1. MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE7
Product Strategy

2. Product Classification (1 of 3)
Consumer Product Classifications
Convenience Products
Shopping Products
Specialty Products
Unsought Products
(1) Products of which consumers are unaware
(2) Products that consumers do not consider
purchasing until a need or emergency
arises

3. Specialty Products

4. Product Classification (2 of 3)
Business Product Classifications
Raw Materials
Component Parts
Process Materials
MRO Supplies
Accessory Equipment
Installations
Business Services

5. Product Classification (3 of 3)
Product Lines and Mixes
Product Line
Product Mix
Benefits of offering a wide variety and deep assortment of products:
Economies of Scale
Package Uniformity
Standardization
Sales and Distribution Efficiency
Equivalent Quality Beliefs

6. Product Lines and Product Mixes at Gillette
Exhibit 7.1

7. Discussion Question
Consider the number of product choices that are available in the U.S. consumer market. In virtually every product category, consumers have many, many options to fulfill their needs. Are all of these options really necessary? Is having this many choices a good thing for consumers? Why or why not?

8. New Product Development
Six strategic product development options:
(1) New-to-the-world products (discontinuous
innovations)
(2) New product lines
(3) Product line extensions
(4) Improvements or revisions of existing
products
(5) Repositioning
(6) Cost reductions
Customer perception of differentiation is critical

9. Avis: “We Try Harder”

10. Product Strategy Throughout the Life Cycle
Development Stage
Introduction Stage
Growth Stage
Maturity Stage
Decline Stage

11. Stages of the Product Life Cycle
Exhibit 7.2

12. Marketing Strategy During the Product Life Cycle
Exhibit 7.3

13. Development Stage No sales revenue during this stage
Components of the product concept:
An understanding of desired uses and benefits
A description of the product
The potential for creating a complete product line
An analysis of the feasibility of the product concept
Customer needs should be discerned before developing marketing strategy

14. Introduction Stage Begins when development is complete
Ends when customers widely accept the product
Marketing strategy goals during this stage:
Attract customers by raising awareness and interest
Induce customers to try and buy
Engage in customer education activities
Strengthen or expand channel and supply relationships
Build on availability and visibility
Set pricing objectives

15. Growth Stage (1 of 2) Be ready for sustained sales increases
Rapid increase in profitability early in the growth stage that decreases at the end of this stage
Length depends on nature of product and competitive reactions
Two strategies:
(1) Establish a strong, defensible marketing position
(2) Achieve financial objectives

16. Growth Stage (2 of 2) Marketing strategy goals in this stage:
Leverage the product’s perceived differential advantages
Establish a clear product and brand identity
Create unique positioning
Maintain control over product quality
Maximize availability of the product
Maintain or enhance the product’s profitability to partners
Find the ideal balance between price and demand
Keep an eye focused on the competition

17. Maturity Stage (1 of 2) Few, if any, new firms will enter the market
Still an opportunity for new product features and variations
Typically the longest stage in the product life cycle

18. Maturity Stage (2 of 2) Four general goals in this stage:
(1) Generate Cash Flow
(2) Hold Market Share
(3) Steal Market Share
(4) Increase Share of Customer
Four options to achieve these goals:
(1) Develop a new product image
(2) Find and attract new users to the product
(3) Discover new applications for the product
(4) Apply new technology to the product

19. Decline Stage Two options: Factors to be considered during this stage:
(1) Attempt to postpone the decline
(2) Accept its inevitability
Harvesting
Divesting
Factors to be considered during this stage:
Market segment potential
The market position of the product
The firm’s price and cost structure
The rate of market deterioration

20. Marketing Strategy in Action
Ford has been creative in restyling the 2005 Mustang with retro styling cues to keep the model viable despite decreasing interest in “muscle cars.” What other ways can marketers combat the inevitability of the decline stage of the product life cycle?

21. Discussion Question
Describe the different product decisions that impact each phase of the product life cycle. If you were losing money with a product in the decline stage, why might you consider retaining that product? Why would a firm or brand manager become sentimental about a product and hold on to it even in the face of monetary losses?

22. Branding Strategy Key Issues In Branding Packaging and Labeling
Brand Loyalty
Brand Equity
Brand Alliances
Packaging and Labeling
Packaging
Protection, storage, convenience, etc.
Labeling
The Nutritional Labeling and Education Act of 1990
Food Choking Prevention Act

23. Advantages of Branding
Exhibit 7.4

24. The World’s Twenty-Five Most Valuable Brands
Exhibit 7.5

25. Product Strategy for Services
Characteristics of Services
Marketing Strategy for Services
Product Issues
Pricing Services
Promoting Service Benefits
Distributing Services

26. Unique Characteristics of Services and Resulting Marketing Challenges
Exhibit 7.6

27. Discussion Question
Given the unique characteristics of services, what potential ethical issues could arise in service marketing and delivery? How can a service marketer prevent ethical challenges and convey a sense of trust to customers?