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Chapter 7: Developing and Managing Offerings


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Chapter 7: Developing and Managing Offerings

  1. 1. by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond Principles of Marketing
  2. 2. Chapter 7Chapter 7 Developing and Managing OfferingsDeveloping and Managing Offerings ©2010 Flat World Knowledge, Inc.
  3. 3. ©2010 Flat World Knowledge, Inc. 3 Developing new products for most companies is a constant process. Some “new” offerings may be only improved versions of existing offerings. The New Offering DevelopmentThe New Offering Development ProcessProcess
  4. 4. The New Offering DevelopmentThe New Offering Development ProcessProcess Learning Objectives 1. Identify an effective process for creating offerings and bringing them to market. 2. Understand the relative importance of each step in the new-offering development process and the functions within each step. 3. Distinguish between the various forms of testing and analysis that take place before a new offering is brought to the market ©2010 Flat World Knowledge, Inc. 4
  5. 5. ©2010 Flat World Knowledge, Inc. 5 It all starts with an idea and, ideas come from everywhere. Does it fit? Is it profitable? What features do customers want? Make prototypes Define manufacturing Limited and market tests Commercialization Monitor progress Most offerings go through a seven step process: Offering Development—7 StepsOffering Development—7 Steps
  6. 6. ©2010 Flat World Knowledge, Inc. 6 • Most companies follow a seven step process in developing new products. • Ideas for new products can come from employees, customers, competitors, and suppliers. • Follow-on steps include: idea screening, feature specification, development, testing, and launching. • Evaluation and monitoring of new products is the last step in the process. • Companies face risks in investment of time and money when new products fail. • There is also the risk of missing opportunity if products are not introduced. Key TakeawaysKey Takeaways
  7. 7. Managing New ProductsManaging New Products ©2010 Flat World Knowledge, Inc. 7 Learning Objectives 1.Explain how organizations manage offerings after they are introduced to the marketplace. 2.Explain how managing an offering may be different in international markets. 3.Explain the product lifecycle and the objectives and strategies for each stage. 4.Explain why during the introduction stage the marketing costs related to a product are typically higher and why companies must generate awareness of it and encourage consumers to try it. 5.Explain why and when penetration and skimming pricing are used in the introduction stage. 6.Describe the characteristics of the growth stage and why competitors are likely to enter the market during this stage. 7.Understand how companies develop different strategies to extend the life cycle of products in the maturity stage. 8.Differentiate between product modifications, market modifications, and marketing-mix modifications. 9.Understand the difference between harvesting and divesting when a product is in the decline stage.
  8. 8. The Product Life Cycle (PLC)The Product Life Cycle (PLC) ©2010 Flat World Knowledge, Inc. 8
  9. 9. Product Life Cycle FactorsProduct Life Cycle Factors ©2010 Flat World Knowledge, Inc. 9
  10. 10. ©2010 Flat World Knowledge, Inc. 10 This is the 6th step in the product development cycle. Product Introduction PhaseProduct Introduction Phase
  11. 11. The Growth StageThe Growth Stage ©2010 Flat World Knowledge, Inc. 11
  12. 12. Growth and DistributionGrowth and Distribution • Effective marketing during the growth phase in the life cycle requires expanding distribution channels. • Having the product in the right place at the right time means expanded presence in order to serve the increasing demand. • This distribution attention continues the higher costs during the growth phase. ©2010 Flat World Knowledge, Inc. 12
  13. 13. Growth Phase PricingGrowth Phase Pricing ©2010 Flat World Knowledge, Inc. 13
  14. 14. The Maturity PhaseThe Maturity Phase ©2010 Flat World Knowledge, Inc. 14 • Products like people reach a stage of maturity, or leveling off of growth. • Sales level off as demand erodes and sales are largely replacement or repeat users as opposed to new customers. • This phase can last longer, and only the strongest suppliers will survive.
  15. 15. Extending Life CyclesExtending Life Cycles ©2010 Flat World Knowledge, Inc. 15
  16. 16. Modifying Products to Extend MaturityModifying Products to Extend Maturity ©2010 Flat World Knowledge, Inc. 16
  17. 17. Extending Life Through New MarketsExtending Life Through New Markets ©2010 Flat World Knowledge, Inc. 17
  18. 18. The Decline StageThe Decline Stage • Product sales decrease at an increasing rate. • Technology obsoletes products. • Fads generally have short lives. • Fashions change life cycles! • Harvesting of products is accomplished through reducing costs to maintain profits. • Modifying products during maturity may avoid a decline phase. ©2010 Flat World Knowledge, Inc. 18
  19. 19. Key TakeawaysKey Takeaways • Understanding life cycles necessary for successful product marketing. • Consumer awareness of new products is critical. • Product benefits and value must be addressed during the growth phase. • Sales level off and competition intensifies during the maturity phase. • Marketing efforts are needed to extend the maturity phase. • Harvesting decisions are needed in the decline phase. ©2010 Flat World Knowledge, Inc. 19