duction Stage Sales grow slowly Profit is minimal or negative Create awareness Stimulate trial High production costs

Limited product models Frequent product modification Penetration pricing Skimming pricing Little competition High failure rate, High marketing costs Promotion strategy focuses on primary demand for the product category developing product awareness Informing about product benefits. Intensive personal selling to retailers and wholesalers is required. B. Growth Stage Characteristics Sales grow at an increasing rate. Large companies may acquire small pioneering firms. Promotion emphasis heavy brand advertising Gaining wider distribution is a key goal Toward the end of this stage prices normally fall Development costs have been recovered C. Maturity Stage Sales continue to increase but at a decreasing rate Annual models of many products Product lines are widened or extended Heavy promotions to both the dealers and consumers are required. D. Decline Stage Signaled by a long-run drop in sales. The rate of decline is governed by a. how rapidly consumer tastes change or b. how rapidly substitute products are adopted. Strategies Deletion. Harvesting To prevent slipping into decline

Many competitors enter the market. Profits are healthy Differences between brands.

profits reach their peak. Sales volume has created economies

The marketplace is approaching satu An emphasis on product style rather marginal competitors begin dropping Prices and profits begin to fall.

Falling demand forces many competitors out of the mar

A few small specialty firms may still manufacture the p

Dropping a product from the companys product line, is Company retains the product but reduces marketing sup Promote more frequent use of the product by cur

Find new target markets for the product Find new uses for the product Price the product below the market Develop new distribution channels Add new ingredients Delete old ingredients Make a dramatic new guarantee

E. Some Dimensions of the Product Life Cycle 1. Length of the Product Life Cycle There is no exact time that a product takes to move through its life cycle Mass communication shortens life cycles 2. Shape of the Product Life Cycle There are several distinctive life-cycle curves Each type suggests different marketing strategies

consumer products usually have shorter lif products Rate of technological change shortens pro

Significant education of the customer is required. Extended introductory period.

Sales begin immediately Little learning is required by the consumer Benefits of purchase are readily understood.

Most often appear in womens and mens clothing styles. Length of the cycles may be years or decades.

Rapid sales on introduction Equally rapid decline. Often novelties and have a short life cycle.

3. The Product Level: Multiple life cycles (class and form) may exist. Product class

Entire product category or industry Such as video game consoles and s

Product form

Variations within the class Such as the computing capability o

4. The Life Cycle and Consumers A product diffuses, or spreads, through the population, a concept called the diffusion of innovation.

Innovators

2.5%

Eager to try new ideas and products Have higher incomes Better educated than noninnovators Much more reliant on group norms Oriented to the local community Tend to be opinion leaders. Collect more information Evaluate more brands than early adopters. Rely on friends, neighbors, and opinion leaders for information and norms.

Early Adopters 13.5%

Early Majority 34%

Late Majority

34%

Adopt because most of their friends have already done so. For them, adoption is the result of pressure to conform. Are older than the others Tend to be below average in income and education. Do not rely on the norms of the group. Independent because they are tradition-bound Have the lowest socioeconomic status Are suspicious of new products Alienated from an advancing society

Laggards

16%

Common reasons for resisting a product in the introduction stage are usage barriers value barriers risk barriers psychological barriers

product is incompatible with existing habi product provides no incentive to change physical, economic, or social cultural differences or image.

Product Characteristics and the Rate of Adoption The degree of difficulty involved in understanding and using a new Slows diffusion. Complexity

Compatibility

The degree to which the new product is consistent with existing va knowledge, past experiences, and current needs. Incompatibility slows diffusion.

Relative advantage

The degree to which a product is perceived to be superior to existi Speeds diffusion The degree to which the benefits and other results of using a new others and communicated to target customers. Speeds diffusion is the degree to which a product can be tried on a limited basis. Speeds diffusion

Observability

Trialability

Marketing Implications of the Adoption Process Word-of-mouth communication Two types of communication aid the Marketing to consumers diffusion process The effectiveness of different messages and appeals depends on the type of adopter targeted. II. MANAGING THE PRODUCT LIFE CYCLE A. Role of a Product Manager

Product manager is responsible for marketing products through the successive stages of their life cycles. Product (or brand) manager manages the marketing efforts for a close-knit family of products or brands. Three ways to manage: o modify the product o modify the market o reposition the product.

B. Modify the Product Altering a products characteristic to try to increase and extend the products sales. o quality o performance o appearance, C. Modify the Market Market modification strategies involve: D. Reposition the Product Product repositioning

Finding new users. Increasing use among existing users. Creating new use situations.

Changing the place a product occupies in a consumers mind relative to com Reposition a product by changing one of four marketing mix elements.

Four factors that trigger a repositioning action are: Competitors position is adversely affecting sales and market share. Reacting to a Competitors Position. Repositioning a product allows it to reach a new market. Reaching a New Market.

Catching a Rising Trend.

Changing consumer trends can also lead to repositioning a product. For example, consumer interest in functional foods that offer health and di nutrition inspired repositioning of oatmeal.

Trading up Changing the Value Offered. Trading down

adding value to the product (or line) Additional features Higher quality materials.

Reducing the number of features Lower quality Lower price. Reducing the content of packages without changing package s package price.

III. BRANDING AND BRAND MANAGEMENT

Branding Decisions A name, term, symbol, design, or combination thereof that identifies a seller's products and different Brand competitors' products. Brand name That part of the brand that can be spoken.. Brand mark The element of the brand that cannot be spoken, such as symbols Trade name commercial, legal name under which a company does business. Trademarks Legal term indicating the owner's exclusive right to use the brand or part of the brand.
o o o

Phrases, Abbreviations, Symbols, Shapes and Color combinations may also qualify for trademark protection. The MARK has to be used continuously to be protected Rights to a trademark continue for as long as it is used. Others are prohibited from using the brand without permission. A service mark performs the same functions for service businesses. Lanham Act of 1946 protects Trademarks 1. Sets severe penalties for trademark infringement. 2. The injured party can sue for triple damages and recovery of any profit. Generic product name identifies a product by class or type and cannot be trademarked

Failure to protect tradema names generic. All of the products below Some still are! aspirin formica sheetrock band-aid kerosene styrofoam dry ice magic marker trampoline dumpster nylon vaseline escalator ping-pong yo-yo

Benefits of Branding Identification

The brand allows the product to be differentiated from others and serves as consumers

Encourages repeat sales Facilitates New Product Introduction Because a familiar brand is more quickly accepted by consumers. product counterfeiting has been a growing problem. Counterfeit products can steal sales from the original manufacturer or hurt the companys reputation.

Some Branding Concepts The value of company and brand names. the added value a given brand name gives to a product beyond the functional benefits prov Often represented by the premium a consumer will pay for one brand over another when th Brand Equity provided are identical

Brand Loyalty Consistent preference for one brand over all others. Leads to repeat purchases. Brand Identity important to developing brand loyalty A brand so dominant in consumers' minds that they think of it immediately when a product catego Master Brand attribute, or customer benefit is mentioned. A. Brand Personality and Brand Equity Brand Equity has two distinct advantages: 1. Brand equity provides a competitive advantage. 2. Consumers are often willing to pay a higher price for a product with brand equity. 1. Creating Brand Equity Brand equity is created by marketing programs Forge strong, favorable, and unique consumer associations and experiences with a brand Sequential four-step building process: 1. 2. 3. 4. 5.

Develop positive brand awareness and an association in consumers minds with a product class or need to Establish a brands meaning in the minds of consumers. Elicit the proper consumer responses to a brands identity and meaning. Attention to how consumers think and feel about a brand. Create a consumer-brand resonance evident in an intense, active loyalty relationship between consumers

2. Valuing Brand Equity Brand equity is a financial advantage for the brand owner. Established brands are considered intangible assets. Can appreciate in value when effectively managed Can lose value when not managed properly.

B. Licensing Licensing is a contractual agreement whereby a company allows another firm to use its brand name, pate property for a royalty or a fee... Licensing also assists companies in entering global markets with minimal risk. C. Picking a Good Brand Name

A good brand name should

Describe product benefits. Be memorable, distinctive Fit the company or produc Have no legal or regulator Be simple and emotional. Be carefully checked for p undesirable images in diffe cultures..

D. Branding Strategies

1. Manufacturer Branding. Multiproduct branding

Use one name for all its pr Called blanket branding st Called family branding str

Makes possible line extensions Subbranding combines a family brand with a new brand. Allows for brand extension o Using a current brand name to enter a completely different product class. o Too many uses for one brand name can dilute the meaning. Co-branding o The use of a combination of brand names to enhance the perceived value of a product o May be used to identify product ingredients or components. o May be used when two organizations wish to collaborate to offer a product. o Adds value to products that are generally perceived to be homogeneous shopping goods.

multibranding

giving each product a disti

Use when each brand is intended for a different market segment. Has become more complex in the global marketplace. Promotional costs are higher with multibranding. Euro-branding,

o o

Use the same brand name for the same product across all countries in the European Union. Makes Pan-European advertising and promotion programs possible.

2. Private Branding. Often called private labeling or reseller branding Use the brand name of a wholesaler or retailer. Manufacturer's Brands vs. Private Brands Advantages of Manufacturer's Brands to retailers or wholesalers

Can enhance retailer's image can carry lower inventory manufacture gets the blame for problems

Advantages of Private Brands to retailers or wholesalers Higher gross margin Manufacturer can not discontinue ties consumer to dealer ties salespeople to dealer dealer controls marketing mix Disadvantages (risks) of Private brands to retailers or wholesalers Higher marketing costs Must buy in large quantities Dealer gets the blame for problems risk of lower perceived quality

Disadvantages (risks) of Manufacturer Brands retailers or wholesalers

Lower margins

3. Mixed Branding. A compromise between manufacturer and private branding A firm markets products under its own name and that of a reseller The segment attracted to the reseller is different from the manufacturers own market. 4. Generic Branding. a no-brand product that competes on price. Low cost, no frills Popular in late 1970's 30%-40% cheaper than national brands 20%-25% cheaper than store brands good market share in some categories

IV. PACKAGING AND LABELING any container in which it is offered for sale and on which label information is c Packaging component Label

Integral part of the package Typically identifies

o o o o

the product or brand Who made it Where and when it was made How it is to be used