For basic marketing management courses - Booze Allen Hamilton new product classification scheme, New product development and Classification, Branding, Brand Equity, Packaging, Labeling, Product Life Cycle

1. Atul Fegade
Marketing Management Unit-1
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2. Digital Payments in India
 Rs. 34,00,000 Crores by 2020.
 11% of GDP
 By 2023 Non cash transactions > cash
transactions
 Paytm (One97 Communications Ltd), Mobikwik
(One Mobikwik Systems Pvt Ltd), Oxigen
Services (India) Pvt. Ltd, Citrus Payment
Solutions Pvt. Ltd, Freecharge and others
 Micro Transactions
 Which Industry would benefit by it?
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3. 3

4.  World’s most innovative companies
 Who are the competitors?
 What is its core business (66%)?
 much more than just an Internet search and
advertising company
 Mission is “to organize the world’s information and
make it universally accessible and useful.”
 Freewheeling new-product development process
 lightning-quick development of iGoogle
 Google Labs
 Gmail, Blog, Checkout, Picasa, Android, Chrome,
Google Maps & Earth,
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5.  Google engineers are encouraged to spend 20
percent of their time developing their own new-product
ideas.
 Google Doodles
 Gmail – automatic separation of mails into promotions
/social feeds
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6.  In dynamic markets companies must constantly introduce
new products and services to keep up with changing
consumer wants and needs.
 Consumer "Needs and Wants" Change, Diet Coke
 Product Reaches The End Of Its Product Life Cycle – Xbox
360 (Shorter PLC)
 Environmental Changes – ICICI Bank delivers e statements
for saving accounts.
 Competitors
 Breakthrough Innovations – increasing technological
capabilities
 Markets grow larger
 Failure of previous products
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7. 7

8. 8

9. 9

10. New product line
(New-to-the-firm products, New category entry):
 Includes new brands and brand extensions - Products
that take a firm into a category new to it.
Ex.: P&G brand shampoo or coffee, Hallmark gift items, Canon laser
printer, McDonald’s McCafe drinks (lattes, cappucinos, frappes,
smoothies, etc.), ITC Sunfeast biscuits
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11. New-to-the-world product
(Breakthrough product, Pioneering product, Revolutionary
product, “Really new” product, Radical innovation,
Discontinuous innovation, Disruptive innovation, New-new
product) - (10% of new products): Very new products &
technology that create a whole new market and change buyer
behavior. Ex.: Polaroid camera, Sony Walkman, Ipod
1. a. Revolutionize existing product categories (e.g., electronic
typewriters, electric cars, hybrid cars)
2. b. Create entirely new categories (e.g., Federal Express, dental
fillings)
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12. Improvements to existing Products
- Improvements/revisions/enhancements/upgrades to existing
products (26%): Current products made better. Ex.: P&G’s
continuing improvements to Tide detergent
Ex: 3rd-generation Amazon Kindle: lighter, thinner, faster page turns, sharper
display resolution, longer battery life, twice the storage E.g., iPod Touch
Reasons: Changes in consumer tastes, technology, and
competition
Quality modifications – Changes in material or production processes related to a product’s
dependability and durability
 - Raise quality: To gain a competitive advantage
 - Reduce quality: To offer a lower price
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13. Addition to existing product line: Includes product line extensions
and flankers (26%): Products that flesh out the product line in
current markets. Ex.: Tide Liquid, Apple’s iMac, HP LaserJet 7P.
1. A. (Product) line extension – Existing product line, existing brand
name: Derivatives of a company’s core (anchor, flagship, parent)
product – Additional colors, sizes, flavors, styles shapes, scents,
quality levels, features, package sizes, forms, etc.
 Use if closely related items and for other reasons for using a
brand franchise extension strategy. E.g., iPhone, iPhone 3G,
iPhone 4 (video camera, faster processor); iPhone 5S (video calling,
better reception, longer battery life, new hardware design)
 E.g., Pepsi & Coke
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14. 2. Functional modifications – Changes affecting a
product’s versatility, effectiveness, convenience
or safety; usually requiring product redesign.
E.g., greener, more energy efficient, faster,
lighter, smaller
E.g., Amazon E-Kindle Reader 2.0, video
game consoles
3. Aesthetic/Form modifications – Changes in the
sensory appeal of a product such as altering taste,
texture, sound, smell, or appearance.
E.g., New Coke
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15. Repositioning: (7%): Products that are
retargeted for a new use/application. Also
includes retargeting to new users/ new
target markets.
Can be physical or psychological
repositioning, often entailing a new brand image.
Ex.: Aspirin repositioned as a safeguard against
heart attacks; Coke retargeted as a Family product
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16.  Cost Reduction (11%): New products
that provide the customer similar
performance but at a lower cost (better value).
May be more of a “new product” in terms of
design or production at the same or lower
price.
E.g., MacDonald's
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17. New Product Options
 Acquisition
 Buy other companies, patents from other companies, license or
franchise etc.
 Reckitt Benckiser acquired Paras Pharma (Moov, Krack, D’Cold,
Itchgaurd)
 Tata Motors – Jaguar & Land Rover
 Development (Organic Growth)
 New variants of automobiles
 New products in own laboratory/R&D
 New Products
 Colgate – Oral care (toothpaste, mouthwash, toothbrush),
Personal Care (bodywash, liquid handwash, hair care, skincare,
shave preps), Home Care(Dishwash), Professional Oral care
(Sensitive, tooth whitening, specialty cleaning, fluoride therapy)
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18. Challenges in New Product
Development – some examples
 Kodak – long time leader in film market
vanished coz of digital photography.
 Selco Solar Pvt. Ltd. – provides sustainable
energy solutions and services to rural
households & businesses. Photovoltaic solar
modules, solar lighting systems, solar
inverters, cookstoves
 Incremental Innovation, disruptive innovation,
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19. New Product Failure
 Indian Context – (1994-95), 53% (Success rate new products)
 Europe Context – 10%
 US Context – 5%
 Ignored or misinterpreted marketing research, overestimate of
market size, high development costs, poor design or ineffectual
performance, incorrect positioning, advertising, price, insufficient
distribution support, intense competition, inadequate ROI or payback.
 Shortage of important ideas in certain areas (Steel or detergent)
 Fragmented markets (lower sales & profits)
 Social, economic & governmental constraints (safety &
environmental concerns)
 Cost of development
 Capital shortages
 Shorter required development time
 Poor launch timing
 Shorter PLCs
 Organizational Support
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20. Organizational Arrangements
 Customer driven engineering
 Internal Changes
 Budgeting for New-Product Development
 As many projects, % of sales what competition spends,
backward calculation
 Organizing New Product Development
 Product Managers, growth leaders, high-level
management committee, new-product development dept
 Cross functional teams – venture teams, intraprenuers
(skunkworks)
 Stage-Gate System – process in stage & gate is a
checkpoint, Funnel, spiral development process.

21. New-Product Development Strategy
Acquisition refers to the buying of a whole
company, a patent, or a license to produce
someone else’s product
New product development refers to original
products, product improvements, product
modifications, and new brands developed
from the firm’s own research and
development
Two ways to obtain new products

22. New-Product Development Process
Major Stages in New-Product Development

24. Discussion Question
In groups of six come up with one idea for a
new product.
kitchen Appliances, office supplies, laptop
accessories, food products, bathroom
accessories, children’s toys, baby
products, gaming tablet for children,
energy efficient vehicle etc.

25. New-Product Development Process
Idea generation is the systematic search for new-product ideas
Sources of new-product ideas
 Internal
 External
Idea Generation

26. New-Product Development Process
Internal sources refer to the
company’s own formal research
and development, management
and staff, and intrapreneurial
programs
External sources refer to sources
outside the company such as
customers, competitors,
distributors, suppliers, and
outside design firms
Idea Generation

27. Idea Generation
 R&D
 Employees, Cisco-Idea Zone/I-Zone
 “intrapreneurial” programs, Samsung-value
innovation program (VIP)
 TATA Nano
Internal Sources

28. Idea Generation
 Distributors (consumer problems & new product
possibilities) & Suppliers (new concepts, techniques &
materials)
 Competitors (ads, buy)
 Trade magazine shows & seminars
 Government agencies, advertising agencies, marketing
research firms, university, commercial laboratories, &
inventors.
 New Product consultants & design firms
 Online collaborative communities
 Customers, Tata-Indica
 Turn customers into co creators
External Sources

29. New-Product Development Process
Inviting broad communities of people—
customers, employees, independent
scientists and researchers, and even the
public at large—into the new-product
innovation process.
Crowdsourcing

30. Idea Generation
 7 ways to draw new ideas from your customers
 Observe how customers are using your product
 Ask customers about their problems with your product
 Ask customers about their dream product
 Use customer advisory board to comment on your
company’s ideas
 Use web sites for new ideas
 Form brand community of enthusiasts who discuss your
product
 Encourage or challenge your customers to change or
improve your product

31. Idea Generation
 Lateral Marketing
 Petrol Station stores = Petrol + food
 Cyber Cafes = cafeteria + internet
 Sony Walkman = audio + portable
 Shopping Malls = merchandise + food + cinema + fun
places

32. New-Product Development Process
 Identify good ideas and drop poor ideas
 Standard format – describe the product, customer value
proposition, the target market & competition, rough
estimations of market size, price, development time & costs,
manufacturing costs & rate of return.
 R-W-W Screening Framework:
 Is it real? (real need)
 Can we win?
 Is it worthdoing?
 A Drop-error
 Go-error
Idea Screening

33. New-Product Development Process
Product idea is an idea for a possible product that the company
can see itself offering to the market
Product concept is a detailed version of the idea stated in
meaningful consumer terms
Product image is the way consumers perceive an actual or
potential product
Concept development
Concept 1 (family car)
Concept 2 (sporty compact)
Concept 3 (green car)
Concept 4 (MUV)
Concept Development and Testing

34. New-Product Development Process
Concept testing refers to testing new-product concepts with
groups of target consumers
A word or picture description or physical presentation
Concept Development and Testing

35. New-Product Development Process
 Marketing strategy development refers to the initial
marketing strategy for introducing the product to the market
 Marketing strategy statement includes:
 Description of the target market
 Value proposition – planned price, distribution & marketing
budget
 Sales and profit goals – planned long run sales, profit &
marketing strategy.
Marketing Strategy Development

36. New-Product Development Process
Business Attractiveness of proposal
Business analysis involves a review of the sales,
costs, and profit projections to find out whether
they satisfy the company’s objectives
Sales history of similar products & conduct market
surveys
Expected costs & profits – marketing, R&D,
operations, accounting & finance costs
Financial attractiveness
Marketing Strategy Development

37. New-Product Development Process
 Involves the creation and testing of
one or more physical versions by the
R&D or engineering departments
 Requires an increase in investment
 Shows whether the product idea
can be turned into a workable
product.
 Product prototype, safety &
effectiveness
 Each morning in Reading, England, up to 80
men shave at the Gillette® testing center
for a total of 20,000 shaves a year. The men
shave in front of a two-way mirror, and are
observed, filmed and interviewed. The
condition of their skin is a measurement for
key learnings used as the basis of
development for new razors and skin
products.
Product development

38. New-Product Development Process
Test marketing is the stage at which
the product and marketing
program are introduced into more
realistic marketing settings
Provides the marketer with
experience in testing the product
and entire marketing program
before full introduction
Company tests – STP, 4Ps & budgets
Test marketing costs are high but
preferable than cost of making a
major mistake
Test Marketing

39. New-Product Development Process
Types of Test Markets
Standard test markets
Controlled test markets
Simulated test markets

40. New-Product Development
Process
 Advantages of simulated test markets
 Less expensive than other test methods
 Faster
 Restricts access by competitors
 Disadvantages
 Not considered as reliable and accurate due to the
controlled setting
Marketing Strategy Development

41. New-Product Development Process
Marketing Strategy Development
When firms test
market
• New product
with large
investment
• Uncertainty
about product
or marketing
program
When firms may
not test market
• Simple line
extension
• Copy of
competitor
product
• Low costs
• Management
confidence

42. New-Product Development Process
Commercialization is the introduction
of the new product
 When to launch
 Where to launch
 Planned market
rollout
Marketing Strategy Development

43. Managing New-Product Development
Successful new-product development should be:
 Customer centered
 Team-based
 Systematic

44. Managing New-Product Development
Customer-centered new product
development new ways to
solve customer problems
and create more customer
satisfying experiences
New-Product Development Strategies

45. Managing New-Product Development
Sequential new-product development company
departments work closely together individually to
complete each stage of the process before passing
it along to the next department or stage
 Increased control in risky or complex projects but
may be slow
New-Product Development Strategies

46. Managing New-Product Development
Team-based new-product development Company
departments work closely together in cross-
functional teams, overlapping in the product-
development process to save time and increase
effectiveness
New-Product Development Strategies

47. Managing New-Product Development
Systematic new-product development
innovative development approach that collects, reviews,
evaluates, and manages new-product ideas
 Creates an innovation-oriented culture
 Yields a large number of new-product ideas
New-Product Development Strategies

48. Branding
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49. Branding
 “A name, term, sign, symbol, or design, or a
combination of them, intended to identify the
goods or services of one seller or group of
sellers and to differentiate them from those of
competitors.”
Introduction

50. Role of Brands Consumer
Benefits
Brands:
• Identify source/maker
• Simplifies decision making
• Reduces risk
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51. Role of Brands
Brands:
• Simplify product handling
• Protect unique features
• Create loyalty
• Establish barriers to entry
Marketer Benefits
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52. Scope of Branding
Creating difference between
products
Brand
•Marketers need to teach
consumers who the
product is – by giving it a
name & other brand
elements to identify it- as
well as what the product
does.
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53. Brand Promise
What the brand must
be and do for
consumers.
A brand promise is the marketers
vision of what the brand must be
and do for consumers. Customers
will decide, based on what they
think and feel about the brand, if
they will accept any marketing
action or program.
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54. 54
Mercedes promises well-built, prestigious,
safety, performance.
Co branding/Dual branding: "Intel inside."

55. Product vs. Brand
A product is something that is
made in a factory
A brand is something that is bought
by a customer.
A product can be copied or
replaced by a competitor.
A brand is unique.
A product can be quickly
outdated.
A successful brand is
timeless.
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Service – P – Hotel, Brand -
Convenience Product – P – Salt, Brand –
Shopping Product – P – Furniture, Brand –
Specialty Product – P – Professional Digital Camera, Brand -
Unsought Product – P – Life Insurance, Brand –
Private Brand –
National Brand –
Industrial Brand -

56. Brands Vs Products
 A brand is more than a product, because it can have
dimensions that differentiate it in some way from other
products designed to satisfy the same need.
 Some brand create competitive advantages with
product performance. Gillette
 Other brands create competitive advantage through
non product related items. Coca-Cola.
 Brands carry different types of associations.
 Brands are most valuable assets (intangible)
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57. Brands – meaning
 Derived from old Norse word brandr which means “to burn”
(Owners of livestock used to mark their animals to identify
them)
 AMA definition
 Variety of brand name strategy. Samsung, P&G, Retailers
 Brand names on people’s name RPG, based on places
(British Airways), Animals or birds names (Dove soap,
Kingfisher), Others (Apple, Shell)
 Use of word with inherent product meaning (Bookmyshow),
important attributes (Duracell)
 Prefixes & Suffixes that sound scientific, natural, or
prestigious (intel, Lexus)
 Logos & symbols can be based upon people, places, things
& abstract images
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58. 58

59. 59

60. 60

61.  The added value endowed on
products and services because of
the brand.
 Reflected in the way consumers
think, feel, & act wrt to brand as well
as in the prices, market share, &
profitability.
Brand Equity

62. Customer-based Brand Equity
Differences in
consumer response
Consumers’ brand
knowledge
(thoughts, feelings, images,
experiences, and beliefs).
Perceptions,
preferences, and
behaviors
Customer-based brand equity is the differential effect brand knowledge
has on consumer response to the marketing of the brand. Can be positive
and negative.
Three key ingredients of customer-based brand equity are:
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63. Definitions of Brand Equity
 “Brand equity is the set of brand assets and liabilities linked to the
brand, its name, and symbol, that adds or subtracts value to a product
or service for a firm/ or its customers” (David Aaker).
 “Brand equity is the set of associations that permits the brand to earn
greater volume than it would without the brand name” (Marketing
Science Institute).
 “Brand equity is everything the customer walks into the store with”
(Peter Farquhar).
 “A set of associations which are most strongly linked to a brand name”
(Andrea Dunham).

64. The concept of brand equity
Brand Equity
Mental Brand
Equity
Behavioural Brand
Equity
Financial/Economical
Brand Equity
Mental Brand
response
Brand behavioural
response
Market response

66. Building Brand Equity
Brand Equity
Brand
Elements
Marketing
Activities
Secondary
Associations
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67. Brand Elements
• Brand Names
• URLs
• Logos
• Symbols
• Characters
• Spokespeople
• Slogans
• Jingles
• Packages
• Signage
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68. Brand Element
Criteria
1. Memorabiltiy
2. Meaningfulness
3. Likability
4. Transferability
5. Adaptability
6. Protectability

69. Criteria
Memorable
 Easily recognized
 Easily recalled
Meaningful
 Descriptive
 Persuasive

70. Criteria
Likable
 Fun & Interesting
 Rich visual & verbal imagery
 Aesthetically pleasing

71. Criteria
Transferable
 Within & across product boundaries
 Across geographic boundaries & cultures

72. Criteria
Adaptable
 Flexible
 Updateable

73. Criteria
Protectable
 Legally – registered trade mark
 Competitively

74. Brand Elements
 Brand Names & URLs
 Logos & Symbols
 Characters
 Slogans & Jingles
 Packaging & Signage

75. Brand Linguistics
 Phonics
 alliteration (Coca-Cola)
 Orthographic
 spelling (Kool); abbreviation (7 Up, IBM)
 Morphologic
 compound (Janitor-in-a-drum)
 Semantic
 Metaphor (Arrid)

76. Brand Names & URLs
Useful for Brand Awareness & Brand Associations –
Compaq, Yahoo, Tide, Dove
 Descriptive – Singapore Airlines, Hit, Gati, Ivory
 Suggestive – suggests a benefit or function –
Colorstay lipsticks, Head & Shoulders, Mop & Glo,
Aquaguard, Eveready, Sugar Free
 Classical – based on Greek, Latin or Sanskrit words
 Arbitrary – no relationship with the company/Product
– Apple Computers, Camel

77. Brand Names
Compound
RedHat
PriceWaterhouse
Coopers
Classical
Vedanta
Balaji Telefilms
Fanciful (imaginative
words)
Vodafone
Wochardt
Arbitary (real words
without direct connection)
Apple
Orange
Mango

78. URLs
 Keep it as simple as possible
 Avoid Clichés
 Avoid the .com
 Brand v/s description – helps only short term
 Unique personality
 Unexpected combination (motley fool)
 Reinvent a real word
 Make new words

79. Logos & Symbols
1. Corporate names & Trademarks – Coca-
Cola, Nestle, Tata, Maruti, Johnson &
Johnson
2. Abstract or non-word mark logos are also
known as symbols- Mercedes star, Rolex
crown, Nike swoosh, Olympic rings
3. Many logos fall between these 2 extremes –
Ralph Lauren’s polo player, Playboy’s
Bunny, McDonald’s Golden Arch, Apple
Logo

80. Benefits
 Visual nature of logos & symbols – easy
recognition & recall
 Versatile- can be updated transferred across
cultures
 Can be appropriate for a range of product
categories-Surf, Dettol, Lux

81. Characters
A symbol that takes on human or real life
characteristics
 McDonald’s Ronald
 Disney Characters –
 Asian Paints – Gattu
 Pillsbury Doughboy
 Kellogg's Bear
 Frosted Flakes -Tony the Tiger
 Duracell Bunnies
 Hush Puppies

82. Benefits
 Enhance brand personality & build
relationship with customers – Disney for kids
 Valuable Licensing properties – Barbie dolls,
Spiderman, Superman etc., All Disney
Characters
 Can be updated to suit the changing times

83. Slogans
 Short phrases that contain descriptive or
persuasive information
 Adds verbal reinforcement
 Design of slogans
 TO build awareness and image
 Product sense and beyond (zindagi ke saath bhi .. Ke
baad bhi)
 Updation of slogans
 Find out contribution of existing slogan
 Find out what more you wish to enhance
 Retain good qualities of earlier slogan and build up on
that

84. Slogans
 Just Do it
 When it absolutely positively has to be there
overnite
 No more tears
 Diamonds are forever
 We try harder
 Pal banaye magical

85. Benefits
 Often rich and colorful – attention getting and
help in creating brand awareness
 Help Brands in breaking through the “clutter”
in the market
 Communicate a key product benefit –
reliability, speed – Sprint telecom

86. Jingles
 Musical – easy recall - Airtel
 Reinforce brand positioning and enhance
POD’s or POP’s
 Useful when designing Ad campaigns
 “Desert rose” – jaguar
 The axe song
 Helps in repetitive reminding

87. Packaging
 Identify the brand – strong brand association
with packaging style of company
 Convey descriptive & persuasive information
 Facilitate product transportation & protection
& storage
 Assist at-home storage (bottles and refill)

88. Packaging
 Aid Product consumption (screw-on cap in
soft drink)
 “Color vocabulary” (product and category)
 Innovations can boost sales – Soft drink cans,
2 litre bottles, chocolates in smaller packs,
shampoos and hair oils in sachets – enhance
product usage & consumption

89. Packaging
 Heineken beer – green bottle
 Cadbury- purple
 Kit-Kat – red
 Kodak films – yellow
 Pepsi - blue

90. Packaging Essentials
 Know your consumer
 Take the big-picture approach
 Aesthetics + Function
 Know your distribution channels
 Educate Management

91. All activities of designing
and producing the
container for a product.
Packaging
Packaging has been defined as “ an activity which is
concerned with protection, economy, convenience and
promotional consideration.”
According to William J Stanton,“Packaging may be
defined as the general group of activities in product
planning which involves designing and producing the
container or wrapper of product.”

92. Cool Water cologne comes in bottle
(Primary package) in a cardboard box
(secondary package) in a corrugated
box (shipping package) containing six
dozen of bottles in cardboxes
Packaging
Colour, functional &
structural design imp
aspects

93. Which chip stacks up better?
Packaging and Labeling

94. Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at-home storage
Aid product consumption
Packaging Objectives

95. Types of
Packaging
 Consumer
Packaging
 Family Package
 Re-use Package
 Multiple Packages
 Transit Packaging.
New Trends in
Packaging
 Plastic a new Trends in
Packaging.
 Squeeze Bottles.
 Tubes.
 Sheet Formed
Containers.
 Skin Packaging.
 Blister Packaging
 Semi Rigid Packaging
 Sachets

98. 98

99. Labeling
 “Label is a part of product, which carries verbal
information about the product or seller. It may be a
small slip or printed statement .”
 It may be a part a package or it may be attached to the
product.
 It convey verbal information about the product and
seller.
 According to William J Stanton,“ The label is the part
of the product which carries verbal information about
the product or the seller (manufacturer or middlemen).
 A label may be part of the package or it may be a tag
attached directly to the product.”
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100.  Identifies
 Grades
 Describes
 Promotes
Functions of Labels
Classification of Labels
 Brand Labels
 Grade Labels
 Descriptive
 Illustrative Label.

101. Product Transportation and
Protection

102. Product Life-Cycle Strategies
Product Life Cycle
Online Movie Viewing Software
Phablets
bottled water
soda
VCRs

103. Sales and Product Life Cycle

104.  Product development
 Develops a new product idea
 Sales are zero and investment costs mount
 Introduction
 Slow sales growth and profits are nonexistent
 Heavy expenses of product introduction
 Growth
 Rapid market acceptance and increasing profits.
 Maturity
 Slowdown in sales growth and profits level off or
decline
 Decline
 Sales fall off and profits drop
Product Life-Cycle Strategies
104

105. Product Life Cycle
 Do all products follow PLC?
 Coca-cola, Gillette, American Express,
Lifebuoy, Lux, Dalda, Lipton, TATA etc.
 Product class – longest life cycle, stays longer
in mature stage
 Product form – standard PLC shape, manual
typewriters, dial telephones
 Brand – can quickly change because of
changing competitive attacks & responses
(Surf, Tide, Nirma, Wheel and Sunlight, 501
bars)
105

106. Style, Fashion, and Fad Life Cycles
 A basic &
distinctive mode of
expression
 Home, clothing
(formal, casual)
 Lasts for
generations
 Renewed interest
 Currently accepted or
popular style in a
given field
 Formal business
attire in 1990s to
business casual
today
 Grow slowly, remain
popular for a while
and then decline
slowly
 Temporary periods of
unusually high sales
driven by consumer
enthusiasm &
immediate product or
brand popularity
 Peak early & declines
very fast
 Acceptance cycle is
very short

107. Product Life-Cycle Strategies
 Slow sales growth
 Little or no profit
 High distribution and promotion expense
 Firms focus on those buyers who are the most ready to buy,
higher income groups
 Prices are higher
 To be first can be rewarding but risky & expensive
Introduction Stage

108. Introduction Stage
 Pioneer Brands
 Adv – producer advantages,
economies of scale, patents,
technology leadership
 What about pioneers like
Reynolds & Netscape?
 First movers & Second movers
(Wikipedia & Google)
 Imitators surpasses
innovators (Manufacturers of
PC, Dell & Compaq are they
leaders today?)
 Golder & Tellis (Pioneer
advantage: marketing logic or
marketing legend? JMM May
1992) – inventor, product
pioneer & Market pioneer.

109. Product Life-Cycle Strategies
 Sales increase
 New competitors enter the market
 Price stability or decline to increase volume
 Consumer education
 Profits increase
 Promotion and manufacturing costs gain
economies of scale
 Promotion expense-sales ration declines
 The Men’s cosmetic market in South Asia
(3800 Crores) growing by more than 21%
 Fair & Handsome, Fair & Lovely Max
Fairness, Oxylife men creme bleach,
Garnier Men range, Amway India
Growth Stage

110. Marketing Strategies: Growth Stage
Improve product quality and add new product
features and improved styling
Add new models and flanker products
Enter new market segments
Increase distribution coverage and enter new
distribution channels
Shift from product-awareness advertising to
product-preference advertising
Lower prices to attract next layer of price-
sensitive buyers

111. Product Life-Cycle Strategies
 Slowdown in sales, Many suppliers, Substitute products, Overcapacity leads to
competition, Increased promotion and R&D to support sales and profits
 Divided into three phases –
 Growth – sales growth rate starts to decline, no new distribution channels to fill in,
new competitors emerge
 Stable – sales flatten because of market saturation, most potential have tried the
product
 Decaying maturity – sales slowdown creates overcapacity in industry which leads
to intensified competition, frequent markdowns, increase advertising, trade &
consumer promotion, increase R&D budgets, Weaker competitors withdraw.
 Leaders are giant firms, quality leaders, service leaders & cost leaders
 Market specialists, product specialists & customizing firms
 Some firms abandon weaker products, concentrates on more profitable products
 Autos, Televisions, watches, cameras etc
 Bajaj scooters & motorcycles
Maturity Stage

112.  Marketing Strategies: Maturity Stage
 Market Modification
 Expand number of brand users by:
1. Converting nonusers
2. Entering new market segments
3. Winning competitors’ customers
 Convince current users to increase usage by:
1. Using the product on more occasions
2. Using more of the product on each occasion
3. Using the product in new ways
 Product Modification
 Quality improvements – increase functional performance
 Feature improvements – size, weight, materials, supplements,
& accessories
 Style improvements – increase aesthetic appeal
 Marketing Program modification
 Modifying non product elements (price, distribution &
communication

113. Product Life-Cycle Strategies
 Reasons
 Technological advances, shift in consumer tastes, increased
competition
 Overcapacity, increased price cutting, & profit erosion
 Eg Sewing machine, newspapers – slow decline
 Eg Floppy discs, VCR – rapid decline
 Maintain the product or reduce the no of products
 Harvest the product (withdrawing from smaller segment,
weaker trade channels, cutting marketing budgets, & reducing
prices further)
 Drop the product
Decline Stage

114.  Marketing Strategies: Decline Stage
 Identify ageing products
 Establish a system for identifying them (Product-review committee)
 Exit barriers in the industry (P&G stayed in declining liquid-soap
business)
 Increase firm’s investment (to dominate the market and strengthen its
competitive position)
 Maintain the firm’s investment level until the uncertainties about the
industry are resolved.
 Decrease the firm’s investment level selectively by dropping
unprofitable customer groups, while simultaneously strengthening the
firm’s investment in lucrative niches
Product Life-Cycle Marketing Strategies

115. Product Life-Cycle Marketing Strategies
 Marketing Strategies: Decline Stage
 Harvesting (“milking”) the firm’s investment to recover cash
quickly. Reducing product costs or business’s costs gradually &
maintaining sales
 Cut in R&D costs, plant & equipment costs. Reduce product quality,
sales force size, marginal services & advertising expenses. Without
letting know the customers, competitors & employees.
 Difficult but can increase cash flow substantially.
 Divesting the business quickly by disposing of its assets as
advantageously as possible.
 How much inventory & service to maintain for past customers.
115

116. 116
Source-ChesterWasson,DynamicCompetitiveStrategy&PLC,
(Austin,TX:AustinPress.1978;JohnWeber,PlanningCorporate
Growthwithinvertedproductlifecycles,LongRangePlanning(Oct
1976);PeterDoyle,TherealitiesofPLC,QtrlyreviewofMarketing
(Summer1976)