Maruti SX4) Two-way
Line Filling Line Modernization Line Featuring & Line Pruning
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Trading Up and Trading Down
Trading up:Trading up: Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products.
Trading down:Trading down: Adding a lower-priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status.
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3.Product Life Cycles (PLC)
The course of a product’s sale and profit over it lifetime.It involves five distinct stages:product development,introduction,growth,maturity,and decline.
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Sales & Profit Life Cycles
IntroductionIntroduction GrowthGrowth MaturityMaturity DeclineDecline
TimeTimeSal
esS
ales
&& p
rofi
tsp
rofi
ts
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Product Life Cycle Stages
IntroductionIntroduction—most risky and expensive.
GrowthGrowth—both sales and profits rise, often rapidly.
MaturityMaturity—sales increase at a decreasing rate and profits decline.
DeclineDecline—demand drops, often because of another product development.
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Strategic Implications of the Stages
introductory stage:introductory stage: developing the market, creating awareness, reaching the innovators
growth stage:growth stage: competition begins, sales grow quickly, profits peak, market penetration
maturity stage:maturity stage: competition is intense, sales slow down, differentiated product offerings, customers are brand loyal, few new entrants
decline stage:decline stage: customers move to other options, competitors leave, profits are low, consider exit
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Characteristics of Introduction Stage
Low sales High cost per customer Zero or Negative profits Create product awareness and trial Offer a basic product Use cost-plus Build selective distribution Awareness building advertising
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Four IntroductoryPrice-Promotion Strategies
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-skimmingskimmingstrategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Rapid-Rapid-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-penetrationpenetration
strategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
Slow-Slow-skimmingskimmingstrategystrategy
PricePrice
LowLow
HighHigh
PromotionPromotionHighHigh LowLow
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Characteristics of the Growth Stage
Rapidly rising sales
Average cost per customer
Rising profits
Offer product extensions
Target new market segments
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Characteristics of Maturity stage Peak sales and profits
Increased advertising and trade and consumer promotion.
Frequent markdowns
Market nicher develops.
Market Modification Strategy
Marketing Mix Modification Strategy
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Characteristics of Declining Stage
Declining sales& Profits
Phase out unprofitable outlets
Cut on promotional expenditure
Liquidating, Divesting and Harvesting the business
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Special categories of PLC (Style, Fashion, Fad)
Style is a basic/distinctive mode of expression appearing in a field of human endeavors.-Once a style is invented, it can last for generations.
Fashion is a currently accepted/popular style in a given field.
Fads are fashion that comes quickly into the public eye, are adopted with great zeal, peak easily and decline fast
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5.new-product development
What is new product? Major stages in new product
development
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What is new product?
Original products Product improvements Product modifications New brands that the firm develops
through its own research and development efforts
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Major stages in new product development Idea generation Idea screening Concept development and testing Marketing strategies Business analysis Product development Test marketing Commercialization
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New Product Development
Process
IdeaIdeaGenerationGeneration
ConceptConceptDevelopmentDevelopmentand Testingand Testing
MarketingMarketingStrategyStrategy
DevelopmentDevelopment
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProductDevelopmentDevelopment
MarketMarketTestingTesting
CommercializationCommercialization
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Probability of Success
ProbabilityProbabilityof technicalof technicalcompletioncompletion
OverallOverallprobabilityprobabilityof successof success==
Probability ofProbability ofcommercializationcommercialization
given technicalgiven technicalcompletioncompletion
XXProbability ofProbability of
economiceconomicsuccess givensuccess given
commercializationcommercializationXX
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Concept Development & Testing
1. Develop Product Ideas into Alternative Product Concepts
1. Develop Product Ideas into Alternative Product Concepts
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
3. Choose the Best One3. Choose the Best One
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High price/ozHigh price/oz..
Lo
w in
Lo
w in
cal
ori
esca
lori
es
LowLow price/oz.price/oz.
Hig
h in
calories
Hig
h in
calories
Product & Brand Positioning
((a)a) Product-positioningProduct-positioningmapmap
(breakfast market)(breakfast market)
ExpensiveExpensive
Slo
wS
low
InexpensiveInexpensive
Qu
ickQ
uick
Baconandeggs
Pancakes Instantbreakfast
Coldcereal
Hotcereal
b)b) Brand-positioningBrand-positioningmapmap
(instant breakfast market(instant breakfast market))
Brand C
Brand B
Brand A
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Conjoint AnalysisBrand nameBrand name
----------
Uti
lity
Uti
lity
1.01.0
00 | | |K2R Glory BissellK2R Glory Bissell
Retail PriceRetail Price
Uti
lity
Uti
lity
----------
1.01.0
0| | |
$1.19 $1.39 $1.59$1.19 $1.39 $1.59
Good Housekeeping Seal?Good Housekeeping Seal?
Uti
lity
Uti
lity
1.01.0----------
00 | |No YesNo Yes
Uti
lity
Uti
lity
Money-BackMoney-BackGuarantee?Guarantee?
1.01.0----------00
| |No YesNo Yes
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Consumer-Goods Market Testing
Sales-Wave
ResearchTest offering trail to
a sample of consumers in
successiveperiods.
Sales-Wave
ResearchTest offering trail to
a sample of consumers in
successiveperiods.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
StandardTest Market
Full marketing campaignin a small number of representative cities.
StandardTest Market
Full marketing campaignin a small number of representative cities.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
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2 1/2%Innovators
13 1/2%Early
adopters
34%Early
majority
34%Late
majority
16%Laggards
Time of adoption innovations
Adopter Categorization of the Basis of Relative Time of Adoption of Innovations
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6.Brand Decision
What is brand? Band decision
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What is brand?
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 differentiate them from those of competitors.
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What is a Brand?
Attributes Benefits Values
Culture
User
Personality
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An Overview ofBranding Decisions
BrandingDecision
•Brand
•No brand
Brand-SponsorDecision
•Manu-facturerbrand
•Distribu-tor(private)brand
•Licensedbrand
Brand-Name
Decision
•Individualbrandnames
•Blanketfamilyname
•Separatefamilynames
Brand-Repositioning
Decision
•Reposi-tioning
•Noreposi-tioning
Brand-StrategyDecision
•Lineextension
•Brandextension
•Multi-brands
•Newbrands
•Cobrands
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Good Brand Names:
SuggestProductBenefits
Distinctive
Lack PoorForeign
LanguageMeanings
SuggestProductQualities
Easy to:PronounceRecognizeRemember
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Brand Strategies
BrandExtension
New
Bra
nd
Nam
e
Product Category
LineExtension
Existing
Existing
MultibrandsNew NewBrands
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Why Package Crucial as a Marketing Tool
Self-service Consumer affluence Company & brand image Opportunity for innovation
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Labels
IdentifyIdentifyIdentifyIdentify
DescribeDescribeDescribeDescribe
PromotePromotePromotePromote