Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGING THE PRODUCT

does the product occupy in its market?) , a rank (how does the product fare against its com-

petitors in various evaluative dimensions?), a mental

(what are consumer attitudes?),

and a strategic process (what

must be attempted in order to create the optimal

product position?). Thus, positioning is both a concept and a process. The positioning process

produces a position for the product, just as the segmentation process produces alternative

market segments . Positioning can be applied to any type of product at any stage of the life-

cycle. Approaches to positioning range from gathering sophisticated market research infor-

mation on consumers' preferences and perceptions

brands to the intuition of the product

manager or a member of his staff.

Aaker and Shansby suggest several positioning strategies employed by marketers. A

product or idea can be positio ned8

1. By attributes- Crest is a cavity fighter

2. By price-Sears is the "value" store

3. By competitors-Avis positions itself against Hertz

4. By application--Gatorade is for after exercising

5. By product user- Miller is for the blue-collar, heavy beer drinker

6. By product cl ass- Carnation Instant Breakfast is a breakfast food

7. By services provided-Circuit City backs up all its products

Products and brands are constantly being repositioned as a result of changes in com-

petitive and market situations. Repositioning involves changing the market's perceptions of a product or brand so that the product or brand can compete more effectively in its present market or in other market segments. Changing market perceptions may require changes

in the tangible product or in its selling price. Often, however, the new differentiation is accomplished through a change in the promotional message. To evaluate the position and to gen-

erate diagnostic information about the future positioning strategies, it is necessary to monitor the position over time. A product position, like sports heroes, may change readily; keeping track and making necessary adj ustments is very important.

Product Line Decisions

A product line can contain one product or hundreds. The

number of products in a product line refer to its dep th, while the number of separate product lines owned by a company is the product line width. Several decisions are related to the product line.

There are two basic strategies that deal with whether the company will attempt to

carry every conceivable product needed and wanted by the consumer or whether they will

carry selected items. The former is a full-line strategy while the latter is called a limited-line strategy. Few full-line manufacturers attempt to provide items fo r every conceivable market niche. And few limited-line manufacturers would refuse to add an item if the demand

were great enough. Each strategy has its advantages and disadvantages.

Line extensions strategies involve adding goods related to the initial product, whose

purchase or use is keyed to the product. For example, a computer company may provi de

an extensive selection of software to be used with its primary hardware. This strategy not

only increases sales volume, it also strengthens the manufacturer's name association with

the owner of the basic equipment, and offers dealers a broader line. These added items tend

to be similar to existing brands with no innovations. They also have certain risks . Often the

company may not have a high level of expeltise either producing or marketing these related

products. Excessive costs, inferior products, and

of goodwill with distributors and

customers are all possible deleterious outcomes. There is also a strong possibility that such

PRODUCT PLANNING AND STRATEGY FORMULATION

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a product decision could create conflict within the channel of distribution. In the computer

example just described, this company may have entered the software business over the strong

objection of their long-telm supplier of software. If their venture into the software busi-

ness fails, re-establishing a positive relationship with this supplier could be quite difficult.

A line extension strategy should only be considered when the producer is certain that

the capability exists to efficiently manufacture a product that compares well with the base

product. The producer should also be sure of profitable competition in this new market.

Line-filling strategies occur when a void in the existing product line has not been filled or a new void has developed due to the activities of competitors or the request of consumers.

Before considering such a strategy several key questions should be answered:

• Can the new product support itself?

• Will it cannibalize existing products?

• Will existing outlets be willing to stock it?

• Will competitors

the gap if we don't?

• What will happen if we don ' t act?

Assuming that we decide to fill out our product line further, there are several ways

of implementing this decision. Three are most common:

1. Product proliferation' the introduction of new varieties of the initial product or

products that are similar (e.g. , a ketchup manufacturer introduces hickory-flavored

and pizza-flavored barbecue sauces and a special hot dog sauce).

2. Brand extension: strong brand preference allows the company to introduce the

related product under the brand umbrella (e.g., Jell-O introduces pie filling and

diet desserts under the Jell-O brand name).

3. Private branding: producing and distributing a related product under the brand of a distributor or other producers (e.g., Firestone producing a less expensive tire

for K-Mart).

In addition to the demand of consumers or pressures from competitors, there are other

legitimate reasons to engage in these tactics. First, the additional products may have a greater appeal and serve a greater customer base than did the original product. Second, the additional product or brand can create excitement both for the manufacturer and distributor. Third,

shelf space taken by the new product means it cannot be used by competitors. Finally, the

danger of the original product becoming outmoded is hedged. Yet, there is serious risk that

must be considered as well: unless there are markets for the proliferations that will expand

the brand' s share, the newer forms will cannibalize the original product and depress profits.

Line-pruning strategies involve the process of getting rid of products that no longer

contribute to company profits. A simple fact of marketing is that sooner or later a product

will decline in demand and require pruning . Timex has stopped selling home computers.

Hallmark has stopped seiling talking cards.

A great many of the components used in the latest automobile have replaced far more

expensive parts, due to the increased costs in other areas of the process, e.g., labor costs.

Using modern robotics technology has halved the manufacturing costs of several prod-

ucts. Through such implementation, Keebler Cookies moved from packaging their cook-

ies totally by hand to 70% automation. Other possible ways a company might become more

efficient are by replacing antiquated machinery, moving production closer to the point of

sale, subcontracting out part of the manufacturing process, or hiring more productive

employees.

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