1.

Product
2. Product levels
3. Product classification
4. Product-line decision
5. Product life-cycle strategies (PLC)
6. New-product Development
7. Pricing methods
 Anything that can be offered to a market for
attention,acquisition,use,or consumption that
might satisfy a want or need.
 Potential product
Augmented product
Expected product
Basic product
Core benefit
 Core benefit —service or benefit (e.g., hotel
guest is buying “rest and sleep”)
 Basic product —turn core benefit into basic
product (e.g., hotel room includes a bed,
bathroom, towels, desk, dresser, and closet)
 Expected product – set of attributes and
conditions buyers normally expect (e.g., clean
bed, fresh towels, working lamps)
 Augmented product—exceeds customer
expectations (e.g., free health spar)
 Potential product—all the possible
augmentations and transformations (e.g., free
internet connections and use)

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-5

 Core benefit or service
 Quality level
 Features
 Design
 Package
 Brand name
 Installation
 After-sale service
 Warranty
 Delivery and credit
 Attached benefit
 2. Product Lines, and Mixes

A specific version of an
Product Item organization’s products.
(SKU) Each has a unique number and bar code

A group of closely-related
Product Line product items.

All products that an

Product Mix organization sells.
5 Gillette’s Product Lines and Mix

Width of the product mix

Length of the product line

Blades and Writing

razors Toiletries instruments Lighters

Mach 3 Series Paper Mate Cricket

Sensor Adorn Flair S.T. Dupont
Trac II Toni
Atra Right Guard
Swivel Silkience
Double-Edge Soft and Dri
Lady Gillette Foamy
Super Speed Dry Look
Twin Injector Dry Idea
Techmatic Brush Plus
Width - number of
different product
lines

Length - total Product Mix -

number of items all the product
within the lines lines offered

Depth - number of
versions of each
product
 Downmarket stretch – sunlight, wheel
 Upmarket stretch - Dove
 Two-way stretch – LG, samsung, Haier
 Quality
Economy Standard Good Superior
Marriott
High Marquis
(Top
executives)
Price

Above Marriott
average (Middle
managers)

Average Courtyard
(Salespeople)

Fairfield Inn
Low (Vacationers)
 3. Product classification

 Type of Products/Goods

• Consumer Goods • Business/Industrial Goods

 Degree of Tangibility
• Nondurable Goods

• Durable Goods
Examples??
• Services
 The Characteristics of Services

Services that cannot be touched,

Intangibility seen, tasted, heard, or felt in the
same manner as goods.

A characteristic of services that

Inseparability allows them to be produced and
consumed simultaneously.
A characteristic of services that
Heterogeneity makes them less standardized
and uniform than goods.
A characteristics of services that
Perishability prevents them from being stored,
warehoused, or inventoried.
 CLASSIFYING GOODS AND SERVICES

A relatively inexpensive item that merits

Convenience little shopping effort. Mostly non-durable
Product goods

Shopping A product that requires comparison

shopping, because it is usually more
Product expensive and found in fewer stores.

A particular item that consumers

Specialty search extensively for and are reluctant to
Product accept substitutes.

Unsought A product unknown to the potential buyer or

a known product that the buyer does not
Product actively seek.
Classification of consumer goods
Convenience Products
Buy frequently & immediately
> Low priced
> Many purchase locations
> Includes:
• non-durable goods mostly
Specialty Products
Special purchase efforts
> Unique characteristics
> Brand identification
> Few purchase locations
Shopping Products
Buy less frequently
> Gather product information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Unsought Products
New innovations
> Products consumers don’t
want to think about.
>Require much advertising &
personal selling
 Service—Any activity or benefit that one party
can offer to another that is essentially
intangible and does not result in the
ownership of anything.
 Disney
 starbucks
 Material and parts
 Capital items
 Supplies and services
 The course of a product’s sale and profit over
it lifetime.
 It involves four distinct stages:
product,introduction,growth,maturity,andecli
ne.
Sales & profits ($)

Introduction Growth Maturity Decline

Time
 The product life-cycle stage in which the new
product is first distributed and made
available for purchase.

 Ex: Micra Disel version, Nokia Android phone

(Newkia)
 The product life-cycle stage in which a
product’s sales start climbing quickly.

 Iphone5, Samsung S4, LEDs,Nutella, Shots,

Cadbury’s shots, etc….
 The stage in the product life cycle in which
sales growth slows or levels off.
 Modify the market,the product,and the
marketing mix.

 LCD Tvs
 The product life cycle stage in which a
product’s sales decline

 Blackberry, VCR, floppy disk, etc

 PLC Stages  Begins when the
company develops a
 Product development new-product idea
 Introduction  Sales are zero
Growth
Investment costs are


Maturity
high


 Decline
 Profits are negative

Goal 2: Realize how marketing strategies change during the product life cycle
 PLC Stages  Low sales
 High cost per
 Product development customer acquired
 Introduction  Negative profits
 Growth  Innovators are
 Maturity targeted
 Decline  Little competition

Goal 2: Realize how marketing strategies change during the product life cycle
  Product – Offer a basic product
 Price – Use cost-plus basis to set
 Distribution – Build selective distribution
 Advertising – Build awareness among early
adopters and dealers/resellers
 Sales Promotion – Heavy expenditures to
create trial

Goal 2: Realize how marketing strategies change during the product life cycle
 PLC Stages  Rapidly rising sales
 Average cost per
 Product development customer
 Introduction  Rising profits
 Growth  Early adopters are
 Maturity targeted
 Decline  Growing competition

Goal 2: Realize how marketing strategies change during the product life cycle
  Product – Offer product extensions, service,
warranty
 Price – Penetration pricing
 Distribution – Build intensive distribution
 Advertising – Build awareness and interest
in the mass market
 Sales Promotion – Reduce expenditures to
take advantage of consumer demand

Goal 2: Realize how marketing strategies change during the product life cycle
 PLC Stages  Sales peak
 Low cost per customer
 Product development  High profits
 Introduction  Middle majority are
 Growth targeted
 Maturity  Competition begins to
 Decline decline

Goal 2: Realize how marketing strategies change during the product life cycle
  Product – Diversify brand and models
 Price – Set to match or beat competition
 Distribution – Build more intensive
distribution
 Advertising – Stress brand differences and
benefits
 Sales Promotion – Increase to encourage
brand switching

Goal 2: Realize how marketing strategies change during the product life cycle
 PLC Stages  Declining sales
 Low cost per customer
 Product development  Declining profits
 Introduction  Laggards are targeted
 Growth  Declining competition
 Maturity
 Decline

Goal 2: Realize how marketing strategies change during the product life cycle
Adopter Categories

Early Laggards
Adopters
13.5% Early Late 16%
Innovators Majority Majority
2.5% 34% 34%

Percentage of Adopters by Category Sequence

Innovators: Description

• 2.5% of population
• Venturesome
• Very eager to try new ideas
• Acceptable if risk is daring
• More cosmopolite social relationships
• Communicates with other innovators
Early Adopters: Description

• 13.5% of population
• Respected
• More integrated into the local social system
• The persons to check with before adopting
a new idea
• Category contains greatest number of
opinion leaders
• Are role models
Early Majority: Description

• 34.0% of population
• Deliberate
• Adopt new ideas just prior to the average
time
• Seldom hold leadership positions
• Deliberate for some time before adopting
Late Majority: Description

• 34% of population
• Skeptical
• Adopt new ideas just after the average
time
• Adopting may be both an economic
necessity and a reaction to peer pressures
• Innovations approached cautiously
Laggards: Description

• 16% of population
• Traditional
• The last people to adopt an innovation
• Most “localite” in outlook
• Oriented to the past
• Suspicious of the new
  Product – Phase out weak items
 Price – Cut price
 Distribution – Use selective distribution:
phase out unprofitable outlets
 Advertising – Reduce to level needed to
retain hard-core loyalists
 Sales Promotion – Reduce to minimal level

Goal 2: Realize how marketing strategies change during the product life cycle
 What is a new product?
 Major stages in new product development
 Original products
 Product improvements
 Product modifications
 New brands that the firm develops through
its own research and development efforts
1. Idea generation
2. Idea screening
3. Concept development and testing
4. Business/Market Analysis
5. Actual Product development
6. Market Test
7. Commercialization
 Marketing Business
Strategy
Analysis
Development
Concept Product
Development Development
and Testing

Idea Market
Screening Testing

Idea
Generation Commercialization
 Probability of Probability of
Overall Probability
probability
of success
= of technical
completion X given technical
completion
X
commercialization economic
success given
commercialization
 Price -- Definition
• the amount of money charged for a product or
service
• the sum of all the values that consumers
exchange for the benefits of having or using
the product or service

• Examples of “price?”
– Tuition, rent, fare, toll, salary/wage, dues
 PRICING STRATEGIES/PRICING
METHODS
• Demand based pricing
• Skimming
• Penetration
• Competition-oriented Pricing
• Premium pricing
• Discount pricing
• Parity pricing
• Product line Pricing
 PRICING STRATEGIES/PRICING
METHODS
• Tender Pricing
• Affordability based pricing
• Differentiated Pricing
• Cost-plus pricing
 PRICING STRATEGIES/PRICING
METHODS
• Tender Pricing
• Affordability based pricing
• Differentiated Pricing
• Cost-plus pricing