developing, positioning, and differentiating products through the life cycle
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To accompany A Framework for Marketing Management, 2nd Edition Slide 1 in Chapter 10©2003 Prentice Hall, Inc.
Chapter 10Chapter 10
Developing, Positioning, Developing, Positioning, and Differentiating and Differentiating Products through Products through
the Life Cyclethe Life Cycle
PowerPoint by Karen E. JamesPowerPoint by Karen E. JamesLouisiana State University - ShreveportLouisiana State University - Shreveport
To accompany A Framework for Marketing Management, 2nd Edition Slide 2 in Chapter 10©2003 Prentice Hall, Inc.
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.
To accompany A Framework for Marketing Management, 2nd Edition Slide 3 in Chapter 10©2003 Prentice Hall, Inc.
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.
To accompany A Framework for Marketing Management, 2nd Edition Slide 4 in Chapter 10©2003 Prentice Hall, Inc.
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 5 in Chapter 10©2003 Prentice Hall, Inc.
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 6 in Chapter 10©2003 Prentice Hall, Inc.
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 7 in Chapter 10©2003 Prentice Hall, Inc.
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 8 in Chapter 10©2003 Prentice Hall, Inc.
Managing New ProductsManaging New Products
Product development
Market testing
Commercialization
New Product Development Process: Development to Commercialization
To accompany A Framework for Marketing Management, 2nd Edition Slide 9 in Chapter 10©2003 Prentice Hall, Inc.
Consumer Adoption ProcessConsumer Adoption Process
Adopters of new products move through five stages:
– Awareness– Interest– Evaluation– Trial– Adoption
To accompany A Framework for Marketing Management, 2nd Edition Slide 10 in Chapter 10©2003 Prentice Hall, Inc.
Consumer Adoption ProcessConsumer Adoption Process
People adopt new products at different rates
– Innovators– Early adopters– Early majority– Late majority– Laggards
To accompany A Framework for Marketing Management, 2nd Edition Slide 11 in Chapter 10©2003 Prentice Hall, Inc.
Consumer Adoption ProcessConsumer Adoption Process
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 12 in Chapter 10©2003 Prentice Hall, Inc.
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 13 in Chapter 10©2003 Prentice Hall, Inc.
Stages of the Product Life Stages of the Product Life CycleCycle
PLC Stages
Introduction
Growth
Maturity
Decline
Low sales
High costs per customer
Negative profits
Innovator customers
Few competitors
To accompany A Framework for Marketing Management, 2nd Edition Slide 14 in Chapter 10©2003 Prentice Hall, Inc.
Stages of the Product Life Stages of the Product Life CycleCycle
PLC Stages
Introduction
Growth
Maturity
Decline
Rising sales
Average costs
Rising profits
Early adopters customers
Growing competition
To accompany A Framework for Marketing Management, 2nd Edition Slide 15 in Chapter 10©2003 Prentice Hall, Inc.
Stages of the Product Life Stages of the Product Life CycleCycle
PLC Stages
Introduction
Growth
Maturity
Decline
Peak sales
Low costs
High profits
Middle majority customers
Stable/declining competition
To accompany A Framework for Marketing Management, 2nd Edition Slide 16 in Chapter 10©2003 Prentice Hall, Inc.
Stages of the Product Life Stages of the Product Life CycleCycle
PLC Stages
Introduction
Growth
Maturity
Decline
Declining sales
Low costs
Declining profits
Laggard customers
Declining competition
To accompany A Framework for Marketing Management, 2nd Edition Slide 17 in Chapter 10©2003 Prentice Hall, Inc.
Objectives and Strategies for Objectives and Strategies for the Product Life Cyclethe Product Life Cycle
PLC Stages
Introduction
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 18 in Chapter 10©2003 Prentice Hall, Inc.
Objectives and Strategies for Objectives and Strategies for the Product Life Cyclethe Product Life Cycle
PLC Stages
Introduction
Growth
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 19 in Chapter 10©2003 Prentice Hall, Inc.
Objectives and Strategies for Objectives and Strategies for the Product Life Cyclethe Product Life Cycle
PLC Stages
Introduction
Growth
Maturity
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 20 in Chapter 10©2003 Prentice Hall, Inc.
Objectives and Strategies for Objectives and Strategies for the Product Life Cyclethe Product Life Cycle
PLC Stages
Introduction
Growth
Maturity
Decline
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
To accompany A Framework for Marketing Management, 2nd Edition Slide 21 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
Two views of positioning:
– Ries and Trout: products are positioned in the mind of prospect
– Treacy and Wiersema: positioning via value disciplinesProduct leader firmOperationally excellent firmCustomer intimate firm
To accompany A Framework for Marketing Management, 2nd Edition Slide 22 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
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.
To accompany A Framework for Marketing Management, 2nd Edition Slide 23 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
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.
To accompany A Framework for Marketing Management, 2nd Edition Slide 24 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
Form
Features
Performance
Conformance
Durability
Reliability
Repairability
Style
Design
Product Differentiation Tools
To accompany A Framework for Marketing Management, 2nd Edition Slide 25 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
Ordering ease
Delivery
Installation
Customer training
Customer consulting
Maintenance and repair
Miscellaneous
Services Differentiation Tools
To accompany A Framework for Marketing Management, 2nd Edition Slide 26 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
Competence
Courtesy
Credibility
Reliability
Responsiveness
Communication
Personnel Differentiation Tools
To accompany A Framework for Marketing Management, 2nd Edition Slide 27 in Chapter 10©2003 Prentice Hall, Inc.
Positioning and Positioning and DifferentiationDifferentiation
Coverage
Expertise
Performance
Channel Differentiation Tools
Symbols
Media
Atmosphere
Events
Image Differentiation Tools
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