Lecture 6

Product Strategy
 LEARNING OBJECTIVES:

 Recognize the various terms that pertain to products and services

 Explain the product life-cycle concept
 Explain the significance of “newness” in new products and services
 Explain the Seven steps of the new-product development process
 Describe the four unique elements of services
 Recognize the importance of branding and alternative branding
strategies.
What is a product?
A product is a good, service, or idea consisting of a
bundle of tangible and intangible attributes that
satisfies consumers’ needs and is received in
exchange for money or something else of value.

idea
Durable good

Non-durable good
How a consumer product is classified affects which products consumers buy and the marketing strategies
used.
Product Decisions
Marketers make product decisions at THREE Levels: Sony Product item

 Product item
 A specific product that has a unique brand, size, or price

 Product line
 A group of product or service items that are closely related
because they satisfy a class of needs, are used together, are sold Sony Mobile Product Line

to the same customer group, are distributed through the same

outlets, or fall within a given price range

 Product mix
 All of the product lines offered by an organization
Sony Product Mix

https://www.sony.com.hk/en
Alternative PLC curves based on product types
Managing the Product Life Cycle
Role of Product/Brand manager:
Manages the marketing efforts for a close-knit family of products
or brands
 Manage existing products through its life cycle
 New product development
 Implement marketing program
 Extensive data analysis

THREE strategies to manage PLC

1) product modification
2) market modification
3) product repositioning
Managing the Product Life Cycle
1) Product Modification
Altering one or more of a product’s characteristics (new features,
packages or scents etc.) to increase the product’s value to
customers and increase sales
Managing the Product Life Cycle
2) Market modification
Finding new customers
Increasing a product’s use
Creating a new use situation for an existing product
Managing the Product Life Cycle
 3) Product repositioning
Changes the place a product (or product line) occupies in a consumer’s
mind relative to competitive products. A firm can reposition a product
by changing one or more of the 4P.
What is a “NEW” product?
What is a new product?
 If a product is functionally different from existing products, it
can be defined as new.

Minor Changes Revolutionary or even create a whole new industry

What is a new product?
 We can define new products in terms of their effects on
consumption – classifies new products according to the degree of
learning required by the consumer
Should marketers always win for all new product
introduction?
Marketing Reasons for New-Product Failures
1. Insufficient point of difference
2. Incomplete market and product protocol before product
development
3. Not satisfying customer needs on critical factors
4. Bad timing
5. No economical access to buyers
6. Poor execution of the marketing mix
7. Too little market attractiveness
8. Poor product quality
An ideal new product plan
 A new product needs a precise protocol that identifies
A well-defined target market
Specific customers’ needs, wants, and preferences
What the product will be and do to satisfy consumers
7 stages of new-product development process
 STAGE 1: NEW-PRODUCT STRATEGY DEVELOPMENT

 Define the role for a new product in terms of the firm’s overall
objectives
 SWOT Analysis/Environmental Scanning
 Defines the vital protocol for each new-product idea
 Identifies the strategic role
 Firms must be on the lookout for innovative products or technology
that might disrupt its plans
STAGE 2: IDEA GENERATION

Develop a pool of concepts to serve as candidates for

new products

Sources of ideas
Suggestions from employees/friends
Customer and supplier suggestions
Competitive Products
Smaller firms, universities, and inventors
Research and development (R&D) labs (e.g. secret lab)
STAGE 3: SCREENING AND EVALUATION

 Evaluate new-product ideas and eliminate those that

warrant no further effort

Internal approach – employees evaluate the

technical feasibility of a proposed new-product idea

External approach (concept tests) – external

evaluations with consumers that consist of
preliminary testing of a new-product idea
 Concept tests reply on written descriptions of the product
but maybe augmented with sketches, mockups, or
promotional literatures
STAGE 4: BUSINESS ANALYSIS

Financial projection
Assess the total “business fit” of the proposed new
product with the company’s mission and objectives
Can the product be economically produced?
What marketing strategy is needed to have the new
product succeed?
Assessment of the marketing and product synergies
Will the new product require a new equipment to produce
or can we use what we already have?
Will it cannibalize our current market?
STAGE 5: DEVELOPMENT

Turn the idea on paper into a prototype (a full-scale

operating model of the product)…A demonstrable,
producible product that involves
Manufacturing the product efficiently
Performing lab and consumer tests to ensure the
product meets the standards established for it in
the protocol

Google's Driverless car

 STAGE 6: MARKET TESTING

 Expose actual products to prospective consumers under realistic

purchase conditions to see if they will buy

Clinique plans global rollout of successful China store concept

 STAGE 7: COMMERCIALIZATION

Position and launch a new

product in full-scale production
and sales
The most expensive stage
E.g., Slotting fee, failure fee
7 stages of new-product development process
What is the difference between Product
and Service?
The service continuum shows how offerings can vary in
their balance of products and services
 The Uniqueness of Services
1. Service Intangibility
Services cannot be seen, tasted, felt, heard, or smelled before they are brought.

 Marketers try to ____________________________________-

 The Uniqueness of Services
2. Service inseparability
Consumer cannot distinguish the service provider from the service itself

 Marketer must provide ____________________________________

The Uniqueness of Services
3. Service inconsistency
The quality of services may vary greatly, depending on who provides them and when, where, and
how.

Pure Good Pure Service

 Organizations attempt to reduce inconsistency through

____________________________________
 The Uniqueness of Services
 4. Inventory (i.e. Service Perishability)
 Service cannot be stored for later sale or use.
 Idle production capacity occurs when the service provider is available but there is no
demand for the service

 Organizations attempt to ____________________________________-

Branding and brand management
 Branding: A basic decision in marketing products in which an
organization uses a name, phrase, design, symbols, or
combination of these to identify its products and distinguish
them from those of competitors
Branding Strategy
Branding Strategies

 Multiproduct Branding Strategy

 A company uses one name for all its product in a product class

1) Product line extension (enter new market segments)

2) Brand extension (enter new product class)

3) Subbranding (combines a corporate or family brand with a new
brand, to distinguish a part of its product line from others)
 Brand Dilution – when consumers no longer associate a brand with a
specific product or service or start thinking less favourably about the brand
Branding Strategies
Multibranding Strategy
Giving each product a distinct name

P&G Product the 20th Anniversary

Branding Strategies
 Private Branding Strategy
Manufactures products and sells them under the brand name of a
wholesaler or retailer
Branding Strategies
 Mixed Branding Strategy
A firm markets products under its own name(s) and that of the
reseller because the segment attracted to the reseller is different
from its own market.
Building your marketing plan
For the product offering in your marketing plan
Identify (1) its stage in the product life cycle and (2) key marketing
mix actions that might be appropriate
Develop (1) branding and (2) packaging strategies, if appropriate
for your offering
Takeaway – Product, Service and Branding
The end!