Product and Service StrategiesLearning ObjectivesStarbucksProduct MixProduct Mix CharacteristicsProduct Mix CharacteristicsSlide 7Product Life CycleDiffusion ProcessPLC Stages and CharacteristicsPLC Length and ShapePLC Marketing StrategiesLimitations of the PLCIncreasing the Product LineIncreasing the Product Line (con’t)Slide 16Product-Mix StrategiesBranding StrategiesEthical IssuesSummaryC H A P T E RC H A P T E R© 2007 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinProduct andService StrategiesProduct andService Strategies1010-2© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdLearning ObjectivesLearning ObjectivesLearning ObjectivesLearning ObjectivesAfter studying this chapter, you should be able to:Understand the different characteristics of a product mix.Recognize the stages and characteristics of the product life cycle.Identify appropriate marketing strategies for products in different life cycle stages.Describe the limitations of the product life cycle concept.Discuss different product-mix and product-line strategies.10-3© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdStarbucksStarbucksStarbucksStarbucksThe first Starbucks coffee shop was at Pike Place Market in Seattle in 1971. The concept was successful, and 165 Starbucks locations were open in 1992 when the company went public. The chain now has more than 9,000 retail locations in the United States and internationally.10-4© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdProduct MixProduct MixProduct MixProduct MixThus a product mix is a combination of product lines, which are combinations of individual products.Product MixProduct MixProduct LineProduct LineA product mix is the total assortment of products and services marketed by a firm.A product line is a group of individual products that are closely related in some way.Individual Individual ProductProductAn individual product is any brand or variant of a brand in a product line.10-5© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdProduct Mix Characteristics Product Mix Characteristics Product Mix Characteristics Product Mix Characteristics Any product mix can be defined in terms of width, length, and consistency.Product MixProduct MixLengthLengthProduct MixProduct MixConsistencyConsistencyProduct mix length refers to the number of products in a product line.Product mix consistency refers to the relatedness of the different product lines in a product mix.Product MixProduct MixWidthWidthThe number of product lines in the product mix. The more product lines, the wider the product mix.10-6© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdProduct Mix CharacteristicsProduct Mix CharacteristicsProduct Mix CharacteristicsProduct Mix CharacteristicsExhibit 10-110-7© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdProduct Mix CharacteristicsProduct Mix CharacteristicsProduct Mix CharacteristicsProduct Mix CharacteristicsFirms marketing multiple products and services must devise strategies for individual products, specific product lines, and the overall product mix. Key strategies at each level are presented below:Exhibit 10-210-8© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdProduct Life CycleProduct Life CycleProduct Life CycleProduct Life CycleThe product life cycle (PLC), like the biological life cycle, describes the advancement of products through identifiable stages of their existence as shown below:Exhibit 10-310-9© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdDiffusion ProcessDiffusion ProcessDiffusion ProcessDiffusion ProcessWhen a new product form is first introduced to the market, consumers go through a process in determining whether to adopt it. Some consumers adopt a new product when it is first introduced; others wait until the innovation has been on the market for some time. These different adoption rates mean that it typically takes time for an innovative new product form to diffuse throughout a market. The diffusion process describes the adoption of an innovation over time.Exhibit 10-410-10© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdPLC Stages and CharacteristicsPLC Stages and CharacteristicsPLC Stages and CharacteristicsPLC Stages and CharacteristicsThe interaction of the diffusion process and firm competition means that marketers face a different situation at each stage of the product life cycle.Exhibit 10-510-11© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdPLC Length and ShapePLC Length and ShapePLC Length and ShapePLC Length and ShapeLife cycle curves for styles, fashions, and fads differ from traditional product life cycle curves:Exhibit 10-610-12© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdPLC Marketing StrategiesPLC Marketing StrategiesPLC Marketing StrategiesPLC Marketing StrategiesShortening lengths of product life cycles and their different shapes increase the complexity of marketing decisions. Firms respond to these trends by developing marketing strategies to take advantage of each life cycle stage.10-13© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdLimitations of the PLCLimitations of the PLCLimitations of the PLCLimitations of the PLC1. The life cycle concept applies best to product forms rather than to classes of products or specific brands.2. The life cycle concept may lead marketers to think that a product has a predetermined life, which may produce problems in interpreting sales and profits. 3. It is only a descriptive way of looking at the behavior of a product and the life cycle can not predict the behavior of a product.10-14© 2007 The McGraw-Hill Companies, Inc. All rights reserved. Bearden Marketing 5th EdUpward Upward StretchStretchAn upward-stretch strategy is just the opposite: Products are added at the higher end of a product line. This has been a favorite approach for Japanese companies in the U.S. market.Downward Downward StretchStretchA downward-stretch strategy is an attempt to add products to the lower end of the product line. Luxury car makers are introducing lower-priced cars to get new