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Inovation Studies Strategic Marketing Ergys Sela PRODUCT CLASSIFICATIONS SERVE CUSTOMER NEEDS : Consumer Products Convenience Goods and Services (milk, gasoline, diapers,film, and dry cleaning) Shopping Goods and Services (universities, cars, computer systems, health care) Specialty Goods and Services (diamond ring, a particular surgeon, a Harley-Davidson motorcycle) PRODUCT CLASSIFICATIONS SERVE CUSTOMER NEEDS Industrial Products : Capital Items (factories, warehouses,office buildings, office equipment, steel presses, delivery trucks) Raw Materials(vegetables, meat, ore, steel, lumber, leather,chemicals) Parts and Components(computer chips, tires, electric motors) Supplies(light bulbs, paint, electricity, Industrial lubricants) Services(accounting, legal,insurance, security) Industrial Products PRODUCT COMPETITION ANDDIFFERENTIATION : General Competition (competes for the consumer’s attention against all other offerings in the marketplace) Indirect Competition (competes with several other offerings within the same general product category) Direct Competition (competes against a similar product or service from another company) PRODUCT COMPETITION ANDDIFFERENTIATION Product Life Cycle : Product Life Cycle Time Product Develop- ment Introduction Profits Sales Growth Maturity Decline Losses/ Investments ($) Sales and Profits ($) PRODUCT DEVELOPMENT STRATEGIC ORIENTATION : Time-to-Market This involves an orientation to getting a product to market fastest Low Product Cost This orientation is focused on developing the lowest cost or highest value product. Development Cost This orientation focuses on minimizing development cost or developing products within a constrained budget Product Performance, Technology & Innovation This orientation focuses on having the highest level of product performance, the highest level of functionality or functions and features, the latest technology or the highest level of product innovation. PRODUCT DEVELOPMENT STRATEGIC ORIENTATION Classification of new products : New-to-the-world products New product lines (new to the firm) Additions to existing lines Improvements and revisions to existing products Cost reductions Repositionings Classification of new products New Product Development Process : Idea Generation and Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialization New Product Development Process Idea Generation : Internal sources Customers Competitors Distributors Suppliers Idea Generation Idea Screening : Process to spot good ideas and drop poor ones Criteria Market Size Product Price Development Time & Costs Manufacturing Costs Rate of Return Idea Screening Concept Development & Testing : Concept Development & Testing Marketing Strategy Development : Marketing Strategy Statement Formulation Marketing Strategy Development -Business Analysis-Product Development : -Business Analysis-Product Development Test Marketing : Test Marketing Introduction Stage of the PLC : Introduction Stage of the PLC Sales Costs Profits Marketing Objectives Product Price Low sales High cost per customer Negative Create product awareness and trial Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers Slide 17: Sales Costs Profits Marketing Objectives Product Price Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market Growth Stage of the PLC Slide 18: Sales Costs Profits Marketing Objectives Product Price Peak sales Low cost per customer High profits Maximize profit while defending market share Diversify brand and models Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits Maturity Stage of the PLC Slide 19: Sales Costs Profits Marketing Objectives Product Price Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Decline Stage of the PLC Get InnovativeStay CompetitiveGareth LoudonLight Minds Ltd : Get InnovativeStay CompetitiveGareth LoudonLight Minds Ltd Slide 21: In the UK, at least 50% of new products fail within their launch year, while many of the remainder never become a major success. U.K National Statistics Office (2000) Because people: Do not want to use them (desire) Do not use them (purpose) Do not enjoy using them (satisfaction) Notice no mention of technology? You don’t have to invent a new technology to create an innovative and successful new product Slide 23: “A successful product is the physical embodiment of a strategy that aligns users, technology and culture” Michael Barry, Point Forward Inc (inventor of Huggies Pull-Up nappies) Famous Product Failures : The 1979 Betamax was a real breakthrough for its time and for the video recording business Famous Product Failures Betamax was defeated by VHS when over 40 companies decided to run with the VCR-compatible format instead. The lower price of VHS-C camcorders probably helped a little too. Slide 25: Coca Cola- New Coke (1985) There was nothing wrong with old coke. Life lesson: If it ain’t broke, don’t fizz it. Pepsi - Crystal Pepsi(1992) : Pepsi - Crystal Pepsi(1992) Similar to New Coke, there was no real need for Crystal Pepsi, People who were that concerned with the health and color of their beverage probably would not be Pepsi drinkers to begin with. McDonalds - Arch Deluxe Burger : McDonalds - Arch Deluxe Burger The goal of the Deluxe line was to market McDonald’s fine cuisine to the adult demographic. Unfortunately, adults weren’t interested in paying significantly more for slightly different burgers DeLorean - DMC-12 : DeLorean - DMC-12 This car is an incredible piece of engineering and style. Rather, failure ensued after hard times fell on the company’s founder. John DeLorean’s empire was dismantled after his arrest on accusations of drug-trafficking resulted in bankruptcy Ford - Edsel : Ford - Edsel A name that didn’t resonate with the crowd, a bizarre pricing strategy, and a national recession have all been cited as factors by those who use the Edsel as an example of how not to market a product. You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.