1. Characteristics of the stages in the product life cyclea. Introductioni. High failure ratesii. Little competitioniii. Frequent product modificationiv. Limited distributionv. High advertising and production costsvi. Negative profitsvii. Promotion focuses on awareness and information viii. Intensive personal selling to channels b. Growthi. Increasing rate of salesii. Entrance of competitorsiii. Market consolidationiv. Initial healthy profitsv. Aggressive advertising of the differences between brandsvi. Wider distributionvii. Prices normally fallc. Maturityi. Sales increase at a decreasing rateii. Saturated marketsiii. Annual models appeariv. Lengthened product linesv. Service and repair assume important rolesvi. Heavy promotions and consumersvii. Marginal competitors drop outviii. Prices and profits fallix. Niche marketers emerge d. Declinei. Long-run drop in salesii. Large inventories of unsold itemsiii. Elimination of all nonessential marketing expenses 2. Differences and similarities between product line extension and product modificationa. Line extensions – product developed is closely related to one or more products in existing product line but specifically designed to meet somewhat different need. i. Brand extension (Starbucks liquor) ii. Up-market extension (Hersey’s extra rich dark chocolate)iii. Down-market extension (Mercedes B-class car) b. Product modifications – product modification means changing one or more of the product’s characteristics; different from line extensions because the original product is removed from product line. i. Quality modification (lower price)ii. Functional modification (Campbell’s on the go soup)3. The stages of the product adaptation process and the types of adoptersSTAGES OF PRODUCTION ADAPTATIONa. Awareness- Buyer becomes aware of the product.b. Interest- Buyer seeks information and is receptive to learning about the product.c. Evaluation- Buyer considers product’s benefits and decides whether to try itTYPES OF ADOPTERSa. Innovators- first to adopt new productb. Early adaptors- Choose new products carefully, help spread word-of-mouthc. Early majority- adopt just prior to average persond. Late majority- skeptics who adopt new products when they feel it is necessarye. Laggards- last to adopt a new product 4. The steps in the NPD processa. Idea generation- seeking product ideas to achieve organizational objectivesb. Screening- selecting the ideas with the greatest potential for further reviewc. Concept testing- seeking a sample of potential buyers’ responses to a product idead. Business analysis- evaluating the potential impact of a product idea on the firm’s sales, costs, and profitse. Product development- determining if producing a product is technically feasible and cost effective f. Test marketing- a limited introduction of a product in geographic areas chosen to represent the intended market g. Commercialization- refining and finalizing plans and budgets for full-scale manufacturing and marketing of a product 5. Why is a city a good test marketThe criteria for choosing test market cities depend on the product’s attributes, the target market’s characteristics, and the firm’s objectives and resources. (#1 test market city- Albany, NY)6. Product depth and breadth and how product lines extensions and product deletions impact themProduct Line- A group of closely related product items viewed as a unit because of marketing, technical, or end-use considerations (different types of Excedrin) Product depth- The average number of different products offered in each product line Number (number of items in line- Coke, Diet Coke, Cherry Coke, etc.)Product breadth (width)- The number of product lines a company offers (Coke, Sprite, Dr.Pepper, Powerade, etc.) Product Deletion – eliminating a product; sometimes necessary1. Weak product is a drain2. Difficult to do3. Three methods:a. Phase out – let product declineb. Run out – increase marketing efforts in core marketsc. Immediate drop – when product generates big losses7. Private labels Private distributor brand- a brand initiated and owned by a resellera. The manufacturers are not identified on the products b. Ex: Wal-Mart’s “Great Value” brand c. Stores advertise the manufacturer brands, but sell private brands as well d. Consumers will buy private over manufacturer mainly because of the lower price (which is the major advantage of private brands)8. The legal components of brandsa. A market should create a brand name so that it can easily be protected through registration b. (Most to least protectable) fanciful, arbitrary, suggestive, descriptive, & generic. (Generic brands are not protectable) c. Registration can protect a trademarks for up to 10 years, and trademarks can be renewed indefinitely d. A company must ensure that a brand is not likely to be considered an infringement (anything starting with “Mc” is not allowed, because it gives the impression McDonalds produced it)e. Registered trademark symbol “®” f. Trademark Law Revision Act in 1988, was enacted by Congress to strengthen trademark protection9. Brand equity and the componentsBrand Equity- The marketing and financial value associated with a brand’s strength in a marketa. Brand-name awareness- recognition of a brand leads to brand familiarity, which in turn results in a level of comfort with the brand. A familiar brand is more likely to be selected than an unfamiliar brand.b. Brand loyalty- Loyalty allows an organization to keep its existing customers and avoid spending an enormous amount of resources getting new ones. c. Perceived brand quality- customers associate a particular brand with a certain level of overall qualityd. Brand associations- at times a marketer works to connect a particular lifestyle or certain personality type with a specific brand. 10. The real management conceptsa. Product manager- The person within an organization who is responsible for a product, a product line, or several distinct products that make up a group. b. Brand manager- The person responsible for a single brandc. Market manager- The person responsible for managing the marketing activities that serve a particular group of customers d. Venture team- A cross-functional group that creates entirely new products that may be aimed at new markets 11. Examples of retailing and the retail life cycleRetailing- all transactions in which the buyer intends to consume the product through personal, family, or household
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