Slide 0 in Chapter 10

1
Chapter 10

• Developing, Positioning, and Differentiating
  Products through the Life Cycle

PowerPoint by Karen E. James Louisiana State
University - Shreveport
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Objectives

• Understand the challenges a company faces in
  developing and introducing new products.
• Learn the main stages in developing new products
  and how they can be better managed.
• Know the factors that affect the rate at which
  consumers adopt new products.

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Objectives

• Learn what marketing strategies are appropriate
  at each stage of the product life cycle.
• Understand how a company can choose and
  communicate an effective market position.

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New Product Development

• What is a New Product?
• New-to-the-world products
• New product lines
• Additions to existing product lines
• Improvements and revisions of existing products
• Repositioned products
• Cost reduction products

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New Product Development

• New Product Failure is Rampant
• 95 of new U.S. consumer products
• 90 of new European consumer products
• Reasons for failure include ignoring unfavorable
  market research, overestimating market size,
  marketing mix decision errors, and stronger than
  anticipated competitive actions

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New Product Development

• Successful new products
• Offer a strong relative advantage
• Reflect better understanding of customer needs,
  and beat the competition to market
• Exhibit higher performance-to-cost ratios and
  higher contribution margins
• Are launched with larger budgets
• Have stronger top management support

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Managing New Products
New Product Development Process Ideas to Strategy

• Concept testing
• Marketing strategy development
• Business analysis

• Idea generation
• Idea screening
• Concept development

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Managing New Products
New Product Development Process Development to
Commercialization

• Product development
• Market testing
• Commercialization

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Consumer Adoption Process

• Adopters of new products move through five
  stages
• Awareness
• Interest
• Evaluation
• Trial
• Adoption

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Consumer Adoption Process

• People adopt new products at different rates
• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards

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Consumer Adoption Process

• Five product characteristics influence the rate
  of adoption
• Degree of relative advantage
• Degree of compatibility
• Degree of complexity
• Degree of divisibility (trialability)
• Degree of communicability

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Marketing Through the Product Life Cycle

• Five product characteristics influence the rate
  of adoption
• Degree of relative advantage
• Degree of compatibility
• Degree of complexity
• Degree of divisibility (trialability)
• Degree of communicability

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Stages of the Product Life Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Low sales
• High costs per customer
• Negative profits
• Innovator customers
• Few competitors

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Stages of the Product Life Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Rising sales
• Average costs
• Rising profits
• Early adopters customers
• Growing competition

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Stages of the Product Life Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Peak sales
• Low costs
• High profits
• Middle majority customers
• Stable/declining competition

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Stages of the Product Life Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Declining sales
• Low costs
• Declining profits
• Laggard customers
• Declining competition

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Objectives and Strategies for the Product Life
Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Objective to create awareness and trial
• Offer a basic product
• Price at cost-plus
• Selective distribution
• Awareness dealers and early adopters
• Induce trial via heavy sales promotion

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Objectives and Strategies for the Product Life
Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Objective maximize market share
• Offer service, product extensions, warranty
• Price to penetrate
• Intensive distribution
• Awareness and interest mass market
• Reduce promotions due to heavy demand

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Objectives and Strategies for the Product Life
Cycle

• Objective maximize profit while defending market
  share
• Diversify brands/items
• Price to match or beat competition
• Intensive distribution
• Stress brand differences and benefits
• Increase promotions to encourage switching

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

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Objectives and Strategies for the Product Life
Cycle

• PLC Stages
• Introduction
• Growth
• Maturity
• Decline

• Objective reduce costs and milk the brand
• Phase out weak models
• Cut price
• Selective distribution
• Reduce advertising to levels needed to retain
  hard-core loyalists
• Reduce promotions to minimal levels

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Positioning and Differentiation

• Two views of positioning
• Ries and Trout products are positioned in the
  mind of prospect
• Treacy and Wiersema positioning via value
  disciplines
• Product leader firm
• Operationally excellent firm
• Customer intimate firm

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Positioning and Differentiation

• Positioning statements
• To (target group and need) our (brand) is
  (concept) that (point-of-difference)
• Example To young, active soft-drink consumers
  who have little time for sleep, Mountain Dew is
  the soft drink that gives you more energy than
  any other brand because it has the highest level
  of caffeine.

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Positioning and Differentiation

• Differentiated products feature meaningful and
  valuable differences that distinguish the
  companys offering from the competition.
• Differences are stronger when they are important,
  distinctive, superior, preemptive, affordable,
  and profitable.

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Positioning and Differentiation
Product Differentiation Tools

• Form
• Features
• Performance
• Conformance
• Durability

• Reliability
• Repairability
• Style
• Design

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Positioning and Differentiation
Services Differentiation Tools

• Ordering ease
• Delivery
• Installation
• Customer training

• Customer consulting
• Maintenance and repair
• Miscellaneous

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Positioning and Differentiation
Personnel Differentiation Tools

• Competence
• Courtesy
• Credibility

• Reliability
• Responsiveness
• Communication

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Positioning and Differentiation
Channel Differentiation Tools

• Coverage
• Expertise

• Performance

Image Differentiation Tools

• Symbols
• Media

• Atmosphere
• Events