Chapter 9 - Managing the productPresentation Transcript
Managing the Product
Tactical Product Decisions (the marketing mix) Product Strategies Product & Product Line/Mix Objectives Must be clear, measurable, and within a distinct time frame (SMART) Own 15% of the snack-chip market by 20115 Considers life of the product & Rate of Diffusion. In two years, create a new package for Sunchips that is both biodegradable AND quiet. Be viewed as the most earth friendly chip brand
Understand the PLC & its relationship to Diffusion
Demonstrate how marketers manage a product using the PLC
Define and understand the role of “branding” as a marketing strategy
Understand the importance of packaging in the marketing mix
The Product Life Cycle (PLC)
The Product Life Cycle (PLC) Explains how the market’s response to a product and marketing activities change over the entire life of a product. Gives managers insights into how long a new product’s life cycle may be, and can help plan for marketing activities in advance. Products/brands need to be nurtured and developed with care... The PLC can help.
Why are profits low here? Stages in the PLC relate to a firm’s marketing objectives and marketing mix actions.
Introduction : launch & create desire for a product category, not always specific brands (primary demand); or create desire for a specific brand or company as competition begins to surface(selective demand) Introduction Choose a pricing strategy - Penetration vs. Skimming May need to educate target audiences
Growth : rapid sales increases, begin to see repeat purchasers and brand loyalty (advertising should focus on selective demand), product positioning is more segmented; product innovation and new features are key! Growth Distribution strategy - broaden the availability, or focus on concentrated/premium distribution and pricing
Maturity : often the longest stage, rate of sales slowing, prices are decreasing, (relative to inflation) profits are narrowing, competition is decreasing, firms try to attract new markets---differentiation is key. Maturity Distribution strategy - wide distribution, increase target market awareness Firms wanting to compete will revise their marketing mix
Decline : rapid decrease in sales, technologies may be obsolete, a product “rebirth” may be needed, firm dedicates limited resources to marketing; hope competition drops out ? Decline BIG DECISION: Deletion or Harvest?
On a Sheet of Paper... Place these products on the PLC curve where you believe they belong today. VCR 3D-TV Digital photo Low-carb ice cream USB memory stick toothpaste Fabric softener Dryer Bars
Homophily : The more similar to each other that members of a culture are, the more likely an innovation is to spread—people are more likely to imitate similar than different models. The two most rapidly adopting countries in the World are the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores high.
Physical distance: The greater the distance between people, the less likely innovation is to spread.
Opinion leadership: The more opinion leaders are valued and respected, the more likely an innovation is to spread. The style of opinion leaders moderates this influence, however. In less innovative countries, opinion leaders tend to be more conservative, i.e., to reflect the local norms of resistance.
Modernity : The extent to which the culture is receptive to new things. In some countries, such as Britain and Saudi Arabia, tradition is greatly valued—thus, new products often don’t fare too well. The United States, in contrast, tends to value progress.
Cultural Influences Other influences on the PLC and Diffusion:
Relative Advantage : do consumers believe a new product provides superior benefits, or superior value proposition?
Compatability: is the product consistent with cultural values, customs, practices? Or is it too radical?
Complexity: Can consumers understand how to use the product?
Trialability: Is the risk low for checking it out? What have we got to lose?
Observability: Does the product carry social meaning, it is visible and will it become part of my self-identity?
Product Factors Other influences on the PLC and Diffusion:
PLC’s are not 100% predictable - only estimable based on history PLC’s are not to be used to forecast sales and production figures PLC’s can be misleading due to spikes & drops in sales, causing mis-adjustment of marketing mix elements Importantly:
End Module 1
Chapter 9 Module 2
Bring the product to life: With brand identity Brand personality and Brand recognition “ Brand” = symbol, name, unique element that identifies one product (or firm) from another. Brands help firms create relationships with customers
“ Brand” = symbol, name, unique element that identifies one product (or firm) from another. Brand mark: a logo or set of words Trade character: carries human features Good Brand names are... Easy to say Convey product benefits Fit customer culture Are legal Trademark: the legal term for a brand name, mark, or character.
Is it memorable?? meaningful??
Dimensions of Brand Meaning
End Module 2
Chapter 9 Module 3
The Importance of Brands
Brand Equity The value over and above the value of the generic version. Price premiums are associated with high brand equity. Consumers can experience strong attachments to brands related to.... Self-concept * Nostalgia * Interdependence * Love 115 00 39 00 = Comp. Advantage It’s me. Feel good Can’t do without Emotional bonds
Value: $79b Value: $15b Pricing Premium: $64b “ Branding accounts for 80% of it’s value.”
The North Face's logo consists of a slightly skewed quarter-circle with two lines running within it. This image is an interpretation of Half Dome, a massive granitic monolith in Yosemite National Park , viewed from the west, with the sheer north (or northwest) face of Half Dome to the left. The North Face maintains strong links with the outdoor community through its sponsored athlete program. Athletes such as Lizzy Hawker who recently won the Ultra Trail Tour du Mont Blanc have benefited greatly from the program. THE NORTH FACE has meaning.
Leveraging Brand Equity
The North Face brand was established in 1966 when Douglas Tompkins and Kenneth "Hap" Klopp created an equipment retail store that eventually acquired the name The North Face. This name was chosen because the north face of a mountain in the northern hemisphere is generally the most difficult face to climb.By the 1980s, skiwear was added to the line of products, and eventually camping equipment was added as well. The North Face is now a wholly owned subsidiary of the VF Corporation . The North Face, Inc. Now specializes in outerwear , fleece, f ootwea r, and e quipment such as backpacks, tents, and s leeping b ags.
Branding strategies Family Brand Individual Brand
Branding strategies National Brands Private Brands High profit potential Compete with national brands Attract price-conscious consumers Still need some brand awareness and recognition Owned by retailer or distributor Carry brand equity Attract brand loyal customers Drive store traffic Owned by manufacturers
Licensing Brands Co-Branding More powerful recognition Can use ingredient branding strategy Helps create a wider product portfolio Can offer instant recognition & interest to lesser known products... ...especially for targeting specific consumer groups
Packaging As part of the product identity As part of the product identity
Packages serve several functions: 1. Protect the product 2. Inform the customer 3. Brand the product 4. Communicate with the customer 5. Lets the customer handle the product Fill the cap for a single serving Flavor, texture, contents Brand Easy to hold Fits in car cup-holder Plastic, opaque protects the contents, maintains freshness. Must consider: Competitor packaging, retailer specs, distribution limits, consumer acceptance
Recap Brand identity influences how consumers perceive the brand. Brand equity, as a competitive advantage, is achieved through branding. Branding is part of product positioning!