Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 7

INTRODUCING AND MANAGING THE PRODUCT

Product Deletion

Eventually a product reaches the end of its life. This is the least

understood stage of product management, because we human beings are very reluctant to

think about death , even that of a product.

There are several reasons for deleting a mature product. First, when a product is los-

ing money, it is a prime deletion candidate. In regard to this indication, it is important to make sure that the loss is truly attributable to the product and not just a

in the com-

pany 's accounting system.

Second, there are times when a company with a long

line can

if the

weakest of these products are dropped. This thinning of the line is referred to as product-

line simplification. Product overpopulation spreads a company 's producti ve, financial, and marketing resources very thin. Moreover, an excess of products in the li ne, some of which

serve overlapping markets, not only creates internal competition among the company's own

products, but also creates confusion in the minds of consumers. Consequently, a company

may apply several criteria to all its products and delete those that fare worst.

A third reason for deleting a product is that problem

absorb too much man-

agement attention. Many of the costs inculTed by weak

are indirect: management

time, inventory costs, promotion expenses, decline of company reputation, and so forth.

Missed opportunity costs reflect the fi nal reason for product deletion. Even if a mature

product is making a profit contribution and its indirect cost consequences are recognized

and considered justifiable, the company might still be

off 'vithout the product because

of its opportunity cost. The opportunity cost of a mature product is the profit contribution

that a new and healthy product could produce if the effort and resources being devoted to

the mature item were redirected.

The final issue is actually going through a product deletion procedure. Sometimes,

however, a product can be revived (see the next Integrated Marketing box).

Strategies for Developing New Products

For several decades, business has come increasingly to the realization that new and improved

products may hold the key to their survival and ultimate success. Consequently, professional

management has become an integral part of this process. As a result, many firms

new products based on an orderly procedure, employing comprehensive and relevant data .

and intelligent decision making.9

MARKETING CAPSULE

•

1. A product is anything, either tangible or intangible, offered

4. Service products, in contrast to goods

are char-

by the fi rm as a solution to the needs and wants of the con-

acterized as being intangible

having simultaneous pro-

sumer, that is profitable or potentially profitable and meets

ductionlo) i,sumption , little standardization, and high

the requirements of the various publics, governing, or influ-

buyer involvement

encing society. There is a core produ ct, a tangible prod-

5. The product plan process includes the following:

uct, an augmented product, and a promised product.

a. Determination of product obj ectives

2. Consumer goods are purchased for personal consumption .

b. Development of product plans to reach objectives

3. Industrial goods are modifi ed or di stributed for resale.

c . Development of appropriate strategies

PRODUCT PLANNING AND STRATEGY FORMULATION

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INTEGRATED MARKETING 7.

PUTTING LEVI'S BACK IN THE SADDLE

Levi Straus & Co. is opting for a new marketing direction.

selves rather than relentlessly trying to convey "attitude." A

The situation is reflected by Maressa Emmar, high school

television campaign for frayed cutoff shorts shows a young

sophomore from Setaukat, N.Y., and her friends, who won't

woman throwing her jeans in front of an oncoming train, which

wear anything from Levi's .

doesn't make the styles we

slices them to cutoffs. Print will support its

53 fashion-

want," says Emmar, who prefer.s baggy pants from JNCO and

forward Levi's Engineered jeans. This new styIe has curved-

Kikwear. "Levi's styles are too tight and for the older gen-

bottom hems, slanted back pockets and a larger watch pocket

eration, like middle-aged people."

to hold pagers and other electronic items.

After three years of tumbling sales, layoffs, plant closing,

As Levi'stry to rise like a phoenix from the ashes, one of

and a failed effort to woo kids online, Levi's is gearing up

the greatest American brand icons is passing into a new era

for several product launches. Notes new chief executive Philip

in its history. Classic Levi's Jeans may find its greatest influ-

Martineau, "Levi's is a mythical brand, but our performance

ence, much like the American cowboy, is more myth than

has been poor. We need to turn our attention back

customers

reality.

and have more relevant products and marketing."

In coming months, Levi's will unveil a slew of youth-

Sources: Michael McCarthy and Emily Fromm, "An American

oriented fashions, ranging from oddly cut jeans to nylon pants

Icon Fades Away," Adweek, April 26, 1999, pp. 28-35; Alice Z.

that unzip into shorts. But Martineau is not giving up on the

Cuneo, "Levi's Makes Move to Drop All the Hype and Push Prod-

geezers. He wants to broaden

appeal to grown-ups by

ucts," Advertising Age.

17,2000, pp. 4, 69; Louis Lee, "Can

extending the Dockers and Slates casual pants brands. Mar-

Levi's Be Cool

Business Week. March 13, 2000, pp.

144-145; Diane Brady. "Customizing for the Masses." Business

tineau also needs to smooth out kinks in manufacturing and

Week. March 20, 2000. pp. 130-131.

shipping that prevent Levi's from rushing new products into

stores.

How do you sell the idea that you're hip while not

ing off the oldsters? New ads will showcase the products them-

Defining the "New" in a New Product

The determination of what constitutes a "new" product remains one of the most difficult questions faced by the marketer. Does the most recent TV model introduced by Sony represent a new product even though 95% of the product remains the same as last year's model?

Are packaged salads a new product, or

the package the only part that is really new?

Indeed, companies have often been guilty of using the word "new" in conjunction

with some questionable products. For example, older products have simply been marketed

in new packages or containers but have been identified as new products by the manufac-

turer. Flip-top cans. plastic bottles,

screw-on caps have all been used to create this image

of newness. Industrial companies have been guilty of similar actions. Computer manufac-

turers, for instance, have slightly modified some of the basic hardware or developed some

software for a particular customer (banks, churches), and have felt free to claim newness.

Finally, manufacturers may

an existing product to their product line and call it new,

even though

is not new to the

Does technOlogy make a product new, or features, or even the price? It is important

to understand the concept of "new" in a new product, since there is sufficient evidence that suggests that each separate category of

may require a different marketing strategy.

Perhaps the best way to approach this problem is to view it from two perspectives;

that of the consumer and that of the manufacturer.

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