CH11 rev[1]

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MANAGING PRODUCTS, SERVICES, AND BRANDS C HAPTER

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Time Profits Sales Introductory Stage Growth Stage Maturity Stage Decline Stage 0 Product Life Cycle Dollars

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Introductory Stage High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits Promotion focuses on awareness and information Intensive personal selling to channels Full-Scale Launch of New Products

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Increasing rate of sales Entrance of competitors Market consolidation Initial healthy profits Promotion emphasizes brand ads Goal is wider distribution Prices normally fall Development costs are recovered Offered in more sizes, flavors, options Growth stage

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Declining sales growth Saturated markets Extending product line Stylistic product changes Heavy promotions to dealers and consumers Marginal competitors drop out Prices and profits fall Niche marketers emerge Many consumer products are in Maturity Stage Maturity Stage

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Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses Rate of decline depends on change in tastes or adoption of substitute products Decline Stage

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How stages of the product life cycle relate to firm’s marketing objectives & marketing mix actions INTRODUCTION GROWTH MATURITY DECLINE Product Strategy Distribution Strategy Promotion Strategy Pricing Strategy Limited models Frequent changes More models Frequent changes. Large number of models. Eliminate unprofitable models Limited Wholesale/ retail distributors Expanded dealers. Long- term relations Extensive. Margins drop. Shelf space Phase out unprofitable outlets Awareness. Stimulate demand.Sampling Aggressive ads. Stimulate demand Advertise. Promote heavily Phase out promotion Higher/recoup development costs Fall as result of competition & efficient produc- tion. Prices fall (usually). Prices stabilize at low level.

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MANAGING THE PRODUCT LIFE CYCLE Alter product quality Enhance performance Change appearance Modifying the Product Modifying the Market Finding New Users Increase use Create new use situations

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EXTENDING THE PRODUCT LIFE CYCLE- Repositioning Trading Up-add bells & whistles to raise price Trading Down- remove bells & whistles to lower price Downsizing-reduce contents but maintain price Reacting to a Competitor’s Position -never compete head on Catching a Rising Trend- baby aspirin is now low dose aspirin to reduce heart attacks Changing the Value Offered

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FIGURE 11-3 Alternative product life cycles Why the different shapes?

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Percentage of Adopters Time Innovators 2.5% Early Adopters 13.5% Late Majority 34% Early Majority 34% Laggards 16% Five categories of product adopters

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Five Profiles of Product Adopters

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BRANDING Brand Name Brand Mark Brand Equity That part of a brand that can be spoken, including letters, words, and numbers. The elements of a brand that cannot be spoken. The value brand names give to a product beyond the functional benefits provided. i.e.-why you pay more for Versache

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Value of Brand Equity Listed as an intangible asset when computing company worth. Makes brand name companies sell for more than unbranded companies Can command larger licensing fees because the product is a definite seller Can sell the use brand name on non-core products like Ralph Lauren paint or Harley Davidson clothing

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BRANDING AND BRAND MANAGEMENT Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Individual Brand Family Brand Multi-brand multi-product multi-brand multi-product

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Multi- product Multi- brand Mixed brand Toro makes snow blowers, Toro lawn mowers and Toro garden hoses Proctor and Gamble makes Tide, Cheer, Ivory Snow and Bold Michelin makes Michelin tires and Sears tires Branding Strategies

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BRANDING AND BRAND MANAGEMENT Picking a Good Brand Name Suggest the Product Benefits Be Memorable, Distinctive, and Positive Fit the Company or Product Image Have No Legal or Regulatory Restrictions Be Simple and Emotional International: Be Nonmeaningful

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CREATING CUSTOMER VALUE THROUGH PACKAGING AND LABELING Functions of Packaging Contain and Protect Inform – nutrition and instructions for use Facilitate Storage, Use, and Convenience Create perception of item- Gold bow on perfume bottle

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Product Life Cycle The product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline.

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Private Brand Often called store brand, a private brand is a manufacturer brand of product sold under the name of the retailer.

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Manufacturer Brand Manufacturer brands are often called national brands and are carry the brand name of a maker of the goods.

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