BMGT 411: Chapter 10

Marketing Through the Life Cycle

Ford Fiesta Blogger Test Drive Page 143

Chapter Questions

• What are the characteristics of products and how do marketers classify products?

• How can companies differentiate products?

• How can a company build and manage its product mix and product lines?

• How can companies use packaging, labeling, warranties, and guarantees as marketing tools?

• What strategies are appropriate for new product development and through the product life cycle?

What is a Product?

• A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

• Examples: Starbuck’s 3rd Place. The place between someone’s work and home. Starbuck’s coffee is a product, but the Starbuck’s experience is a product as well, and include comfortable cafe’s, free wifi, and service that is beyond typical fast food and beverage.

Figure 10.1 Five Product Levels Page 144

Five Product Level Example: Kohl’s

• Core Benefit: Clothes

• Basic Product: Clothing and home goods in a variety of styles and sizes

• Augmented Product: Clothing and home goods, with weekly and seasonal specials, customers will get excited about savings

• Potential Product: Any future updates Kohl’s would do in the future to exceed customer expectations (More online offerings, same day shipping, etc)

Product Classification Schemes Page 145

Durability

Tangibility

Use

Product Classifications

Nondurable goods: tangible goods consumed in one or a few uses. Large availability, smaller markups, induce trial and build preference

Product Classifications

Durable goods: tangible goods like appliances that survive many uses, higher margins, more service required, and also require more seller guarantees

Product Classifications

Services: intangible, inseparable, variable products that require more quality control, credibility, and adaptability

Consumer Goods Classifications• Convenience Goods: Purchased frequently,, and with minimal effort (often self service)

• Ex: Soft Drinks

• Shopping Goods: Consumers compare on the basis of suitability, price, and style

• Ex. Appliance

• Speciality Good: Unique characteristics or brand identification for which enough buyers make a special purchasing effort

• Ex. Cars

• Unsought Goods: Needs, that the customer does not normally think about buying

• Ex. Smoke detectors, first aid kits

Industrial Goods Classification

• Materials and parts: Go into the final finished product

• Ex. Wheat delivered to make cereal

• Capital items: Equipment to make final product

• Ex. Oven to roast cereal

• Supplies/business services: Short term items that help making the final product, like office supplies and consulting fees

Product Differentiation

• Product form

• Features

• Customization

• Performance

• Conformance

• Durability

• Reliability

• Repairability

• Style

Product Differentiation

Form: Products size, shape, or physical structure

Product Differentiation

Features: Supplement the products basic function, often deployed to users in regular cycles, to increase upgrades and excitement in the product

Product Differentiation

Customization: A company meets each customers requirements on a mass basis, by individually designing products, services, or programs.

Product Differentiation

Style: The look and feel of a product to a buyer. Often a key item in creating demand for a product. Style often depends on target market being sought.

Service Differentiation

• Ordering ease

• Delivery

• Installation

• Customer training

• Customer consulting

• Maintenance and repair

• Returns

Zappos.com

• Differentiation is based on service:

• Ease of ordering

• Customer service

• Ease of returns

Product-Mix Pricing

• Product-line pricing: Varying prices in a line of products: Ex. Soda

• Optional-feature pricing: Price of product plus options: Ex. Cars

• Captive-product pricing: Introduction products and the price of ancillary or captive products: Ex. Razors, Low intro price, and high price of blades

• Two-part pricing: Fixed fee plus variable pricing: Ex. Cell Phone + Data Plans

• By-product pricing: Price of by products in the production of the main product: Ex. Meats

• Product-bundling pricing: Price for a bundle of products or service: Ex. Comcast Triple Play

Ingredient Branding

Creating brand equity for the materials or components inside of a finished product, to increase demand and create higher margins based on perceived quality

• Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product

• Sometimes, packaging is just as important as the product itself

• Packaging is the customers first experience with the product

• It must identify the brand, convey descriptions and persuasive information, facilitate product transportation, and aid in product consumption

• Can you think of any iconic brand packaging?

Altoids Packaging

Mio Packaging

Tropicana Packaging

New Product Development Process

Ways to Find Great New Ideas

• Run informal sessions with customers

• Allow time off for technical people to putter on pet projects

• Make customer brainstorming a part of plant tours

• Survey your customers

• Undertake “fly on the wall” research to customers

• Social Media Crowd sourcing: Gathering popular ideas directly from customers

Concept Testing

Concept Testing: Who will use this product? What benefit will it provide? When will they use it?

• Need level

• Perceived value

• Purchase intention

• User targets, purchase occasions, purchasing frequency

Prototype Testing

• Alpha testing: Testing within the firm

• Beta testing: Testing with a group of customers

• Market testing: Testing in a few markets to gauge customer acceptance, sales forecasts, identify any logistic issues

True Runner (Dick’s Sporting Goods) Concept: Shady Side

True Runner (Dick’s Sporting Goods) Cranberry Township, PA

What is Adoption?

Adoption is an individual’s decision to become a regular user of a product.

Stages in Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption

Figure 10.4 Adopter Categorization on the Basis of Relative time of Adoption Technology is speeding up the

life cycles

Figure 10.4 Adopter Categorization on the Basis of Relative time of Adoption Technology is speeding up the

life cycles

Product Life Cycle Marketing

• Introduction and Innovator Stage: High marketing costs and low profit, due to getting awareness out to customers and driving trial

• Growth: Improve quality, reduce cost, add features to maximize profitability. Can become a market leader in this stage, increasing profitability in the maturity stage

• Maturity: Longest section of life cycle. This is where targeted marketing takes over from broad based marketing to increase users at a reduced marketing cost.

• Decline: Choice to let the brand die, or innovate to create a new product or service based on new needs, technology, etc. Declining products should not be invested in unless it is to be relaunched

AthleteTrax

• What is the product of AltheteTrax?

• Is it a good? Or an experience?

• What stage of the life cycle is it in?

• Who should it target at this stage to grow?