PRODUCT DECISIONS

7-1
 Product
• Product is critical
element of marketing
mix; Anything that can
be offered to a market
for attention,
acquisition, use or
consumption and that
might satisfy a want or
need.
– Physical object, service,
person, place,
organization, idea
7-2
 Unique Characteristics of Services
and Resulting Marketing Challenges

Exhibit 7.6 7-3

 Product Decisions Involve…
• Product mix- total group of products offered
by company
• Product lines-group of closely related product
items
– Depth-number of items in line
• Brands-combination of name, symbol, term, or
design that identifies specific product
• Packaging and labeling
• Positioning
7-4
 Positioning Decision

• Positioning is the act of

designing the company’s
offering and image to occupy a
distinctive place in the target
market’s mind.

7-5
 Steps In The Positioning Process
1. Identify relevant set of competitive products
serving target market
2. Identify the set of determinant attributes that
define the “product space”.
3. Collect information from a sample of customers
and potential customers about perceptions of each
product on the determinants
4. Determine the product’s current positioning.
5. Determine the customers’ most preferred
combination of determinant attributes.
6. Examine the fit between preferences of market
segments and current position of products.
7. Write positioning statement to guide development
of marketing strategy.
7-6
 Positioning Map: Automobiles For Generation Yers

More “Edgy”

Kia Sorrento
Scion
Cube
Inexpensiv Expensive
e $13k $20K
Civic

Less “Edgy”
7-7
 Trout and Ries suggest a six-step
question framework for successful
positioning:
1. What position do you currently
own?
2. What position do you want to
own?
3. Whom you have to defeat to own
the position you want.
4. Do you have the resources to do
it?
5. Can you persist until you get
there?
6. Are your tactics supporting the
positioning objective you set?

7-8
• How is the Ford Mustang positioned? How has Ford
achieved this positioning? Has its positioning changed
over time?
7-9
 Product Differentiation

• Differentiation Strategies – Create differences in

the firm’s product offering that sets it apart from
competing offerings based on
– Product features
– Advantages
– Benefits

7-10
Using Product Descriptors
for Product Differentiation

Exhibit 6.7 7-11

How is Venus positioned/differentiated
from other razors?

7-12
Stages of the Product Life Cycle

Exhibit 7.2 7-13

Marketing Strategy During
the Product Life Cycle

Exhibit 7.3 7-14

 Introduction Stage

• Begins when development is complete

• Ends when customers widely accept the product
• Marketing strategy goals during this stage:
– Attract customers by raising awareness and interest
– Induce customers to try and buy
– Engage in customer education activities
– Strengthen or expand channel and supply
relationships
– Build on availability and visibility
– Set pricing objectives 7-15
 Growth Stage (1 of 2)

• Be ready for sustained sales increases

• Rapid increase in profitability early in the growth
stage that decreases at the end of this stage
• Length depends on nature of product and
competitive reactions
• Two strategies:
– (1) Establish a strong, defensible marketing position
– (2) Achieve financial objectives
7-16
 Growth Stage (2 of 2)

• Marketing strategy goals in this stage:

– Leverage the product’s perceived differential advantages
– Establish a clear product and brand identity
– Create unique positioning
– Maintain control over product quality
– Maximize availability of the product
– Maintain or enhance the product’s profitability to partners
– Find the ideal balance between price and demand
– Keep an eye focused on the competition

7-17
 Maturity Stage (1 of 2)

• Few, if any, new firms will enter the market

• Still an opportunity for new product features
and variations
• Typically the longest stage in the product
life cycle

7-18
 Maturity Stage (2 of 2)

• Four general goals in this stage:

– (1) Generate Cash Flow
– (2) Hold Market Share
– (3) Steal Market Share
– (4) Increase Share of Customer
• Four options to achieve these goals:
– (1) Develop a new product image
– (2) Find and attract new users to the product
– (3) Discover new applications for the product
– (4) Apply new technology to the product 7-19
 Decline Stage

• Two options:
– (1) Attempt to postpone the decline
– (2) Accept its inevitability
• Harvesting
• Divesting
• Factors to be considered during this stage:
– Market segment potential
– The market position of the product
– The firm’s price and cost structure
– The rate of market deterioration
7-20
 Product-Mix Width Procter & Gamble Example
Disposable Detergents Bar Toothpaste Paper
Diapers Soap Tissue
Pampers Ivory Snow Ivory Gleem Charmin
Luvs Dreft Kirk’s Crest Puffs
Tide Lava Banner

Cheer Camay Summit

1100’s
Oxydol Zest

Dash Safeguar
d
Bold Coast

Gain Olay

Era
7-21
 Product Lines and
Product Mixes at Gillette

Exhibit 7.1 7-22

 Product Mix Decisions
• Def.: Set of all products and items that a
particular seller offers to buyers.
• Decisions include selection of width, length,
depth, and consistency

7-23
 Product Line Decisions
• Line stretching
– Downward – enter on the low end
– Upward – enter on the high end
– Two-way – enter both directions
– Line-filling – add more items
• Line Modernization – update to reflect current
trends, themes
• Line-Featuring-select one or a few items in the line to
feature
• Line-Pruning – select item(s) to cut

7-24
 What is a Brand?
• A brand is 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.

7-25
7-26
The World’s Twenty-Five
Most Valuable Brands

Exhibit 7.5 7-27

 Branding Decisions

• Brand Name
– Individual (General Mills- Bisquick, Gold Medal, Betty Crocker;
P&G)
– Blanket family name (Heinz, Campbell)
– Separate family names (Sears-Kenmore for appliances,
Craftsman for tools)
– Company plus individual names (Kellogg Rice Krispies)

7-28
 Branding Decisions
Product Category

Line Existing New

Category
Existing Line Extension – Brand Extension –
additional items in Use existing brand
the same product name to launch
category under the new products in
same brand name, other categories,
new flavors, e.g. Hondo lawn
package sizes, mowers, marine
added ingredients, engines
e.g. Heinz Green
Ketchup

New Multibrands – New Brands –

Additional brand in launches new
the same product products in new
category, Pampers, categories, e.g.
Luvs Barbie Bedding 7-29
 Good Brand Names
• Distinctive
• Lack Poor Foreign Language Meanings
• Suggest Product Qualities
• Suggest Product Benefits
• Easy to Pronounce, Recognize, Remember
– Zit (Chocolate from Germany)
– Koff (Beer)

7-30
 Packaging Decisions
• Design, materials, size
• Critical as marketing tool
– Self-service
– Company & brand image
– Opportunity for brand innovation

7-31
 Factors Influencing Product
Strategy Decisions

• Classification of Products
– Convenience
– Shopping
– Specialty
– Unsought Products
• Product Life Cycle

7-32
 Product Classification (1 of 3)
• Consumer Product
Classifications
– Convenience Products
• Routinely purchased, require
little or not time searching
• Make them widely available

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– Shopping Products
• Spend considerable time making the purchase; seek info on
price, features, service
• Product differentiation very important
• Have strategy to guarantee and reduce consumer
satisfaction

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– Specialty Products
• Unique, shoppers expend considerable time,
effort, money to acquire; accept no substitutes

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– Unsought Products
• (1) Products of which consumers are
unaware
• (2) Products that consumers do not consider
purchasing until a need or emergency
arises

7-36
 New Product Development
• Six strategic product development options:
– (1) New-to-the-world products (discontinuous
innovations)
– (2) New product lines
– (3) Product line extensions
– (4) Improvements or revisions of existing
products
– (5) Repositioning
– (6) Cost reductions
• Customer perception of differentiation is
critical
7-37
 Development Stage

• No sales revenue during this stage

• Components of the product concept:
– An understanding of desired uses and benefits
– A description of the product
– The potential for creating a complete product line
– An analysis of the feasibility of the product concept
• Customer needs should be discerned before
developing marketing strategy
7-38