Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGING THE PRODUCT

aiming at suburbanites and women farmers. They have introduced a series of redesigned

lawn and garden tractors, tillers, and snow blowers that are easier for women to operate.

Although this represents a limited selection of objectives, it does suggest that there

must be a reason for all product-related activities. These reasons are best expressed in the

form of specific objectives.

The Product Pla n

Once a marketer

determined a set of product objectives, it is then possible to initiate

the activities that constitute the product plan. Although there are a number of ways to look

at this process, we have elected to explain this process through the product lifecycle con-

cept (PLC). It should be noted that the value of the PLC framework as a planning tool lies

at the industry and/or product category level.

The Product Lifecycle

A company has to be good at both developing new products and managing them in the face

of changing tastes, technologies, and competition. Evidence suggests that every product goes

through a lifecycle with predictable sales and profits, as illustrated in Figure 7.3. As such,

the manager must find new products to replace those that are in the declining stage of the

product lifecycle and learn how to manage products optimally as they move from one stage to the next.

The five stages of the PLC and their components can be defined as follows:

1. Product development: the period during which new product ideas are generated,

operationalized, and tested prior to commercialization.

2. Introduction: the period during which a new product is introduced. Initial distribution is obtained and promotion is obtained.

3. Growth: the period during which the product is accepted by consumers and the

trade. Initial distribution is expanded, promotion is increased, repeat orders from

initial buyers are obtained, and word-of-mouth advertising leads to more and more

new users.

SALES/PROFITS ($)

SALES

PROFITS

o

TIME

PRODUCT

MATURITY

DEVELOPMENT

TIME

STAGE

FIG URE 1.3

The product lifecycle

PRODUCT PLANNI NG AND STRATEGY FORMULATION

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4. Maturity: the

during which competition becomes serious. Towards the end

of this period, competitors' products cut deeply into the company's market position.

5. Decline: the product becomes obsolete and its competitive disadvantage result in decline in sales and, eventually, deletion.

It should be noted that the predictive capabilities of the product lifecycle are depend-

ent upon several factors, both controllable and uncontrollable, and that no two companies

may follow the same exact pattern or produce the same results. For example, differences

in the competitive situation during each of these stages may dictate different marketing

approaches . Some argue that the competitive situation is the single most important factor

the duration of height of a product lifecycle curve. A useful way of looking at

this phenomenon is in the telms of competitive distinctiveness. Several years ago, Dean geSted that a separation exists between products of lasting and perishable distinctiveness.

Often, new products may, upon introduction, realistically expect a long period of lasting

distinctiveness or market protection-through such factors as secrecy, patent protection, and

the time and cash required to develop competitive products. However, almost all new

ucts can

fewer than 5, 10, or 15 years of market protection.s

Of course, changes in other elements of the marketing mix may also affect the

formance of the product duri ng its lifecycle. For example, a vigorous promotional program

or a dramatic lowering of price may improve the sales picture in the decline period, at least

temporarily. The

TV market illustrated this point. Usually the improve-

ments brought about by nonproduct tactics are

short-lived and basic alterations

to product offerings provide longer benefits.

Whether one accepts the S-shaped curve as a valid product-sales pattern or as a pat-

tern that holds only for some products (but not for others), the product lifecycle concept

can still be very useful. It offers a framework for dealing systematically with product

agement issues and activities. Thus, the marketer must be cognizant of the generalizations

apply to a given product as it moves through the various stages. This process begins

with product development and ends with the

(discontinuation) of the product.

Product Strategies

Product planning should be an ongoing process that consistently evaluates existing

ucts, modifies where necessa;:y, deletes products that no longer contribute to the fi rm, and

introduces new products. Since most companies have at least one product line (and per-

several) , each containing several items, product management is a necessary activity-

a daily activity. The task involves gathering the necessary data, utilizing a framework to

evaluate it in light of a particular product or groups of products, selecting an appropriate

strategy, and implementing that strategy. In general, there are two product strategy issues:

approaches to the market and key product decisions.

Approaches to the Market

primary task

a product is to facilitate the success of a particular market strategy. A

market strategy delineates what the seller wants to accomplish relative to buyers. Strategy

is partly

on the approach used to represent the product. There are three general

approaches, each of which may change during the life of the product.

Produci differentiation is used

a marketer chooses to appeal to the whole mar-

ket by attempting to cater to the particular desires of all the buyers who hopefully would

prefer his brand . This strategy is

if the brand is widely popular and can be con-

tinued in general market

through strong promotion. Crest toothpaste is an example

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