Chapter 10 - Product/brand Management - BUAD301

Chapter 10 for Exam 2 of BUAD301

Product life cycle

Course that a product’s sales and profits take over its lifetime. The product life cycle have five distinct stages (product development, introduction, growth, maturity, decline)

Introduction (product life style)

Low sales

High cost per customer

Negative profits

Few competitors

Growth (product life cycle)

Rapidly rising sales

Average cost per customer

Rising profits

Growing number of competitors

Maturity (product life cycle)

Peak sales, sales increase at a decreasing rate

Low cost per consumer (most consumers are repeat buyers or have tried the product once and abandoned it)

High profits

Stable number of competitors

Decline (product life cycle)

Declining sales

Low cost per customer

Declining profits

Declining number of competitors

Alternative product life cycles

Depending on the type of product, the life cycle can be a little bit different

High learning product (Alternative product life cycles)

Need learning to use the product, introduction stage takes much longer (Microsoft office)

Low-learning product (alternative product life cycles)

If the product does not require learning the introduction stage is much shorter (drink)

Fad product (alternative product life cycles)

a product that has a very short life cycle, comes in and out of relevancy very fast (ex. kids toys, yoyo, slime)

Fashion product (alternative product life cycles)

Fashion trends come in and out all the time, meaning that the product life cycle goes up and down all the time (ex. flare pants)

Multiproduct branding (corporate branding)

Use one name for all of its products in a product class

Line extension (multi-product branding)

Offering additional items in the same product line under the same successful brand name (new colors, flavors etc)

(Coke → Diet Coke → Diet Coke with lime)

Subbranding (Line extension)

Combine a corporate brand with a new brand

(Porsche → Porsche carrera (high end), Porsche Boxster (low end))

Brand extension (Multiproduct branding)

Using successful existing brand name to launch a new product line

(Virgin (radio shop) → Virgin casino, Virgin radio)

Line extension advantages

Takes advantage of the value of the original brand, saves in advertising

Line extension disadvantages

Cannibalization - A situation where a company’s new product or service negatively impacts the sales of its existing products or services

Brand extension advantages

Instant recognition and earlier acceptance of the extended brand

Substantial savings in marketing costs

Brand extension disadvantages

Brand Dilution: A mismatch between a original brand and a new product can damage the original brand.

Multi-Branding (individual branding)

Use distinct name for each product

(P&G - Oral B and Pringles)

(Toyota - Lexus)

Multi-branding advantages

Low brand dilution risk

Differentiation of each brand (target different markets, positioning different images etc)

Multi branding disadvantages

High promotion costs

Private branding

Use the brand name of a wholesaler or retailer

(Target smartly, Heyday, Wild fable)

Mixed branding

A compromise between a manufacturer and private branding.

Sometimes putting your brand name on product, but when it’s sold in different stores they use that stores brand name.

(Apple and Mastercards Apple Pay OR A pet food is sold under its actual brand name online but in Costco it is sold under Costcos brand)

Brand Equity

Added value a given brand name gives to a product beyond the functional benefits provided

(emotionally attached to brand, having a tattoo of the apple logo)

PLC and Consumers

Consumers differ in their tendencies to adopt a new product, and this difference can be used as a market segment factor

PLC marketing strategy - Introduction

Gain awareness of your product by informing and educating the public about your product

PLC Marketing strategy: Growth

Maximize market share by differentiation (make yourself seem different from other products on the market)

Product proliferation occurs

PLC marketing strategy - Maturity

Maximize profit while defending market shares, maintain brand loyalty

Diversify brand and Models

PLC marketing strategy - Decline

Reduce expenditures and milk the brand

Limitations of PLC

Managers often have trouble identifying what stage of PLC they (brands) are in

By pushing products (brands) through the PLC managers may miss an opportunity to rescue products (brands) foundering in the maturity phase.