chapter 10 - managing successful products, services, + brands

product life cycle (PLC)

the stages a product goes through in the marketplace

concept that seeks to describe a products sales, competitors, customers, + marketing emphasis from its beginning until it is removed from the market

introduction

full-scale launch of new product into marketplace

sales are low, high failure rate

little competition

frequent product modification

limited distribution

high marketing + product costs

growth

sales grow at an increasing rate

many competitors enter market

large companies may acquire small pioneering firms

profits are healthy

maturity

sales continue to increase but at a decreasing rate

marketplace is approaching saturation

typified by annual models of products with an emphasis on style rather than function

products lines are wider or extended

marginal competitors drop out

decline

signaled by a long-run drop in sales

rate of decline is governed by how rapidly consumer tastes change or how rapidly substitute products are adopted

falling demand forces many out of market

deletion

drop product from product line

harvesting

retain product but reduce marketing costs

self fulfilling prophecy

many firms may engage in a self fulfilling prophecy, whereby they predict falling sales + then ensure this by reducing or removing marketing support

modifying the product

after one or more of the product characteristics to increase value to customers + increase sales

modifying the market

find new customers, increase product use

repositioning the product

change the place (image) the product occupies in consumers minds relative to competitive products

adoption

the process by which a consumer or business customer begins to buy + use a new good, service, or idea

diffusion

describes how the use of a product spreads throughout a population

relative advantage

a product innovation is perceived as better than existing alternatives

positively correlated with an innovations adoption rate

exist when a new product offers better performance, increased comfort, saving in the time + effort, or immediacy of reward

compatibility

an innovation is perceived to fit into a persons way of doing things

an innovation fits with other complementary products

the greater compatibility, the more rapid a products rate of adoption

overcome perception of incompatibility through heavy advertising to persuade consumers

complexity

the degree to which products or its use is difficult to understand

the more complex the product, the more slowly a products rate of adoption

overcome perception of complexity with demonstrations, personal selling, + emphasis on ease of use

trialability

ease of sampling the product is to people who might adopt it

the trial experience serves to reduce the risk of a consumers being dissatisfied with a product offer having permanently committed to it through outright purchase

observability

how visible the product is to people who might adopt it

the higher the visibility, the more rapid the adoption rate

innovators

2.5%, the first to accept a new idea or product

venturesome + willing to take risks

cosmopolites: willing to seek social relationships outside of their local peer group

rely heavily on impersonal information sources

early adopters

13.5%, the seconds to adopt an innovation

heavy media users

tend to be concerned with social acceptance

opinion leaders primarily come from the early adopter group (very socially connected)

early majority

34%, adopt the product prior to the mean time of adoption

deliberate + cautious

spend more time in the innovation decision process

slightly above average in education + social status

late majority

34%, follow the average adoption time

older, more conservative

peers are the primary source of new ideas

below average in education, income, + social status

wait to purchase until product has become a necessity and/or peers pressure to adopt

laggards

16%, last to adopt an innovation

lower in social class than other categories

bound by tradition

product may have already been replaced by another innovation

brand

a name, term, symbol, logo, or any other unique element of a product that identifies one firms product(s) + sets it apart from competition

is a signal or a promise

should suggest product benefits, be memorable + distinctive, have positive connotation, fit with desired image, no legal/regulatory restrictions, simple and/or emotional, ‘convert’ well for international use

brand equity

brands value to its organization

added value to a brand gives to a product beyond the functional benefits

assets + liabilities linked to a brand that add to or subtract from the value provided by the product or service

provides customer loyalty, perceived quality, brand name awareness, competitive advantage

can be used to establish brand extensions

individual branding (multibranding)

each product has its own brand

family (corporate brands (multiproduct))

market all (or a group of) products under an umbrella brand

national/manufacturer brands

producers brands (kraft mayo)

private label/reseller/store

store brands

licensing

one firm sells the right to another firm to use its brand under specific circumstances

co-branding → ingredient branding

one brand is a part/component that makes up the other product/brand

co-branding → cooperative branding

two brands receive fairly equal treatment, borrow from each others brand equity

co-branding → complementary branding

two brands marketed together to suggest use

packaging functions

perceptual benefits → communicate brand personality, positioning, distinguish from other brands

communication benefits → instructions/directions, required information

functional benefits → protect the product, make the package/product more user-friendly