Product scope: goods, services, experiences, events, persons, places,
properties, organizations, information and ideas.
Competitive pressures push competition at the augmented level, features at
the augmented level become expected features, as the market adopts new
features, further hightening competition. This leaves room to develop
stripped down products for price conscious market.
- Core Benefits
- Basic Product: to satisfy core benefit sought
- Expected Product: meet buyers expectations for product
Focus of competition in LDC
- Augmented Product: exceed expectations
Focus of competition in developed countries
- Potential Product: future possibilities
Delight Customers by
Different types of goods require different marketing mixes to
- Need Family
- Product Family
- Product Class
- Product Line
- Product Type
Innovation of batteries?
- Durable Goods
- Non Durable Goods
Consumer Goods Classification:
Industrial Goods Classification:
- Convenience: Packaging is important to sell the product. Consumers will
accept a substitute. Marketers focus on intense
distribution, time utility. Convenience products
can be categorized into staple (milk), impulse (not intended prior to
- Shopping: Consumers expend considerable effort planning and making purchase
decisions. IE appliances, stereos, cameras. Consumers are not
particularly brand loyal.
Need producer intermediary cooperation, high margins, less outlets than
Use of sales personnel, communication of competitive advantage, branding, advertising,
customer service etc. Attribute based (Non
Price Competition), product with the best set of attributes is
product attributes are judged to be similar, then priced based.
- Specialty: Buyer knows what they want and will not accept a substitute, IE
Mercedes. Do not compare alternatives. Brand, store and person loyal. Will pay a
premium if necessary. Need reminder advertising.
- Unsought: Sudden problem to resolve, products to which consumers are
unaware, products that people do not necessary think of purchasing.
Umbrellas, Funeral Plots, Encyclopedia!!
If an organization is marketing more than one product it
has a product mix.
- Production Goods
- Raw Materials:
- Component parts: becomes part of the physical product: Intel, Gore
- Process materials: not readily identifiable part of the production of other
- Support Goods
- Major Equipment:
- Accessory Equipment: desk tops and tools
- Consumable Supplies: IE Paper, pencils or ink
- Business to Business services: Financial, legal marketing research etc.
Depth measures the # of products that are offered within each product line.
Satisfies several consumer segments for the same product, maximizes
shelf space, discourages competitors, covers a range of prices and
sustains dealer support. High cost in inventory etc.
- Product item--a single product
- Product line--all items of the same type
- Product mix--total group of products that an organization
Width measures the # of product lines a company offers. Enables a
firm to diversify products, appeals to different consumer needs and
encourages one stop shopping.
Product Line Decisions:
Cannibalization and consumer movement issues
Internal (company) versus external (market) needs/decisions
Coke Hunts for Talent ro Re-Establish Its Marketing Might
What is Branding? Why Brand?
A name, term, design, symbol or any other feature that identifies
one seller's good or service as distinct from anothers.
Provides benefits to buyers and sellers
- Help buyers identify the product that they like/dislike.
- Identify marketer
- Helps reduce the time needed for purchase.
- Helps buyers evaluate quality of products especially if unable
to judge a products characteristics.
- Helps reduce buyers perceived risk of purchase.
- Buyer may derive a psychological reward from owning the brand,
IE Rolex or Mercedes.
Branding versus Tactical Promotions?
- Differentiate product offering from competitors
- Helps segment market by creating tailored images
- Brand identifies the companies products making repeat
purchases easier for customers
- Reduce price comparisons
- Brand helps firm introduce a new product that carries the name
of one or more of its existing products...half as much as using a new brand, lower co. designs,
advertising and promotional costs
- Easier cooperation with intermediaries with well known brands
- Facilitates promotional efforts
- Helps foster brand loyalty helping to stabilize market
- Firms may be able to charge a premium for the brand.
Brand Equity (Customer Equity)
Operating profits - expected profits for generic $: 10 Most
Share of Mind, Attitudes = ImagePower. Landor Associates
Brand awareness = considered set
- within relevant market(s)
- with influencers
- with entire market
The Best Global
Interbrand: Best Global
Brand Name Decisions:
Criteria for choosing a name, some issues to consider:
The Brand Pyramid:
- Easy for customers to say, spell and recall (inc.
- Indicate products major benefits
- Should be distinctive
- Compatible with all products in product line
- Used and recognized in all types of media
- Single and multiple words Bic, Dodge Grand Caravan, IBM PC (letters), or a
combination Mazda RX7
- Availability, already over 400 car "name plates", this makes it difficult to select a new
- Use words of no meaning to avoid negative connotation, Kodak,
- Can be created internally by the organization, or by a
- Legal restrictions, i.e. Food products must adhere to the Nutrition
Labeling and Education Act, 1990...May 8 1994
- Global translations ?
- Features: tangible characteristics of product
- Finctional Benefits: benefits to consumer for brand features
- Emotional Rewards: psychological or emotional benefits received by
using brand's product?
- Values: what are the values of the typical loyal customer for this
- Personality: what words would you use to describe brand if it were a
Domain Names: Highjacking issues? (Highjacked Domain and New Domain): Help! I've Lost My Domain
Discussion Topic: Investigate the above issues to
determine who has rights to the use of a domain name.
Online brand investment versus offline brand
Discussion Topic: Discuss the challenges of branding on the web, how are Pampers
developing a branding strategy?
Arthur Andersen changes
now a clear winner without Andersen name
Is there a window
Discussion Topic: Discuss the evolution of the value of the brand:
Discussion Topic: Discuss the role the corporate logo
plays in branding. Cite logos and their inherent value. Discuss logos
which have changed, and why?
Consists of a products physical container, label and/or
Approximately 10% of product selling cost.
Development of a container and a graphic design for a product. Can
effect purchase decisions IE pump dispenser on a tube of
Packaging Functions include:
Packaging decision serve the channel members and the final consumer.
- Protect product and maintain functional form, IE milk.
- Foil shop lifting
- Offer convenience, Usage (dispersement)
- Promote product by communicating features "last 5 seconds of
mktg", Campbells red labels...
- Develop reusable package for alternative use.
- Segmentation, tailored to a specific group
CD Packing Issues
- Cost--how much are customers willing to pay for the packaging?
- Preprinted cost, use UPC codes
- Must comply with the FDA packaging regulations.
- Make product tampering evident to the reseller and customer, cost
benefit with liability
- Need to consider consistency among package designs--Family packaging...category
- Need to inform potential buyers of new products content, features, uses, advantages and
- Need to create a desirable image through color etc. Can be designed to appear taller
or shorter (thin vertical lines for taller) People associate specific colors with certain
Red with fire. Do not package meet in green!!
- Must meet the needs of resellers--transportation, storage and
- Environmental responsibility.
Product Positioning and Product Repositioning
This refers to a place a product offering occupies in consumers' minds on
important attributes, relative to competing offerings.
How new and current items in the product mix are perceived, in the
minds of the consumer, therefore reemphasizing the importance of
New Product--need to communicate benefits
Established Products--need to reinforce benefits
Need to introduce products that possess characteristics that the
target market most desires, ideal. Product positioning is crucial.
Consumers desires refer to the attributes consumers would like the
products to possess--IDEAL POINTS.
Whenever a group of consumers has a distinctive "ideal" for a
product category they represent a potential target market segment.
A firm does well if its attributes (of the product) are perceived
by consumers as being close to their ideal. The objective is to be
"more ideal" than the competitors.
Each product must provide some unique combination of new features
desired by the target market.
Instead of allowing the customer to position products
independently, marketers try to influence and shape consumers
concepts and perceptions.
Marketers can use perception maps.
Sun Tan Lotion Example:
Old Position | New Position
Traditional sun tan lotion positioned as aiding in getting a very
glamorous deep tan etc.
Dermatologist reports...skin cancer etc.
Lifestyle needs change, move to more health conscious society
Need to reposition sun tan lotion as a healthy way to be exposed to
Target market has shifted from the left quartile to the right
quartile as far as needs are concerned.
Sun tan marketers need to do same as far as changing consumers
perception for the product.
- Change Promotion: "Tan don't Burn" The St. Tropez Tan vs. Ultra Sweat Proof
Serious tan for...Be Sun Smart
- Change Product: Sunscreen and sunless tanning agent.
BMW positions on affordability
BMW, to reposition up to the left
Due to the exchange rate, Lexus moves to the right
Why did they repositition?
Competitors include Infiniti, Lexus, Mercedes Benz and Aurora
If you already have a brand in the market, must be sure to avoid
cannibalization. Attributes and brand image should give a product
New Product Positioning
When developing a new product, a company should identify all the features that are offered
by all its major competitors.
Second, identify important features/benefits used in making
Determine the overall ranking of features by importance and relate
the importance of each feature to its "uniqueness": what are the unique selling points (USPs).
For example you wouldn't buy a spreadsheet program that if it
didn't perform basic math, so basic math is very important.
However since every spreadsheet has that its an "important
fundamental feature", instead of an "important differentiating
The flip side would be a spreadsheet that displays all numbers in
binary (0-1) instead of "normal" numbers (0-9). This is unique but
The evaluation becomes a 2 x 2 matrix with uniqueness on the X-axis
and importance on the Y-axis.
X Important to TM (Stockbroker) X
Math functions | Import Data
If the feature is in the upper right hand corner then you have
probably got a winning feature (USP).
This is known as feature positioning, as opposed to product
positioning. One can then see what type of customer needs the
important (and perhaps unique) features.
If your spreadsheet accepts continuous data in real-time (such as
stock market data) while Excel doesn't, you'd position your
spreadsheet as a "real-time spreadsheet with all calculations
needed by Wall Street."
Its a claim that tells something unique about your product, who
it's for, and by implication, that Excel can't do it.
Product Life Cycle
Popularized by Theodore Levitt, 1965
PLC can be applied to:
Four Stages to the Product Life Cycle:
- product category (Watch)
- product style (Digital)
- a product item/brand (Timex)
The following material refers to the PLC as far as the product category is concerned
unless otherwise stated.
Failure rate for new products can range from 60%-90%, depending on
the industry. A product does not have to be an entirely new
product, can be a new model (car), a new product for the company, or repositioning a product to
a new market.
Marketing Mix(MM) considerations
Need to build channels of distribution/selective distribution
Dealers offered promotional assistance to support the product...PUSH
Develop primary demand/pioneering information, communications should
stress the benefits of the product to the consumer, as opposed to the brand name of the
particular product, since there
will be little competition at this stage and you need to educate consumers of the
Price skimming...set a high price in order to recover developmental
costs as soon as possible.
Price penetration...set a low price in order to avoid encouraging
competitors to enter the market, also helps increase demand and therefore
allows the company to take advantage of economies of scale.
Need to encourage strong brand loyalty, competitors are entering the
market place. Profits begin to decline late in the growth stage.
May need to pursue further segmentation.
May need to perform some type of product modification to correct weak or
omitted attributes in the product.
Need to build brand loyalty (selective demand), communications should stress
the brand of the product, since consumers are more aware of the products
benefits and there is more competition, must differentiate your
offering from your competitors.
May begin to move toward intensive distribution-the product is more
accepted, therefore intermediaries are more inclined to risk accepting
Price dealing/cutting or meeting competition, especially if previously
adopted a price skimming strategy.
Sales curve peaks-severe competition, consumers are now experienced
A product may be rejuvenated through a change in the packaging, new models or aesthetic changes.
Advertising focuses on differentiating a brand, sales promotion
aimed at customer (PULL) and reseller (PUSH).
Move to more intense distribution
Price dealing/cutting or meeting competition
Provides company with a large, loyal group of stable customers. Generally cash cows that can
support other products.
Strategies during maturity include:
Weaker competition will have left the market place.
- Modification of product...use line
- Reposition Product
Sales fall off rapidly. Can be caused by new technology or a
Can justify continuing with the product as long as it contributes
to profits or enhances the effectiveness of the product mix.
Need to decide to eliminate or reposition to extend its life.
Some competition drop out
Need to time and execute properly the introduction, alteration and
termination of a product.
Cannibalization strategies to introduce new products.
Need to manage product mix through their respective life-cycles. When to
decide to introduce new (modified) products that compete with the current
With high-tech products, need to consider introducing new (and competing) products as the
existing product is still in the growth stage of its life cycle.
Different types of Life Cycle Curves
- Fad Curve
Fleeting fashions vs. lasting shifts in consumer preference.
Cannot differentiate between the two using usual marketing tools like focus
"Hand anyone a hula hoop, and they'll have fun with it--at first"
- Seasonal Curve
Life cycles that vary by season, clothing etc.
Developing and Managing Products
To compete effectively and achieve goals of an organization, the
organization must be able to adjust its product mix.
Need to understand competition and customer attitudes and preferences.
Timex Turns down the Swatch
1982, Timex turned down the opportunity to market "Swatches".
Timex was resting on its laurels, simple low cost watches.
Digital revolutionized industry technological
change, Timex stuck with analog.
DID NOT KEEP UP WITH WATCHES EVOLUTION FROM A FUNCTIONAL OBJECT
TO A FASHION ACCESSORY.
Now consumer owns 5 watches up from 1.5 30 years ago (emphasizing
Timex has acquired Guess and Monet Jewellers (distribution outlets) in an effort respond to
Dressy watches to Walt Disney Character watches, Indigo.
Now have 1,500 styles, 300 in 1970.
Developing New Products
Need to develop new products. A new product can be:
For a new product to succeed it must have:
Developing new products is expensive and risky.
- desirable attributes
- be unique
- have its features communicated to the consumer (mkt support
Failure not to introduce new products is also risky. IE Timex above
Firms develop new products in three ways:
About 20K new products a year launched: about 75% are brand extensions.
- By acquisition, i.e. Timex bought Guess and Monet Jewellers in
1992, bringing in new products to their product mix.
- Acquiring patents, licensing technology
- Internal development, this is what we are going to focus on.
Why New Products Fail
- Lack of differentiating advantage
- Poor marketing plan
- Poor timing
- Target market too small
- Poor product quality
- No access to market
Seven phases to new product development:
Need to consider:
- New Product Strategy Development
Only a few ideas are good enough to reach commercialization. Ideas
can be generated by chance, or by systematic approach and by company culture (3M). Need a
purposeful, focused effort to identify new ways to serve a market.
New opportunities appear from the changes in the environment.
- Idea Generation
Continuous systematic search for new product opportunities.
- Product Screening and Evaluation
New product check list; list new product attributes considered most
important and compare each with these attributes. Check list is
standardized and allows ideas to be compared.
--General characteristics, Marketing Characteristics and Production
Ideas with the greatest potential are selected for further
Do they match the organizations goals (Some companies have many patents that they have not
exploited for this very reason.)
Look at companies ability to produce and market the product.
Need to look at the nature and wants of the buyers and possible
Sample of potential buyers is presented with the product idea
through a written or oral description to determine the attitudes
and initial buying intentions.
Conjoint Analysis to see feature tradeoffs.
This is done before investing considerable sums of money and
resources in Research and Development.
Can better understand product attributes and the benefits customers
feel are most important.
Would you buy the product?
Would you replace your current brand with the new product?
Would this product meet real needs?
- Business Analysis
Analyze potential contribution to sales, costs and profits.
Does the product fit into the current product mix?
What kind of environmental and competitive changes can be
How will these changes effect sales etc.?
Are the internal resources adequate?
Cost and time line of new facilities etc.?
Is financing available?
Synergies with distribution channel etc.
MIS to determine the market potential sales etc.
Patentability should be determined, last 17 years, 14 years for a
Find out if it is technically feasible to produce the new product.
If you can produce the new product at a low enough cost so as to be
able to make a profit.
- Product Development
Develop a prototype, working model, lab test etc.
Attributes that consumers have identified that they want must be
communicated through the design of the product.
- Test Marketing
Can observe actual consumer behavior.
Limited introduction in geographical areas chosen to represent
Aim is to determine the reaction of probable buyers.
It is the sample launch of the Marketing
Determine to go ahead, modify product, modify marketing plan or
drop the product.
- Lessens the risk of product failure.
- Reduces the risk of loss of credibility or undercutting a
- Can determine the weaknesses in the MM and make
- Can also vary parts of the MM during the test market.
- Need to select the appropriate MM and check the validity.
Alternatively can use a simulated test market.
Free samples offered in the mall, taken home and interviewed over
the telephone later.
- Test market is expensive.
- Firm's competitors may interfere.
- Competitors may copy the product and rush it out. IE Clorox
detergent with bleach P&G. "In a live test you've tipped your hand, and believe me, the
competition is going to come after you. Unless you have patented
chemistry, they can rip you off and beat you to a national launch" -Director of Marketing at
Gillette's Personnel division.
Corresponds to introduction stage of the Product
Plans for full-scale marketing and manufacturing must be refined
Need to analyze the results of the test market to determine any
changes in the marketing mix.
Need to make decisions regarding warranties etc (reduces consumers
risk). Warranties can offer a competitive advantage.
Spend alot of $s on advertising, personnel etc. Combined with
capital expenditure makes commercialization very expensive.
- the speed of acceptance among consumers and channel members;
- intensity of distribution,
- production capabilities,
- promotional capabilities,
- time period to profitability and commercialization costs.
Buyers' Product Adoption Process
Rate of adoption depends on consumer traits as well as the product and the
firm's marketing efforts.
Buyers become aware of the product
Buyers seek information and is receptive to learning about
Buyers consider product benefits and determines whether
to try it
Buyers examine, test or try the product to determine
usefulness relative to needs
Buyers purchase the product and can be expected to use it
when the need for the general type of product arises.
The manner in which different members of the target market often accept and purchase a
product (go through the adoption process)
Implications to marketers, company must promote product to create
widespread awareness of existence and benefits.
Techno-savvies first customers to buy a product, 2.5
% of consumers
- Early Adopters
Tend to be opinion leaders. Adopt new products but
use discretion, 13.5%
- Early Majority
34% of consumers, first part of the mass market to
buy the product
- Late Majority
Less cosmopolitan and responsive to change, 34%
Price conscious, suspicious of change, 16%, do not adopt
until the product has reached maturity.
Product and physical distribution must be linked to patterns of
adoption and repeat purchase.
Discussion topic: Discuss the differences in the new product development process
for digital goods versus tangible goods, consider intellectual
property issues, standards issues etc?
Relevant Knowledge@Wharton Articles
of Stadiums and Other
Institutions Donít Always
Switching names, effect of brand. Value to stadiums,
value to customers?
How to Keep
Others From Ripping Off Your Ideas
Poachers Are Out
to Plunder Your Intellectual Property Can you Do Anything?
Intellectual Property: WIPO
Intellectual Property and the National
Link to discussion
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