strategic marketing ebma 3715 unit 6 & 7 (chapter 6 & 7)

PRODUCT DECISIONSCHAPTER 6

Have you come across

any NEW PRODUCT

DEVELOPMENTS

recently?

© Juta and Company Ltd, 2012 12

What is a Product (pg.164)‘A product is a physical good or service which is obtained by the consumer and which has the aim of

satisfying the needs of the consumer as a result of the product’s direct use, with additional factors, services and perceptions of the product such as being useful, desirable or convenient.’


Actual, physical product which is offered to the consumer. E.g. design, features, brand, quality.

Figure 6.1(pg. 165)Five Product Levels

Using each

level to add

more customer value

Production ImagePotential Product

Augmented Product

Tangible Product

CORE PRODUC

T

Dominant benefit the user expects.

Physical & non-physical “extra’s” that add value. E.g. Delivery, installation, guarantees

Potential Developments & Adjustments

How the product is perceived by consumers

Identify how the 5 product levels were implemented by the “Smart Racket”:

PRODUCT/ BRAND

PRODUCT/ BRAND

IF YOU HAD TO BE A

WHICH WOULD YOU CHOOSE? WHY?


The Meaning of Brands (pg. 181)

A name, symbol, slogan or design that is created with the aim of identifying a seller, manufacturer, provider of a product or service, or the product or service itself.


Types of New Products (pg. 192)

NEW-TO-THE-WORLD PRODUCTS

NEW-TO-THE-MARKETER PRODUCTS

LINE EXTENSIONS

REPOSITIONED PRODUCTS

IMPROVED PRODUCTS

LINE EXTENSIONS

Improvements


THE NEW PRODUCT DEVELOPMENT PROCESS (pg. 193)

THE NEW PRODUCT DEVELOPMENT PROCESS:1.Idea generation2.Idea screening3.Concept testing4.Business analysis 5.Product development6.Test marketing7.Commercialisation8.Review of market performance


IDEA GENERATION (pg. 195) Customers

Competitors

Employees and R&D staff

Top Management

IDEA SCREENING

Marketing FactorsProduction Factors

Development Factors

Financial Factors


THE NEW PRODUCT DEVELOPMENT PROCESS (pg. 193)

THE NEW PRODUCT DEVELOPMENT PROCESS:1.Idea generation2.Idea screening3.Concept testing4.Business analysis 5.Product development6.Test marketing7.Commercialisation8.Review of market performance


Figure 6.10 (pg. 204)Category of Adopters:

Differences in peoples readiness to try a new product

Address the five characteristics of acceptance:

-RELATIVE ADVANTAGE - Emphasise the advantage of using a product.

-COMPATIBILITY- Match the product with consumer’s values and

experiences

-COMPLEXITY- Make product user-friendly

-DIVISIBILITY- Use samples, demonstrations and free offers.

-COMMUNICABILITY- Beneficial results of product should be observed.

216

The Product Life Cycle


INTRODUCTION Phase (pg. 210)

LOW sales, LOW Profits and HIGH costs

Innovative products: No direct competition

Difficult to persuade retailers to carry the product.

Customers: Innovators

Inform potential customers Create Awareness

Induce product trial 4P’s Strategies (pg.

211) Rapid skimming strategy Low skimming strategy Rapid penetration strategy Slow penetration strategy

CHARACTERISTICS STRATEGIES


GROWTH Phase (pg. 212)

Rapid increase in sales and profits due to:

Increased awareness, trial and satisfaction.

New competitors enter, attracted by the opportunities: 'Me too' products

Improved operation costs and methods

Brand loyalty comes into play Build Brand loyalty

Customers: Early adopters

PRODUCT DECISIONS: Service/Support Strategy

becomes important: after-sales service, expert advice.

DISTRIBUTION DECISIONS: Expand market coverage

Maximum exposure Prevent delays

PRICE DECISIONS: Slight/ drastic price reductions

PROMOTION DECISIONS: Create secondary demand Inform, remind and convince

them to buy



Strategies: MATURITY Phase (pg. 335)

This phase presents major challenges for marketers: Reduced prices and increased

marketing costs lead to reduced profits

Increased competitive activity Saturated market penetration Brand switching occurs Product differentiation,

possible modifications and/or range expansion must be considered

Use marketing communications to: Emphasize differentiation and/ or

improvements

Retain the existing marketing strategy

Retaining the current product and revise other marketing instruments

1. Changing price2. Changing market

communication3. Changing distribution4. Changing price, marketing

communication and distribution

Changing all the marketing instruments

Product differentiation – improved quality, improved product characteristics, improved styling

Product range extensions – extended product range

Other marketing instruments



Strategies: DECLINE Phase (pg. 335)

Shift in consumer tastes and/or technological developments

Declining sales and profits- despite marketing efforts

Customers: Laggards Management needs to

decide: Withdrawing marketing support

and leaving the product to run its own course naturally

Eliminating the product Phased withdrawal Selling or contracting out

Continue with the existing marketing strategy

Revise existing marketing strategy partly or entirely

Withdraw product from all markets


The Many

Parts of the

Product &

Brand Puzzle

Types of

Products

Product Line & Mix

Decisions

Product Line

Decisions

Benefits of Branding

Types of

Brands

Packaging &

Labelling

TOPIC 1: CLASSIFYING PRODUCTSExplain the following product concept/s and provide as many South

African examples as possible (pg. 168-170)Sub-Topic Explanation SA Examples

Durable goods

Nondurable goods

Services

REVIEW YOUR TOPIC…

REVIEW HOW YOU WILL BE ASSESSED…

READ AND SUMMARISE…

Consumer products van be classified as…

DURABLE

CONSUMER EXPECTS:

A product that can be used over a LONG period of time: at least 3 years!

BUSINESSES AIM:Big purchase= Big support

NON-DURABLE

CONSUMERS EXPECT:

A product that can be used/consumed over s

SHORT period.

The benefits of these goods fade after one of

few uses.

BUSINESSES AIM:Create HABIT

SERVICES

CONSUMERS EXPECT:

100% intangible offering

BUSINESSES AIM:

Create tangible cues to make service offering

stand out.

Most Tangible Most Intangible

Durable

Non-DurableCreate a HABIT

ServicesCreate Tangible

Cues

Group Leaders to come to the

front to pick a topic for next Wednesday’s presentation

session

Visit Blackboard for more

information

Bring your study guide along

strategic marketing ebma 3715 unit 6 & 7 (chapter 6 & 7)

Education