0 chapter 10 developing, positioning, and differentiating products through the life cycle
TRANSCRIPT
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Chapter 10Chapter 10
Developing, Positioning, Developing, Positioning,
and Differentiating and Differentiating
Products through Products through
the Life Cyclethe Life Cycle
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ObjectivesObjectives
Understand the challenges a company faces in
developing and introducing new products.
Learn the main stages in developing new
products and how they can be better managed.
Know the factors that affect the rate at which
consumers adopt new products.
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ObjectivesObjectives
Learn what marketing strategies are appropriate
at each stage of the product life cycle.
Understand how a company can choose and
communicate an effective market position.
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New Product DevelopmentNew Product Development
What is a “New” Product?
– New-to-the-world products
– New product lines
– Additions to existing product lines
– Improvements and revisions of existing products
– Repositioned products
– Cost reduction products
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New Product DevelopmentNew Product Development
New Product Failure is Rampant:– 95% of new U.S. consumer products
– 90% of new European consumer products
Reasons for failure include ignoring unfavorable market research, overestimating market size, marketing mix decision errors, and stronger than anticipated competitive actions
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New Product DevelopmentNew Product Development
Successful new products:
– Offer a strong relative advantage
– Reflect better understanding of customer needs,
and beat the competition to market
– Exhibit higher performance-to-cost ratios and
higher contribution margins
– Are launched with larger budgets
– Have stronger top management support
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Managing New ProductsManaging New Products
Idea generation
Idea screening
Concept
development
Concept testing
Marketing strategy
development
Business analysis
New Product Development Process: Ideas to Strategy
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Managing New ProductsManaging New Products
Product development
Market testing
Commercialization
New Product Development Process: Development to Commercialization
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Consumer Adoption ProcessConsumer Adoption Process
Adopters of new products move through five
stages:
– Awareness
– Interest
– Evaluation
– Trial
– Adoption
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Consumer Adoption ProcessConsumer Adoption Process
People adopt new products at different rates
– Innovators
– Early adopters
– Early majority
– Late majority
– Laggards
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Marketing Through the Marketing Through the Product Life CycleProduct Life Cycle
Five product characteristics influence the
rate of adoption:
– Degree of relative advantage
– Degree of compatibility
– Degree of complexity
– Degree of divisibility (trialability)
– Degree of communicability
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Stages of the Product Life CycleStages of the Product Life Cycle
PLC Stages
IntroductionIntroduction
Growth
Maturity
Decline
Low sales
High costs per
customer
Negative profits
Innovator customers
Few competitors
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Stages of the Product Life CycleStages of the Product Life Cycle
PLC Stages
Introduction
GrowthGrowth
Maturity
Decline
Rising sales
Average costs
Rising profits
Early adopters
customers
Growing competition
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Stages of the Product Life CycleStages of the Product Life Cycle
PLC Stages
Introduction
Growth
MaturityMaturity
Decline
Peak sales
Low costs
High profits
Middle majority
customers
Stable/declining
competition
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Stages of the Product Life CycleStages of the Product Life Cycle
PLC Stages
Introduction
Growth
Maturity
DeclineDecline
Declining sales
Low costs
Declining profits
Laggard customers
Declining competition
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Objectives and Strategies for the Objectives and Strategies for the Product Life CycleProduct Life Cycle
PLC Stages
IntroductionIntroduction
Growth
Maturity
Decline
Objective: to create awareness and trial
Offer a basic product Price at cost-plus Selective distribution Awareness – dealers and
early adopters Induce trial via heavy
sales promotion
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Objectives and Strategies for the Objectives and Strategies for the Product Life CycleProduct Life Cycle
PLC Stages
Introduction
GrowthGrowth
Maturity
Decline
Objective: maximize market share
Offer service, product extensions, warranty
Price to penetrate Intensive distribution Awareness and interest –
mass market Reduce promotions due to
heavy demand
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Objectives and Strategies for the Objectives and Strategies for the Product Life CycleProduct Life Cycle
PLC Stages
Introduction
Growth
MaturityMaturity
Decline
Objective: maximize profit while defending market share
Diversify brands/items Price to match or beat
competition Intensive distribution Stress brand differences and
benefits Increase promotions to
encourage switching
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Objectives and Strategies for the Objectives and Strategies for the Product Life CycleProduct Life Cycle
PLC Stages
Introduction
Growth
Maturity
DeclineDecline
Objective: reduce costs and milk the brand
Phase out weak models Cut price Selective distribution Reduce advertising to levels
needed to retain hard-core loyalists
Reduce promotions to minimal levels
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Positioning and DifferentiationPositioning and Differentiation
Two views of positioning:
– Ries and Trout: products are positioned in the
mind of prospect
– Treacy and Wiersema: positioning via value
disciplines Product leader firm
Operationally excellent firm
Customer intimate firm
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Positioning and DifferentiationPositioning and Differentiation
Positioning statements:– To (target group and need) our (brand) is
(concept) that (point-of-difference)Example: To young, active soft-drink
consumers who have little time for sleep, Mountain Dew is the soft drink that gives you more energy than any other brand because it has the highest level of caffeine.
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Positioning and DifferentiationPositioning and Differentiation
Differentiated products feature meaningful
and valuable differences that distinguish the
company’s offering from the competition.
Differences are stronger when they are
important, distinctive, superior, preemptive,
affordable, and profitable.
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Positioning and DifferentiationPositioning and Differentiation
Form
Features
Performance
Conformance
Durability
Reliability
Repairability
Style
Design
Product Differentiation Tools
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Positioning and DifferentiationPositioning and Differentiation
Ordering ease
Delivery
Installation
Customer
training
Customer
consulting
Maintenance and
repair
Miscellaneous
Services Differentiation Tools
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Positioning and DifferentiationPositioning and Differentiation
Competence
Courtesy
Credibility
Reliability
Responsiveness
Communication
Personnel Differentiation Tools
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Positioning and DifferentiationPositioning and Differentiation
Coverage
Expertise
Performance
Channel Differentiation Tools
• Symbols
• Media
• Atmosphere
• Events
Image Differentiation Tools