New product development and Classification, Branding, Brand Equity, Product Life Cycle

Atul Fegade

Marketing Management Unit-1

1

Digital Payments in India Rs. 34,00,000 Crores by 2020.

11% of GDP

By 2023 Non cash transactions > cash

transactions

Paytm (One97 Communications Ltd), Mobikwik

(One Mobikwik Systems Pvt Ltd), Oxigen

Services (India) Pvt. Ltd, Citrus Payment

Solutions Pvt. Ltd, Freecharge and others

Micro Transactions

Which Industry would benefit by it?

2

World’s most innovative companies

Who are the competitors?

What is its core business (66%)?

much more than just an Internet search and advertising company

Mission is “to organize the world’s information and make it universally accessible and useful.”

Freewheeling new-product development process

lightning-quick development of iGoogle

Google Labs

Gmail, Blog, Checkout, Picasa, Android, Chrome, Google Maps & Earth,

4

Google engineers are encouraged to spend 20

percent of their time developing their own new-product

ideas.

Google Doodles

Gmail – automatic separation of mails into promotions

/social feeds

5

In dynamic markets companies must constantly introducenew products and services to keep up with changingconsumer wants and needs.

Consumer "Needs and Wants" Change, Diet Coke

Product Reaches The End Of Its Product Life Cycle – Xbox360 (Shorter PLC)

Environmental Changes – ICICI Bank delivers e statementsfor saving accounts.

Competitors

Breakthrough Innovations – increasing technologicalcapabilities

Markets grow larger

Failure of previous products

6

New product line

(New-to-the-firm products, New category entry):

Includes new brands and brand extensions - Products

that take a firm into a category new to it.

Ex.: P&G brand shampoo or coffee, Hallmark gift items, Canon laser

printer, McDonald’s McCafe drinks (lattes, cappucinos, frappes,

smoothies, etc.), ITC Sunfeast biscuits

10

New-to-the-world product

(Breakthrough product, Pioneering product, Revolutionary

product, “Really new” product, Radical innovation,

Discontinuous innovation, Disruptive innovation, New-new

product) - (10% of new products): Very new products &

technology that create a whole new market and change buyer

behavior. Ex.: Polaroid camera, Sony Walkman, Ipod

1. a. Revolutionize existing product categories (e.g., electronic

typewriters, electric cars, hybrid cars)

2. b. Create entirely new categories (e.g., Federal Express, dental

fillings)

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Improvements to existing Products

- Improvements/revisions/enhancements/upgrades to existing

products (26%): Current products made better. Ex.: P&G’s

continuing improvements to Tide detergent

Ex: 3rd-generation Amazon Kindle: lighter, thinner, faster page turns, sharper

display resolution, longer battery life, twice the storage E.g., iPod Touch

Reasons: Changes in consumer tastes, technology, and

competition

Quality modifications – Changes in material or production processes related to a product’s

dependability and durability

- Raise quality: To gain a competitive advantage

- Reduce quality: To offer a lower price

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Addition to existing product line: Includes product line extensions

and flankers (26%): Products that flesh out the product line in

current markets. Ex.: Tide Liquid, Apple’s iMac, HP LaserJet 7P.

1. A. (Product) line extension – Existing product line, existing brand

name: Derivatives of a company’s core (anchor, flagship, parent)

product – Additional colors, sizes, flavors, styles shapes, scents,

quality levels, features, package sizes, forms, etc.

Use if closely related items and for other reasons for using a

brand franchise extension strategy. E.g., iPhone, iPhone 3G,

iPhone 4 (video camera, faster processor); iPhone 5S (video calling,

better reception, longer battery life, new hardware design)

E.g., Pepsi & Coke

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2. Functional modifications – Changes affecting a

product’s versatility, effectiveness, convenience

or safety; usually requiring product redesign.

E.g., greener, more energy efficient, faster,

lighter, smaller

E.g., Amazon E-Kindle Reader 2.0, video

game consoles

3. Aesthetic/Form modifications – Changes in the

sensory appeal of a product such as altering taste,

texture, sound, smell, or appearance.

E.g., New Coke

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Repositioning: (7%): Products that are

retargeted for a new use/application. Also

includes retargeting to new users/ new

target markets.

Can be physical or psychological

repositioning, often entailing a new brand image.

Ex.: Aspirin repositioned as a safeguard against

heart attacks; Coke retargeted as a Family product

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Cost Reduction (11%): New products

that provide the customer similar

performance but at a lower cost (better value).

May be more of a “new product” in terms of

design or production at the same or lower

price.

E.g., MacDonald's

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New Product Options Acquisition

Buy other companies, patents from other companies, license or franchise etc.

Reckitt Benckiser acquired Paras Pharma (Moov, Krack, D’Cold, Itchgaurd)

Tata Motors – Jaguar & Land Rover

Development (Organic Growth)

New variants of automobiles

New products in own laboratory/R&D

New Products

Colgate – Oral care (toothpaste, mouthwash, toothbrush), Personal Care (bodywash, liquid handwash, hair care, skincare, shave preps), Home Care(Dishwash), Professional Oral care (Sensitive, tooth whitening, specialty cleaning, fluoride therapy)

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Challenges in New Product

Development – some examples

Kodak – long time leader in film market vanished coz of digital photography.

Selco Solar Pvt. Ltd. – provides sustainable energy solutions and services to rural households & businesses. Photovoltaic solar modules, solar lighting systems, solar inverters, cookstoves

Incremental Innovation, disruptive innovation,

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New Product Failure Indian Context – (1994-95), 53% (Success rate new products)

Europe Context – 10%

US Context – 5%

Ignored or misinterpreted marketing research, overestimate of market size, high development costs, poor design or ineffectual performance, incorrect positioning, advertising, price, insufficient distribution support, intense competition, inadequate ROI or payback.

Shortage of important ideas in certain areas (Steel or detergent)

Fragmented markets (lower sales & profits)

Social, economic & governmental constraints (safety & environmental concerns)

Cost of development

Capital shortages

Shorter required development time

Poor launch timing

Shorter PLCs

Organizational Support

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Organizational Arrangements Customer driven engineering

Internal Changes

Budgeting for New-Product Development

As many projects, % of sales what competition spends, backward calculation

Organizing New Product Development

Product Managers, growth leaders, high-level management committee, new-product development dept

Cross functional teams – venture teams, intraprenuers (skunkworks)

Stage-Gate System – process in stage & gate is a checkpoint, Funnel, spiral development process.

C:/Users/Atul/Desktop/newproductdevelopmentdiagram-e1359109652959.jpg

New-Product Development Strategy

Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product

New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development

Two ways to obtain new products

New-Product Development Process

Major Stages in New-Product Development

Discussion Question

In groups of six come up with one idea for a

new product.

kitchen Appliances, office supplies, laptop

accessories, food products, bathroom

accessories, children’s toys, baby

products, gaming tablet for children,

energy efficient vehicle etc.


Idea generation is the systematic search for new-product ideas

Sources of new-product ideas

Internal

External

Idea Generation


Internal sources refer to the company’s own formal research and development, management and staff, and intrapreneurial programs

External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms

Idea Generation

Idea Generation

R&D

Employees, Cisco-Idea Zone/I-Zone

“intrapreneurial” programs, Samsung-value

innovation program (VIP)

TATA Nano

Internal Sources

Idea Generation

Distributors (consumer problems & new product possibilities) & Suppliers (new concepts, techniques & materials)

Competitors (ads, buy)

Trade magazine shows & seminars

Government agencies, advertising agencies, marketing research firms, university, commercial laboratories, & inventors.

New Product consultants & design firms

Online collaborative communities

Customers, Tata-Indica

Turn customers into co creators

External Sources


Inviting broad communities of people—

customers, employees, independent

scientists and researchers, and even the

public at large—into the new-product

innovation process.

Crowdsourcing

Idea Generation

7 ways to draw new ideas from your customers

Observe how customers are using your product

Ask customers about their problems with your product

Ask customers about their dream product

Use customer advisory board to comment on your company’s ideas

Use web sites for new ideas

Form brand community of enthusiasts who discuss your product

Encourage or challenge your customers to change or improve your product

Idea Generation

Lateral Marketing

Petrol Station stores = Petrol + food

Cyber Cafes = cafeteria + internet

Sony Walkman = audio + portable

Shopping Malls = merchandise + food + cinema + fun

places


Identify good ideas and drop poor ideas Standard format – describe the product, customer value

proposition, the target market & competition, rough estimations of market size, price, development time & costs, manufacturing costs & rate of return.

R-W-W Screening Framework:

Is it real? (real need)

Can we win?

Is it worth doing?

A Drop-error Go-error

Idea Screening


Product idea is an idea for a possible product that the company can see itself offering to the market

Product concept is a detailed version of the idea stated in meaningful consumer terms

Product image is the way consumers perceive an actual or potential product

Concept development

Concept 1 (family car)

Concept 2 (sporty compact)

Concept 3 (green car)

Concept 4 (MUV)

Concept Development and Testing


Concept testing refers to testing new-product concepts with groups of target consumers

A word or picture description or physical presentation

Concept Development and Testing


Marketing strategy development refers to the initial marketing strategy for introducing the product to the market

Marketing strategy statement includes:

Description of the target market

Value proposition – planned price, distribution & marketing budget

Sales and profit goals – planned long run sales, profit & marketing strategy.

Marketing Strategy Development


Business Attractiveness of proposal

Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company’s objectives

Sales history of similar products & conduct market surveys

Expected costs & profits – marketing, R&D, operations, accounting & finance costs

Financial attractiveness



Involves the creation and testing ofone or more physical versions by theR&D or engineering departments

Requires an increase in investment Shows whether the product idea

can be turned into a workableproduct.

Product prototype, safety &effectiveness

Each morning in Reading, England, up to 80men shave at the Gillette® testing centerfor a total of 20,000 shaves a year. The menshave in front of a two-way mirror, and areobserved, filmed and interviewed. Thecondition of their skin is a measurement forkey learnings used as the basis ofdevelopment for new razors and skinproducts.

Product development


Test marketing is the stage at which the product and marketing program are introduced into more realistic marketing settings

Provides the marketer with experience in testing the product and entire marketing program before full introduction

Company tests – STP, 4Ps & budgetsTest marketing costs are high but

preferable than cost of making a major mistake

Test Marketing

New-Product Development ProcessTypes of Test Markets

Standard test markets

Controlled test markets

Simulated test markets


Advantages of simulated test markets

Less expensive than other test methods

Faster

Restricts access by competitors

Disadvantages

Not considered as reliable and accurate due to the controlled setting


New-Product Development ProcessMarketing Strategy Development

When firms test market

• New product with large investment

• Uncertainty about product or marketing program

When firms may not test market

• Simple line extension

• Copy of competitor product

• Low costs

• Management confidence

http://www.decisioninsight.com/

http://www.decisioninsight.com/


Commercialization is the introduction

of the new product

When to launch

Where to launch

Planned market

rollout


Managing New-Product Development

Successful new-product development should be:

Customer centered

Team-based

Systematic


Customer-centered new product development new ways to solve customer problems and create more customer satisfying experiences

New-Product Development Strategies


Sequential new-product development company departments work closely together individually to complete each stage of the process before passing it along to the next department or stage

Increased control in risky or complex projects but may be slow



Team-based new-product development Company departments work closely together in cross-functional teams, overlapping in the product-development process to save time and increase effectiveness



Systematic new-product development

innovative development approach that collects, reviews, evaluates, and manages new-product ideas

Creates an innovation-oriented culture

Yields a large number of new-product ideas


Branding48

Branding

“A name, term, sign, symbol, or design, or a

combination of them, intended to identify the

goods or services of one seller or group of

sellers and to differentiate them from those of

competitors.”

Introduction

Role of Brands Consumer

Benefits

Brands:

• Identify source/maker

• Simplifies decision making

• Reduces risk

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Role of Brands

Brands:

• Simplify product handling

• Protect unique features

• Create loyalty

• Establish barriers to entry

Marketer Benefits

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Scope of Branding

Creating difference between

products

Brand

•Marketers need to teach

consumers who the

product is – by giving it a

name & other brand

elements to identify it- as

well as what the product

does.

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Brand Promise

What the brand must

be and do for

consumers.

A brand promise is the marketers

vision of what the brand must be

and do for consumers. Customers

will decide, based on what they

think and feel about the brand, if

they will accept any marketing

action or program.

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Mercedes promises well-built, prestigious, safety, performance.

Co branding/Dual branding: "Intel inside."

Product vs. Brand

A product is something that is

made in a factory A brand is something that is bought

by a customer.

A product can be copied or

replaced by a competitor.

A brand is unique.

A product can be quickly

outdated.

A successful brand is

timeless.

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Service – P – Hotel, Brand -

Convenience Product – P – Salt, Brand –

Shopping Product – P – Furniture, Brand –

Specialty Product – P – Professional Digital Camera, Brand -

Unsought Product – P – Life Insurance, Brand –

Private Brand –

National Brand –

Industrial Brand -

Brands Vs Products

A brand is more than a product, because it can have

dimensions that differentiate it in some way from other

products designed to satisfy the same need.

Some brand create competitive advantages with

product performance. Gillette

Other brands create competitive advantage through

non product related items. Coca-Cola.

Brands carry different types of associations.

Brands are most valuable assets (intangible)

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Brands – meaning

Derived from old Norse word brandr which means “to burn” (Owners of livestock used to mark their animals to identify them)

AMA definition

Variety of brand name strategy. Samsung, P&G, Retailers

Brand names on people’s name RPG, based on places (British Airways), Animals or birds names (Dove soap, Kingfisher), Others (Apple, Shell)

Use of word with inherent product meaning (Bookmyshow), important attributes (Duracell)

Prefixes & Suffixes that sound scientific, natural, or prestigious (intel, Lexus)

Logos & symbols can be based upon people, places, things & abstract images

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The added value endowed on products and services because of the brand.

Reflected in the way consumers think, feel, & act wrt to brand as well as in the prices, market share, & profitability.

Brand Equity

Customer-based Brand Equity

Differences in consumer response

Consumers’ brand knowledge

(thoughts, feelings, images, experiences, and beliefs).

Perceptions,

preferences, and

behaviors

Customer-based brand equity is the differential effect brand knowledge

has on consumer response to the marketing of the brand. Can be positive

and negative.

Three key ingredients of customer-based brand equity are:

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Definitions of Brand Equity

“Brand equity is the set of brand assets and liabilities linked to the brand, its name, and symbol, that adds or subtracts value to a product or service for a firm/ or its customers” (David Aaker).

“Brand equity is the set of associations that permits the brand to earn greater volume than it would without the brand name” (Marketing Science Institute).

“Brand equity is everything the customer walks into the store with” (Peter Farquhar).

“A set of associations which are most strongly linked to a brand name” (Andrea Dunham).

The concept of brand equity

Brand Equity

Mental Brand

Equity

Behavioural Brand

Equity

Financial/Economical

Brand Equity

Mental Brand

response

Brand behavioural

response

Market response

Building Brand Equity

Brand Equity

Brand Elements

Marketing Activities

Secondary Associations

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Brand Elements

• Brand Names

• URLs

• Logos

• Symbols

• Characters

• Spokespeople

• Slogans

• Jingles

• Packages

• Signage

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Brand Element

Criteria1. Memorabiltiy

2. Meaningfulness

3. Likability

4. Transferability

5. Adaptability

6. Protectability

Criteria

Memorable

Easily recognized

Easily recalled

Meaningful

Descriptive

Persuasive

Criteria

Likable

Fun & Interesting

Rich visual & verbal imagery

Aesthetically pleasing

Criteria

Transferable

Within & across product boundaries

Across geographic boundaries & cultures

Criteria

Adaptable

Flexible

Updateable

Criteria

Protectable

Legally – registered trade mark

Competitively

Brand Elements

Brand Names & URLs

Logos & Symbols

Characters

Slogans & Jingles

Packaging & Signage

Brand Linguistics

Phonics

alliteration (Coca-Cola)

Orthographic

spelling (Kool); abbreviation (7 Up, IBM)

Morphologic

compound (Janitor-in-a-drum)

Semantic

Metaphor (Arrid)

Brand Names & URLs

Useful for Brand Awareness & Brand Associations –

Compaq, Yahoo, Tide, Dove

Descriptive – Singapore Airlines, Hit, Gati, Ivory

Suggestive – suggests a benefit or function –

Colorstay lipsticks, Head & Shoulders, Mop & Glo,

Aquaguard, Eveready, Sugar Free

Classical – based on Greek, Latin or Sanskrit words

Arbitrary – no relationship with the company/Product

– Apple Computers, Camel

Brand Names

Compound

RedHat

PriceWaterhouse

Coopers

Classical

Vedanta

Balaji Telefilms

Fanciful (imaginative words)

Vodafone

Wochardt

Arbitary (real words

without direct connection)

Apple

Orange

Mango

URLs

Keep it as simple as possible

Avoid Clichés

Avoid the .com

Brand v/s description – helps only short term

Unique personality

Unexpected combination (motley fool)

Reinvent a real word

Make new words

Logos & Symbols1. Corporate names & Trademarks – Coca-

Cola, Nestle, Tata, Maruti, Johnson & Johnson

2. Abstract or non-word mark logos are also known as symbols- Mercedes star, Rolex crown, Nike swoosh, Olympic rings

3. Many logos fall between these 2 extremes –Ralph Lauren’s polo player, Playboy’s Bunny, McDonald’s Golden Arch, Apple Logo

Benefits

Visual nature of logos & symbols – easy

recognition & recall

Versatile- can be updated transferred across

cultures

Can be appropriate for a range of product

categories-Surf, Dettol, Lux

CharactersA symbol that takes on human or real life

characteristicsMcDonald’s RonaldDisney Characters –Asian Paints – GattuPillsbury DoughboyKellogg's Bear Frosted Flakes -Tony the TigerDuracell BunniesHush Puppies

Benefits

Enhance brand personality & build

relationship with customers – Disney for kids

Valuable Licensing properties – Barbie dolls,

Spiderman, Superman etc., All Disney

Characters

Can be updated to suit the changing times

Slogans Short phrases that contain descriptive or

persuasive information Adds verbal reinforcement Design of slogans

TO build awareness and image Product sense and beyond (zindagi ke saath bhi .. Ke

baad bhi)

Updation of slogans Find out contribution of existing slogan Find out what more you wish to enhance Retain good qualities of earlier slogan and build up on

that

Slogans

Just Do it

When it absolutely positively has to be there

overnite

No more tears

Diamonds are forever

We try harder

Pal banaye magical

Benefits

Often rich and colorful – attention getting and

help in creating brand awareness

Help Brands in breaking through the “clutter”

in the market

Communicate a key product benefit –

reliability, speed – Sprint telecom

Jingles

Musical – easy recall - Airtel

Reinforce brand positioning and enhance

POD’s or POP’s

Useful when designing Ad campaigns

“Desert rose” – jaguar

The axe song

Helps in repetitive reminding

Packaging

Identify the brand – strong brand association

with packaging style of company

Convey descriptive & persuasive information

Facilitate product transportation & protection

& storage

Assist at-home storage (bottles and refill)

Packaging

Aid Product consumption (screw-on cap in

soft drink)

“Color vocabulary” (product and category)

Innovations can boost sales – Soft drink cans,

2 litre bottles, chocolates in smaller packs,

shampoos and hair oils in sachets – enhance

product usage & consumption

Packaging

Heineken beer – green bottle

Cadbury- purple

Kit-Kat – red

Kodak films – yellow

Pepsi - blue

Packaging Essentials

Know your consumer

Take the big-picture approach

Aesthetics + Function

Know your distribution channels

Educate Management

All activities of designing and producing the

container for a product.

Packaging

Packaging has been defined as “ an activity which is concerned with protection, economy, convenience and promotional consideration.”

According to William J Stanton,“Packaging may be defined as the general group of activities in product planning which involves designing and producing the container or wrapper of product.”

Cool Water cologne comes in bottle (Primary package) in a cardboard box (secondary package) in a corrugated box (shipping package) containing six

dozen of bottles in cardboxes

Packaging

Colour, functional & structural design imp

aspects

Which chip stacks up better?

Packaging and Labeling

Identify the brand

Convey descriptive and persuasive information

Facilitate product transportation and protection

Assist at-home storage

Aid product consumption

Packaging Objectives

Types of

Packaging

Consumer

Packaging

Family Package

Re-use Package

Multiple Packages

Transit Packaging.

New Trends in

Packaging

Plastic a new Trends in

Packaging.

Squeeze Bottles.

Tubes.

Sheet Formed

Containers.

Skin Packaging.

Blister Packaging

Semi Rigid Packaging

Sachets

Labeling “Label is a part of product, which carries verbal

information about the product or seller. It may be a

small slip or printed statement .”

It may be a part a package or it may be attached to the

product.

It convey verbal information about the product and

seller.

According to William J Stanton,“ The label is the part

of the product which carries verbal information about

the product or the seller (manufacturer or middlemen).

A label may be part of the package or it may be a tag

attached directly to the product.”

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Identifies

Grades

Describes

Promotes

Functions of Labels

Classification of Labels Brand Labels

Grade Labels

Descriptive

Illustrative Label.

Product Transportation and

Protection

Product Life-Cycle StrategiesProduct Life Cycle

Online Movie Viewing Software

Phablets

bottled water

soda

VCRs

Sales and Product Life Cycle

Product development Develops a new product idea

Sales are zero and investment costs mount

Introduction Slow sales growth and profits are nonexistent

Heavy expenses of product introduction

Growth Rapid market acceptance and increasing profits.

Maturity Slowdown in sales growth and profits level off or

decline

Decline Sales fall off and profits drop

Product Life-Cycle Strategies104

Product Life Cycle

Do all products follow PLC?

Coca-cola, Gillette, American Express,

Lifebuoy, Lux, Dalda, Lipton, TATA etc.

Product class – longest life cycle, stays longer

in mature stage

Product form – standard PLC shape, manual

typewriters, dial telephones

Brand – can quickly change because of

changing competitive attacks & responses

(Surf, Tide, Nirma, Wheel and Sunlight, 501

bars)

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Style, Fashion, and Fad Life Cycles

A basic &

distinctive mode of

expression

Home, clothing

(formal, casual)

Lasts for

generations

Renewed interest

Currently accepted or

popular style in a

given field

Formal business

attire in 1990s to

business casual

today

Grow slowly, remain

popular for a while

and then decline

slowly

Temporary periods of

unusually high sales

driven by consumer

enthusiasm &

immediate product or

brand popularity

Peak early & declines

very fast

Acceptance cycle is

very short

Product Life-Cycle Strategies

Slow sales growth

Little or no profit

High distribution and promotion expense

Firms focus on those buyers who are the most ready to buy, higher income groups

Prices are higher

To be first can be rewarding but risky & expensive

Introduction Stage

Introduction Stage Pioneer Brands

Adv – producer advantages, economies of scale, patents, technology leadership

What about pioneers like Reynolds & Netscape?

First movers & Second movers (Wikipedia & Google)

Imitators surpasses innovators (Manufacturers of PC, Dell & Compaq are they leaders today?)

Golder & Tellis (Pioneer advantage: marketing logic or marketing legend? JMM May 1992) – inventor, product pioneer & Market pioneer.


Sales increase

New competitors enter the market

Price stability or decline to increase volume

Consumer education

Profits increase

Promotion and manufacturing costs gain economies of scale

Promotion expense-sales ration declines

The Men’s cosmetic market in South Asia (3800 Crores) growing by more than 21%

Fair & Handsome, Fair & Lovely Max

Fairness, Oxylife men creme bleach,

Garnier Men range, Amway India

Growth Stage

Marketing Strategies: Growth Stage

Improve product quality and add new product

features and improved styling

Add new models and flanker products

Enter new market segments

Increase distribution coverage and enter new

distribution channels

Shift from product-awareness advertising to

product-preference advertising

Lower prices to attract next layer of price-

sensitive buyers


Slowdown in sales, Many suppliers, Substitute products, Overcapacity leads to

competition, Increased promotion and R&D to support sales and profits

Divided into three phases –

Growth – sales growth rate starts to decline, no new distribution channels to fill in,

new competitors emerge

Stable – sales flatten because of market saturation, most potential have tried the

product

Decaying maturity – sales slowdown creates overcapacity in industry which leads

to intensified competition, frequent markdowns, increase advertising, trade &

consumer promotion, increase R&D budgets, Weaker competitors withdraw.

Leaders are giant firms, quality leaders, service leaders & cost leaders

Market specialists, product specialists & customizing firms

Some firms abandon weaker products, concentrates on more profitable products

Autos, Televisions, watches, cameras etc

Bajaj scooters & motorcycles

Maturity Stage

Marketing Strategies: Maturity Stage

Market Modification

Expand number of brand users by:1. Converting nonusers

2. Entering new market segments

3. Winning competitors’ customers

Convince current users to increase usage by:1. Using the product on more occasions

2. Using more of the product on each occasion

3. Using the product in new ways

Product Modification

Quality improvements – increase functional performance

Feature improvements – size, weight, materials, supplements,

& accessories

Style improvements – increase aesthetic appeal

Marketing Program modification

Modifying non product elements (price, distribution &

communication


Reasons

Technological advances, shift in consumer tastes, increased competition

Overcapacity, increased price cutting, & profit erosion

Eg Sewing machine, newspapers – slow decline

Eg Floppy discs, VCR – rapid decline

Maintain the product or reduce the no of products

Harvest the product (withdrawing from smaller segment, weaker trade channels, cutting marketing budgets, & reducing prices further)

Drop the product

Decline Stage

Marketing Strategies: Decline Stage

Identify ageing products

Establish a system for identifying them (Product-review committee)

Exit barriers in the industry (P&G stayed in declining liquid-soap

business)

Increase firm’s investment (to dominate the market and strengthen its

competitive position)

Maintain the firm’s investment level until the uncertainties about the

industry are resolved.

Decrease the firm’s investment level selectively by dropping

unprofitable customer groups, while simultaneously strengthening the

firm’s investment in lucrative niches

Product Life-Cycle Marketing Strategies

Product Life-Cycle Marketing Strategies

Marketing Strategies: Decline Stage

Harvesting (“milking”) the firm’s investment to recover cash

quickly. Reducing product costs or business’s costs gradually &

maintaining sales

Cut in R&D costs, plant & equipment costs. Reduce product quality,

sales force size, marginal services & advertising expenses. Without

letting know the customers, competitors & employees.

Difficult but can increase cash flow substantially.

Divesting the business quickly by disposing of its assets as

advantageously as possible.

How much inventory & service to maintain for past customers.

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New product development and Classification, Branding, Brand Equity, Product Life Cycle

Marketing

Transcript of New product development and Classification, Branding, Brand Equity, Product Life Cycle