managing products and brands. product life cycle the product life cycle describes the stages a new...
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Managing Products and Brands
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Product Life Cycle
• The Product Life Cycle describes the stages a new product goes through in the marketplace.– Introduction– Growth– Maturity– Decline
• In the graph, the lines represent total industry sales revenue and total industry profit
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Product Life Cycle
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Product Life CycleIntroduction Stage
• Product– Goal of this stage is to create consumer
awareness and to get the consumer to try your product
– First introduction of the product– Have invested a lot of money into product
development– Try to impress quality by only having limited
options (1 flavor, 1 variety, etc.)
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Product Life CycleIntroduction Stage
• PriceCan be either priced relatively high or relatively low
• Skimming strategy – Pricing the product high in the beginning to try and
recoup development costs– Customers do not really have an expectation at
this point, so don’t know that the price is too high– Attracts competition because they think there is
high profit potential
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Product Life CycleIntroduction Stage
• PriceCan be either priced relatively high or relatively low
• Penetration pricing strategy– Pricing the product low.– This discourages competition– Builds sales volume by encouraging trial based
on low price– Must constantly monitor costs
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Product Life CycleIntroduction Stage
• Place– Difficult to find distribution because some
stores may be leery of stocking a new product
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Product Life CycleIntroduction Stage
• Promotion– Lots of money spent on advertising,
promotional tools, hope to create primary demand• Get consumer to want product class, not
necessarily brand– Want to inform consumers about what your
product is all about XM Radio
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Product Life CycleGrowth Stage
• Product– Goal of this stage is to stress how different
your product is in relation to competition– Competitors begin appearing – Sales grow because many new people are
trying your product and because of repeat purchasers
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Product Life CycleGrowth Stage
• Product– Improvements help to differentiate from
competition• New designs• New features
– Create more versions of product (add varieties, flavors, etc.)
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Product Life CycleGrowth Stage
• Price– More aggressive pricing because of increased
competition– Profit begins to peak– Want to gain market share
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Product Life CycleGrowth Stage
• Place– Want to get a lot of distribution opportunities– Increased competition means like products
are fighting for store shelf space
• Promotion– Focus mainly on selective demand (getting
consumer to want your brand)– Show how your product is better
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Product Life CycleMaturity Stage
• Product– Goal of this stage is to maintain brand loyalty– Sales tend to slow down– Competition is still great, but marginal
competitors tend to exit market– Most consumers that are going to purchase
product have and are either repeat customers or will not buy again
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Product Life CycleMaturity Stage
• Product– Sales are increasing but at a decreasing rate– Keep adding different elements to product
• Add improvements, varieties, etc.
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Product Life CycleMaturity Stage
• Price– The competitors that are left are serious about
their product, so fierce pricing competition begins
– Prices (as well as profits) usually decline
• Place– Try to get product in as many places as you
can
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Product Life CycleMaturity Stage
• Promotion– Want to “hold what you’ve got”, as well as
gain new customers– Continue to focus on product differentiation
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Product Life CycleDecline Stage
• Product– Goal of this stage is to delete the products
from your line that aren’t doing well and harvest the ones that are doing well
– Sales and profits decrease• Usually because of environmental changes
(mainly technology)
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Product Life CycleDecline Stage
• Product– Deletion
• Drop product from product line• Most drastic strategy• Products still have customers, so this is not an
easy decision to make– Harvesting
• Retain product, reduce marketing costs• Coca-Cola’s Tab• Gillette’s Liquid Paper
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Product Life CycleDecline Stage
• Price– Want to continue to be profitable, but will not
obtain major profits
• Place– Only in those outlets that are profitable– Fewer in number
• Promotion– Not a lot of promotion occurring in this stage
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Product Life Cycle – Introduction
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Product Life Cycle – Growth
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Product Life Cycle – Maturity
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Product Life Cycle – Decline
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Product Life Cycle Dimensions
• Length of cycles
• Shape of sales curves
• Product variety at different stages
• Consumer product adoption
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Product Life Cycle Dimensions
Length of Life Cycle
• No definite timeframe of cycles
• Consumer products have shorter life cycles than business products
• Technology has a lot to do with length of life cycle
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Product Life Cycle Dimensions
Shape of Life Cycle Curves
• Not all life cycles are the same curve
• Based on marketing strategies– High-learning– Low-learning– Fashion products– Fad products
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Product Life Cycle Dimensions
Shape of Life Cycle Curves
• High-learning products– A lot of education for consumer required– Long introduction period
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Product Life Cycle Dimensions
Shape of Life Cycle Curves
• Low-learning products– Little learning required for consumers
because they understand product already– Imitated by competitors easily, want to expand
Place quickly
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Product Life Cycle Dimensions
Shape of Life Cycle Curves
• Fashion product– Introduced, declines, returns– Length of cycles last years, maybe decades– Men’s and women’s clothing styles
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Product Life Cycle Dimensions
Shape of Life Cycle Curves
• Fad products– Rapid sales in introduction stage, decline
rapidly– Novelty type product, short life cycle
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Product Life Cycle Dimensions
Product Variety
• Product Class– Refers to the entire product category or
industry– Ex: Video game consoles and software
• Product Form– Pertains to variations within the class– Ex: Computing capabilities of game consoles
(GameCube, Xbox)
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Product Life Cycle DimensionsConsumer Adoption
• Diffusion of Innovation– How the product spreads through the population– Some people buy early, some wait for awhile– Breakdown of consumers
• Innovators• Early adopters• Early majority• Late majority• Laggards
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Life Cycle and Consumers
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Managing the Product Life Cycle
• A Product Manager (or Brand Manager) manages the marketing efforts of a group of products or brands
• First introduced by Proctor & Gamble
• Responsible for managing existing products through the life cycle, some are responsible for developing new products
• Develops and executes a marketing plan, approves copy, media selection, and package design for products
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Managing the Product Life Cycle
• Product Modification– Involves altering a product’s characteristics to
hopefully increase sales– Sometimes new features, packages, or scents
give consumers the idea of a redesigned (or reformulated) product
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Managing the Product Life Cycle
Modifying the Market
• How can you modify the market?
• Find New Users– Package differently to appeal to different
segment, develop different versions of product to appeal to different segments
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Managing the Product Life Cycle
Modifying the Market
• Increase Use– Show that your product can be used more
often than it was first introduced• Soup, orange juice
• Create New Use Situation– Same product, different uses
• Baking Soda
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Managing the Product Life Cycle
Repositioning the Product
• Changing the place a product occupies in a consumer’s mind relative to competitive products
• Can reposition based on product, price, place, or promotion
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Managing the Product Life Cycle
Repositioning the Product
• Reacting to a Competitor’s Position– Competition is affecting sales and/or market
share– Ex: New Balance changed focus to comfort
and fit rather than fashion and design
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Managing the Product Life Cycle
Repositioning the Product
• Reaching a New Market– Basically same product, get a different market
• St. Joseph Aspirin for babies, repositioned as low-strength aspirin for adults
• Catching a Rising Trend– Based on consumer trends
• More health conscious population
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Managing the Product Life Cycle
Repositioning the Product
• Changing the Value Offered– Trading up adds value to product (or line)
through additional features or higher quality materials• Dog food companies offering “life-stage
nutrition”• J.C. Penney adding designer clothes to stores
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Managing the Product Life Cycle
Repositioning the Product
• Changing the Value Offered– Trading down reduces number of features,
quality, or price• Airlines add more seats, reduces room• Downsizing package content without
changing package size or price
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Branding and Brand Management
• Branding– An organization uses a name, phrase, design,
symbol, or combination of these to identify its products and distinguish them from those of competition.
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• Brand Name– Any word, devise (design, sound, shape, or
color), or combination of these used to distinguish a seller’s good are services.
– One of the most valuable assets a company owns• Coca-Cola, McDonald’s, Sony say their
brand names have a value of at least $1 billion
– Consumers get consistency
Branding and Brand Management
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• Trade Name– A commercial, legal name under which a
company does business.• The Campbell Soup Company
Branding and Brand Management
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• Trademark– Identifies that a firm has legally registered its
brand name or trade name so the firm has its exclusive use, thereby preventing others from using it.
– Often has some sort of design elements• Shapes, slogans, sounds, letters, numbers,
etc.
Branding and Brand Management
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• Trade Name = GM
• Trademark = Buick
Branding and Brand Management
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• Trademark– A well-known trademark advertises its offering to
customers, helps to learn brand loyalty– Product counterfeiting is where low-cost copies of a
brand are sold by someone other than the owner of the brand
– Trademark Counterfeiting Act (1984) makes it a federal offense to counterfeit products that are trademarked
– Don’t want to be deceptive by indicating a quality the product doesn’t have
Branding and Brand Management
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• Trademarks– Usually followed by the generic name of the
product class or “brand”• Glad disposable trash bags• Kleenex brand tissues
– Trademarks shouldn’t be spoken of in the plural• 3 Kleenexes or 3 Kleenex brand tissues
Branding and Brand Management
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Brand Personality and Brand Equity
• Brand Personality– A set of human characteristics associated with
a brand name– Successful, established brands have brand
personality– Traditional, romantic, rugged, sophisticated,
rebellious are examples of brand personalities– Customers often choose products with brand
personalities that they feel best fits their image (or desired image)
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• Brand Equity– The added value a given brand name gives to a
product beyond the functional benefits provided.– Advantages:
• Provides competitive advantage• Consumers are willing to pay a higher price
for a product with brand equity–Godiva chocolate gets premium price
because of strong brand equity
Brand Personality and Brand Equity
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Creating Brand Equity
• Develop positive brand awareness– Want people to think of your brand when they
think of a product class– Kleenex = facial tissue
• Establish brand’s meaning in consumers’ minds– What does the product stand for?– Functional, performance related and abstract,
imagery-related
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• Elicit proper consumer response to brand’s identity and meaning– Thoughts about a brand
• Perceived quality, credibility, and superiority relative to competition
– Feelings about a brand• How does the consumer react emotionally
to a brand?
Creating Brand Equity
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• Create active loyal relationship with consumer to the brand– Most difficult part of creating brand equity– Harley-Davidson, Apple
Creating Brand Equity
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Valuing Brand Equity
• Successful, established brand names create a financial advantage for the company
• Brand equity has an economic value
• Can loose value when poorly managed
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Brand Licensing
• Brand licensing is a contractual agreement where one party (licensor-the brand name owner), allows its brand name or trademarks to be used with products or services offered by another company (licensee-the buyer)
• Want to make sure both companies have a good “fit”– Good fits: Ralph Lauren – paint, fragrances,
furniture– Bad fits: Bic perfume, Domino’s fruit-flavored gum
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Picking a Good Brand Name
• The name should suggest the product benefits– Tidy Bowl, Easy Off, Glass Plus
• The name should be memorable, distinctive, and positive– Mustang, Thunderbird
• The name should fit the company or product image– Sharp, Excedrin
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Picking a Good Brand Name
• The name should have no legal or regulatory restrictions– U.S. Food and Drug Administration doesn’t
like the word “heart” to be used in names
• Need a corresponding address on the Internet
• The name should be simple and emotional
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Picking a Good Brand Name
• International brand names are better if they have a non-meaningful name– 7-Up brand name is “death through drinking”
in China
• Needs to be easy to pronounce
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Branding Strategies
Multiproduct Branding
• One name for all its products in a product class
• Family branding, corporate branding
• GE, Gerber, Sony, Arm & Hammer
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Branding Strategies
Multiproduct Branding
• Advantages– Brand equity makes line extensions favored in
new market segments– Lowers advertising and promotion costs
• Disadvantages– Makes other items in product line vulnerable
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Branding Strategies
Multiproduct Branding
• Subbranding– Combines a corporate or family brand with a
new brand– Gatorade Frost
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Branding Strategies
Multiproduct Branding
• Brand Extension– The practice of using a current brand name to
enter a completely different product class– Tylenol = Tylenol Cold & Flu– If the brand name is used too much, it can
weaken the meaning for consumers
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Branding Strategies
Multiproduct Branding
• Co-Branding– The pairing of two brand names of two
manufacturers on a single product• Hershey Foods and General Mills =
Reese’s Peanut Butter Puffs
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Branding Strategies
Multibranding
• Involves giving each product a distinct name
• Good when different brands are targeted to different segments
• Black & Decker uses Black & Decker name for household users and DeWalt for professional tools
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Branding Strategies
Multibranding
• Can be accomplished by using price as the means for a different brand
• Or can be used to go up against the competitions brand that may be getting a piece of your market share– Barbie has Flava brand of hip-hop fashion
dolls because Bratz brand dolls were getting some of their Barbie sales
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Branding Strategies
Multibranding
• Promotional costs are expensive
• Has to generate brand awareness because you’re not using a recognized brand name
• Unique brands for market segments
• Other products won’t really be affected by product failures
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Branding Strategies
Private Branding
• A company manufactures products but sells them under the brand name of a wholesaler or retailer.
• Has high profits for manufacturers and resellers
• Sears, Wal-Mart, Kroger
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Branding Strategies
Mixed Branding
• A firm markets products under its own name and that of a reseller because the segment attracted to the reseller is different from its own brand.
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Packaging and Labeling
• Packaging– Refers to any container in which a product is
offered for sale and on which label information is conveyed.
• Label– An integral part of the package and typically
identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients.
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Packaging and Labeling
• Packaging and labeling are very expensive
• Essential because grabs consumer attention, provides information
• Can be a competitive advantage
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• Communication Benefits– Information for consumer
• Usage, product composition, etc.– Can develop brand equity
• Coca-Cola bottle
Packaging and Labeling
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• Functional Benefits– Storage, convenience, protection, product
quality– Square vs. round, tamper resistant bottles– Open dating of products– Product quality
Packaging and Labeling
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• Perceptual Benefits– Colors used, shapes, size
• Egg Beaters have red and yellow packaging; consumers think of sunrise, in turn breakfast
– Listing country of origin on packaging because of consumer stereotypes of who makes the best items• English Tea, French perfume, Japanese
electronics
Packaging and Labeling
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• Global Trends in Packaging– Environmental Sensitivity
• Recycling packaging (P&G uses recycled cardboard in 70% of its paper packaging and 25% in plastic containers of Tide, Cheer, Era, and Dash)
• European Union requires recycled packaging to be able to sell products in their countries
Packaging and Labeling
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• Global Trends in Packaging– Health and Safety Concerns
• Packaging must be safe for consumers (child proof items, sealed lids)
Packaging and Labeling
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Product Warranty
• A statement indicating the liability of the manufacturer for product deficiencies.
• Express warranties are written statements of liability.
• Limited-coverage warranties specifically state the bounds of coverage and areas of noncoverage.
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Product Warranty
• Full warranties have no limits of noncoverage
• Implied warranties assign responsibility for product deficiencies to the manufacturer.
• Can be a great competitive advantage
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Product Warranty
• Zippo lighters: “If it ever fails, we’ll fix it for free.”
• Sherwin Williams Super Paint has 20 year warranty against peeling
• Maytag water heaters have 10 year tank warranty