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BREAK FREE FROM THE PRODUCT LIFE CYCLE By: Youngme Moon , HBR May 2005
Presented By: Neha Rai - 10202144 Hina Tarey -
10202140 Suresh Kr. Sah-
10202173
BREAK FREE FROM THE PRODUCT LIFE CYCLE
Theodore Levitt introduced the concept of the product life cycle in 1965
Companies tend to adopt similar positioning approaches for products and services during each of the life cycle stages
Competitive relax to augment products as they mature
The augmented product becomes the expected product, so it must be further enhanced to remain competitive
By positioning or repositioning , companies can change how customers categories them, as a result, companies can rescue products foundering in the maturity phase of their life cycles and return them to the growth phase
Positioning Strategy
Reverse positionin
g
Breakaway
Positioning
Stealth Positionin
g
By stripping away attributes
consumers expect in a mature product and adding some
surprising new ones
By combining features of products in
distinctly different categories
By associating a tainted product with a category
consumers embrace
Reverse Positioning
Assumes that although consumers do want something more than the baseline product , they don’t necessarily want an endless parade of new features
Once a product is returned to its baseline state, reverse positioners supplement the stripped – down product with one or more carefully selected attributes that would typically found in a highly augmented product
This combination of attributes allow the product: a. to assume a new competitive position within the category b. move backwards from maturity into a growth position on
the life cycle curve
IKEA
IKEA has long been celebrated in the business press for its innovative marketing and phenomenal growth
Cheap and stylish inventory
Top stores compete by carrying enormous and varied inventories
Key factor in the stores high performance is its brilliant reverse positioning
IKEA STORE(before reverse
positioning)
No in- store sales assistance
Limited Variety
No Delivery Option
Most of the furniture require assembly
Durability is not to be expected
IKEA STORE(After
reverse positioning)
Stores have an airy, ultramodern look
Company operated day care center for children
Customers can stop for lunch at a delightful cafe
Customers can purchase items besides furniture like
toys and house wares
Benefits for IKEA
IKEA has become the 7th largest furniture stores in the U.S.
It has doubled its market share, and
tripled its U.S. sales from $600mn to $1.7 bn over the past 8 years
Commerce Bank
Serving New Jersey, Delaware, New York and Metropolitan Philadelphia
Pays the lowest interest rate in its market
Offers a limited product line- just for checking accounts
Hence Commerce bank reverse positioned itself as the most convenient bank in America
Growth between 1999 to 2004: a. Expanded branches from 120 to 319 b. deposits from $5.6 bn to $27.7 bn c. loans from $3 bn to $9.4 bn
Commerce Bank(After
reverse positioning)
Open 7 days in a week including evenings
Customers can get a debit card while waiting
An escort with an umbrella to car while raining
Free coffee and news papers
Free coin counting ‘penny arcade” machines that
customer loves
Benefits for Commerce Bank
In 2004, commerce bank opened 1.1 million new customer accounts.
JET BLUEIn December 2004 JetBlue celebrated its 16th
consecutive profitable quarterA 26.8% increase in operating revenue($1.27
billion) over previous year By offering : a. cheap seats and a lean value proposition b. no meals c. no round trip fares d. no first class seating
JetBlue(After
reverse positioning)
Leather seatsHigh- end personal
entertainment systems with satellite television
Extra leg room in the back two -thirds of the plane
Benefits for JetBlue
Establish a unique position in the market and steal shares from less creative competitors
Successfully appeals to customers among segments – from college students to business executives
Breakaway positioningThrough breakaway positioning ,a product escapes
its category by deliberately associating with a new one.
By manipulating the marketing mix a firm can change the way the customers frame a product , therefore the way they respond to it.
A breakaway product instead of being framed as simply an alternative to others in its category, customers perceive it as altogether different product.
This strategy allows the product to shift backward on the life cycle curve, moving from doldrums of maturity into a thriving growth opportunity.
SwatchEarlier strategy Breakaway change
1.Swiss watches were marketed as a form of jewelry2.They were serious, enduring, expensive and discreetly promoted.
1.Playful fashion accessories.
2.They were fun, ephemeral,inexpensive and showily promoted.
Customer bought it once and it lasted life time.
Inspired impulse buying: customer often purchased half a dozen in different designs
FROM:High end
jewelry
TO:Fashion Accessor
ies Categor
y
Swatch became
the best –selling
wristwatch of all time
The Simpsons
o The fox network has done a breakaway positioning when it launched its animated series The Simpsons in 1989.
o Although cartoons appeared in evening TV in the 1960s,no network had created a cartoon for adults and placed it in prime time.
o The Simpsons success was due to its ability to break away from its presumed category(cartoons) and associating itself with an entirely different category Adult prime time sitcom.
o The Simpsons’s breakaway positioning has had an important impact on its progress along the life cycle.
EZ Squirt ketchupIt came in spectrum of
unketchuppy hues-green,purple,orange,pink and teal and was sold in squeeze bottles with kid
friendly nozzles
Heinz advertising emphasized the product’s creative application and encouraged kids to write
their name on hot dogs and draw dinosaurs on burgers
Children immediately grasped that EZ Squirt is
more than a food , it was an edible art and craft product.
Started buying several different colors at once and polishing them off in days.
It was one of the most successful product launches in
the company’s history resulting in 10% leap in
market share.
Stealth PositioningStealth positioning conceal the true nature of their products by affiliating them with a different category.
Skeptical Thinking .
You may have a great product, but the category turns off potential customers.
By using stealth positioning, companies can, in effect, sneak products into the market and gain acceptance that might otherwise prove elusive.
stealth positioning and deceit.
EyeToy :PlaySony's goal is to make the PlayStation a broad platform for home entertainment and communications
Error of Perception.
A video camera (the EyeToy) and game software (called Play) that plugged into the new PlayStation 2 console.
Selling of more than 2.5 million units in its first seven months.
They wanted to establish the EyeToy hardware in people's minds as a plaything rather than a scary communications device
AIBOSimilar stealth strategy for household robot category.
Sony positioned the product as a lovable but otherwise useless pet.
Market test of a flawed technology.
Sony gathered invaluable consumer feedback to guide continued development of its robots.
Next-generation robot :QRIO.
Mac MiniThe Mini is a minimalist aluminum box, six inches square and two inches tall.
Downplaying its PC capability. Music server for car Dedicated Internet port for the kitchen. Mobile recording studio for the band. Backup device for photos. TiVo-like recorder. Digital entertainment hub for the living room.
Popularity of Windows-based PCs.
Overpriced Apple Computers
Apple Mac Mini Starting at $599
2X Faster Processor
2X Faster Graphics
Fast, Flexible Thunderbolt I/O
Connectivity B.Y.O.D.K.M. Storage & Memory
Thunderbolt Display
THANK YOU