1. Gilbert A. Churchill, Jr. J. Paul Peter Chapter 9 Managing Existing Products Marketing

2. Types of Products Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products A product is a good, service, or idea that offers a wide range of tangible and intangible benefits. It includes both the core, the auxiliary, and anything else that adds value to customers Slide 9-1

3. Basic Categories of Consumer Products Slide 9-2 Table 9.1 Category Convenience Type of Purchase Decision Shopping Specialty Relatively low PricePromotion Placement or Distribution Moderate May or may not be expensive Little information sought Mass media Mass media; some personal selling Widely available More information sought Lots of information sought Mass media; more personal selling Selectively available Exclusively available Unsought Do not seek information and unaware Relatively expensive Persuasive advertising; aggressive personal selling Varies

4. Goods and Services Slide 9-3 Durable Goods Non-Durable Goods Services Fantastic Sam’s Haircut Airline Taxi Ride Restaurant Meal Kleenex Tissues Scott Towels Pair of Glasses Sealy Mattress Maytag Washer Auto Repair

5. Product Class - a broad group of products that differ somewhat but provide similar benefits. household cleaners, beer Product Category - subset of a product class containing products of a certain type. Household cleaners - liquid, powder, spray, gel Beer - light, imported, regular, nonalcoholic Product Item - a specific version of a product that can be designated as a distinct offering among an organization’s products. Product Line - a group of closely related products offered by the organization. P & G - soaps, detergents, toothpaste Product Mix - all the product offerings of an organization. Width of the product mix - number of product lines that an organization offers. Gillette - blades and razors, writing instruments, toiletries, lighters Depth of a product line - number of product items in a product line. Gillette’s blades and razors - mach 3, sensor, track II, atra, etc. Product Terminology Slide 9-4

6. The Product Life Cycle (PLC) A graphical description of a product’s history Time Dollars 0 Product Category Profits Total Market Profits Product Category Sales Total Market Sales Introductory Stage Growth Stage Maturity Stage Decline Stage Slide 9-5

7. INTRODUCTION STAGE A full-scale launch of a new product into the marketplace (trying to gain a foothold). Typically we have –High failure rates (slow sales initially) –Little to no competition –Frequent product modification –Limited distribution (try to attract intermediaries) –Price is generally high (to recover high marketing & production costs) –Main customers are Innovators –Negative profits(due to high initial costs) –Durables (one product); non-durables (variety) Strategy –Developing product awareness (informing customers of benefits - lead to trial) –Stimulate primary demand for the product category –Intensive personal selling –Pioneering Advantage - benefit of being the first one in the market Slide 9-6

8. GROWTH STAGE Begins when the product begins to break even Typically we have –sales grow at an accelerated (increasing) rate –Many competitors enter the market –Large companies may acquire small pioneering firms –Profits are healthy (because of demand) –R & D costs have been recovered; sales begin to level off; sales volume create economies of scale Strategy –Promotion stresses brand preference & brand loyalty –Promotion is targeted towards attracting the mass market –Product quality will be stressed & improved –Wider distribution will be gained and costs will be lowered Slide 9-7

9. MATURITY STAGE This is where most products spend most amount of time at. Typically we have –Sales continue to increase but at a decreasing rate –Marketplace is approaching saturation –Marginal competitors begin dropping out –Both price and profits begin to fall Strategy –Heavy promotion is necessary to both dealers and consumers (by increasing usage) –Product lines are widened; annual models with emphasis on style rather than function; products require little technological improvements –Market share can be increased by either taking it away from the competitors or manufacturing private brands for channel members Slide 9-8

10. DECLINE STAGE Signaled by a long-run drop in sales –Product looses market acceptance Change in consumers taste Wide availability of substitutable products Typically we have –Few competitors remain –Decreased profits industry wide –Price generally stabilizes Strategy –Do very little if any promotion –Minimize distribution costs –Drop the product completely Slide 9-9

11. Adopter Categories Slide 9-10 Figure 9.2 Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%)

12. Relationship of the Diffusion Process to the PLC Innovators Early adopters Early majority Late majority Laggards Product life cycle curve Diffusion curve Cumulative Percentage of Adoption 100 90 80 70 60 50 40 30 20 10 0 Introduction Growth Maturity Decline Time of Adoption of Innovations Slide 9-11

13. Brand - a name, term, design, symbol, or another feature that identifies one seller’s good or service as distinct from other sellers. (e.g. Coca Cola) Brand Name - that part of a brand that can be spoken. (e.g. the word Coke) Brand Mark - that part of a brand that cannot be spoken. (e.g. the flowing script used to write Coca Cola) Trademark - a brand that has legal status by virtue of it’s being registered with the federal government. (e.g. Coca Cola) Trade name - the legal name under which a company operates. (e.g. The Coca Cola Company) Brand extension - the practice of using an existing brand name for a new product. (e.g. Cherry Coke, Diet Coke, Caffeine Free Coke) Service mark - a brand for a service that has legal status by virtue of its being registered with the federal government. Family brand - the use of the same brand name for an entire product line. Co-Branding - placing two or more brand names on a product (e.g., ConAgra + Kellogg = Healthy Choice) Branding Terminology Slide 9-12

14. Brand Structure Private Brands Generic Brands Salsa Old El Paso Salsa Types of Brands Slide 9-13 Manufacturer’s Brands A & P Masterchoice Salsa

15. Selecting a Brand Slide 9-14 A good brand name has several characteristics. 1.It should imply product benefits. 2.It should be positive, distinctive, easy to say and easy to remember. 3.It should be consistent with the image of the product and manufacturer. 4.It should be legally protectable and permissible. 5.It should translate well, if the product is to be offered globally.

16. Elements of Brand Equity Slide 9-15 Figure 9.5 Provides value to customer by Enhancing Customer’s: Interpretation/Processing of information Confidence in the Purchase Decision Use Satisfaction Provides value to firm by Enhancing: Efficiency and effectiveness of Marketing Programs Brand Loyalty Prices/Margins Brand Extensions Trade Leverage Competitive Advantage Brand Loyalty Name Awareness Perceived Quality Brand Associations Other Proprietary Brand Assets Brand Equity Name Symbol

17. Product Mixes and Product Lines Slide 9-16 Figure 9.7 Source: Courtesy of P. Gayle Fuguitt, Marketing Research Director, Big “G” Division, General Mills Ready-to-Eat Cereals Convenience Foods Snack FoodsBaking Products Dairy Products Total Wheaties Lucky Charms Cinnamon Toast Crunch Cheerios Kix Trix Hamburger Helper Suddenly Salad Betty Crocker Cake Mixes Creamy Deluxe Frosting Dessert Mixes Pop Secret Popcorn Fruit Rollups Nature Valley Granola Bars Bisquick Gold Medal Flour Yoplait Yogurt Colombo Yogurt Width DEPTHDEPTH