Chapter 11 Managing Products and Services I Introduction As the cycle turns a Kodak Example i New Kodak Strategy Just Pictures May 4 1994 1 Kodak to sell a Sterling Winthrop Inc i pharmaceuticals and over the counter drugs b L F Products i Lysol and other home and personal care products c Clinical Diagnostics division i produces medical testing devices 2 The reaction among financial analysts was that Kodak was finally leaving businesses that it never should have entered in the first place 3 The company plans to build upon its traditional film and camera 4 Many on Wall Street sounded a sharp note of skepticism about business whether ii Kodak to finish camera making August 2 2006 1 EASTMAN Kodak is to stop making cameras iii George Eastman 1 Film Patent 1879 2 By 1886 sold 100 000 cameras 3 Until recently available in most countries with 13 Billion sales 4 Mid 1980 s until now Two major challenges a First Fuji Film b Then digital photography i Their sales of film DROPPED 5 2003 Change of direction away from film to digital technologies a To become the leader in helping people take share print and view images for memories for information or for entertainment 6 Mixed Results a 16 4 market share in 2007 b on average unit costs are higher c digital cameras outsell film 5 to 1 d penetration rate only 8 in 2000 now 50 e future is digital II PROTECT your product 107 a Polaroid vs Kodak i Instant picture cameras b As the cycle turns i February 13 2008 ii Ends instant film production due to digital iii Polaroid was awarded damages of 909 million III Product Life Cycle a Aggregate demand over an extended period of time for all brands comprising a generic product category b PLC and profit curves varies from product category to another but above is the basic shape that we often see c Note the NEGATIVE profits Sales are needed to offset product development costs d As we move through the PLC we must increase advertising selling efforts cut prices in face of competition e Deciding when to enter a market can IMPACT Profitability IV PLC Characteristics and Implications a Characteristics b Customers c Competition d Sales e Profits Introduction Innovators Little Low None Growth To the masses Increasing Rapid Growth Strong peak 108 a Marketing Implications b Overall Strategy c Costs d Product Strategy e Pricing Strategy f Distribution Strategy g Promotional Strategy a Characteristics b Customers c Competition d Sales e Profits a Marketing Implications Overall Strategy b Costs c Product Strategy d Pricing Strategy e Distribution Strategy f Promotional Strategy g WHY do brands decline Market Development High per unit Undifferentiated High Scattered Awareness Penetration Declining Improved features Lower over time Intensive Brand Preference Maturity Mass market Intense Slow Declining Defensive Stable Differentiated Lowest Intensive Brand Loyalty Decline Loyal Customers Decreasing Declining Low none Efficient or exit Low Pruned line Increasing Selective Reinforcement i Better or less expensive products monopoly vs tv video games ii Need for product disappears due to product development orange juicer iii Most competitors abandon the market BUT iv Some can develop small successful niche businesses V Length of Product Life Cycle a The length of the cycle from introduction to decline varies i Examples fashion short PLC vs Telephone landline LONG b Extended introduction stage Refrigerators 28 years c Fad beanie babies razor mood rings d Indefinite Maturity stage i Examples POGS coke pet rocks e The Product Life Cycle is getting shorter for most products due to 109 Imitators me too i ii Technology advances f The Product Life Cycle can be affected by i The product category and it s uses 1 Example Retin A wrinkles to acne ii Difference in geographic markets 1 Example KFC and McDonalds VI Product Life Cycle Management a Successful marketers need to do well at predicting the PLC for their product and b Recognize what stage they are in and adapt to it i ISSUES When to enter When is there pioneering Advantage c Entry Strategies i When is there a Pioneering Advantage An imitation strategy may be better ex No Cal soda innovator Diet Coke imitation i Differentiation competition comes in Why are you better ex video d Managing on the Rise games e Managing During Maturity Innovative packaging Sherwin Williams f Surviving the Decline i i Eagle Brand condensed milk civil war no fridge Strategy use in baking 1 During the decline stage firms may a Ensure that marketing and production programs are efficient as b Prune unprofitable sizes and models which decreases sales but possible increases profits c Run out the product to squeeze out final profits or d Revitalize it best and toughest route VII Brands a The word brand is comprehensive b It is used both to identify the seller and to differentiate the product from Words letters numbers that can be vocalized competition c Brand Name i Example Pier 1 Imports P G Victoria Secret i Examples Nike Swoosh Firefox icon Mercedes peace sign Symbol design color lettering d Brand Mark 110 Legal Protection of a brand Companies strive vigorously to e Trade Mark protect their trademarks Protecting brands f Leading Brands i Example WWF WWE because of World Wildlife Federation i Examples Zara Microsoft Google Gillette Nokia Apple Coke GE g Reason for Branding from the consumer perspective i brands make it easy to identify goods or service and move quickly through the shopping market Also it helps assure consumers of consistent quality Makes shopping easier and faster h Reason for Branding from the marketer s perspective i brands can be promoted and differentiated from other offerings Also where loyalty is found brands reduce price competition 1 Are the benefits worth the cost 2 Example P G paid 50 billion to acquire Gillette i BusinessWeek s Top Global Brands also see Best Global Brands Summit 2009 http www youtube com watch v 8f2crqqTglI Business Week s Top Global Brands 2009 1 Coca Cola 2 IBM 3 Microsoft 4 GE 5 Nokia j Reasons for NOT branding i Do not want brand ownership responsibilities 1 Promoting a Brand expensive 2 Maintaining consistent quality a Product can not easily be physically differentiated VIII Selecting a Brand Name a Good Brand name i Contributes to the product s success ex DieHard batteries b The Challenge i Finding a good brand name ii c Solutions iii Many dictionaries only have 50 000 words 1 Combine words and numbers 7up 2 Morphemes google lexus Exxon d A Good Brand name