1 Characteristics of the stages in the product life cycle a Introduction i High failure rates ii Little competition iii Frequent product modification iv Limited distribution v High advertising and production costs vi Negative profits vii Promotion focuses on awareness and information viii Intensive personal selling to channels b Growth i Increasing rate of sales ii Entrance of competitors iii Market consolidation iv Initial healthy profits v Aggressive advertising of the differences between brands vi Wider distribution vii Prices normally fall c Maturity i Sales increase at a decreasing rate ii Saturated markets iii Annual models appear iv Lengthened product lines v Service and repair assume important roles vi Heavy promotions and consumers vii Marginal competitors drop out viii Prices and profits fall ix Niche marketers emerge d Decline i Long run drop in sales ii Large inventories of unsold items iii Elimination of all nonessential marketing expenses 2 Differences and similarities between product line extension and product modification a 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 adopters STAGES OF PRODUCTION ADAPTATION a Awareness Buyer becomes aware of the product b Interest Buyer seeks information and is receptive to learning about the c Evaluation Buyer considers product s benefits and decides whether to try TYPES OF ADOPTERS Innovators first to adopt new product a b Early adaptors Choose new products carefully help spread word of c Early majority adopt just prior to average person d Late majority skeptics who adopt new products when they feel it is e Laggards last to adopt a new product product it mouth necessary 4 The steps in the NPD process a Idea generation seeking product ideas to achieve organizational objectives b Screening selecting the ideas with the greatest potential for further review product idea c Concept testing seeking a sample of potential buyers responses to a d Business analysis evaluating the potential impact of a product idea on the e Product development determining if producing a product is technically firm s sales costs and profits 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 market The 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 them Product 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 necessary 1 Weak product is a drain 2 Difficult to do 3 Three methods a Phase out let product decline b Run out increase marketing efforts in core markets c Immediate drop when product generates big losses 7 Private labels Private distributor brand a brand initiated and owned by a reseller a 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 brands a A market should create a brand name so that it can easily be protected through registration 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 b 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 protection 9 Brand equity and the components Brand Equity The marketing and financial value associated with a brand s strength in a market a 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 quality d Brand associations at times a marketer works to connect a particular lifestyle or certain personality type with a specific brand 10 The real management concepts a 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 brand c 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 cycle Retailing all transactions in which the buyer intends to consume the product through personal family or household use Retailer An organization that purchases products for the purpose of reselling them to ultimate consumers provide services assist in product selection make shopping more convenient 1 General
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