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Chapter 7: Product Planning and Strategies

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The Product Life Cycle ... the life cycle must be considered in relation to ... successful life-cycle management requires predicting the shape of the curve and ... – PowerPoint PPT presentation

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Title: Chapter 7: Product Planning and Strategies


1
Chapter 7Product Planning and Strategies
2
What is a Product?
  • a set of tangible and intangible attributes,
    including packaging, colour, price, quality, and
    brand, plus service and reputation, that provides
    a set of perceived benefits to consumers
  • it is more than physical products includes
    services, places, persons, and ideas

3
Product Attributes
4
Consumer and Business Products
  • depends on the intended target market how it is
    used and by whom
  • Some products are sold only to consumers, others
    are sold to organizations for use in the
    business, for resale, or to provide services.

5
Classifying Consumer Products
  • convenience low price, low risk, no need to shop
    around, widely available
  • shopping want to compare quality and price, risk
    and price are higher, available in selected
    retail outlets
  • specialty strong brand preferences, risk is
    high, prepared to seek out exclusive retail
    outlets

6
Classifying Business Products
  • raw materials unprocessed, become part of other
    manufactured products
  • manufactured parts and materials processed
    products that become part of other products
  • installations major buildings and equipment
  • accessory equipment used in operations, include
    computers, desks, tools
  • operating supplies low value, used by most
    firms, convenience products for businesses

7
Deciding on the Product Mix
  • the product mix is a collection of product lines
    it has both breadth and depth
  • product line is a group of related products
  • breadth is the number of product lines within the
    mix
  • depth is the variety of sizes, models, or items
    within each product line

8
Product Mix Breadth and Depth
9
Product Positioning
  • Product position refers to the image that it
    projects in the minds of consumers
  • a product may be positioned
  • in relation to a competitor by drawing
    comparisons
  • in relation to a product class or attribute by
    stressing certain characteristics
  • to appeal to a specific target market
  • on price, quality or value.

10
Expanding the Product Mix
  • expansion is accomplished by increasing the depth
    of lines or by adding lines
  • increasingly, this involves line extensions
  • related products under the same brand
  • unrelated products under the same brand
  • or unrelated products under a different brand
  • or related products under a different brand

11
Other Product-Mix Strategies
  • trading-up adding a higher-priced product to
    reach a broader market
  • trading-down adding a lower-priced product to a
    line to attract people who can not afford the
    higher-priced original
  • occasionally, a product will be altered to
    improve it or to allow for its repositioning
  • new products or variations on current ones

12
Adoption-Diffusion Process
  • different new products are adopted by consumers
    at different rates
  • the individual consumer goes through certain
    stages before adopting a new product

13
Stages in the Adoption Process
  • awareness
  • interest
  • evaluation
  • trial
  • adoption
  • confirmation

14
The Product Life Cycle
  • applies to product categories, not to brands
    (related to diffusion of innovation concept)
  • a product is normally perceived to pass through
    four stages over its life cycle introduction,
    growth, maturity, and decline
  • different products will have differently-shaped
    life cycle curves will diffuse at different
    rates
  • each stage requires different marketing
    strategies

15
Typical Life Cycle of a Product Category
16
Characteristics of the Stages
  • introductory stage developing the market,
    creating awareness, reaching the innovators
  • growth stage competition begins, sales grow
    quickly, profits peak, market penetration
  • maturity stage competition is intense, sales
    slow down, differentiated product offerings,
    customers are brand loyal, few new entrants
  • decline stage customers move to other options,
    competitors leave, profits are low, consider exit

17
Characteristics of Life Cycles
  • length of the life cycle will vary
  • some products do not make it through all four
    stages they may fail in introduction
  • the life cycle must be considered in relation to
    a market stage may vary across segments

18
Product Life Cycle Variations
19
Managing the Life Cycle
  • successful life-cycle management requires
    predicting the shape of the curve and then
    successfully adapting strategies at each stage
  • when to consider entering the market
  • how to manage to capitalize on growth
  • it is possible to develop strategies that will
    extend the maturity stage modify the product,
    devise new uses, or design new appeals
  • greatest challenge comes at the decline stage

20
For next class...
  • Read Chpt. 8
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