Managing the Marketing Mix: Product

The Product Life Cycle

Marketing Mix Strategies Through the Product Life Cycle

The product life cycle: Introduction

•       Introduction — the initial stage of a product’s life cycle = its first appearance in the marketplace.

Ø  Sales start at zero and profits are negative because of high initial expenses.

Ø  Aim is to make potential buyers aware of the features, uses and advantages.

Ø  Most new products start off slowly and immediate profits are rare.

Developing new products

•       Necessary to enhance the product mix, to meet changing buyer demands and needs.

•       Competitive actions often demand this response.

•       Risky and often expensive (in time and money).

•       ___% never reach the market, and < ___% of those that survive last for 5 years.

•       New Consumer (B2C) products fail more than business (B2B) products.

•       Innovative companies have the right “risk-taking” culture and use the NPD process.

The product life cycle: Growth

•       Growth — the second stage of a product’s life cycle where sales rise rapidly and profits reach a peak and then start to decline.

Ø  More competitors enter the market

Ø  Product pricing is aggressive

Ø  Brand loyalty has to be encouraged

Ø  Gaps in market coverage are filled

Ø  Promotion expenditures may be lower

Ø  Production efficiencies can lower costs

The product life cycle: Maturity

•       Maturity — the third stage of a product’s life cycle where the sales curve peaks and starts to decline and profits continue to fall.

Ø  Intense competition

Ø  Competitors emphasize improvements and differences in their product versions

Ø  Weaker competitors lose interest and exit the market

Ø  Advertising and dealer-oriented promotions predominate

Ø  Distribution sometimes expands to the global market

Marketing Mature Products

•       Marketers need to keep giving consumers new reasons to buy products in the mature stage

•       This may be accomplished by finding new uses for an existing product, moving into new markets, changing the product’s attributes or by introducing variations to keep consumer interest

The product life cycle: Decline

•       Decline — the fourth stage of a product’s life cycle where sales fall rapidly.

Ø  Delete items from the product line

Ø  Cutting promotion expenditures

Ø  Eliminating marginal distributors and channels

Ø  Advertising of special offers may slow the inevitable decline

Ø  Planning to phase out the product, as sales staff move their efforts to more attractive products

Product Decisions

Product Attribute Decisions

• Product Quality

 How do consumers think the product will perform?

Creating Product Identity:
Branding Decisions

•       Brand:
A name, term, symbol, or any other unique element that identifies one firm’s product and sets it apart from the competition

The value of branding

•       Value of branding for consumers:

Ø  Helps speed consumer purchases by identifying specific preferred products

Ø  Provides a form of self-expression and status

Ø  Indicates product quality, to reduce the risk of purchase

•       Value of branding for marketers:

Ø  Identifies and differentiates a firm’s products from competing products

Ø  Helps in the introduction of new products

Ø  Facilitates the promotion of all same-brand products

Ø  Fosters the development of brand loyalty

Selecting a brand name

•       A brand name should:

Ø  be easy to say, spell and recall.

Ø  indicate the product’s major benefits.

Ø  suggest the product’s major uses and special characteristics.

Ø  be distinctive, setting it apart from competing brands.

Ø  be compatible with all the products in the product line.

Ø  be designed for use and recognition in all types of media.

Ø  Not be offensive or have negative references.

Trademarks

•       Trademark: The legal term for a brand name, brand mark, or trade character

–      Trademarks legally registered by a government obtain protection for exclusive use in that country 

Packaging

•       Packaging involves the development of a container and a graphic design for a product.

•       Packaging Functions:

Ø  Protect the product from damage

Ø  Maintain its functional form

Ø  Offer convenience to consumers

Ø  Prevent waste and make storage easier

Ø  Promote the product by communicating
its features, uses, benefits and image

Functions of Packaging

Major packaging considerations

•       Cost of Packaging

Ø  Limited consumer willingness to pay for better packaging.

•       Family Packaging

Ø  Similar packaging for all of a firm’s products or packaging that has one common design element.

•       Promotional Role (Informing the Consumer)

Ø  Verbal and nonverbal symbols

Ø  Size, shape, texture, color and graphics

•       Reseller Needs

Ø  Transportation, storage and handling

Packaging and marketing strategy

•       Altering the Package

Ø  To update style and to meet increased competition

Ø  To highlight new features

Ø  To take advantage of new packaging materials

Ø  To make the product safer or easier to use

Ø  To reduce packaging costs

•       Secondary-Use Packaging

Ø  Reusable packaging adds customer value

•       Category-Consistent Packaging

Ø  Packaging reflects customer expectations for the expected appearance of products in a category

•       Innovative Packaging

Ø  Unique features or ways of packaging that make a product more distinct from its competitors.

•       Multiple Packaging

Ø  Bundling multiple units of a product together to encourage usage and to increase demand.

•       Handling-Improved Packaging

Packaging that has been changed to facilitate product handling in the distribution channel

Labelling

•       Providing identifying, promotional, legal or other information on package labels.

•       Purposes of labels:

Ø  Help identify the product

v  Display the brand name and any unique graphics

Ø  Support promotional efforts for the product

v  Coupons, discounts, product features

Ø  Provide legally required labeling information

v  Australia New Zealand Food Standards Code

Ø  Provide information on product origin

v  ‘Made in Australia’