2. Chapter4: product
Powerpoint: chapter4.1
Powerpoint: chapter4.2
Powerpoint: chapter4.3
Powerpoint: chapter4.4
Chapter5: place
Powerpoint: chapter5.1
Powerpoint: chapter5.2
Chapter6: price
Chapter7: promotion

3. A.Whatis a product
B. Product categories
C.Product mix
D.Brand decisions
E.Product features
F.Product development
G.Product life cycle
4 classes:
4.1, 4.2, 4.3 and4.4
4.1
4.2
4.3
4.4

4. F. Product development
Innovation
Market opportunities
Product developmentproces
Successor failure?
Case: Mercedes Benz
G. Product life cycle
Introduction
Growth
Maturity
Decline

5. F.
Innovation
Market opportunities
Product development proces
Success or failure?
Case: Mercedes Benz

6. Up toyou
In pairs, 5’
Thinkof a newlydevelopedproduct (innovation)
Was itcreatedbecausetherewas a need?
An otherreason?
Is itsomehowa creativebreakthrough?

7. Dueto
Changes in consumerneeds
New technologies
Mobile phone=> wifi=> smart phone
Competitiveforce
Samsung vs. Apple

8. Financial risks
Chancestofailare quitebig
Even despiteextendedmarket research

9. Growth
Continuity(survival)
Profit
Tackle PLC
Make useof overproduction
Meet the changingneedsof the consumers

10.  Advantages innovation vs. Me-too
 Early mover advantages: large brand awareness and knowledge
 MP3 = iPod
 Cost leadership because of large production volume
 Registered innovation => production start long before competition
 Eg. Senseo pads (ended in 2006)
 Eg. Nestlé capsules (ended in 2012)

11. Nestlé lost animportant court case in 2012 againsta small British coffee manufacturer(Dualit)

12. Imitators
Advantages
No R&D costs
Stealpart of the market/segmentedtargets
Disadvantages
Hard toconquerpart of the market (‘follower’)
Sometimesonlyabletotake part in the successbymeans of producingprivate labels

13. Whendo companies innovate?
Theyoffer somethingrare/hard tofind
Onlytobefound in a uniquelocation
Theyimprovethe existingservice/product
Locateproblem=> improve
Theycreatea totallynew product
Alreadyin the USA
Practicallyunknownin the East of Europe

17. Step 1: ideageneration
Consumers
Externaldevelopments
Competition
Technologicaldevelopments
Internalsources (staff, sales managers)
Ownresearch

18. 2. Concept refinementandopportunity assessment
Evaluatethe variousideas
How attractiveis the potentialmarket
How well canwe manage this?
Product evaluationmatrix
Variouscriteria, differencesin rating

19. 4. Business case
Turn ideaintoconcrete concept
List product benefits
Definetarget audience
Concept testing
Make a prototype
Checklist
Check purchaseintentions
Example: Google glasses, biochip

20. 5 & 6. Market andcustomer research
Basedon research, developmarketing strategy
USP
Price setting
Place–distributionchannels
Communication goals
Budget –financial planning
LT goals forturnover andprofit
Google Glass: “sometimethisyear, £ 1,000, stock (?)

21. 7. Go/ No go
Full financial analysis
Estimationof costsandturnover
Estimationof break-even point
8. Product development
Concept becomesreal product
Testingof the prototypes
Functionaltests in the company
Consumer tests

22. 9. Launch
Introduce the new product on the market
Goodmarketing!
Check out howthe innovationis acceptedby
Consumers
Distrbutors
Check out whotheyare
Innovators
Earlyadopters
Extremelypopular
Michael Dell’sinvitation: fordie-hardsonly

23. Failure?
Nota uniqueconcept
Bad or insufficientmarketing support
Inferiorquality
Bad timing
Otherreasons: product features, location, …

25. The goal:
Development of carrunning on hydrogen
Fastacceleration
150 km/h
Reach: 450 km

26. The segment:
Cheaper, 2nd family car: more compact andcity-friendly
Middleclass sportscarforyoungdrivers
‘Green’ carforthosewhowant lesspollution, basic transport andlow fuelcosts
SUV forhighersegment whichwants biggercarbut regretsthe high fuelcosts

28. Checklist consumerpanel:
Do youunderstandthe concept of a hydrogenengine?
Do youbelievein the promisedachievementsof the car?
Whatare the advantagesof thiscarwhencomparedtoa normalcar?
Whichimprovementscanyouthinkof?
Whatis the idealpricesetting accordingtoyou?
Whoin yourfamily woulddrive yourcar? Towhatpurpose?
Wouldyouconsiderbuyinga carlikethis?

29. Resultchecklist
An effective, verycompact electriccarthatruns on hydrogen.
Fun todrive, for4 passengers
Practical andreliablemeans of transport withhardlyanypollution
Canreachup to150 km/h
Anddoesn’tneedtobecharged(as comparedtocarswithanelectricbatterysystem)
Idealpriceall-inclusiveis 25,000 euro

30. Development of marketing strategy
Target market is jong, highlyeducated, withanincomeaboveaverage-high
Couplesor small families
Lookingfora practical andenvironment-friendlyway of transport
Image tobecreated:
fuel-efficient,
nicertodrive,
lesspolluting
has lesslimitswhencomparedtohybridor electriccars

31. Developstrategy:
1st year: sell100,000 cars, loss: max. 15 mio. Euro
2nd year: sell120,000 cars, profit: 25 mio. Euro
Three colours
Airco is optional
Price setting: 20,000 Euro
15 % marginfordealers
Advertising budget: 20 mio. Euro
Half forregionaladvertising
Half fornationaladvertising
Focus on: fuel-efficiency anddrivingpleasure

32. StrategyLT:
3% of totalcarmarket
Carqualityneedstobehigh as of day1
Constant improvements
Price willbeincreasedin year2 and3 ifpossible(competition)
Total advertising budget: increaseof 10% everyyear

33. Up toyou
Brainstorm abouta new product foroneof the followingsectors
Health, wellnessor lifestyle
Fun (event, culture, leisuretime)
Retrospective(bringback somethingfromthe past)
Check the feasability
Depictthe target audience
Describeyournew product

34. G.

35.  Every product goes through the PLC
 Duration depends on type of product
 Technological product: 1 year
 Others: can last for more than 100 years…
 Every phase asks for a different marketing
approach
 Every phase: different turnover

37. Turnover:
Growingslowly
Facilitateadoption
Restraints:
Insufficientmanufacturing capacity
Technical problems
Market is fluid, predictionsare difficult
Examples: DixanMegaperls, Omo, Renault Cactus, augmentedreality

38. Augmentedreality

39. Costs
Costs> return
R&D
High manufacturing costs
Low sales volume
High advertising costs
No profityet; financial lossonly
Examples: 3D television, holographicprojection

41. Competition:
Hardlyany
Marketing objectives
In case of new product category: explain
Createbrand awareness
Stimulatetrial
Workon distributionnetwork

42. Product management
Hardlyanyvariation/choice
Mostly1 type only
Competitorswillfollow sooniftheysmellsuccess
Price setting:
Price skimming
Penetrationpricing
Normalpricesetting

44. Communication strategy:
Depends on budget andsizeof organization
Introductionnew product category
Make surebrand name becomeswell-known(brand awareness)
Not just a pen, but a legacy: Montblanc
Sales promotions

45. Distribution strategy:
Youget a chance tobeintroduced?
Strictconditions
Negotiate
Fightforshelfspace

46. Turnover grows
Evolutionof costs:
Manufacturing costsdecrease
Economyof scale: more production=> lowercosts
Learning bydoing
Profit grows
Competitiongrowstoo(me-tooplayers)

47. Marketing objectives
Createbrand preference
Potentialbuyersneedtobecomereal buyers
Extenddistributionnetwork
Make surethe growthphaselastsas long as possible
Createnew types of yourproduct
Fillthe gapsin the market

48. Distribution:
New channels–placesfordistribution
Smaller shops willwaitforyourproduct tobetrulysuccessful
Price setting:
priceskimming
Slow decrease: new customers
Penetrationpricing
Reach normalsales volume afterinitialboost

49. Communication/advertising:
Focus on strong brand
(Value-) expressiveadvertising
Focus on product benefits
Sales promotions
Eg. Lego forgirls (2013)

50.  Largest part of products are (stuck) in this phase
 Market stability
 No considerable growth
 Turnover:
 First slow growth
 Followed by plateau
 Maximum level of penetration
 All possible buyers have been reached

51. Competition
A lot of competition
Price battle
Marginsare smaller
Profit is made becauseof large sales volume
Marketing objectives
Defendmarket share
Createbrand loyalty

52. Product management = PLC-stretching
Look fornew consumers
Look fornew momentsof use
Stealconsumersfromcompetitors
Increaseuser frequency
Stimulatereplacement
Improvedesign/style
Improvefunctionality
Improvequality

55. Up toyou: look forexamples
Look for new consumers
Look for new moments of use
Steal consumers from competitors
Increase user frequency
Stimulate replacement
Improve design/style
Improve functionality
Improve quality

56. Product management
Sometimes: stop product line
No more parts, accessories, service, repair
Eg. Windows 98 afterXP launch, Minidisc player

57.  Turnover decreases, due to
 Technological evolution
 Increasing competition
 Changing life styles
Once in decline, now again trendy

58. Verysuddenandbriskdeath
Photo cameras
Slow death
Video recorders
Declinetomarginallevel
Survivein the margin