Marketing Management: Managing Products 14 January 2009
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Marketing Management Managing Products 14th January 2009
Managing Products
Product line decisions Product lifecycle Product portfolio Product Pricing
Product Line
A group of products that are closely related because they perform similar function, satisfy same basic want, are sold to same customer groups, are marketed through same distribution channels or fall within same price ranges or share some other characteristics. Each Product line consists of product items E.g. Detergent manufacturer with different types of detergents”
Why would you extend your Product Line?
Product line can be extended upwards, downwards or both ways Challenge for product managers is to identify the optimal length Basis of decisions!
Customer segmentation Consumer Desires Pricing breadth Short term gain (like sales promotions) Competitive intensity Trade Pressure (Pressure from competing retailers)
What factors would affect your Product Line Decisions?
Category Size: Market Potential/ Market Size Product Life Cycle: Which stage of the lifecycle is your product in? (Introduction, growth, maturity and decline) Sales Cyclicity / Seasonality (change in business cycles, change in seasons) Profitability that varies overtime and business trends/ factors of production etc
Think about it!
You are a product line manager. Look into each of porter five forces.
Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Rivalry Pressure from substitutes
How does each force affect your product line decision?
Product Life Cycle Sales Development
Introduction
Growth
Maturity
Saturation
CONSUMERS
Growing adopters: Trial of products or services
Growing selectivity of purchase
Saturation of users
COMPETITION
Entry of competitors
May be many
Reliance on repeat purchase: fight for share
Decline
Drop off in usage
Exit of competitors
Time
Product Life Cycle Stages
Product Development: Stages
New ideas/possible inventions Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at? Product Development and refinement Test Marketing – possibly local/regional Analysis of test marketing results and amendment of product/production process Preparations for launch – publicity, marketing campaign
Product Life Cycle Stages
Introduction/Launch:
Advertising and promotion campaigns Target campaign at specific audience? Monitor initial sales Maximise publicity High cost/low sales Length of time – type of product
Product Life Cycles Stages
Growth:
Increased consumer awareness Sales rise Revenues increase Costs - fixed costs/variable costs, profits may be made Monitor market – competitors reaction?
Product Life Cycle Stages
Maturity:
Sales reach peak Cost of supporting the product declines Ratio of revenue to cost high Sales growth likely to be low Market share may be high Competition likely to be greater Monitor market – changes/amendments/new strategies?
Product Life Cycle Stages
Saturation:
New entrants likely to mean market is ‘flooded’ Necessity to develop new strategies becomes more pressing:
Searching out new markets:
Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures, acquisition – media/music, etc.
Developing new uses Focus on adapting the product Re-packaging or format Improving the standard or quality Developing the product range
Product Life Cycle Stages
Decline and Withdrawal:
Product outlives/outgrows its usefulness/value Fashions change Technology changes Sales decline Cost of supporting starts to rise too far Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
Strategies at each stage
Introductory Stage: Marketing Mix Growth Stage: Build Brand and increase market share Maturity Stage: Defend the market share while maximizing the profit Decline Stage: Maintain, Harvest or Discontinue
Product Life Cycle Sales Development
Introduction
Growth
Maturity
Saturation
CONSUMERS
Growing adopters: Trial of products or services
Growing selectivity of purchase
Saturation of users
COMPETITION
Entry of competitors
May be many
Reliance on repeat purchase: fight for share
Decline
Drop off in usage
Exit of competitors
Time
THANK YOU
Managing Products
Product line decisions Product lifecycle Product portfolio Product Pricing
Product Line
A group of products that are closely related because they perform similar function, satisfy same basic want, are sold to same customer groups, are marketed through same distribution channels or fall within same price ranges or share some other characteristics. Each Product line consists of product items E.g. Detergent manufacturer with different types of detergents”
Why would you extend your Product Line?
Product line can be extended upwards, downwards or both ways Challenge for product managers is to identify the optimal length Basis of decisions!
Customer segmentation Consumer Desires Pricing breadth Short term gain (like sales promotions) Competitive intensity Trade Pressure (Pressure from competing retailers)
What factors would affect your Product Line Decisions?
Category Size: Market Potential/ Market Size Product Life Cycle: Which stage of the lifecycle is your product in? (Introduction, growth, maturity and decline) Sales Cyclicity / Seasonality (change in business cycles, change in seasons) Profitability that varies overtime and business trends/ factors of production etc
Think about it!
You are a product line manager. Look into each of porter five forces.
Threat of new entrants Bargaining power of buyers Bargaining power of suppliers Rivalry Pressure from substitutes
How does each force affect your product line decision?
Product Life Cycle Sales Development
Introduction
Growth
Maturity
Saturation
CONSUMERS
Growing adopters: Trial of products or services
Growing selectivity of purchase
Saturation of users
COMPETITION
Entry of competitors
May be many
Reliance on repeat purchase: fight for share
Decline
Drop off in usage
Exit of competitors
Time
Product Life Cycle Stages
Product Development: Stages
New ideas/possible inventions Market analysis – is it wanted? Can it be produced at a profit? Who is it likely to be aimed at? Product Development and refinement Test Marketing – possibly local/regional Analysis of test marketing results and amendment of product/production process Preparations for launch – publicity, marketing campaign
Product Life Cycle Stages
Introduction/Launch:
Advertising and promotion campaigns Target campaign at specific audience? Monitor initial sales Maximise publicity High cost/low sales Length of time – type of product
Product Life Cycles Stages
Growth:
Increased consumer awareness Sales rise Revenues increase Costs - fixed costs/variable costs, profits may be made Monitor market – competitors reaction?
Product Life Cycle Stages
Maturity:
Sales reach peak Cost of supporting the product declines Ratio of revenue to cost high Sales growth likely to be low Market share may be high Competition likely to be greater Monitor market – changes/amendments/new strategies?
Product Life Cycle Stages
Saturation:
New entrants likely to mean market is ‘flooded’ Necessity to develop new strategies becomes more pressing:
Searching out new markets:
Linking to changing fashions Seeking new or exploiting market segments Linking to joint ventures, acquisition – media/music, etc.
Developing new uses Focus on adapting the product Re-packaging or format Improving the standard or quality Developing the product range
Product Life Cycle Stages
Decline and Withdrawal:
Product outlives/outgrows its usefulness/value Fashions change Technology changes Sales decline Cost of supporting starts to rise too far Decision to withdraw may be dependent on availability of new products and whether fashions/trends will come around again?
Strategies at each stage
Introductory Stage: Marketing Mix Growth Stage: Build Brand and increase market share Maturity Stage: Defend the market share while maximizing the profit Decline Stage: Maintain, Harvest or Discontinue
Product Life Cycle Sales Development
Introduction
Growth
Maturity
Saturation
CONSUMERS
Growing adopters: Trial of products or services
Growing selectivity of purchase
Saturation of users
COMPETITION
Entry of competitors
May be many
Reliance on repeat purchase: fight for share
Decline
Drop off in usage
Exit of competitors
Time
THANK YOU
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