PRODUCTS AND LIFE CYCLE

STRATEGIES
 Products and  Branding
product lines
 New products:
Development,
successes and
failures
 The Product Life
Cycle and Diffusion
of Innovations

MKTG 370 PRODUCT Lars Perner, Instructor 1

 Product Lines vs. Product Mix
 Product Line: A number of similar or related
products—e.g.,
 BIC writing utensils
 Boeing Commercial Aircraft (aircraft and parts)
 Nike shoes; Nike clothing
 Product Mix: assortment of different products
offered
 E.g., “KFC—we do chicken right!” (Only one product
line)
 3M: Tapes, adhesives, Post-its, chemicals, computer
disks, overhead projectors (things that are bonded
together

MKTG 370 PRODUCT Lars Perner, Instructor 2

 Reasons for Product Failure
 Insignificant “Point of Difference”
 Incomplete prior market and
product definition
 Insufficient market attractiveness
 Poor execution of the marketing mix
 Poor product quality or customer
need sensitivity
 Bad timing
 Lack of economical access to
customers

MKTG 370 PRODUCT Lars Perner, Instructor 3

 Stages in New Product
Development Process

Text, p. 279. Copyright © 2002 McGraw-Hill.

MKTG 370 PRODUCT Lars Perner, Instructor 4
 Idea Generation
 Sources of new ideas
 Customer based
 Outright suggestions
 Observation of customer problems and tasks
 Market research on processes and problems
 Supplier suggestions
 Employee suggestions
 R&D Breakthroughs
 Competitive ideas
 Adaptation of products seen in foreign markets

MKTG 370 PRODUCT Lars Perner, Instructor 5

 Screening
 Internal screening
 Technical feasibility
 Consistency with
strategic objectives
 External screening
 Marketing research
 Questionnaires

 Conjoint analysis

(determines
importance of
attributes)

MKTG 370 PRODUCT Lars Perner, Instructor 6

 Business Analysis and Development
 Business analysis  Development
 Financial  Design
feasibility  Prototypes
 Legal issues  Refinements
 Impact on sales
of existing
products
 Financial
projections

MKTG 370 PRODUCT Lars Perner, Instructor 7

 Test Marketing and
Commercialization
 Test marketing  Commercialization
 Limited regional  Positioning
release  Launching product
 May pre-test prices  Risks
and positioning  Slotting fees

 Simulated test  Failure fees

markets  Withdrawal due to
 Laboratory
insufficient sales
 Computer based

MKTG 370 PRODUCT Lars Perner, Instructor 8

 The Product Life Cycle

Text, p. 295. Copyright © 2002 McGraw-Hill.

MKTG 370 PRODUCT Lars Perner, Instructor 9

 Some PLC Stage Examples
 Color TVs: Maturity  Digital photography:
 Black and white TVs: Growth
Decline  Fax machines: Maturity
 HDTV: Growth  Internet access (U.S.)
 VCRs: Decline  Dial-up: Mature
 DVD players: Growth  DSL, Cable: Growth
 Jeans: Maturity  Travel agencies:
 Fast food: Decline
Growth/maturity  Autism education:
 Traditional Introduction
photography: Maturity  Cranberry juice:
Revitalization
MKTG 370 PRODUCT Lars Perner, Instructor 10
 The Product Life Cycle (PLC)
involves ________ over time
 Demand for the product  Investment
 Awareness of the opportunities (Boston
product Consulting Group
 Competition in model)
supplying the product  Appropriate strategies
 Price
 Features
 Differentiation
 Profitability
 Alternatives available
to the product

MKTG 370 PRODUCT Lars Perner, Instructor 11

 Dimensions of the Product Life
Cycle (PLC)
 Length  Diffusion among
 Tend to be consumer segments
increasingly short
 Especially short in
Japan
 Shape
 Effects of learning
opportunities
 Product level
 Class (e.g., TVs)
 Form (e.g., HDTV)

MKTG 370 PRODUCT Lars Perner, Instructor 12

 The International Life Cycle
 Market for older  “Leap frogging”
technology tends to exist
in less developed countries
 Going directly from
old technology to the
 Manufacturing of older
very newest, skipping
generation technology-- intermediate step
e.g., Pentium I (e.g., wireless rather
computers than wired
 Resale of capital technology)
equipment—e.g., DC 8  Shortening
aircraft, old three part of product
canning machines life
 Some countries tend to be cycles
more receptive to
innovation than others

MKTG 370 PRODUCT Lars Perner, Instructor 13

 Types of Innovations
 Continuous--same product, just small
improvements over time--e.g., typical
automobile/stereo system model changes
 Dynamically continuous--product form
changed, but function and usage are roughly
similar--e.g., jet aircraft, ball point pen, word
processor
 Discontinuous--entirely new product; usage
approach changes (e.g., fax)

MKTG 370 PRODUCT Lars Perner, Instructor 14

 Some Diffusion Examples
 ATMs  Fax machines
 Easy observability  Network economies
 Significant relative
 Rap music
advantage
 Low barriers to entry
 Credit cards
 Spread to a new
 “Chicken-and-egg”
consumer group
problem
 Hybrid corn
 Jump-starting the
 Trialability
cycle
 Imitation
 Faded, torn jeans
 Fads
 Innovations do not
have to be high tech
MKTG 370 PRODUCT Lars Perner, Instructor 15
 To Adopt or Not to Adopt: How Will
Consumers Answer the Question?
 Some causes of resistance to
adoption
 perceived risk--financial and social
 self image
 effort to implement and/or learn to
use the product
 incompatibility
 inertia

MKTG 370 PRODUCT Lars Perner, Instructor 16

 Influences on the Speed of
Diffusion
 Risk to expected benefit ratio
(relative advantage)
 Product pricing
 Trialability
 Switching difficulties and learning
requirements/ ease of use

MKTG 370 PRODUCT Lars Perner, Instructor 17

 Branding
 Brands
 Product or product line
specific brands
 E.g., Tide, DeWalt, Hayes

modem
 International issues

 “Umbrella Brands”
 3M

 National vs. regional

 National vs. international Branding has been traced
 Store brands to whiskey casks that
were identified for quality.
 Trade marks and “genericide”

MKTG 370 PRODUCT Lars Perner, Instructor 18

 Brand as Category Label: A Mixed
Blessing
 Brand names potentially in danger
 Coke (“cola drink”)
 Kleenex (“facial tissue”)
 FedEx (“overnight express”)
 Xerox (“photo copy”)
 Market share benefit of descriptive brand
name
 Distributional
 Consumer “mind share”

MKTG 370 PRODUCT Lars Perner, Instructor 19

 Brand Value and Image
 Brand equity: Value added to product based
on brand name
 Choice likelihood
 Ability to charge higher price
 Use of product as loss leader
 Benefit in market share, temporary revenue
(Coca Cola)
 Possible damage to long term brand image
(Louis Vuitton suitcases in Japan)
 Brand “personality:” Associations with
product
MKTG 370 PRODUCT Lars Perner, Instructor 20
 Co-branding
 To take advantage of assets  Ingredients:
of both firms  Cooperative: Dreyers’
 Types ice cream with Mars
 Distributional: M&Ms
 Egalitarian: Carl’s Jr.
 Independent: Local
and Green Taco computer maker
advertises Maxtor hard
 Hierarchical: Kodak drive components
as official film of
Disney Parks
 Intrusive: “Intel Inside”
 Line filling—e.g., airline  Partial: McD’s serves
code sharing Coca Cola
 Sponsorship: Good
Housekeeping seal of
approval

MKTG 370 PRODUCT Lars Perner, Instructor 21

 Branding Issues
 To extend or not to extend?
 Congruence--are products consistent in
image to be represented by the same
brand name?
 Coke and Diet Coke
 Miller vs. Miller Light Beer
 Perception of ability to make product well
 Extention should not be exploitative (e.g.,
Heinecken Popcorn)
 Order of entry: First manufacturer of new
to market product should not extend

MKTG 370 PRODUCT Lars Perner, Instructor 22