gilbert a. churchill, jr. j. paul peter chapter 9 managing existing products marketing
TRANSCRIPT
Gilbert A. Churchill, Jr. J. Paul PeterGilbert A. Churchill, Jr. J. Paul Peter
Chapter 9
Managing Existing Products
Marketing
Types of ProductsTypes of Products
UnsoughtProducts
UnsoughtProducts
SpecialtyProductsSpecialtyProducts
ShoppingProducts
ShoppingProducts
ConvenienceProducts
ConvenienceProducts
ConsumerProducts
ConsumerProducts
BusinessProducts
BusinessProducts
ProductsProducts
A product is a good , service, or idea that offers a wide range of tangible and intangible benefits. It includes both the core, the auxiliary, and anything else that adds value to customers
Slide9-1
Basic Categories of Consumer ProductsBasic Categories of Consumer ProductsSlide9-2
Table9.1
CategoryCategory
Convenience
Type ofType ofPurchasePurchaseDecisionDecision
Shopping
Specialty
Relatively low
PricePrice PromotionPromotionPlacement orPlacement orDistributionDistribution
Moderate
May or may not be expensive
Little information sought
Mass media
Mass media; some personal selling
Widely available
More information sought
Lots of information sought
Mass media; more personal selling
Selectively available
Exclusively available
Unsought Do not seek information and unaware
Relatively expensive
Persuasive advertising; aggressive personal selling
Varies
Goods and ServicesGoods and ServicesSlide9-3
Durable Goods
Non-Durable Goods
Services
Fantastic Sam’s HaircutAirline Taxi Ride
RestaurantMeal
Kleenex TissuesScott Towels
Pair ofGlasses
Sealy MattressMaytag Washer
AutoRepair
• Product Class - a broad group of products that differ somewhat but provide similar benefits.
• household cleaners, beer
• Product Category - subset of a product class containing products of a certain type.
• Household cleaners - liquid, powder, spray, gel
• Beer - light, imported, regular, nonalcoholic
• Product Item - a specific version of a product that can be designated as a distinct offering among an organization’s products.
• Product Line - a group of closely related products offered by the organization.
• P & G - soaps, detergents, toothpaste
• Product Mix - all the product offerings of an organization.• Width of the product mix - number of product lines that an organization offers.
• Gillette - blades and razors, writing instruments, toiletries, lighters
• Depth of a product line - number of product items in a product line.
• Gillette’s blades and razors - mach 3, sensor, track II, atra, etc.
Product TerminologyProduct TerminologySlide9-4
The Product Life Cycle (PLC) The Product Life Cycle (PLC) A graphical description of a product’s historyA graphical description of a product’s history
Time
Do
llars
0
Product Category ProfitsTotal Market Profits
Product Category SalesTotal Market Sales
IntroductoryStage
GrowthStage
MaturityStage
DeclineStage
Slide9-5
INTRODUCTION STAGEINTRODUCTION STAGE
• A full-scale launch of a new product into the marketplace (trying to gain a foothold).
• Typically we have– High failure rates (slow sales initially)– Little to no competition– Frequent product modification– Limited distribution (try to attract intermediaries)– Price is generally high (to recover high marketing &
production costs)– Main customers are Innovators– Negative profits(due to high initial costs)– Durables (one product); non-durables (variety)
• Strategy– Developing product awareness (informing customers
of benefits - lead to trial)– Stimulate primary demand for the product category– Intensive personal selling– Pioneering Advantage - benefit of being the first one in
the market
Slide9-6
GROWTH STAGEGROWTH STAGE
• Begins when the product begins to break even
• Typically we have– sales grow at an accelerated (increasing) rate– Many competitors enter the market– Large companies may acquire small pioneering firms– Profits are healthy (because of demand)– R & D costs have been recovered; sales begin to level
off; sales volume create economies of scale
• Strategy– Promotion stresses brand preference & brand loyalty– Promotion is targeted towards attracting the mass
market– Product quality will be stressed & improved– Wider distribution will be gained and costs will be
lowered
Slide9-7
MATURITY STAGEMATURITY STAGE
• This is where most products spend most amount of time at.
• Typically we have– Sales continue to increase but at a decreasing rate– Marketplace is approaching saturation– Marginal competitors begin dropping out– Both price and profits begin to fall
• Strategy– Heavy promotion is necessary to both dealers and
consumers (by increasing usage)– Product lines are widened; annual models with
emphasis on style rather than function; products require little technological improvements
– Market share can be increased by either taking it away from the competitors or manufacturing private brands for channel members
Slide9-8
DECLINE STAGEDECLINE STAGE
• Signaled by a long-run drop in sales
– Product looses market acceptance
• Change in consumers taste
• Wide availability of substitutable products
• Typically we have
– Few competitors remain
– Decreased profits industry wide
– Price generally stabilizes
• Strategy
– Do very little if any promotion
– Minimize distribution costs
– Drop the product completely
Slide9-9
Adopter CategoriesAdopter CategoriesSlide9-10
Figure9.2
Innovators(2.5%)
EarlyAdopters(13.5%)
EarlyMajority
(34%)
LateMajority
(34%)
Laggards(16%)
Relationship of the Diffusion Process to the PLCRelationship of the Diffusion Process to the PLC
Innovators
Early adopters
Early majority
Late majority
Laggards
Productlife cyclecurve
Diffusioncurve
Cu
mu
lati
ve P
erce
nta
ge
of
Ad
op
tio
n 100
90
80
70
60
50
40
30
20
10
0
Introduction Growth Maturity Decline
Time of Adoption of Innovations
Slide9-11
• Brand - a name, term, design, symbol, or another feature that identifies one seller’s good or service as distinct from other sellers. (e.g. Coca Cola)
• Brand Name - that part of a brand that can be spoken. (e.g. the word Coke)
• Brand Mark - that part of a brand that cannot be spoken. (e.g. the flowing script used to write Coca Cola)
• Trademark - a brand that has legal status by virtue of it’s being registered with the federal government. (e.g. Coca Cola)
• Trade name - the legal name under which a company operates. (e.g. The Coca Cola Company)
• Brand extension - the practice of using an existing brand name for a new product. (e.g. Cherry Coke, Diet Coke, Caffeine Free Coke)
• Service mark - a brand for a service that has legal status by virtue of its being registered with the federal government.
• Family brand - the use of the same brand name for an entire product line.
• Co-Branding - placing two or more brand names on a product (e.g., ConAgra + Kellogg = Healthy Choice)
Branding TerminologyBranding TerminologySlide9-12
BrandBrandStructureStructure
PrivateBrands
GenericBrands
Salsa
Old El PasoSalsa
Types of BrandsTypes of BrandsSlide9-13
Manufacturer’sBrands
A & P MasterchoiceSalsa
Selecting a BrandSelecting a BrandSlide9-14
A good brand name has several characteristics.
1. It should imply product benefits.
2. It should be positive, distinctive, easy to say and easy to remember.
3. It should be consistent with the image of the product and manufacturer.
4. It should be legally protectable and permissible.
5. It should translate well, if the product is to be offered globally.
Elements of Brand EquityElements of Brand EquitySlide9-15
Figure9.5
Provides value to customer by Enhancing Customer’s:
Interpretation/Processing of information
Confidence in the Purchase Decision
Use Satisfaction
Provides value to firm by Enhancing:
Efficiency and effectiveness of Marketing Programs
Brand Loyalty
Prices/Margins
Brand Extensions
Trade Leverage
Competitive Advantage
BrandLoyalty
NameAwareness
PerceivedQuality Brand
AssociationsOther Proprietary Brand Assets
Brand Equity
Name Symbol
Product Mixes and Product LinesProduct Mixes and Product LinesSlide9-16
Figure9.7
Source: Courtesy of P. Gayle Fuguitt, Marketing Research Director, Big “G” Division, General Mills
Ready-to-EatCereals
ConvenienceFoods
Snack Foods BakingProducts
DairyProducts
Total
Wheaties
Lucky Charms
Cinnamon Toast Crunch
Cheerios
Kix
Trix
Hamburger Helper
Suddenly Salad
Betty Crocker Cake Mixes
Creamy Deluxe Frosting
Dessert Mixes
Pop Secret Popcorn
Fruit Rollups
Nature Valley Granola Bars
Bisquick
Gold Medal Flour
Yoplait Yogurt
Colombo Yogurt
Width
DEPTH