THE PRODUCT

Products are almost always combinations of the tangible and intangible. The entire package is sometimes referred to as the augmented product. The mix of tangibles and intangibles in the augmented product varies from one product or service to another.

THE PRODUCT

Product is a key element in the market offering. Marketing mix planning begins with formulating an offering to meet target customers needs or wants. The customer will judge the offering by three basic elements : product features and quality, services mix and quality, and price appropriateness.

COMPONENTS OF THE MARKET OFFERING

Value based pricing

Attractiveness of the market offering Product features and quality Services mix and quality

PRODUCT LEVELS

In planning its market offering, the marketer needs to think through five levels of the product.

Each level adds more customer value, and the five constitute a customer value hierarchy.

FIVE LEVELS OF THE PRODUCT

(5) Potential Product (1) Core Product (2) Basic Product

(4) Augmented Product

3)Expected Product

FIVE LEVELS OF THE PRODUCT

Core Product / Core Benefit : The

fundamental service or benefit that the customer is really buying.

Basic Product : At the same level, the

marketer has to turn the core benefit into a basic product.

Expected Product : A set of attributes and

conditions buyers normally expect when they purchase this product.

FIVE LEVELS OF THE PRODUCT

Augmented Product : The marketer prepares an

augmented product that exceeds customer expectations.

Todays competition essentially takes place at the product-augmentation level. ( In less developed countries, competition takes place mostly at the expected product level ).

FIVE LEVELS OF THE PRODUCT

( Augmented Product )

According to Levitt : The new competition is not between what companies produce in their factories, but between what they add to their factory output in the form of packaging, services, advertising, customer advice, financing, delivery arrangements, warehousing, and other things that people value.

FIVE LEVELS OF THE PRODUCT

Some things should be noted about productaugmentation strategy :

First, each augmentation adds cost. The marketer has to ask whether customers will pay enough to cover the extra cost. Second, augmented benefits soon become expected benefits. For gaining competitive advantage one will have to search for still other features and benefits.

FIVE LEVELS OF THE PRODUCT

( product-augmentation strategy )

Third, as companies raise the price of their augmented product, some competitors can offer a Stripped-down version at a much lower price. Thus alongside the growth of fine products we see the emergence of lower-cost products for the clients who simply want the basic product.

FIVE LEVELS OF THE PRODUCT

Potential Product : encompasses all the possible augmentations and transformations the product might undergo in the future. Companies search for new ways to satisfy customers and distinguish their offer. ( Successful Companies add benefits to their offering that not only satisfy customers but also surprise and delight them. ) The best way to hold customers is to constantly figure out how to give them more for less.

PRODUCT DIFFERENTIATION
The challenge before the product marketers is to create relevant and distinctive product differentiation. The product differentiation may be based on :

Physical Differences ( eg.features, performance, conformance, durability, reliability, design, style, packaging ) Availability Differences (eg.available from stores or orderable by phone, mail, fax, internet )

PRODUCT DIFFERENTIATION

Service Differences ( eg., delivery, installation, training, consulting, maintenance, repair ) Price Differences ( eg., very high price, medium price, low price, very low price ) Image Differences ( eg., symbols, atmosphere, events, media )

CHALLENGES FOR PRODUCT INNOVATORS

Any successful differentiation will tend to draw imitators. The innovator faces three choices : Lower the price to protect market share and accept lower profits. Maintain the price and lose some market share and profits. Find a new basis to differentiate the product and maintain current price.

PRODUCT CLASSIFICATION
ON THE BASIS OF PRODUCT CHARACTERISTICS :DURABILITY, TANGIBILITY AND USE (consumer or industrial ) (1) (2) (3) NON-DURABLE DURABLE SERVICES

(1)

NON-DURABLES or SOFT GOOD

These are tangible goods normally consumed in one or few uses. Because these goods are consumed quickly and purchased frequently, the appropriate strategy is to make them available at many locations, charge only a small mark up and advertise heavily to induce trial and build preference.
Ex-FMCGs such as cosmetics and cleaning products, food, fuel, office supplies, packaging and containers, paper and paper products, personal products, rubber, plastics, textiles, clothing and footwear. Toothpaste, Soaps, Medicine, Eatables

(2) DURABLES OR HARD GOOD

These are tangible goods that normally survive many uses. Normally require more personal selling and service, command a higher margin, and require more seller guarantees.
Ex: Cars, appliances, business equipment, electronic equipment, home furnishings and fixtures, houseware and accessories, photographic equipment, recreational goods, sporting goods, toys and games

(3) SERVICES
These are intangible, inseperable,variable and perishable products. Normally require more quality control superior credibility, and adaptability.

Ex:-Insurance,

PRODUCT CLASSIFICATION
ON THE BASIS OF CUSTOMER SHOPPING HABITS : (1)CONVENIENCE GOODS (2)SHOPPING GOODS (3)SPECIALITY GOODS (4)UNSOUGHT GOODS

(1) CONVENIENCE GOODS

are goods that the customer usually purchases frequently, immediately, and with a minimum of efforts. (A) Staples: Consumers purchase on a regular basis. (B) Impulse Goods: are purchased without any planning or search efforts. (C) Emergency Goods: are purchased when a need is urgent.

(2) SHOPPING GOODS

are goods that the customer , in the process of selection and purchase, characteristically compares on such basis as suitability, quality, price and style. (A) Homogeneous Shopping Goods: are similar in quality but different enough in price to justify shopping comparisons. (B) Heterogeneous Shopping Goods: differ in product features and services that may be more important than price.

(3) SPECIALITY GOODS

are goods with unique characteristics or brand identification for which buyer is willing to make a special purchasing effort.

(4)

UNSOUGHT GOODS

are goods the consumer does not know about or does not normally think of buying. These goods require advertising and personal selling support.

PRODUCT STRATEGY
Calls (1) (2) (3) (4)

for coordinated decisions on : Product Mix

Product Line Individual Product Service Product

PRODUCT MIX
A product mix (also called product assortment) is the set of all products lines and items that a particular company offers for sale. A total group of products that an organization markets. A companys product mix has a certain width, length, depth and consistency.

DIMENSIONS OF PRODUCT MIX

The width of companys (say HULs) product mix refers to how many different product lines the company carries, such as bathing

soap, detergents, shampoos, toothpaste,

food products.

DIMENSIONS OF PRODUCT MIX

The length of a companys product mix refers to the total number of items in its product mix. Thus in each of the product line HLL has a number of product items. Eg., in the product line of bathing soaps, HLL has several product items like Lux, Liril, Lifebuoy, Pears.

DIMENSIONS OF PRODUCT MIX

The depth of a companys product mix refers to how many variants are offered of each product in the line. Thus if close up toothpaste comes in three formulations and in three sizes, Close up has a depth of nine (3x3). The average depth of HLL product mix can be calculated by averaging the number of variants within the brand groups.

DIMENSIONS OF PRODUCT MIX

The Consistency of the product mix refers to how closely related the various product lines are in end-use, production requirements, distribution channels, or some other way. HLLs product lines are consistent insofar as they are consumer goods that go through the same distribution channels.

DIMENSIONS OF PRODUCT MIX

These four dimensions of the product mix provide the handles for defining the companys product strategy. The company can expand its business in four ways. The Co. can add new product lines, thus widening its product mix. The Co. can lengthen each product line. The Co. can add more product variants to each product and deepen its product mix. The Co. can pursue more product-line consistency or less, depending upon whether it wants to acquire a strong reputation in a single field or participate in several fields.

HLL PRODUCT MIX

PRODUCT MIX WIDTH PL-1 Bath Soaps Dove Liril Le Sancy Rexona Lifebuoy Hamam Breeze Jai Moti PL-2 Fabric Wash PL-3 Beverages PL-4,5 etc

Surf Rin Wheel Sunlight Ala 501

Bru Brooke Bond red label Lipton Green label T Taaza Taj Mahal Super Dust Ruby Dust A1

PRODUCT LINE
A product line is a group of products that are closely related, because they perform a similar function, are sold to the same customer groups, are marketed through the same channels or fall within the given price ranges. The product mix may be composed of several product lines.

PRODUCT LINE ANALYSIS

Product line managers need to know the sales and profits of each item in their line in order to determine which items to build, maintain, harvest,, or divest. They also need to understand each products market profile, i.e. how their product line is positioned against competitors product lines (The Product Map).

Product Line Stretching

Line stretching is a measure firms undertake frequently in product management.

AIM:

To enter a new price slot and a new market segment ,which is not covered by the existing offers of the firm. It can be in two ways

Line Stretching

Stretching UP

Stretching Down

Product Line Stretching

When a company stretches a particular product line upward or downwardit changes current product positioning into customer mind Its find new positioning planks for the new offers and enters new market segments Satisfaction of new segments of customers through new offers Co. always take care to see that the stretching down or stretching up decisions do not adversely affect its main product /brand in the line and image it has built up over the years Ex-As Parker has stretched down to lower end market it has lost its premium image

Stretching UP

When the Co. Has positioned its product at lower end market ,decides to make higher priced offer for the top slots known as stretching up In stretching up firm moves up the line from its original posture to and make high priced offers from its stable It addresses the new segment ,even existing customers are encouraged to aspire for premium products for their preferred firm/brand Examples: Philips-Earlier phase Philips was into two in one section b/w 1000-1500 & use to cater mass market ,at that time due to high sales and good services co thought to take a risk and move into higher segment. They launched there Power Play range & it got successful.

Stretching Down

When company has initially taken its position at higher price slot ,stretches the line downwards by offering the product in the same line for lower end

markets

They move their product availability from niche market to mass market To make more profits & try to enter into new market Existing customers also get excited and are the probable purchasers at initial stage to the company

Stretching Down

a)

Examples: HUL-HUL was playing into market into higher slot of detergents
of Surf due to higher price segment and wake of competition of low price brands like Nirma, Ghadi, HLL decided to down stretch its detergent line by giving lower priced offers Like Wheel ,Sunlight were the result of this decision.

b)
c)

Parker-Parker has come down to economic change where the

mass market can afford it. chose to serve the high end market ,high tech offers. -It was high premium priced , concentrated , detergent powder To enter into lower end market they launched the various products into blue & green bars, Airtel super soaker

Ariel-When P & G was entering the Indian detergent market ,it

Line filling

In Line filling company offers Full Line products ,so that customers do not go to competitors for offers /models in a particular price slots. Examples: Videocon Air Conditioners TV segment Washing Machines Microwaves Iron

Line Pruning
Companies after some years of growth find that their product lines have become unduly long & complicated ,with too many brands ,variants and pack sizes ,because of this company withdraw/reduce its some of the brands . Reason for Pruning: a) Profitability might be under strain b) Line pruning is opposite of line stretching c) Serving market through some value added products Ex: P&G,Head & Shoulders[35 versions but reduced to 15]

Why Product Management

Product management means managing the various Product lines and the overall Product mix of the company, it is also know as Product policy Management. Main task in Product Management: How many different Product Lines should the Firm accommodate? How can the different lines be grouped for effective management? What composition need to be taken within a product line How to position these product in the market?

Why Product Management

What should be the brand policy? Should there be individual brands or Family brands? what should be the approach to brand extensions? How to develop brand equity? How to plan for new products so that in the long run the firm retains a healthy product portfolio?

Main tasks in Product Management

Appraisal of each product line and each product/brand in the line Decisions on Packaging Product differentiation and positioning Managing brands and developing brand equity New Product Development Managing the PLC of Products/Brands Managing product quality

Appraisal of each product line and each product/brand in the line

Appraisal is required due to changing business environment ,Customer taste and preferences,Comptetion Why: Given product might have lost its market acceptance It may be facing problem in its functional criteria due to new/improved/substitute products Lost its profitability

Appraisal of each product line and each product/brand in the line

Other product may be poor and damaging its own sales and members of the product line Product might be entered into its decline stage

Results: Withdrawal of existing products Changing the quality control of products Giving an independent brand name to product Adding new features to the product Introducing new product all together

Appraisal of each product line and each product/brand in the line

Ex: HUL Is soap line working properly? Is it achieving it sales target? What market share it is maintaining? Is there too much competition? Do lime have too many brands Which brand need to be discontinued Should the line stretching need to be done to new price slots

Appraisal of each product line and each product/brand in the line

Does the line need pruning? Does the line need filling Which are the best performing brands? Which are the weak ones?

The Firms need to be continuous monitor and take decisions to its product line for better profits.

Packaging

Everyday, we encounter different types of packaging, but how many of us truly appreciate the art of packaging? From food packaging to beverage containers, tissue boxes to CD covers, packaging is hard to be missed in our daily lives. Yet not many of us see packaging as a form of art. Are we taking it for granted because it is around us at all times? Or perhaps we see it simply as a marketing tool to sell products? When was the last time you were excited by the packaging of a product? Did it persuade you to buy the product? Packaging is not only a powerful selling tool, it is also an effective method of communication that can stimulate the viewers senses. Good packaging can break through the language barrier and can stand the test of time.

Packaging

Packaging is the science, art and technology of enclosing or protecting products for distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation, and production of packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports, informs, and sells. In many countries it is fully integrated into government, business, institutional, industrial, and personal use.

Packaging

Physical protection - The objects enclosed in the

package may require protection from, among other things, shock, vibration, compression, temperature, etc

Barrier protection vapor, dust, etc.

A barrier from oxygen, water

Containment or agglomeration - Small objects

are typically grouped together in one package for reasons of efficiency Liquids, powders, and granular materials need containment. convenience in distribution, handling, stacking, display, sale, opening, reclosing, use, dispensing, and reuse

Convenience - Packages can have features that add

Packaging Types

Packaging may be looked at as being of several different types. For example a transport package or distribution package can be the shipping container used to ship, store, and handle the product or inner packages. Some identify a consumer package as one which is directed toward a consumer or household.

Packaging may be described in relation to the type of product being packaged: medical device packaging, bulk chemical packaging, over-the-counter drug packaging, retail food packaging, military materiel packaging,
pharmaceutical packaging, etc.

Packaging Types

It is sometimes convenient to categorize packages by layer or function: "primary", "secondary", etc. Primary packaging is the material that first envelops the product and holds it. This usually is the smallest unit of distribution or use and is the package which is in direct contact with the contents. Secondary packaging is outside the primary packaging, perhaps used to group primary packages together. Tertiary packaging is used for bulk handling, warehouse storage and transport shipping. The most common form is a palletized unit load that packs tightly into containers. These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink wrap can be primary packaging when applied directly to the product, secondary packaging when combining smaller packages, and tertiary packaging on some distribution packs.

Packaging Types

Symbols used on packages and labels

Many types of symbols for package labeling are nationally and internationally standardized. For consumer packaging, symbols exist for product certifications, trademarks, proof of purchase, etc. Some requirements and symbols exist to communicate aspects of consumer use and safety. Examples of environmental and recycling symbols include: Recycling symbol, Resin identification code (below), and Green Dot (symbol).

Bar codes (below), Universal Product Codes labels are common to allow automated information management in logistics and retailing. Country of Origin Labeling is often used.

Product differentiation

A marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior. The Major attraction and the major benefit in resorting to differentiation is that it takes the firm away form a total price based competition . It Allows firm to fight on No-Price Plank Through differentiation ,firms move to a position wherein they can claim a premium in the market

Product differentiation

Differentiation can be Achieved through Multiple Sources and in multiple ways: Product differentiation can be achieved in many ways. It may be as simple as packaging the goods in a creative way, or as elaborate as incorporating new functional features. Sometimes differentiation does not involve changing the product at all, but creating a new advertising campaign or other sales promotions instead Cos can achieve diff. using the product, or distribution methods , or promotion steps. It can start from Firms collaboration , or Plant location , to its after sales service.

Product differentiation

Being unique in the marketplace provides distinct advantages. In fact, if you do not provide something unique, your business will be severely challenged. So, what are the three elements of product differentiation?

1. Convenience (or timing) 2. Customization. 3. Cost Recovery

Product differentiation
1.

Convenience (or timing)

People don't want to wait these days. In order to differentiate your product from your competitors', consider how you can deliver your goods and services precisely when they are needed. Often, this means being faster than your competitor but not always! If I order drapes as part of a renovation project, for example, I don't necessarily want them immediately. I may not need them for six weeks. If I get them too soon, they might get damaged waiting to be hung. However, I do want them when the time is right for me. The company that can deliver what I need when I need it will certainly be better positioned to earn my continued business.

Product differentiation

2. Customization

When I order those drapes, I don't want just any old size or pattern. They need to fit perfectly to my windows, and I want them in the style and color pattern that goes best in my house. Customization is an element of product differentiation that cannot be over-emphasized. The more you know about your customers' needs and the better you do in serving those needs to your customers' satisfaction the stronger your competitive position will be in the market. Service-based businesses are particularly capable of customization. Even with a product-based business, there are still techniques available for individualizing your firm, such as customizing your billings, or special packaging for your best customers. Product customization is a rapidly growing field for clothing, footwear (ex. sports shoes in school colors), backpacks in the color you want, cosmetics, automobiles, motorcycles, etc.

Product differentiation

3. Cost Recovery Cost recovery does not mean paying the cheapest price. It does mean gaining the highest leverage per rupee spent. Often, in fact, it makes more sense to spend a little more to obtain a product or service that most closely aligns with your needs and brings satisfaction. Too frequently, "I got it cheap" is the consolation prize when you end up with something that really doesn't properly serve your needs

Product differentiation

These three elements of product differentiation convenience, customization, and cost recovery may appear to be simple and obvious. Unfortunately, they are far too often missing in your efforts to develop and improve your position in the market. As a result, companies that focus on providing these three elements and improving them steadily will be in a much better position to gain and keep a competitive advantage over their rivals. To put it another way, paying attention to these three "c"s will yield a fourth: commerce. Commerce happens when your customers' needs equal your ability to satisfy them, building a steady flow of continued customer satisfaction and business growth. Please take a few moments over the next week or so and look to see how well you do in each of these three elements of product differentiation.

Product differentiation
Maximum Scope of diff. remains with product: The Product can be differentiation along 2 major planks: A. Tangible product B. Intangible Product

Tangible Product: a) Ingredients/Formulas b) Functional value c) Additional Features d) Packaging e) Design Superiority f) Product Quality/technology/service/operational efficiency

Product differentiation-Tangible Product

Ingredients/Formulas
Ex: Close Up toothpaste with gel TTK Prestige with Teflon coating Promise with clove oil Vatika with herbal ingredients Parashute ,Antidandruff Oil Clinic plus Antidandruff Shampoo Safola for reduce Cholesterol

Functional value

Ex: 3M Scotch Tape Videocon Computer controlled fridge Nokia Phone Batteries Microwave

Product differentiation
Additional Features
Ex: The mega feature as a differentiation: Companies in the television ,audio and refrigerators industries in India. came with mega sized products and used the mega feature as part of their differentiation effort In TV sets BPL,Videocon, Onida, Philips etc. After sales service, Pre-sales service [Banking]

Packaging

Ex: The Ponds cold cream and brylcreem in tubes Application convenience of Harpic The beer Can Economy Packs Sachets Reusable Containers Refill Packs

Product differentiation
Design Superiority
Ex: Titan Watches Tanishq Jwellery Automobile industry

Product Quality/technology/service/operational efficiency

Ex: Godrej Infosys Sony Ford Escoda Nokia Phones Raymonds Rayban Zodiac Kingfisher

Product differentiation-Intangible Product

Dinesh Suitings Reid & Taylor Rayban BMW Mercedes Ferrari Diamonds

INDIVIDUAL PRODUCT DECISIONS

Product Attribute Decisions Brand Decisions Brand Positioning Packaging and Labeling

DEFINITION OF BRAND

American Management Association defines brand as follows : A brand is a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors.

THE MEANING OF BRAND

The brand is not a product but it gives the product meaning and defines its identity in both time and space. Brands are a direct consequence of the strategy of market segmentation and product differentiation. Companies want to stamp their mark on different sectors and set their imprint on their products.

BUILDING THE BRAND

The art of marketing is the art of brand building. When something is not a brand, it will probably viewed as a commodity. Then price is what counts. When price is the only thing that counts, the only winner is the low-cost producer. . ( Philip Kotler )

BRAND NAME DECISIONS

Individual Names
Blanket Family Names

Separate Family Names for all

products

Company Trade name combined

with individual product names.

BRAND NAME
It should suggest something about the products benefits. It should suggest something about product qualities. It should be easy to pronounce, recognize and remember. It should be distinctive. It should not carry poor meanings in other countries and languages.

BRAND IDENTITY AND ASSOCIATION

A brand identity or association is anything that is directly or indirectly linked in memory to a brand. The most common association is that of product attributes or customer benefits. A brands associations are assets that can differentiate, provide reasons to buy, instil confidence and trust, affect feelings towards a product and the use experience, and provide the basis for brand extension.

BENEFITS OF BRAND AWARENESS

First, awareness provides the brand with a sense of familiarity, and people like the familiar. Second, name awareness can be a signal of presence, commitment, and substance. The logic is that if a name is recognized, there must be a reason. Third, the salience of a brand will determine if it is recalled at a key time in the purchasing process.

BRAND LOYALTY

First, brand loyalty reduces the marketing costs of doing business, since existing customers are relatively easier to hold. Second, brand loyalty represents a substantial barrier to competitors. Excessive resources are required when entering a market in which existing customers must be enticed away from an established brand that they are loyal to. Third, Brand loyalty provides trade leverage. Fourth, a relatively large, satisfied customer base provides an image of a brand as an accepted, successful, and enduring product. Finally, brand loyalty provides the time to respond to competitive moves.

DEFINITION OF BRAND EQUITY

Brand equity is a set of assets and liabilities linked to a brands name and symbol that add to or substract from the value provided by a producer or service to a firm and / or that firms customers. Brand equity generates value to the customer that can emerge either as a price premium or enhanced brand loyalty.

BRAND EQUITY
Brand Awareness

Brand Identity

Brand Equity
Perceived Quality Brand Loyalty

( Powerful brands have high brand equity, higher brand loyalty.)

TOOLS FOR BUILDING BRAND

Advertising Sponsorship of games and events Social Causes Public Facilities Founders personality

BRAND STRATEGY DECISIONS

Line Extensions Brand Extensions Multibrands New brands Co-brands

BRAND STRATEGY DECISIONS

Category
Existing

Product
Existing Line New Brand Extension New Brand Names

Brand Name
New

Extension

Multibrands

LINE EXTENSION

Line extension occurs when a company introduces additional items in the same product category under the same brand name, usually with new flavours, forms, colours, added ingredients, package sizes and so on. Line extensions generally have a higher chance of survival than new products. On the down side extensions may lead to the brand name losing its specific meanings; Ries and Trout call this Line Extension Trap .

BRAND EXTENSION

Brand Extension occurs when a company decides to use an existing brand name to launch a product in the new category.
Brand Extension offers a number of advantages.

-Instant recognition and earlier acceptance

-Saves considerable advertisement

BRAND EXTENSION

Brand Extension also involves risks. - The new product might disappoint buyers and damage their respect for companys other products. - The brand name may loose its special positioning in the consumers mind through over extension - a phenomenon called brand dilution .

MULTI BRANDS

A company will often introduce additional brands in the same product category. - One of the motives for multibranding is to establish different features and/or appeal to different buying motives. - It also enables the company to lock up more distributor shelf space and protest its major brand by setting up flanker brands.

NEW BRANDS

When a company launches products in a new category, it may find that none of its current brand names are appropriate.

When the present brand image is not likely to help the new product, companies are better off creating new brand names.

CO-BRANDS

Co-branding occurs when two different companies pair their respective brands in a collaborative marketing effort.

Each brand sponsor expects that other brand name will strengthen brand preference or purchase intention.

PRODUCT LIFE CYCLE

The Product Life Cycle ( PLC ) is an important concept in marketing that provides insights into a products competitive dynamics. To fully understand the concepts of PLC , one should first understand its parent concept, the demand and technology life cycles.

DEMAND / TECHNOLOGY LIFE CYCLE

Marketing thinking should not begin with a product or even a product class, but rather with a need. The product exists as one solution among many to meet a need. A need is satisfied by some technology. Each new technology normally satisfies the need in a superior way and it shows a demand-technology life cycle. The PLC portrays distinct stages in the sales history of a product.

DEMAND-TECHNOLOGY-PRODUCT LIFE CYCLES

Sales

Time

STAGES IN THE PRODUCT LIFE CYCLE

Sales & Profits Time

Introduction Growth Maturity Decline

STAGES IN THE PRODUCT LIFE CYCLE

By identifying the stage that a product is in, or may be headed toward, companies can formulate better marketing plans. Products require different marketing, financial, manufacturing, purchasing and personnel strategies in each stage of their life cycle. Marketers must pursue appropriate marketing strategies in each stage of PLC. Today, in order to succeed, it is absolutely essential to constantly improve products to increase the value offered to customers, ( V = B/P ). The success of competitors is based on creating value for the customer by differentiating their product, ( Competitive Differential ).

EXTENDING THE PRODUCT LIFE CYCLE

Sales Time

( When the sales of a product starts declining marketers may choose suitable strategy for further growth of product /business/enterprise.)

PRODUCT LIFE CYCLE

Reasons for change in behavior of PLC :

--Changes in the consumer needs and preferences --Advancing Technology --Competition, Government Policies etc. --Changes in number of potential buyers

Stages in PLC :
Introduction, Growth, Maturity, And Decline.

MARKETING STRATEGIES IN THE INTRODUCTION STAGE

Promotion

High

Low

High
Price

Low

Rapid Skimming Strategy Rapid Penetration Strategy

Slow Skimming Strategy Slow Penetration Strategy

MARKETING STRATEGIES IN THE GROWTH STAGE

It improves product quality and adds new product features and improved styling. It adds new models and flanker products (i.e., products of different sizes, flavors, and so forth that protect the main product ). It enters new market segments. It increases its distribution coverage and enters new distribution channels. It lowers prices to attract the next layer of price-sensitive buyers. It shifts from product-awareness advertising to product-preference advertising.

MATURITY STAGE
Sales are increasing but at a decreasing rate. Profits are beginning to decline. Price competition increases. The manufacturer assume a greater share of the total promotional effort in the fight to retain dealers and shelf space in their stores.

MATURITY STAGE
To understand better, we can devide Maturity Stage into three stages :

Growth Maturity : When the rate of sales growth starts to decline because of distribution saturation. Stable Maturity : When the rate of sales growth starts declining due to market saturation. Decaying Maturity : The sales level starts to decline as some of the customers move towards other competitive and substitute products.

MARKETING STRATEGIES IN THE MATURITY STAGE

Market Modification Product Modification Marketing Mix Modification

MARKETING STRATEGIES IN THE MATURITY STAGE

Market Modification

Expand number of users : - Convert non-users - Enter new market segments - Win competitors customers Increase annual usage : - More frequent use - More usage per occasion - New and more varied uses

MARKETING STRATEGIES IN THE MATURITY STAGE

Product Modification

A strategy of quality improvement aims at increasing the products functional performance - its durability, reliability, speed, taste. A strategy of feature improvement aims at adding new features ( for example size, weight, materials, additives, accessories ) that expand the products versatility, safety, or convenience.

MARKETING STRATEGIES IN THE MATURITY STAGE

Product Modification (contd.) A strategy of style improvement aims at increasing the products aesthetic appeal. The periodic introduction of new car models amounts to style competition rather than quality or feature competition.

MARKETING STRATEGIES IN THE MATURITY STAGE

Marketing Mix Modification Prices Distribution Advertising Sales Promotion Personal Selling Services

MARKETING STRATEGIES IN THE DECLINE STAGE

Identifying the Weak Products To do this, many companies appoint a product-review committee with representatives from marketing, R&D, manufacturing and finance. The product review committee makes a recommendation for each dubious product--leave it alone, modify its marketing strategy, or drop it.

MARKETING STRATEGIES IN THE DECLINE STAGE (Contd.)

Determining Marketing Strategies : ( Go Strategy ) Continuation Strategy : -Increasing the firms investment ( to dominate the market or strengthen the competitive position ) - Maintaining the firms investment level until the uncertainties about the industry are resolved. (Contd.)

MARKETING STRATEGIES IN THE DECLINE STAGE (Contd)

Determining Marketing Strategies : ( Go Strategy ) Concentration Strategy : - Decreasing the firms investment level selectively, by dropping unprofitable customer groups, while simultaneously strengthening the firms investment in lucrative niches. Harvesting Strategy : - Divesting the business quickly by disposing of its assets as advantageously as possible.

MARKETING STRATEGIES IN THE DECLINE STAGE (Contd)

The Drop Strategy

- When a company decides to drop a

product, it faces further decisions. If the product has strong distribution and residual goodwill, the company can probably sell it to another firm. - If the company cant find any buyers, it must decide whether to liquidate the brand quickly or slowly. It must also decide on how much parts inventory and service to maintain for past customers.

NEW PRODUCT DEVELOPMENT PROCESS

(1) Idea Generation (2) Screening (3) Concept Development and Testing (4) Marketing Strategy (5) Business Analysis (6) Product Development (7) Market Testing (8) Commercialization

THE CONSUMER ADOPTIONPROCESS (STAGES IN THE ADOPTION PROCESS )

Awareness : The consumer becomes aware of the innovation but lacks information about it. Interest : The consumer is stimulated to seek information about the innovation. Evaluation : The consumer considers whether to try the innovation. Trial : The consumer tries the innovation to improve his or her estimate of its value. Adoption : The consumer decides to make full and regular use of the innovation.

ADOPTER CATEGORIZATION ON THE BASIS OF RELATIVE TIME OF ADOPTION OF INNOVATIONS

Time of adoption of innovations