MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE
7
Product Strategy
Product Classification (1 of 3)
• Consumer Product Classifications
– Convenience Products
– Shopping Products
– Specialty Products
– Unsought Products
• (1) Products of which consumers are unaware
• (2) Products that consumers do not consider
purchasing until a need or emergency
arises
7-2
Specialty Products
7-3
Product Classification (2 of 3)
• Business Product Classifications
– Raw Materials
– Component Parts
– Process Materials
– MRO Supplies
– Accessory Equipment
– Installations
– Business Services
7-4
Product Classification (3 of 3)
• Product Lines and Mixes
– Product Line
– Product Mix
• Benefits of offering a wide variety and deep
assortment of products:
– Economies of Scale
– Package Uniformity
– Standardization
– Sales and Distribution Efficiency
– Equivalent Quality Beliefs
7-5
Product Lines and
Product Mixes at Gillette
Exhibit 7.1 7-6
Discussion Question
• Consider the number of product choices that
are available in the U.S. consumer market.
In virtually every product category,
consumers have many, many options to
fulfill their needs. Are all of these options
really necessary? Is having this many
choices a good thing for consumers? Why
or why not?
7-7
New Product Development
• Six strategic product development options:
– (1) New-to-the-world products (discontinuous
innovations)
– (2) New product lines
– (3) Product line extensions
– (4) Improvements or revisions of existing
products
– (5) Repositioning
– (6) Cost reductions
• Customer perception of differentiation is
critical
7-8
Avis: “We Try Harder”
7-9
Product Strategy
Throughout the Life Cycle
• Development Stage
• Introduction Stage
• Growth Stage
• Maturity Stage
• Decline Stage
7-10
Stages of the Product Life Cycle
Exhibit 7.2 7-11
Marketing Strategy During
the Product Life Cycle
Exhibit 7.3 7-12
Development Stage
• No sales revenue during this stage
• Components of the product concept:
– An understanding of desired uses and benefits
– A description of the product
– The potential for creating a complete product line
– An analysis of the feasibility of the product concept
• Customer needs should be discerned before
developing marketing strategy
7-13
Introduction Stage
• Begins when development is complete
• Ends when customers widely accept the product
• Marketing strategy goals during this stage:
– Attract customers by raising awareness and interest
– Induce customers to try and buy
– Engage in customer education activities
– Strengthen or expand channel and supply
relationships
– Build on availability and visibility
– Set pricing objectives 7-14
Growth Stage (1 of 2)
• Be ready for sustained sales increases
• Rapid increase in profitability early in the growth
stage that decreases at the end of this stage
• Length depends on nature of product and
competitive reactions
• Two strategies:
– (1) Establish a strong, defensible marketing position
– (2) Achieve financial objectives
7-15
Growth Stage (2 of 2)
• Marketing strategy goals in this stage:
– Leverage the product’s perceived differential advantages
– Establish a clear product and brand identity
– Create unique positioning
– Maintain control over product quality
– Maximize availability of the product
– Maintain or enhance the product’s profitability to partners
– Find the ideal balance between price and demand
– Keep an eye focused on the competition
7-16
Maturity Stage (1 of 2)
• Few, if any, new firms will enter the market
• Still an opportunity for new product features
and variations
• Typically the longest stage in the product
life cycle
7-17
Maturity Stage (2 of 2)
• Four general goals in this stage:
– (1) Generate Cash Flow
– (2) Hold Market Share
– (3) Steal Market Share
– (4) Increase Share of Customer
• Four options to achieve these goals:
– (1) Develop a new product image
– (2) Find and attract new users to the product
– (3) Discover new applications for the product
– (4) Apply new technology to the product 7-18
Decline Stage
• Two options:
– (1) Attempt to postpone the decline
– (2) Accept its inevitability
• Harvesting
• Divesting
• Factors to be considered during this stage:
– Market segment potential
– The market position of the product
– The firm’s price and cost structure
– The rate of market deterioration
7-19
Marketing Strategy in Action
• Ford has been creative in restyling the 2005 Mustang with retro
styling cues to keep the model viable despite decreasing interest in
“muscle cars.” What other ways can marketers combat the
inevitability of the decline stage of the product life cycle?
7-20
Discussion Question
• Describe the different product decisions that
impact each phase of the product life cycle.
If you were losing money with a product in
the decline stage, why might you consider
retaining that product? Why would a firm
or brand manager become sentimental about
a product and hold on to it even in the face
of monetary losses?
7-21
Branding Strategy
• Key Issues In Branding
– Brand Loyalty
– Brand Equity
– Brand Alliances
• Packaging and Labeling
– Packaging
• Protection, storage, convenience, etc.
– Labeling
• The Nutritional Labeling and Education Act of 1990
• Food Choking Prevention Act
7-22
Advantages of Branding
Exhibit 7.4 7-23
The World’s Twenty-Five
Most Valuable Brands
Exhibit 7.5 7-24
Product Strategy for Services
• Characteristics of Services
• Marketing Strategy for Services
– Product Issues
– Pricing Services
– Promoting Service Benefits
– Distributing Services
7-25
Unique Characteristics of Services
and Resulting Marketing Challenges
Exhibit 7.6 7-26
Discussion Question
• Given the unique characteristics of services,
what potential ethical issues could arise in
service marketing and delivery? How can a
service marketer prevent ethical challenges
and convey a sense of trust to customers?
7-27
