Ch.7:PRODUCT STRATEGY Product Classification (1 of 3)

1. Consumer Product Classifications Convenience Products Shopping Products Specialty Products Unsought Products (1) Products of which consumers are unaware (2) Products that consumers do not consider purchasing until a need or emergency arises Ch.7:PRODUCT STRATEGYProduct Classification(1 of 3)

2. Business Product Classifications Raw Materials Component Parts Process Materials MRO Supplies Accessory Equipment Installations Business Services Product Classification(2 of 3)

3. Product Lines and Mixes Product Line Product Mix Benefits of offering a wide variety and deep assortment of products: Economies of Scale Package Uniformity Standardization Sales and Distribution Efficiency Equivalent Quality Beliefs Product Classification(3 of 3)

4. 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 New Product Development

5. Stages of the Product Life Cycle Exhibit 7.2

6. 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. 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

8. Growth Stage • 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 • 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

9. Maturity Stage • 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 • 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

10. 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

11. Branding Strategy • Key Issues In Branding • Brand Loyalty • Brand Equity • Brand Alliances • Packaging and Labeling • Packaging • Protection, storage, convenience, etc. • Labeling • The Nutritional Labeling and Education Act of 1990 • Food Choking Prevention Act

12. Product Strategy for Services • Characteristics of Services • Marketing Strategy for Services • Product Issues • Pricing Services • Promoting Service Benefits • Distributing Services