Product and Services Strategy

New Product Development and

Product Life Cycles

1
What is a Product?
 A Product is anything that can be offered to a
market for attention, acquisition, use, or
consumption and that might satisfy a want or need.
 Includes:
 Physical Objects
 Services
 Events
 Persons
 Places
 Organizations
 Ideas
 Combinations of the above 2
What is a Service?
 A Service is a form of product that consist of
activities, benefits, or satisfactions offered for sale
that are essentially intangible and do not result in
the ownership of anything.
 Examples include:
 Banking
 Hotels
 Tax Preparation
 Home Repair Services

3
Nature and
Characteristic of a
Service
Can’t be seen, tasted, felt,
Intangibility
Intangibility heard, or smelled before
purchase.

Inseparability Can’t be separated from

Inseparability service
providers.

Variability
Variability
Quality depends on who
provides them and when,
Perishability where and how.
Perishability
4
Can’t be stored for later sale
Products, Services, and
Experiences
Tangible Service
Pure Good With Hybrid With Pure
Tangible Accompanyi Offer Accompanyi Service
Good ng Services ng Minor
Goods
Auto With Airline Trip
Soa Accompanyi Restauran With Doctor’s
p ng Repair t Accompanyi Exam
Services ng Snacks

5
Levels of Product
Augmented
Augmented Product
Product

Installation

Packaging
Brand Features
Name Core
Core After-
Delivery Benefit
Benefit or
or Sale
& Credit Service
Quality Service Service
Design
Level

Warranty

Actual
Actual Product
Product Core
Core Product
Product
6
Product Classifications
Consumer Products
Convenience Products
 Buy frequently & immediately
 Low priced
 Mass advertising
 Many purchase locations
i.e Candy, newspapers
Specialty Products
 Special purchase efforts
 High price
 Unique characteristics
 Brand identification
 Few purchase locations
i.e Lamborghini, Rolex
Shopping Products
 Buy less frequently
 Higher price
 Fewer purchase locations
 Comparison shop
i.e Clothing, cars,
appliances
Unsought Products
 New innovations
 Products consumers don’t
want to think about these products
 Require much advertising &
personal selling
i.e Life insurance, blood donation
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Product Classifications
Industrial Products
Materials
Materials
and
and
Parts
Parts

Capital
Capital
Items
Items

Supplies
Supplies
and
and
Services
Services 8
Product Classifications
Other Marketable
Entities
 Activities undertaken to create, maintain, or
change the attitudes and behavior toward the
following:
 Organizations - Profit (businesses) and nonprofit
(schools and churches).
 Persons – Politicians, entertainers, sports figures,
doctors and lawyers.
Place
Marketing:
Vac ation spots
are the subject of
most place marketing

 Places - Business sites and tourism. Click orp ress space bar to re tu rn.

 Ideas (social ideas marketing) – public health

campaigns, environmental campaigns, and others
such as family planning, or human rights.
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Individual Product
Decisions

Product Attributes
Branding
Labeling
Packaging
Product Support
Services 10
Product Attributes

Developing a Product or Service Involves

Defining the Benefits that it Will Offer Such
as:
Ability
Ability of
of aa Product
Product to
to
Product
Product Quality
Quality Perform
Perform ItsIts Functions;
Functions;
Includes
Includes Level
Level & & Consistency
Consistency
Help
Help to
to Differentiate
Differentiate the
the
Product
Product Features
Features Product
Product from
from Those
Those of
of the
the
Competition
Competition
Product
Product Style
Style Process
Process of
of Designing
Designing aa
&& Design
Design Product’s
Product’s Style
Style &
& Function
Function
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 This Land-O-Lakes ad shows the depth of the brand.

Branding

Consistency
Consistency Quality
Quality &
& Value
Value

Attributes
Advantages
Advantages Identification
Attributes of Identification
of
Brand
Brand Names
Names

High Brand
Brand
High Brand
Brand Strong
Strong Brand
Brand
Loyalty Equity
Equity
Loyalty Association
Association

Name
Name Awareness
Awareness Perceived
Perceived Quality
Quality
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Major Branding
Decisions

Brand
Brand Name
Name Selection
Selection
Selection
Selection
Protection
Protection

Brand
Brand Sponsor
Sponsor
Manufacturer’s
Manufacturer’s Brand
Brand
Private
Private Brand
Brand
Licensed
Licensed Brand
Brand
Co-branding
Co-branding

Brand
Brand Strategy
Strategy
Line
Line Extensions
Extensions
Brand
Brand Extensions
Extensions
Multibrands
Multibrands 13
New
New Brands
Brands
The Product Mix and
Product Line
Product mix is a group of products that a firm
makes available for sale (e.g. Nestle)

Product line is a group of similar products

intended for a similar group of buyers who will
use them in similar ways

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 Product Mix Decisions

Width
Width-- number
numberofof
different
different product
product
lines
lines
Consistency

Length
Length--total
total Product
Product Mix
Mix--
number
number ofof items
items all
allthe
theproduct
product
in
in product
product lines
lines lines
lines&&items
items
offered
offered
Depth
Depth --number
numberofof
versions
versionsof
of each
each
product
product 15
Brand Strategy
 Line Extension
 Existing brand names extended to new forms, sizes, and
flavors of an existing product category.
 Brand Extension
 Existing brand names extended to new or modified
product categories.
 Multibrands
 New brand names introduced in the same product
category.
 New Brands
 New brand names in new product categories.

16
 This business-to-business ad offers to provide
ecologically sound packaging.

Besides its impact on the

environment, what aspects
of packaging can
help/hinder product sales?

How have these products

become known by their

Packaging
packaging:
•Cracker Jacks?
•Capri Sun?

 Activity of designing and

producing the container or
wrapper for a product.
 Packaging used to just contain
and protect the product.
 Packing now has promotional
value and marketers should:
 Establish a packaging concept,
 Develop specific elements of the
package,
 Tie together elements to support
the positioning and marketing
strategy. 17
 A classic labeling example .

Labeling What a bout thi s l abe l he lps to se ll the pr oduc t?

Click or pres s s pacebar to r et urn.

 Printed information
appearing on or with the
package.
 Performs several functions:
 Identifies product or brand
 Describes several things about
the product
 Promotes the product through
attractive graphics.

18
New-Product
Development
and Product
Life-Cycle
Strategies 19
Major Stages in New-
Product Development
Marketing Business
Strategy Analysis

Concept
Product
Development
Development
and Testing

Idea Test
Screening Marketing

Idea Commercializatio
Generation n 20
 Product Life Cycle

Sales and
Profits ($) Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment
Losses/
Investments ($)

Sales and Profits Over the Product’s Life From Inception

21
to Demise
 Eg g Beaters had to first convince people that t hey needed an egg
substitute (overcoming a strong nega tive response to “fake e ggs”)

Introduction Stage of the

then demo nstrate that their product was a perfect so lutio n.

PLC
Summary of Characteristics, Objectives, &
Sales
Sales
Strategies
Low
Low sales
sales
Costs
Costs High
High cost
cost per
per customer
customer
Profits
Profits Negative
Negative or
or low
low
Marketing
Marketing Objectives
Objectives Create
Create product
product awareness
awareness and
and
trial
trial
Product
Product Offer
Offer aa basic
basic product
product
Price
Price Usually
Usually is
is high;
high; use
use cost-plus
cost-plus
formula
formula
Distribution
Distribution High
High distribution
distribution expenses
expenses
Advertising
Advertising Build
Build product
product awareness
awareness among
among 22
early
early adopters
adopters and
and dealers
dealers
Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Rapidly
Rapidly rising
rising sales
sales
Costs
Costs Average
Average cost
cost per
per customer
customer
Profits
Profits Rising
Rising profits
profits
Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Product
Product Offer
Offer new
new product
product features,
features,
extensions,
extensions, service,
service, and
and warranty
warranty
Price
Price Price
Price to
to penetrate
penetrate market
market
Distribution
Distribution Increase
Increase number
number of
of distribution
distribution
outlets
outlets
Advertising
Advertising Build
Build awareness
awareness and
and interest
interest in
in 23
the
the mass
mass market
market
Maturity Stage of the
PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Peak
Peak sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits
High
High profits,
profits, then
then lower
lower profits
profits
Marketing Maximize profits while defending
Maximize profits while defending
Marketing Objectives
Objectives
market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models
Price
Price Price
Price to
to match
match or
or best
best competitors
competitors
Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution
Advertising
Advertising Stress
Stress brand
brand differences
differences and
and 24
benefits
benefits
Maturity Stage of the
PLC

Company tries to increase

consumption of the current product.

Changing characteristics such as

quality, features, or styles to attract
new users.

Company tries to improve sales by

changing one or more marketing mix
elements. 25
Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Sales Declining
Declining sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits Declining
Declining profits
profits
Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditure
expenditure and
and maintain,
maintain,
reposition,
reposition, harvest
harvest or
or drop
drop the
the
Product
Product Phase
Phase out weak
weak items
product
out
product items
Price
Price Cut
Cut price
price
Distribution
Distribution Go
Go selective:
selective: phase
phase out
out
unprofitable
unprofitable outlets
outlets
Advertising
Advertising Reduce
Reduce to level needed to
to level needed to retain
retain 26
hard-core
hard-core loyal
loyal customers
customers