Marketing Fourteen (product Decisions)
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PRODUCT DECISIONS
Product Line Decisions: Product Mix
• Product mix: set of all product lines – Width: # of product lines – Length: # of products in lines
Width Detergent
Soap
# product lines (3) Shampoo
ABC
– Depth: # of versions of each product carried – Consistency: how closely related the product lines are
Adapted from Kotler, McDougall and Picard, p.360
• Product Mix Decisions – A firm may lengthen or widen its product mix – A Company may decide to add variations that will attract new users – A product may be pruned or altered
11-3
Two-Way Product-Line Stretch: Marriott Hotels Economy
Quality
Standard
Good
High
Price
Marriott (Middle managers)
Above AboveAverage ge
Courtyard (Salespeople)
Average
Low
Fairfield Inn (Vacationers)
Superior
Marriott Marquis (Top executives)
TENSATOR :THE INNOVATOR
• •
• • • •
Tensator :small company ,not known for its innovation. The company's Sales and Marketing Director Terry Green stated that ‘I'm a very firm believer that innovation doesn't need to be revolutionary. There's nothing my company has done that couldn't be done by anyone else'. Tensator is in a light engineering business which manufactured the Constant Force Spring, a device used in the manufacture of car seat belts throughout Europe. In 1978 , the CEO put forward plans for the use of the Constant Force Spring in the production of queuing barriers for supermarkets and banks, etc. He persuaded the company to focus on this new product idea. Research was undertaken where customers, current and potential, were asked to give opinions on the viability of such a product and how it could improve on the products that were currently available.
TENSATOR THE INNOVATOR • Tensabarrier was launched. By 1996, the product was being exported to thirty‑six countries and accounted for £3 million turnover. • There are now a variety of Tensabarriers in a variety of shapes and forms. There is a bolt‑down barrier and a special checkout version which incorporates an electronic movement sensor to prevent theft. • Tensator launched thirteen new products in the years 1995 and 1996. Total turnover had risen more than threefold since 1988 to £10 million,
What are new products????
Stages in the new-product process
Marketing information and methods used in the new-product process
Mattel’s Barbie
Why should laboratory and safety tests be done?
Why do new products fail? • • • • • • • • • • • •
One study estimated that as many as 80% of new consumer packaged products failed. Only about 40% of new consumer products are around 5 years after introduction WHY???????????????????????? Overestimated market Poor design Incorrect positioning Error in pricing Poor marketing Cost overrun Competition
LIST OF FAILED PRODUCTS?????
The product lifecycle (PLC) • Products need managing throughout their working lives. • This requires deciding: • – What products should be created. • – The best time to launch them and introduce them to the public. • – How to capitalise on a product’s strengths and iron out any weaknesses. • – When an older product is past its prime and needs
Stages in PLC
Task
• Identify products at different stages of the life cycle
Product Line Decisions: Product Mix
• Product mix: set of all product lines – Width: # of product lines – Length: # of products in lines
Width Detergent
Soap
# product lines (3) Shampoo
ABC
– Depth: # of versions of each product carried – Consistency: how closely related the product lines are
Adapted from Kotler, McDougall and Picard, p.360
• Product Mix Decisions – A firm may lengthen or widen its product mix – A Company may decide to add variations that will attract new users – A product may be pruned or altered
11-3
Two-Way Product-Line Stretch: Marriott Hotels Economy
Quality
Standard
Good
High
Price
Marriott (Middle managers)
Above AboveAverage ge
Courtyard (Salespeople)
Average
Low
Fairfield Inn (Vacationers)
Superior
Marriott Marquis (Top executives)
TENSATOR :THE INNOVATOR
• •
• • • •
Tensator :small company ,not known for its innovation. The company's Sales and Marketing Director Terry Green stated that ‘I'm a very firm believer that innovation doesn't need to be revolutionary. There's nothing my company has done that couldn't be done by anyone else'. Tensator is in a light engineering business which manufactured the Constant Force Spring, a device used in the manufacture of car seat belts throughout Europe. In 1978 , the CEO put forward plans for the use of the Constant Force Spring in the production of queuing barriers for supermarkets and banks, etc. He persuaded the company to focus on this new product idea. Research was undertaken where customers, current and potential, were asked to give opinions on the viability of such a product and how it could improve on the products that were currently available.
TENSATOR THE INNOVATOR • Tensabarrier was launched. By 1996, the product was being exported to thirty‑six countries and accounted for £3 million turnover. • There are now a variety of Tensabarriers in a variety of shapes and forms. There is a bolt‑down barrier and a special checkout version which incorporates an electronic movement sensor to prevent theft. • Tensator launched thirteen new products in the years 1995 and 1996. Total turnover had risen more than threefold since 1988 to £10 million,
What are new products????
Stages in the new-product process
Marketing information and methods used in the new-product process
Mattel’s Barbie
Why should laboratory and safety tests be done?
Why do new products fail? • • • • • • • • • • • •
One study estimated that as many as 80% of new consumer packaged products failed. Only about 40% of new consumer products are around 5 years after introduction WHY???????????????????????? Overestimated market Poor design Incorrect positioning Error in pricing Poor marketing Cost overrun Competition
LIST OF FAILED PRODUCTS?????
The product lifecycle (PLC) • Products need managing throughout their working lives. • This requires deciding: • – What products should be created. • – The best time to launch them and introduce them to the public. • – How to capitalise on a product’s strengths and iron out any weaknesses. • – When an older product is past its prime and needs
Stages in PLC
Task
• Identify products at different stages of the life cycle
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