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Explain the product life cycle concept. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 11, YOU SHOULD BE ABLE TO: Explain the product life cycle concept. LO1 Identify ways that marketing executives manage a product’s life cycle. LO2 LO3 Recognize the importance of branding and alternative branding strategies. 11-2

LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 11, YOU SHOULD BE ABLE TO: Describe the role of packaging and labeling in the marketing of a product. Recognize how the four Ps framework is expanded in the marketing of services. LO5 11-3

GATORADE: QUENCHING THE ACTIVE THIRST WITHIN YOU 11-4

FIGURE 11-1 How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-5

FIGURE 11-1A Stages of the product life cycle and its total industry sales and total industry profit 11-6

FIGURE 11-1B How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions 11-7

CHARTING THE PRODUCT LIFE CYCLE INTRODUCTION STAGE LO1 Product Life Cycle Primary Demand Selective Demand Skimming Strategy Penetration Pricing 11-8

FIGURE 11-2 Product life cycle for the stand-alone fax machine for business use: 1970-2012 11-9

CHARTING THE PRODUCT LIFE CYCLE GROWTH STAGE LO1 Rapid Sales Growth Repeat Purchasers New Features Broad Distribution More Competitors 11-10

CHARTING THE PRODUCT LIFE CYCLE MATURITY STAGE LO1 Industry/Product Sales Slow Profit Declines Product Differentiation Fewer Competitors 11-11

CHARTING THE PRODUCT LIFE CYCLE DECLINE STAGE LO1 Environmental Changes Industry/Product Sales Drop Deletion Harvesting 11-12

MARKETING MATTERS Will E-Mail Spell Extinction for Fax Machines? LO1 11-13

CHARTING THE PRODUCT LIFE CYCLE THREE ASPECTS OF THE PLC LO1 Length of the Product Life Cycle Shape of the Product Life Cycle Generalized Life Cycle High-Learning Product Fashion Product Low-Learning product Fad Product 11-14

FIGURE 11-3 Alternative product life cycle curves based on product types 11-15

CHARTING THE PRODUCT LIFE CYCLE THREE ASPECTS OF THE PLC LO1 The Product Level: Class and Form Product Class Product Form 11-16

CHARTING THE PRODUCT LIFE CYCLE THREE ASPECTS OF THE PLC LO1 The Life Cycle and Consumers Diffusion of Innovation Innovators Late Majority Early Adopters Laggards Early Majority 11-17

FIGURE 11-4 Five categories and profiles of product adopters (diffusion of innovation) 11-18

CHARTING THE PRODUCT LIFE CYCLE THREE ASPECTS OF THE PLC LO1 The Life Cycle and Consumers Barriers to Adoption Usage Value Risk Psychological 11-19

MANAGING THE PRODUCT LIFE CYCLE ROLE OF A PRODUCT MANAGER LO2 Product/Brand Manager Responsibilities Product Life Cycle New Product Development Marketing Program Implementation Data Analysis CDI BDI 11-20

USING MARKETING DASHBOARDS Knowing Your CDI and BDI LO2 Category Development Index (CDI) and Brand Development Index (BDI) 11-21

MANAGING THE PRODUCT LIFE CYCLE MODIFYING THE PRODUCT OR MARKET LO2 Product Modification Altering Characteristics Market Modification Finding New Customers Increasing a Product’s Use Creating a New Use Situation 11-22

MANAGING THE PRODUCT LIFE CYCLE REPOSITIONING THE PRODUCT LO2 Product Repositioning Reacting to a Competitor’s Position Reaching a New Market Catching a Rising Trend Changing the Value Offered Trading Up Trading Down/Downsizing 11-23

MAKING RESPONSIBLE DECISIONS Consumer Economics of Downsizing— Get Less, Pay More LO2 11-24

BRANDING AND BRAND MANAGEMENT LO3 Branding Brand Name Logotype (Logo) Trade Name Trademark ® ™ 11-25

BRANDING AND BRAND MANAGEMENT BRAND PERSONALITY AND BRAND EQUITY LO3 Brand Personality Brand Equity Provides a Competitive Advantage Consumers Willing to Pay a Higher Price 11-26

Oro and Degree Fragrances What are their brand personalities? LO3 11-27

FIGURE 11-5 The customer-based brand equity pyramid 11-28

BRANDING AND BRAND MANAGEMENT BRAND PERSONALITY AND BRAND EQUITY LO3 Creating Brand Equity Develop Positive Brand Awareness Establish a Brand’s Meaning Elicit the Proper Response Create Intense Brand Loyalty 11-29

BRANDING AND BRAND MANAGEMENT BRAND PERSONALITY AND BRAND EQUITY LO3 Valuing Brand Equity Provides a Financial Advantage Brand Licensing 11-30

BRANDING AND BRAND MANAGEMENT PICKING A GOOD BRAND NAME LO3 Should Suggest the Product Benefits Should Be Memorable and Positive Should Fit the Company or Product Image Should Have No Legal or Regulatory Restrictions Should Be Simple and Emotional 11-31

FIGURE 11-6 Alternative branding strategies 11-32

BRANDING AND BRAND MANAGEMENT BRANDING STRATEGIES LO3 Multiproduct Branding (Family or Corporate Branding) Product Line Extensions Subbranding Brand Extension 11-33

BRANDING AND BRAND MANAGEMENT BRANDING STRATEGIES LO3 Multibranding Fighting Brands Private Branding (Private Labeling or Reseller Branding) Mixed Branding 11-34

Kimberly-Clark’s Huggies What branding strategy is used? LO3 11-35

What branding strategy is used? Marriott What branding strategy is used? LO3 11-36

Black & Decker and DeWalt Tools What branding strategy does each use? LO3 11-37

PACKAGING AND LABELING PRODUCTS CREATING CUSTOMER VALUE AND COMPETITIVE ADVANTAGE LO4 Packaging Label Communication Benefits Functional Benefits Perceptual Benefits 11-38

MARKETING MATTERS Creating Customer Value Through Packaging— Pez Heads Dispense More Than Candy LO4 11-39

What are the packaging benefits for each? “?” and Heinz Ketchup What are the packaging benefits for each? LO4 11-40

Lay’s STAX, Pringles and Celestial Seasonings What are the packaging benefits for each? LO4 11-41

Connecting with Customers PACKAGING AND LABELING PRODUCTS PACKAGING AND LABELING CHALLENGES AND RESPONSES LO4 Connecting with Customers Environmental Concerns Health, Safety, and Security Issues Shelf Life Cost Reduction 11-42

MANAGING THE MARKETING OF SERVICES THE EIGHT Ps OF SERVICES LO5 Eight Ps of Services Marketing Product (Service) Branding Productivity Capacity Management 11-43

MANAGING THE MARKETING OF SERVICES THE EIGHT Ps OF SERVICES LO5 Price Off-Peak Pricing Place (Distribution) Promotion Publicity Public Service Announcements (PSAs) 11-44

MANAGING THE MARKETING OF SERVICES THE EIGHT Ps OF SERVICES LO5 People Customer Experience Management (CEM) Physical Environment Process 11-45

PHILADELPHIA PHILLIES, INC.: SPORTS MARKETING 101 VIDEO CASE 11 11-46

PHILADELPHIA PHILLIES VIDEO CASE 11 PHILADELPHIA PHILLIES 11-47

PHILADELPHIA PHILLIES VIDEO CASE 11 PHILADELPHIA PHILLIES 1. (a) What is the “product” that the Phillies market? (b) What “products” are the Phillies careful not to market? 11-48

PHILADELPHIA PHILLIES VIDEO CASE 11 PHILADELPHIA PHILLIES 2. How does the “quality” dimension in marketing the Philadelphia Phillies as an entertainment service differ from that in marketing a consumer product such as a breakfast cereal? 11-49

PHILADELPHIA PHILLIES VIDEO CASE 11 PHILADELPHIA PHILLIES 3. In terms of social network marketing strategy (a) what are the likely characteristics of the Phillies fans and (b) what should the Phillies’ Facebook fan page contain? 11-50

PHILADELPHIA PHILLIES VIDEO CASE 11 PHILADELPHIA PHILLIES 4. Considering all five elements of the promotional mix (advertising, personal selling, public relations, sales promotion, and direct marketing), what specific promotional activities should the Phillies use? Which should be used off-season? During the regular season? 11-51

PHILADELPHIA PHILLIES VIDEO CASE 11 PHILADELPHIA PHILLIES 5. What kind of special promotion gift days (with premiums) and event days (no premiums) can the Phillies use to increase attendance by targeting these fan segments: (a) 14 and under, (b) 15 and over, (c) other special fan segments, and (d) all fans? 11-52

Product Life Cycle A product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. 11-53

Branding Branding is a marketing decision by an organization to use a name, phrase, design, or symbols, or combination of these to identify its products and distinguish them from those of competitors. 11-54

Brand Name A brand name is any word, device (design, shape, sound, or color), or combination of these used to distinguish a seller’s goods or services. 11-55

Brand Personality Brand personality is a set of human characteristics associated with a brand name. 11-56

Brand Equity Brand equity is the added value a brand name gives to a product beyond the functional benefits provided. 11-57

Multiproduct Branding Multiproduct branding is a branding strategy in which a company uses one name for all its products in a product class. 11-58

Multibranding Multibranding is a branding strategy that involves giving each product a distinct name when each brand is intended for a different market segment. 11-59

Eight Ps of Services Marketing The eight Ps of services marketing expands the four Ps framework to include productivity, people, physical environment, and process. 11-60

Capacity Management Capacity management integrates the service component of the marketing mix with efforts to influence consumer demand. 11-61

Off-Peak Pricing Off-peak pricing involves charging different prices during different times of the day or days of the week to reflect variations in demand for the service. 11-62

Customer Experience Management (CEM) Customer experience management (CEM) is the process of managing the entire customer experience within the firm. 11-63