Objectives
• Product Characteristics• Building & Managing the Product Mix & Product Lines• Brand Decisions• Packaging & Labeling• Product life cycle• Developing new product• Service
Components of the Market Offering
Value-based prices
Services mixand quality
Product featuresand quality
Attractiveness ofthe market offering
Specialty ProductsSpecialty Products Unsought ProductsUnsought Products
Shopping ProductsShopping ProductsBuy less frequently> Gather product information> Fewer purchase locations> Compare for:
• Suitability & Quality • Price & Style
Convenience ProductsConvenience Products
Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations
New innovations> Products consumers don’t want to think about. >Require much advertising & personal selling
Buy frequently & immediately> Low priced> Many purchase locations> Includes:
• Staple goods• Impulse goods• Emergency goods
Consumer-Goods Classification
Product Mix
WidthWidth - number of different product lines
WidthWidth - number of different product lines
LengthLength - total number of items
within the lines
LengthLength - total number of items
within the lines
Depth Depth - number of versions of each
product
Depth Depth - number of versions of each
product
Product Mix - Product Mix - all the product
lines offered
Product Mix - Product Mix - all the product
lines offered
Co
nsi
sten
cy
Product-Line Length
• Line Stretching– Downmarket– Upmarket– Two-way
• Line Filling• Line Modernization• Line Featuring & Line Pruning
Two-Way Product-Line Stretch: Marriott Hotels
Quality
Economy SuperiorStandard Good
Pri
ce
Pri
ce
High
Aboveaverage
Average
Low Fairfield Inn(Vacationers)
Courtyard(Salespeople)
Marriott(Middle
managers)
MarriottMarquis
(Topexecutives)
Brand Equity
No Brand Loyalty(customer will change)
No Brand Loyalty(customer will change)
Satisfied Customer(no reason to change)Satisfied Customer
(no reason to change)
Satisfied & Switching CostSatisfied & Switching Cost
Values the Brand(brand as friend)
Values the Brand(brand as friend)
Devoted to Brand
Devoted to Brand
An Overview ofBranding Decisions
BrandingDecision
•Brand
•No brand
Brand-SponsorDecision
•Manu-facturerbrand
•Distribu-tor(private)brand
•Licensedbrand
Brand-Name
Decision
•Individualbrandnames•Blanketfamilyname•Separatefamilynames•Company-individualnames
Brand-Repositioning
Decision
•Reposi-tioning
•Noreposi-tioning
Brand-StrategyDecision
•Lineextension
•Brandextension
•Multi-brands
•Newbrands
•Cobrands
Brand Strategies
BrandExtension
New
Bra
nd
Nam
e
Product Category
LineExtension
Existing
Existing
MultibrandsNew NewBrands
Good Brand Names:
SuggestProductBenefits
Distinctive
Lack PoorForeign
LanguageMeanings
SuggestProductQualities
Easy to:PronounceRecognizeRemember
Why Package Crucial as a Marketing Tool
• Self-service• Consumer affluence• Company & brand image• Opportunity for innovation
Four IntroductoryMarketing Strategies
Rapid-skimmingstrategy
Rapid-skimmingstrategy
Rapid-penetration
strategy
Rapid-penetration
strategy
Slow-penetration
strategy
Slow-penetration
strategy
Slow-skimmingstrategy
Slow-skimmingstrategy
Price
Low
High
PromotionHigh Low
Decline Stage
• Decrease investment• Resolve uncertainties - stable investment• Selective niches• Harvesting• Divesting
Why New Products Fail
• “Over Championing”• Overestimated Demand• Poor Design• Poor Marketing Execution• High Development Costs• Strong Competitive Reaction
Challenges in NPD
• Idea Shortage• Fragmented Markets• Social & Governmental Constraints• Cost• Capital Shortage• Need for Speed• Shorter Product Life Cycles
New Product Development Process
IdeaIdeaGenerationGeneration
ConceptConceptDevelopmentDevelopmentand Testingand Testing
MarketingMarketingStrategyStrategy
DevelopmentDevelopment
IdeaIdeaScreeningScreening
BusinessBusinessAnalysisAnalysis
ProductProductDevelopmentDevelopment
MarketMarketTestingTesting
CommercializatCommercializationion
Probability of Success
Probabilityof technicalcompletion
Overallprobabilityof success =
Probability ofcommercialization
given technicalcompletion
XProbability of
economicsuccess given
commercializationX
Concept Development & Testing
1. Develop Product Ideas into Alternative Product Concepts
1. Develop Product Ideas into Alternative Product Concepts
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
2. Concept Testing - Test the ProductConcepts with Groups of Target Customers
3. Choose the Best One3. Choose the Best One
High price/oz.
Lo
w in
cal
ori
es
Low price/oz.
Hig
h in
calo
ries
Product & Brand Positioning
(a) Product-positioningmap
(breakfast market)
Expensive
Slo
w
Inexpensive
Qu
ick
Baconandeggs
Pancakes Instantbreakfast
Coldcereal
Hotcereal
b) Brand-positioningmap
(instant breakfast market)
Brand C
Brand B
Brand A
Consumer-Goods Market Testing
Sales-Wave
Research
Test offering trail toa sample of consumers insuccessive
periods.
Sales-Wave
Research
Test offering trail toa sample of consumers insuccessive
periods.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
SimulatedTest Market
Test in a simulated shopping environment
to a sample of consumers.
StandardTest Market
Full marketing campaignin a small number of representative cities.
StandardTest Market
Full marketing campaignin a small number of representative cities.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
Controlled Test Market
A few stores that have agreed to carry newproducts for a fee.
2 1/2%Innovators
13 1/2%Early
adopters
34%Early
majority
34%Late
majority
16%Laggards
Time of adoption innovations
Adopter Categorization of the Basis of Relative Time of Adoption of Innovations
Characteristics of the Innovation Rate of Adoption
• Relative advantage• Compatibility• Complexity• Divisibility• Communicability
Categories of Service Mix
PurePureServiceService
TangibleTangibleGoodGood
w/w/ServicesServices
MajorMajorServiceService
w/ Goodsw/ GoodsHybridHybrid
PurePureTangibleTangible
GoodGood
ServicesServices
InseparabilityServices cannot
be separatedfrom theirproviders
InseparabilityServices cannot
be separatedfrom theirproviders
PerishabilityServices cannot
be stored forlater sale or use
PerishabilityServices cannot
be stored forlater sale or use
IntangibilityServices cannotbe seen, tasted,felt, heard, or
smelled beforepurchase
IntangibilityServices cannotbe seen, tasted,felt, heard, or
smelled beforepurchase
VariabilityQuality of
services dependson who providesthem and when,where, and how
VariabilityQuality of
services dependson who providesthem and when,where, and how
Service characteristics
ServicesServices
InseparabilityIncrease
productivity ofproviders
InseparabilityIncrease
productivity ofproviders
PerishabilityMatch supplyand demand
PerishabilityMatch supplyand demand
IntangibilityUse cues to
make it tangible
IntangibilityUse cues to
make it tangible
VariabilityStandardize
serviceproduction& delivery
VariabilityStandardize
serviceproduction& delivery
Overcoming service challenges
Three Types of Marketingin Service Industries
Internalmarketing
CompanyCompany
CustomersCustomers
Externalmarketing
EmployeesEmployees Interactivemarketing
Cleaning/maintenance
services
Financial/bankingservices
Restaurantindustry
ServiceExcellence
• Strategic Concept• Top-Management Commitment• High Standards• Monitoring Systems• Satisfying Customer Complaints• Satisfying Both Employees & Customers• Managing Productivity
Importance-Performance Analysis
A. Concentrate here B. Keep up the good work
D. Possible overkillC. Low priority
Extremely important
Slightly important
Exce
llent
per
form
ance
Fair
perf
orm
ance
1 2
9
1113
1214
34 5 67
810
# = Attributes