Chapter 10 Developing, Positioning, and Differentiating Products through  the Life Cycle PowerPoint by Karen E. James Loui...
Objectives <ul><li>Understand the challenges a company faces in developing and introducing new products. </li></ul><ul><li...
Objectives <ul><li>Learn what marketing strategies are appropriate at each stage of the product life cycle. </li></ul><ul>...
New Product Development <ul><li>What is a “New” Product? </li></ul><ul><ul><li>New-to-the-world products </li></ul></ul><u...
New Product Development <ul><li>New Product Failure is Rampant: </li></ul><ul><ul><li>95% of new U.S. consumer products </...
New Product Development <ul><li>Successful new products: </li></ul><ul><ul><li>Offer a strong relative advantage </li></ul...
Managing New Products <ul><li>Idea generation </li></ul><ul><li>Idea screening </li></ul><ul><li>Concept development </li>...
Managing New Products <ul><li>Product development </li></ul><ul><li>Market testing </li></ul><ul><li>Commercialization </l...
Consumer Adoption Process <ul><li>Adopters of new products move through five stages: </li></ul><ul><ul><li>Awareness </li>...
Consumer Adoption Process <ul><li>People adopt new products at different rates </li></ul><ul><ul><li>Innovators </li></ul>...
Consumer Adoption Process <ul><li>Five product characteristics influence the rate of adoption: </li></ul><ul><ul><li>Degre...
Marketing Through the  Product Life Cycle <ul><li>Five product characteristics influence the rate of adoption: </li></ul><...
Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul>...
Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul>...
Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul>...
Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul>...
Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>G...
Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>G...
Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>G...
Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>G...
Positioning and Differentiation <ul><li>Two views of positioning: </li></ul><ul><ul><li>Ries and Trout: products are posit...
Positioning and Differentiation <ul><li>Positioning statements: </li></ul><ul><ul><li>To  (target group and need)  our  (b...
Positioning and Differentiation <ul><li>Differentiated  products feature meaningful and valuable differences that distingu...
Positioning and Differentiation <ul><li>Form </li></ul><ul><li>Features </li></ul><ul><li>Performance </li></ul><ul><li>Co...
Positioning and Differentiation <ul><li>Ordering ease </li></ul><ul><li>Delivery </li></ul><ul><li>Installation </li></ul>...
Positioning and Differentiation <ul><li>Competence </li></ul><ul><li>Courtesy </li></ul><ul><li>Credibility </li></ul><ul>...
Positioning and Differentiation <ul><li>Coverage </li></ul><ul><li>Expertise </li></ul><ul><li>Performance </li></ul>Chann...
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Developing, Positioning, and Differentiating Products through the Life Cycle

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Developing, Positioning, and Differentiating Products through the Life Cycle

  1. 1. Chapter 10 Developing, Positioning, and Differentiating Products through the Life Cycle PowerPoint by Karen E. James Louisiana State University - Shreveport
  2. 2. Objectives <ul><li>Understand the challenges a company faces in developing and introducing new products. </li></ul><ul><li>Learn the main stages in developing new products and how they can be better managed. </li></ul><ul><li>Know the factors that affect the rate at which consumers adopt new products. </li></ul>
  3. 3. Objectives <ul><li>Learn what marketing strategies are appropriate at each stage of the product life cycle. </li></ul><ul><li>Understand how a company can choose and communicate an effective market position. </li></ul>
  4. 4. New Product Development <ul><li>What is a “New” Product? </li></ul><ul><ul><li>New-to-the-world products </li></ul></ul><ul><ul><li>New product lines </li></ul></ul><ul><ul><li>Additions to existing product lines </li></ul></ul><ul><ul><li>Improvements and revisions of existing products </li></ul></ul><ul><ul><li>Repositioned products </li></ul></ul><ul><ul><li>Cost reduction products </li></ul></ul>
  5. 5. New Product Development <ul><li>New Product Failure is Rampant: </li></ul><ul><ul><li>95% of new U.S. consumer products </li></ul></ul><ul><ul><li>90% of new European consumer products </li></ul></ul><ul><li>Reasons for failure include ignoring unfavorable market research, overestimating market size, marketing mix decision errors, and stronger than anticipated competitive actions </li></ul>
  6. 6. New Product Development <ul><li>Successful new products: </li></ul><ul><ul><li>Offer a strong relative advantage </li></ul></ul><ul><ul><li>Reflect better understanding of customer needs, and beat the competition to market </li></ul></ul><ul><ul><li>Exhibit higher performance-to-cost ratios and higher contribution margins </li></ul></ul><ul><ul><li>Are launched with larger budgets </li></ul></ul><ul><ul><li>Have stronger top management support </li></ul></ul>
  7. 7. Managing New Products <ul><li>Idea generation </li></ul><ul><li>Idea screening </li></ul><ul><li>Concept development </li></ul><ul><li>Concept testing </li></ul><ul><li>Marketing strategy development </li></ul><ul><li>Business analysis </li></ul>New Product Development Process: Ideas to Strategy
  8. 8. Managing New Products <ul><li>Product development </li></ul><ul><li>Market testing </li></ul><ul><li>Commercialization </li></ul>New Product Development Process: Development to Commercialization
  9. 9. Consumer Adoption Process <ul><li>Adopters of new products move through five stages: </li></ul><ul><ul><li>Awareness </li></ul></ul><ul><ul><li>Interest </li></ul></ul><ul><ul><li>Evaluation </li></ul></ul><ul><ul><li>Trial </li></ul></ul><ul><ul><li>Adoption </li></ul></ul>
  10. 10. Consumer Adoption Process <ul><li>People adopt new products at different rates </li></ul><ul><ul><li>Innovators </li></ul></ul><ul><ul><li>Early adopters </li></ul></ul><ul><ul><li>Early majority </li></ul></ul><ul><ul><li>Late majority </li></ul></ul><ul><ul><li>Laggards </li></ul></ul>
  11. 11. Consumer Adoption Process <ul><li>Five product characteristics influence the rate of adoption: </li></ul><ul><ul><li>Degree of relative advantage </li></ul></ul><ul><ul><li>Degree of compatibility </li></ul></ul><ul><ul><li>Degree of complexity </li></ul></ul><ul><ul><li>Degree of divisibility (trialability) </li></ul></ul><ul><ul><li>Degree of communicability </li></ul></ul>
  12. 12. Marketing Through the Product Life Cycle <ul><li>Five product characteristics influence the rate of adoption: </li></ul><ul><ul><li>Degree of relative advantage </li></ul></ul><ul><ul><li>Degree of compatibility </li></ul></ul><ul><ul><li>Degree of complexity </li></ul></ul><ul><ul><li>Degree of divisibility (trialability) </li></ul></ul><ul><ul><li>Degree of communicability </li></ul></ul>
  13. 13. Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Low sales </li></ul><ul><li>High costs per customer </li></ul><ul><li>Negative profits </li></ul><ul><li>Innovator customers </li></ul><ul><li>Few competitors </li></ul>
  14. 14. Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Rising sales </li></ul><ul><li>Average costs </li></ul><ul><li>Rising profits </li></ul><ul><li>Early adopters customers </li></ul><ul><li>Growing competition </li></ul>
  15. 15. Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Peak sales </li></ul><ul><li>Low costs </li></ul><ul><li>High profits </li></ul><ul><li>Middle majority customers </li></ul><ul><li>Stable/declining competition </li></ul>
  16. 16. Stages of the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Declining sales </li></ul><ul><li>Low costs </li></ul><ul><li>Declining profits </li></ul><ul><li>Laggard customers </li></ul><ul><li>Declining competition </li></ul>
  17. 17. Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Objective: to create awareness and trial </li></ul><ul><li>Offer a basic product </li></ul><ul><li>Price at cost-plus </li></ul><ul><li>Selective distribution </li></ul><ul><li>Awareness – dealers and early adopters </li></ul><ul><li>Induce trial via heavy sales promotion </li></ul>
  18. 18. Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Objective: maximize market share </li></ul><ul><li>Offer service, product extensions, warranty </li></ul><ul><li>Price to penetrate </li></ul><ul><li>Intensive distribution </li></ul><ul><li>Awareness and interest – mass market </li></ul><ul><li>Reduce promotions due to heavy demand </li></ul>
  19. 19. Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Objective: maximize profit while defending market share </li></ul><ul><li>Diversify brands/items </li></ul><ul><li>Price to match or beat competition </li></ul><ul><li>Intensive distribution </li></ul><ul><li>Stress brand differences and benefits </li></ul><ul><li>Increase promotions to encourage switching </li></ul>
  20. 20. Objectives and Strategies for the Product Life Cycle <ul><li>PLC Stages </li></ul><ul><li>Introduction </li></ul><ul><li>Growth </li></ul><ul><li>Maturity </li></ul><ul><li>Decline </li></ul><ul><li>Objective: reduce costs and milk the brand </li></ul><ul><li>Phase out weak models </li></ul><ul><li>Cut price </li></ul><ul><li>Selective distribution </li></ul><ul><li>Reduce advertising to levels needed to retain hard-core loyalists </li></ul><ul><li>Reduce promotions to minimal levels </li></ul>
  21. 21. Positioning and Differentiation <ul><li>Two views of positioning: </li></ul><ul><ul><li>Ries and Trout: products are positioned in the mind of prospect </li></ul></ul><ul><ul><li>Treacy and Wiersema: positioning via value disciplines </li></ul></ul><ul><ul><ul><li>Product leader firm </li></ul></ul></ul><ul><ul><ul><li>Operationally excellent firm </li></ul></ul></ul><ul><ul><ul><li>Customer intimate firm </li></ul></ul></ul>
  22. 22. Positioning and Differentiation <ul><li>Positioning statements: </li></ul><ul><ul><li>To (target group and need) our (brand) is (concept) that (point-of-difference) </li></ul></ul><ul><ul><ul><li>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. </li></ul></ul></ul>
  23. 23. Positioning and Differentiation <ul><li>Differentiated products feature meaningful and valuable differences that distinguish the company’s offering from the competition. </li></ul><ul><li>Differences are stronger when they are important, distinctive, superior, preemptive, affordable, and profitable. </li></ul>
  24. 24. Positioning and Differentiation <ul><li>Form </li></ul><ul><li>Features </li></ul><ul><li>Performance </li></ul><ul><li>Conformance </li></ul><ul><li>Durability </li></ul><ul><li>Reliability </li></ul><ul><li>Repairability </li></ul><ul><li>Style </li></ul><ul><li>Design </li></ul>Product Differentiation Tools
  25. 25. Positioning and Differentiation <ul><li>Ordering ease </li></ul><ul><li>Delivery </li></ul><ul><li>Installation </li></ul><ul><li>Customer training </li></ul><ul><li>Customer consulting </li></ul><ul><li>Maintenance and repair </li></ul><ul><li>Miscellaneous </li></ul>Services Differentiation Tools
  26. 26. Positioning and Differentiation <ul><li>Competence </li></ul><ul><li>Courtesy </li></ul><ul><li>Credibility </li></ul><ul><li>Reliability </li></ul><ul><li>Responsiveness </li></ul><ul><li>Communication </li></ul>Personnel Differentiation Tools
  27. 27. Positioning and Differentiation <ul><li>Coverage </li></ul><ul><li>Expertise </li></ul><ul><li>Performance </li></ul>Channel Differentiation Tools <ul><li>Symbols </li></ul><ul><li>Media </li></ul><ul><li>Atmosphere </li></ul><ul><li>Events </li></ul>Image Differentiation Tools
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