Product Strategy Fall - 2014

Important Announcement and lets Breathe !!!

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Todays Agenda

What is a New Product ?

Approaches to Developing new Products

The Product Life Cycle

Product Failures

Services Perspective

Branding

PLC vs BCG and Ansoff

Approaches to Developing New Products...

Innovation

New product lines

Product line extensions

Repositioning

Cost reductions

Improvements or changes in existing products

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Product Lines and Product Mixes at Gillette

Elements to Consider in Developing Marketing Strategies

Must consider mission, goals, & objectives in light of the firms strengths, weaknesses, opportunities & threats

The best marketing strategy should be: differentially advantageous, sustainable (not easily copied), timely (strategic window), feasible (skills, experience & resources) & affordable

one of the primary reasons marketing plans failnot enough financial resources devoted in implementation

THE PLC STRATEGIES AND CONSIDERATIONS

No sales revenue during this stage

Components of the product concept: An understanding of desired uses and benefits

A description of the product

The potential for creating a complete product line

An analysis of the feasibility of the product concept

Customer needs should be discerned before developing marketing strategy

Development Stage

Begins when development is complete

Ends when customers widely accept the product

Marketing strategy goals during this stage: Attract customers by raising awareness and interest

Induce customers to try and buy

Engage in customer education activities

Strengthen or expand channel and supply relationships

Build on availability and visibility

Set pricing objectives

Introduction Stage

Be ready for sustained sales increases

Rapid increase in profitability early in the growth stage that decreases at the end of this stage

Length depends on nature of product and competitive reactions

Two strategies: (1) Establish a strong, defensible marketing

position

(2) Achieve financial objectives

Growth Stage (1 of 2)

Marketing strategy goals in this stage: Leverage the products perceived differential advantages

Establish a clear product and brand identity

Create unique positioning

Maintain control over product quality

Maximize availability of the product

Maintain or enhance the products profitability to partners

Find the ideal balance between price and demand

Keep an eye focused on the competition

Growth Stage (2 of 2)

Few, if any, new firms will enter the market

Still an opportunity for new product features and variations

Typically the longest stage in the product life cycle

Maturity Stage (1 of 2)

Four general goals in this stage: (1) Generate Cash Flow

(2) Hold Market Share

(3) Steal Market Share

(4) Increase Share of Customer

Four options to achieve these goals: (1) Develop a new product image

(2) Find and attract new users to the product

(3) Discover new applications for the product

(4) Apply new technology to the product

Maturity Stage (2 of 2)

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Two options: (1) Attempt to postpone the decline

(2) Accept its inevitability Harvesting

Divesting

Factors to be considered during this stage: Market segment potential

The market position of the product

The firms price and cost structure

The rate of market deterioration

Decline Stage

Market Share = Total Sales

Total Market Sales

Market Growth = Current years market Segment Sales

Last Years Market Segment Sales

15 Mins Break

An example of NPD: The Sinclair C5

C5 2' 7" (795 mm)

5' 9"

(1744 mm)

2' 5"

(744 mm)

The Product

Basic Package = C5 + Battery + Charger + Handbook

The Price 399 + 29 delivery/packing

plus indicators; 19.95

wing mirrors 14.95 Total so far = 469.85

horn 6.95

also weather jacket 34.95

side panels 19.95

tonneau 7.95 etc

Main Stages of Development Sir Clives Idea (1973+)

1980 Government abolishes motor tax on electric vehicles 1982 More interest in electric vehicle idea at Sinclair Research Ltd. 1983 Government legislation defines an Electrically Assisted Pedal Cycle Product Concept Developed

Late 1983 Contract placed with Lotus Cars Ltd. to develop C5 Prototype Testing & modifications April 1984 Agreed with Hoover Ltd. to produce C5 Decided to sell initially by mail-order Nov 1984 Production started (stockpiled at 3 centres) Jan 1985 Product Launch

Launch Results

Jan 1985 Officially launched - huge publicity

Feb 1985 Hired unemployed teenagers to drive C5s around Britains cities Mar 1985 Production halted for 3 weeks to modify a gearbox component

Apr 1985 Production cut by 90% 100 vehicles per week May 1985 Stock levels of 6,000

June 1985 Consumers Association produces condemning report on C5 July 1985 Advertising Standards Authority reports 17 separate complaints

on adverts

Aug 1985 Comet slashes price to 189 inc. accessories

Sept 1985 Production of C5 stops

Oct 1985 Receivers called in

- Company has debts of 7.75 million -

- 14,000 C5s were produced, of which 4,000 were sold at a reduced price -

Sinclairs C5 Consumers Association Complaints

Height of C5: Risk of injury

Dazzled by headlights

Inhale exhaust fumes

Basic model with no mirrors or indicators

Horn ineffective

No reverse gear

Body of C5 offers little protection in collision

Max Speed 15mph

Consumers Association Complaints

1 Height of C5 - easily hidden - risk of injury (bumper height) - dazzled by headlights - inhale exhaust fumes - hit by spray 2. Basic model has no mirrors or indicators 3. Horn ineffective and headlight beam insufficient 4. No reverse gear - hazardous on busy roads 5. Max speed 15 mph - hazardous on busy roads 6. Body of C5 offers little protection in collision Also -Range? Sinclair claimed 20 miles They say 14.2 (no stops or hills) or 5-10 miles (normal urban driving) - Problems on hills

SERVICES MARKETING

Marketing Strategies for Services...

Must consider the unique aspects of services

Intangibility (Cannot Touch Services)

Inseparability (Cannot separate production and consumption)

Variability (Cannot duplicate services)

Perishability (Cannot Store services)

Ownership (Ownership cannot be transferred)

Product Considerations for Services...

Provide satisfaction guarantees to customers

Standardization & service quality are difficult to control

Services can be customized to meet consumers specific needs

Customized services tend to be very expensive

Pricing Considerations for Services...

Pricing conveys quality to many consumers

Determining the cost of productivity & delivering a service is difficult

Pricing tactics can help a firm balance peak & off peak demand

Promotion Considerations for Services...

Services are difficult to explain to customers

Service advertising typically focuses on tangible cues that symbolize the service

Endorsements from satisfied customers are often used

Distribution Considerations for Services...

Consumers cannot take physical possession of services

Services must be provided in a convenient manner

often requires multiple outlets to increase convenience

Production & consumption may need to be separated by creating a tangible representation of the service

i.e.-a credit card represents a line of credit offered by a bank

Branding Strategy...

Branding is the identification a product maintains through name, symbol or design

differentiates one manufacturers products from another

Brand name is the spoken part of the brand Brand mark is the symbol or design Trade mark is the legal description indicating that

owner has exclusive use of the brand or part of the brand & that others are prohibited from using it

Trade name is the full & legal name of the organization

Other Elements of Brands...

Brand loyalty

Brand recognition

Brand preference

Brand equity

Co-branding

Brand licensing

Advantages of Branding...

Helps buyers identify the brands they support

Speeds up the buying process

Provides status & psycho social identification

Assists in evaluating product quality & price

Reduces the risk in purchasing

Makes repeat purchases easier

Allows for greater acceptance of new products under that brand name

Generates consumer loyalty

The Worlds Most Valuable Brands...

See you next week!!!