4 stages

Stages a new product goes through in the marketplace: introduction, growth, maturity, and decline. 

Example: page 237 graph in book. 

This stage occurs when a product is introduced to its intended target market. 

Typically, during this stage, sales grow slowly and profit is minimal. 

The major objective during this stage is to create consumer awareness and stimulate trial (or the initial purchase by the consumer). 

Also, during this stage, companies spend heavily on advertising to build the awareness and to stimulate the product trial. 

The advertising and promotion, during this stage, are made to stimulate primary demand, which is the desire for the product class rather than the brand. 

As the product moves along the life cycle, and more competitors enter the market, the company focuses on selective demand, which is the preference for a specific brand. 

Pricing strategies can either be high (using skimming strategies, which creates heavy competition) or low (using penetration strategies, which discourages competition). 

This stage is characterized by a rapid increase in sales, which grows at an increasing rate because of new people trying the product and a growing number of repeat purchasers (people who tried the product, were satisfied, and bought again). 

In this stage, competition appears.

The result of more competition and aggressive pricing strategies is that profit usually peaks during the growth stage. 

The emphasis on advertising shifts to selective demand (see Introduction Stage for definition), which the product benefits are compared with the competition's offerings, in hopes to gain market share. 

Changes appear in the growth stage, which help differentiate a company's brand from the competition (example- improved versions, new features, and product proliferation occurs).

Here, it is very important to gain as much distribution as possible. 

This stage is characterized by a slowing of total industry sales or product class revenue. 

Marginal competitors begin to leave the market.

Sales increase at a decreasing rate as fewer buyers enter the market. 

Profit declines due to fierce competition among many sellers and the cost of gaining new buyers rise.

Marketing attention is directed toward maintaining market share through further product differentiation and finding new buyers.

Still, a major consideration in a company's strategy in this stage is to control overall marketing cost by improving promotional and distribution efficiency. 

The decline stage occurs when sales drop. 

This typically occurs, not because of companies wrong strategies, but because of environmental changes.

Products in the decline stage tend to consume a disproportionate share of resources relative to their future worth. 

A company will follow one of two strategies to handle a declining product: 

Deletion: This is when a company drops a product from the company's product line, and this is a very drastic measure. 

Harvesting: This is when a company retains the product, but reduces the marketing costs. 

There is no exact length per product. 

Consumer products have shorter life cycles than business products. 

The availibility of mass communication vehicles informs consumers quickly and shortens life cycles.

Technological change tends to shorten product life cycles  as new-product innovation replaces existing products. 

There are four generalized life cycles (graphs on page 241): 

• High learning product: This is one which significant customer education is required and there is an extended introductory period. Example- convection ovens. 
• Low learning product: This is one which sales begin immediately because little learning is required by the consumer, and the benefits of purchasing are readily understood. These products can easily be imitated by competitors. Example: Gillette's Fusion Razor
• Fashion Product: This is the style of the times. Typically, fashion products are introduced, decline, and then seem to return. Example: Panty Hose (clothing in general). 
• Fad: This experiences rapid sales on introduction and then an equally rapid decline. These products are typically novelties. Example: Vinyl Dresses. 

The life cycle of a product depends on sales to consumers.

Most sales occur after the product has been on the market for quite some time. 

A product diffuses, or spreads, through the population, a concept called diffusion of innovation.

Consumer population is divided into five main categories of product adopters based on which they adopt a product: 

• Innovators: venturesome, higher educated, use multiple information sources. 
• Early Adopters: Leaders in social setting, slightly above average education. 
• Early Majority: Deliberate, many informal social contracts. 
• Late Majority: Skeptical, below average social status. 
• Laggards: Fear of debt, neighbors and friends are information source. 

Several factors will affect whether a consumer will adopt a new product of not: 

• Usage Barriers (the product is not compatible with existing habits)
• Value Barriers (the product provides no incentive to change)
• Risk Barriers (physical, economic, social)
• Psychological Barriers (cultural differences or image)

Companies attempt to overcome these barriers in numerous ways: 

• Warranties
• Money-back guarantees
• Extensive usage instructions
• Demonstrations
• Free samples

Managing the Product Life Cycle: 

The Role of a Product Manager

The product manager, sometimes called the brand manager, manages the marketing effort for a close-knit family of products or brands. 

Product managers are responsible for managing existing products through the stages of the life cycle. 

They are also responsible for developing and executing a marketing program for the product line and approving ad copy, media selection, and packaging design. 

They also engage in extensive data analysis. 

Managing the Product Life Cycle: 

Modifying the Product

Product Modification: involves altering a product's characteristics, such as its quality, performance, or appearance, to increase the product's value to customers and increase sales. 

Managing the Product Life Cycle: 

Modifying the Market

With market modification strategies, a company tries to: 

• Finding new customers (Harley Davidson is trying to attract more women riders)
• Increasing product use (Campbell's soup- eat more during the summer)
• Creating a new use situation (Dockers pants for different occasions) 

Managing the Product Life Cycle: 

Repositioning the Product

Product Repositioning changes the place a product occupies in a consumer's mind relative to competitive products. A firm can reposition a product by changing one of the four marketing mix elements. 

Four Factors the trigger the need for a repositioning action: 

• Reaching to a Competitor's Position
• Reaching a New Market
• Catching a Rising Trend 
• Changing the Value Offered- trading up (adding value to the product through additional features) or trading down (reducing the number of features, quality, or price). 

Organization's use of a name, phrase, design, symbols, or combination of these to identify and distinguish its products. 

Any word, device (design, shape, color, or sound), or combination of these used to distinguish a seller's goods or services. 

Set of human characteristics associated with a brand name. 

Consumers choose brands that are consistent with their own or desired self-image. 

Marketers can provide brand personality through advertising that depicts a certain user or usage situation and conveys certain emotions or feelings to be associated with the brand. 

Added value a brand name gives to a product beyond the functional benefits provided. 

Two advantages of brand equity: 

• provides a competitive advantage
• consumers are often willing to pay a higher price for a product with brand equity 

Four Steps to achieve brand equity: 

1. develop positive brand awareness
2. establish a brand's meaning in the minds of the consumer through brand performance and brand imagery
3. elicit the proper consumer responses to a brand's identity and meaning through consumer judgments and feelings 
4. create a consumer brand connection evident in an intense, active, loyalty relationship between consumers and the brand 

Brand equity also provides a financial advantage for the brand owner. 

They are intangible assets, and can appreciate in value when effectively marketed. 

Brand Licensing: This is a contractual agreement whereby one company (licensor) allows its brand name(s) or trademark(s) to be used with products or services offered by another company (licensee) for a royalty fee. 

Manufacturer's branding strategy that uses one name for all products.

The approach is sometimes called family branding or corporate branding. 

There are several advantages to this strategy: 

• Consumers who have a good experience with the product will transfer this favorable attitude to other items in the product class with the same name. 
• Makes line extensions, or the practice of using a current brand name to enter a new market segment in its product class, possible. 
• Lower advertising and promotion costs because the same brand is used on all products, thus raising brand awareness 

However, a risk with line extension is that sales of an extension may come at the expense of other items in the company's product line. 

Subbranding: This combines a corporate or family brand name with a new brand, to distinguish a part of its product line from others (example- Gatorade Rain, Gatorade Frost, etc)

Brand Extension: This is the practice of using a current brand name to enter a completely different product class. 

Too many uses for one brand name can, however, dilute the meaning of a brand for consumers. 

Manufacturer's branding strategy that gives each product a distinct name. 

Useful strategy when each brand is intended for a different market segment. 

Multibranding is applied in a variety of ways. 

Some companies array their brands on the basis of price-quality segments (Marriott). 

Other companies introduce new product brands as defensive moves to counteract competition. 

This is called fighting brands, which chief purpose is to confront competitor brands. 

Advertising and promotion costs tend to be higher. 

The advantages of this strategy is that each brand is unique to each market segment, and there is no risk that a product failure will affect other products in the line. 

Part of a product that refers to any container in which it is offered for sale and on which label information is displayed. 

Label:This is an integral part of the package and typically identifies the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients. 

The customer's first exposure to a product is the package and label and both are an expensive and important part of the marketing strategy. 

Packaging and labeling are essential because both provide important benefits for the manufacturer, retailer, and ultimate consumer. 

A major benefit of packaging is the label information on it conveyed to the customer, such as directions on how, where, and when to use the product and the source and composition of the product, which is needed to satisfy legal requirements of product disclosure. 

Packaging often plays a functional role, such as storage, convenience, protection, or product quality. 

Another component of packaging and labeling is the perception created in the consumer's mind. 

Package and label shape, color, and graphics distinguish one brand from another, convey a brand's positioning, and build brand equity. 

Successful marketers recognize that changes in packages and labels can update and uphold a brand's image in the consumer's mind. 

Package and label designers face four challenges: 

1. Connecting with customers, the challenge lies in creating aesthetic and functional design features that attract customer attention and deliver customer value in their use. 
2. Environmental concerns, where recycling packaging material is a major thrust. 
3. Health, safety, and security issues. European and US consumers believe companies should make sure products and their packages are safe and secure, regardless of the cost, and companies are responding in numerous ways. Shelf Life: The time a product can be stored. 
4. Cost reduction, which the challenge is to find innovative ways to cut packaging costs while delivering value to their customers. 

Managing the Marketing of Services: 

The 4 P's

Product (service): 

There are three aspects of the product/service element of the mix that warrant special attention when dealing with services: 

1. Exclusivity. A major difference between products and services is that services cannot be patented. 
2. Branding. Because services are intangible and, therefore, more difficult to describe, the brand name or identifying logo of the service organization is particularly important in consumer decisions. 
3. Capacity Management. This is the integrating of service components of he marketing mix with efforts to influence consumer demand. 

Price: 

In the service industries, price is referred to in many ways. 

Regardless of the term, price plays two essential roles: 

1. to affect consumer perceptions
2. to be used in capacity management

Off-Peak Pricing: Charging different prices during different times of the day or days of the week to reflect variation in demand for the service. 

Place (Distribution): 

Place or distribution is a major factor in developing a service marketing strategy because of the inseparability of services from the producer. 

The availability of electronic distribution through the Internet now provides global coverage for travel services, banking, entertainment, and many other information-based services. 

Promotion: 

The value of promotion, specifically advertising, has played a major role in the promotional strategy of nonprofit services and some professional organizations. 

Five criteria are mentioned most often when selecting a good brand name:

1. The name should suggest the product benefits. 
2. The name should be memorable, distinctive, and positive. 
3. The name should fit the company or product image. 
4. The name should have no regulatory or legal restrictions. 
5. The name should be simple and emotional. 

A company uses private branding, often called private label or reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer. 

This produces high profit margins for manufacturers and resellers. 

It is estimated that one out of every five items purchased at a US supermarket, drug store, and mass merchandiser bears a private brand. 

This is where a firm markets products under its own name(s) and that of a reseller because the segment attracted to the reseller is different from its own market.