L2 Basics of Product Strategy产品策略.doc

Product Strategy Learning Goals1) Explain the marketing conception of a product and list the components of a product strategy.2)Describe the classification system for consumer and business goods and services.3)Distinguish between a product mix and a product line4)Identify and briefly describe each of the four stages of the product life cycle.5)List the stages of the new-product development process6)Explain how firms identify their productsProduct strategyThe creation of new products is the lifeblood of an organization. Since products do not remain economically viable forever, new ones must be developed to ensure the survival of an organization.classifications of goods and servicesproduct lines and product mixproduct life cycleproduct identification through brand names and distinctive packaging Product strategyWhat is a product?a bundle of physical, service, and symbolic attributes/designed to satisfy consumer wantsWhat is product strategy?involves considerably more than just producing a good or service ; focuses on benefitsIt includes decisions about:package designbrand name, trademarkswarrantiesproduct imagenew product developmentcustomer servicee.g. Your favorite soft drinkDo you like it for its taste alone, or other attributes such as clever ads, attractive packaging, ease of purchase from vending machines and other convenient locations, and overall image? Other attributes than taste may influence your choice more than you realize. Classifications of goods and servicesDepending on the purchasers of the particular item: B2C, B2B classifying consumer goods and services purchased for consumers own use and enjoyment and not for resale Based on consumer buying habits of the majority of purchasers Convenience products: items that the consumer seeks to purchase frequently , immediately, and with little effort, usually items stocked in 7-eleven, vending machines, and local newsstands, e.g. Newspapers, chewing gum, bread etc. Shopping products: those typically purchased only after the buyer has compared competing products in competing stores. E.g. Furniture, fridge, TV set, etc. Specialty products: those that a purchaser is willing to make a special effort to obtain already familiar with the item and considers it to have no reasonable substitute e.g.diamond, jewlery, luxury vehicles, etc. classifying business goods goods and services used in operating an organization, e.g. Cell phones, pcs; used to produce other products for resale,including machinery, tools, raw materials, components, and buildings Based on how they are used and by their basic characteristics: Capital items: goods that are long-lived and expensive Expense items: less costly proudcts that are consumed within a year Five basic categories of B2B products: Installations: are major captial items expensive; long-term buyer and seller negotiation lasting more than a year; purchase approval involves different people such as production specialists, representatives from purchasing dept., members of top managementE.g. New factories, heavy equipment and machinery, and custom-made equipment Accessory equipments: also include capital itemsusually less expensive and shorter lived; involve fewer decision makerse.g. Hand tools, fax machines. Compenent parts and materials: finished business goods that become part of a final product. e.g. Disk drivers sold to computer manufacturers,batteries purchased by automakers Raw materials: farm and natural products used in producing other final products.e.g. Milk, iron ore, leather, soybeans etc. Supplies: expense items used in a firms daily operations that do not become part of the final product. MRO: maintainence, repair, operatinge.g. Paper clips, light bulbs, copy paperclassifying service B2B,B2C; in some cases, service can accommodate both consumer and business markets Depending on buying patterns of consumers Convenience Shopping SpecialtyDistinguished from goods in: Intangible Perishable cos firms cannot stock them in inventory Difficult to standardize must meet individual customers needs The service provider is the service buyers perspective Marketing strategy implications Cosumer product classification system: useful tool in marketing strategy in that marketers have a better idea of its promotion, pricing, and distribution needs. Each group of business products requires a differenct marketing strategyMost installations and many component parts: marked directly from manufacturer to business buyer, promotional emphasis being on personal selling rather than advertising Supplies and accessory equipment: rely more on advertising, since sold through an intermediary such as a wholesalerInstallations and components, esp. When custom-,made, involve customers in new-product development.Firms marketing supplies and accessory equipment emphasize competitive pricing strategies, while other product marketers tend to concentrate on product quality an d customer service Product line and product mixProduct line: a group of related products that are physically similar or are intended for the same market.Few firms operate with a single proudct. With initial successful entry, firms tend to increase profit and growth chances by adding new items to offer their customers, or even branching out into services.e.g. Dell, Inc., originally PC sales, adding printers, personal digital assistants, marketing technical services to biz customers.More examples?Product mix: companys assortment of product lines and individual goods and services that a firm offers to consumers and business users.Marketers must assess their product mix continually: to ensure company growth; to satisfy changing consumer goods and wants; to adjust to competitors offerings. To remain competitive, look for gaps in product lines and fill them with new products or modified versions Product life cycle stages of the product life cycleintroduction stageWhat should marketers do at the introduction stage?The firm tries to promote demand for its new offering, inform the market about it, give free samples to entice consumers to make a trial purchase, and explain its features, uses and benefitse.g. Mcdonalds has used its stores around the country to test the introduction of new menu items.NB:1) New development costs and extensive introductory promotional campaigns are expensive and commonly lead to losses in the introductory stage. 2) Losses also occur due to the relatively low sales and high costs of promotions, establishing distribution channels, and training the sales force about the new products advantages. Growth stage 1) Sales climb quickly as new customers join early users who are now repurchasing the item. 2) Word-of-mouth referrals and continued advertising and other special promotions by the firm induce others to make trial purchases.3) The firm begins to earn profits on the new product.4) Competitors are encouraged to enter the field with similar offerings, and price competition appears. e.g. digital cameras Maturity stage1) Industry sales at first increase, but eventually, they reach a saturation level at which further expansion is difficult.2) Competition intensifies both on price and new features, increasing the availability of the product.3) Firms concentrate on capturing competitiors customers, often dropping prices to further the appeal. e.g. cell phones, PCs4) Sales volume fades late in the maturity stage, and some of the weaker competitors leave the market.5) Firms promote mature products aggressively to protect their market share and distinguish their products from those of competitors. Decline stage1) Sales continue to fall.2) Profits decline and may become losses as a result of further price-cutting.3) Competitors gradually exit, making some profits for remaining firms in the shrinking market.4) Usually caused by a product innovation or a shift in consumer preferences or hastened by new technology. e.g. DVDs vs Videocassettsmarketing strategy implications of the product life cycle The marketers objective is to extend the product life cycle as long as the item is profitableCompetitive moves may involve developing new products, lowering prices, increasing distribution coverage, creating new promotional campaigns, or any combination of these strategies. to increase customers frequency of use. e.g. Wal-Mart added grocery sections in giant discount-store locations to add new userse.g. Zippo marketed lighter with declining cigarette sales to find new rules for productse.g. Arm & Hammer, baking soda for toothpase, refrigerator freshener and flame extinguisher to change package sizes, labels and product designse.g. White Castle, a new brief-case stages in new-product development New-product development is expensive, time-consuming, and risky, since only about one-third of new products become success stories, which also eventually reach the end of the decline stage and must be replaced with new-product offerings.Reasons for failures: not properly developed and tested, poorly packaged, lack of adequate promotional support or distribution, not satifying customer need or want; generating ideas for new offerings customer suggestions, suppliers, employees, research scientists, marketing research, inventors outside the firm, competive products Screening eliminates ideas that do not agree with overall company objectives or cannot be met by given company resources Concept development and business analysis assessing the new products potential sales, profits, growth rate and competitive strength, whether to fit with companys product, distribution, and promotional resourcesConcept testing: marketing research designed to solicit initial consumer reaction to new-product ideas before products are developed. e.g. potential consumers might be asked about proposed brand names and other methods of product indentification. Product development: subject to series of tests and revision Test marketing: the item is sold in a limited area while the company examines both consumer responses to the new offering and the marketing effort used to support it. Commercialization: the product is made generally available in the marketplace, or a product launchSuccess is not guaranteed until the new-product offering achieves customer acceptance! Product identificationBoth tangible goods and intangible services are identified by brands, brands names and trademarks.Brand: name: term, sign, symbol, design, or some combination that identifies the products of a firm and distinguishes them from competitive offerings.Selecting an effective brand name Good brands are easy to pronounce, recognize, and remember. e.g. Crest, VisaGlobal firms face a real problem in selecting brand names, since an excellent brand name in one country may prove disastrous in another. e.g. Coca-cola, E-Z washing machines Should convey the right image to the buyer. create a name linking the product with its positioning strategy Must be legally protectable.generic words are not Brand categories manufacturers (or national) brand. e.g. Tide, Swatch, Reebok private (or store) brand, that carries a wholesalers or retailers label. generic products (retailers), which have plain packaging and minimal labeling, enjoys little if any advertising, and meet only minimum quality standards. family brand, a single brand name used for several related products. e.g. Johnson & Johnson, Hewlett-Packard individual brand, giving each product within a line a different name. e.g. Tide,Cheer and Dash under Procter & Gamble. Brand loyalty and brand equity Brand loyalty: measured in three stages as below.Brand recognition, brand acceptance strong enough so that the consumer is aware of the brand, but not strong enough to cause a preference over other brands.B