http://www-rohan.sdsu.edu/~renglish/370/notes/chapt11/index.

htm
A way to trace the stages of a product's acceptance from its introduction to its demise.
One of the most familiar concepts in marketing
A prevalent marketing management tool
Refers to the life of the product category
The time a product category spends in a stage of the product life cycle may vary from a few weeks
Does not predict how long a product category will remain in any one stage
A tool to help marketers understand
where their product is now
what may happen
which strategies are normally appropriate.
A. Introduction Stage

Sales grow slowly

Create awareness

High production costs

Frequent product modification
Skimming pricing
High failure rate,

Promotion strategy focuses on primary demand for the product category

developing product awareness

Intensive personal selling to retailers and wholesalers is required.

B. Growth Stage
Characteristics

Sales grow at an increasing rate.

Large companies may acquire small pioneering firms.

Promotion emphasis

heavy brand advertising

Gaining wider distribution is a key goal

Toward the end of this stage

prices normally fall

Development costs have been recovered

C. Maturity Stage

Sales continue to increase but at a decreasing rate

Annual models of many products

Product lines are widened or extended

Heavy promotions to both the dealers and consumers are required.

D. Decline Stage

Signaled by a long-run drop in sales.

The rate of decline is governed by

a. how rapidly consumer tastes change or

b. how rapidly substitute products are adopted.

Strategies

Deletion.

Harvesting
To prevent slipping into decline

E. Some Dimensions of the Product Life Cycle

1. Length of the Product Life Cycle

There is no exact time that a product takes to move through its life cycle

Mass communication shortens life cycles

2. Shape of the Product Life Cycle

There are several distinctive life-cycle curves

Each type suggests different marketing strategies

Significant education of the customer is required.

Extended introductory period.

Sales begin immediately

Little learning is required by the consumer

Benefits of purchase are readily understood.

Most often appear in women’s and men’s clothing styles.

 Length of the cycles may be years or decades.

Rapid sales on introduction

Equally rapid decline.

Often novelties and have a short life cycle.

3. The Product Level:

Multiple life cycles (class and form) may exist.

Product class

Product form

4. The Life Cycle and Consumers

A product diffuses, or spreads, through the population, a concept called the diffusion of innovation.
Innovators
Early Adopters

Early Majority
Late

Majority
Laggards

Common reasons for resisting a product in the introduction stage are

usage barriers

value barriers

risk barriers
psychological barriers

Product Characteristics and the Rate of Adoption

Complexity

Compatibility

Relative advantage

Observability

Trialability
Trialability

Marketing Implications of the Adoption Process

Two types of communication aid the diffusion process

The effectiveness of different messages and appeals depends on the type of adopter targeted.

II. MANAGING THE PRODUCT LIFE CYCLE

A. Role of a Product Manager

Product manager is responsible for marketing products through the successive stages of their life cy

Product (or brand) manager manages the marketing efforts for a close-knit family of products or bra
Three ways to manage:
modify the product
modify the market
reposition the product.

B. Modify the Product

Altering a product’s characteristic to try to increase and extend the product’s sales.
quality
performance
appearance,

C. Modify the Market Market

modification strategies involve:
D. Reposition the Product

Product repositioning

Four factors that trigger a repositioning action are:

Reacting to a Competitor’s Position.

Reaching a New Market.

Catching a Rising Trend.

Changing the Value Offered.
III. BRANDING AND BRAND MANAGEMENT
Branding Decisions

Brand

Brand name

Brand mark

Trade name
Trademarks

Legal term indicating the owner's exclusive right to use the brand or part of the brand.

Phrases, Abbreviations, Symbols, Shapes and Color combinations may also qualify for trademark
protection.

The MARK has to be used continuously to be protected

Rights to a trademark continue for as long as it is used.
Others are prohibited from using the brand without permission.
A service mark performs the same functions for service businesses.
Lanham Act of 1946 protects Trademarks

1. Sets severe penalties for trademark infringement.

2. The injured party can sue for triple damages and recovery of any profit.

Generic product name identifies a product by class or type and cannot be trademarked
Benefits of Branding

Identification
Encourages repeat sales

Facilitates New Product Introduction

product counterfeiting has been a growing problem.

Counterfeit products can steal sales from the original manufacturer or hurt the company’s reputatio

Some Branding Concepts

Brand Equity
Brand Equity

Brand Loyalty

Brand Identity

Master Brand

A. Brand Personality and Brand Equity

Brand Equity has two distinct advantages:

1. Brand equity provides a competitive advantage.

2. Consumers are often willing to pay a higher price for a product with brand equity.

1. Creating Brand Equity

Brand equity is created by marketing programs

 Forge strong, favorable, and unique consumer associations and experiences with a brand

Sequential four-step building process:

1. Develop positive brand awareness and an association in consumer’s minds with a product class o
brand an identity.

2. Establish a brand’s meaning in the minds of consumers.

3. Elicit the proper consumer responses to a brand’s identity and meaning.

4. Attention to how consumers think and feel about a brand.

5. Create a consumer-brand resonance evident in an intense, active loyalty relationship between co

brand.

2. Valuing Brand Equity

Brand equity is a financial advantage for the brand owner.

 Established brands are considered intangible assets.

Can appreciate in value when effectively managed

Can lose value when not managed properly.

B. Licensing

Licensing is a contractual agreement whereby a company allows another firm to use its brand name
secret, or other property for a royalty or a fee...

Licensing also assists companies in entering global markets with minimal risk.

C. Picking a Good Brand Name

A good brand name should

A good brand name should

D. Branding Strategies

1. Manufacturer Branding.

Multiproduct branding

Makes possible line extensions

 Subbranding combines a family brand with a new brand.

Allows for brand extension

Using a current brand name to enter a completely different product class.

Too many uses for one brand name can dilute the meaning.
Co-branding

The use of a combination of brand names to enhance the perceived value of a product

May be used to identify product ingredients or components.

May be used when two organizations wish to collaborate to offer a product.

Adds value to products that are generally perceived to be homogeneous shopping goods.

multibranding

Use when each brand is intended for a different market segment.

 Has become more complex in the global marketplace.

Promotional costs are higher with multibranding.

Euro-branding,

Use the same brand name for the same product across all countries in the European Union.

Makes Pan-European advertising and promotion programs possible.

2. Private Branding.

Often called private labeling or reseller branding

Use the brand name of a wholesaler or retailer.

Manufacturer's Brands vs. Private Brands

Advantages of
Manufacturer's Brands

to retailers or wholesalers
Can enhance retailer's image
can carry lower inventory
manufacture gets the blame for problems

Disadvantages (risks) of
Manufacturer Brands

retailers or wholesalers
 Lower margins
3. Mixed Branding.

A compromise between manufacturer and private branding

A firm markets products under its own name and that of a reseller

The segment attracted to the reseller is different from the manufacturer’s own market.

4. Generic Branding.

a no-brand product that competes on price.

Low cost, no frills

Popular in late 1970's

30%-40% cheaper than national brands

20%-25% cheaper than store brands

good market share in some categories

IV. PACKAGING AND LABELING

Packaging component
Label

A. Creating Customer Value through Packaging and Labeling

Packaging Functions

Contain and Protect Products

Facilitate Recycling

Reduce Environmental Damage

Facilitate Storage
Facilitate Use

Wholesalers
&
Retailers

want
packages that

Consumers want

packages

that are

Packaging is often used to segment markets, particularly

by offering different sizes for different segments.

1. Communication Benefits.
Label information 

Packaging can also have brand equity benefits, as in the case of L’eggs.

2. Functional Benefits.
Convenience
Product protection
Storage.
Consumer protection

3. Perceptual Benefits.

Create perception in the consumer’s mind.

Can connote
status
economy
product quality.
B. Global Trends in Packaging
1. Environmental Sensitivity

The amount, composition, and disposal of packaging material continue to receive much attention.

European countries have been trendsetters in packaging guidelines and environmental sensitivity.

U.S. firms marketing in the EU have responded to these guidelines and ultimately benefited consum

Firms are using life-cycle analysis (LCA) to examine the environmental effects of their packaging at
sources and production through distribution and disposal.

2. Health and Safety Concerns

A majority of U.S. and European consumers believe that companies should make sure products and
of the cost.

New packaging technology to extend shelf life (the time a product can be stored) and prevent spoila
special applications for less-developed countries.

C. Labeling

Persuasive labeling
Informational labeling

Universal Product Codes (UPC)

Nutrition Labeling and Education Act of 1990

Requires detailed nutritional information on most food packages

Establishes standards for health claims on food packaging.

V. PRODUCT WARRANTY

A warranty is a statement indicating the liability of the manufacturer for product deficiencies.
 There are various types of product warranties with different implications for manufacturers and cust

Warranties are important in light of increasing product liability claims.

This issue is hotly contested between companies and consumer advocates.

Warranty Strategy

Product Warranties

Warranty

Express Warranty

full warranty

limited-coverage warranty
Implied Warranty

Magnuson-Moss Warranty

Federal Trade

Commission
Improvement Act
w weeks to decades.
Profit is minimal or
negative
Stimulate trial
Limited product
models
Penetration pricing
Little competition
High marketing costs

Informing about
product benefits.

Many competitors
enter the market.
Profits are healthy

Differences between
brands.
profits reach their
peak.
Sales volume has
created economies of
scale.

The marketplace is
approaching
saturation
An emphasis on
product style rather
than function
marginal competitors
begin dropping out of
the market.
Prices and profits
begin to fall.

Falling demand
forces many
competitors out of
the market

A few small specialty

firms may still
manufacture the
product.

Dropping a product
from the company’s
product line, is the
most drastic
strategy.
Company retains the
product but reduces
marketing support
Promote more
frequent use of
the product by
current customers
Find new target
markets for the
product
Find new uses for
the product
Price the product
below the market
Develop new
distribution
channels
Add new
ingredients
Delete old
ingredients
Make a dramatic
new guarantee

consume
r
products
usually
have
shorter
life
cycles
than
business
products
Rate of
technolo
gical
change
shortens
product
life
cycles.
 Entire
produ
ct
categ
ory or
indust
ry
Such
as
video
game
conso
les
and
softw
are.

Variat
ions
within
the
class
Such
as the
comp
uting
capab
ility of
game
conso
les.

ation.
 Eager
to try
new
ideas
and
produ
cts
Have
highe
r
incom
es
Better
educa
ted
than
nonin
novat
ors
2.50%
Much
more
relian
t on
group
norms
 Orient
ed to
the
local
comm
unity
Tend
to be
opinio
n
leade
rs.
13.50%
Collec
t
more
infor
matio
n
Evalu
ate
more
brand
s than
early
adopt
ers.
Rely
on
friend
s,
neigh
bors,
and
opinio
n
leade
rs for
infor
matio
n and
norms
.
34%
 Adopt
becau
se
most
of
their
friend
s
have
alrea
dy
done
so.
For
them,
adopt
ion is
the
result
of
press
ure to
confo
rm.
Are
older
than
the
other
s
Tend
to be
below
avera
ge in
incom
e and
educa
tion.
34%
Do
not
rely
on
the
norms
of the
group
.
 Indep
enden
t
becau
se
they
are
traditi
on-
bound
Have
the
lowes
t
socio
econo
mic
status
Are
suspic
ious
of
new
produ
cts
Aliena
ted
from
an
advan
cing
societ
y
16%

product
is
incompat
ible with
existing
habits
product
provides
no
incentive
to
change
physical,
economic
, or social
 cultural
differenc
es or
image.

The degree of
difficulty involved
in understanding
and using a new
product.
Slows diffusion.

The degree to
which the new
product is
consistent with
existing values
and product
knowledge, past
experiences, and
current needs.
Incompatibility
slows diffusion.

The degree to
which a product is
perceived to be
superior to
existing
substitutes.
Speeds diffusion

The degree to
which the benefits
and other results
of using a new
product can be
observed by
others and
communicated to
target customers.
Speeds diffusion

is the degree to
which a product
can be tried on a
limited basis.
Speeds diffusion
 Word-of-mouth
communication
Marketing to
consumers

d.

eir life cycles.

cts or brands.

Finding new users.

Increasing use among
existing users.

Creating new use situations.

Changing the place a

product occupies in a
consumer’s mind relative to
competitive products.

Reposition a product by
changing one of four
marketing mix elements.

Competitor’s position is
adversely affecting sales
and market share.

Repositioning a product
allows it to reach a new
market.

Changing consumer trends

can also lead to
repositioning a product.

For example, consumer

interest in “functional
foods” that offer health and
dietary benefits beyond
nutrition inspired
repositioning of oatmeal.
 addin
g
value
to the
produ
ct (or
line)
Additi
onal
featur
es
Highe
r
qualit
y
mater
ials.
Trading up
Reduc
ing
the
numb
er of
featur
es
Lower
qualit
y
Lower
price.
Reduc
ing
the
conte
nt of
packa
ges
witho
ut
chang
ing
packa
ge
size
and
maint
aining
the
packa
ge
price.
Trading down
A name, term,
symbol, design, or
combination thereof
that identifies a
seller's products and
differentiates them
from competitors'
products.
That part of the
brand that can be
spoken..
The element of the
brand that cannot be
spoken, such as
symbols
commercial, legal
name under which a
company does
business.

Failure to protect
trademarks may
make product
names generic.
All of the products
below were
trademarked.
Some still are!

aspirin
formica®
sheetrock®
band-aid®
kerosene
styrofoam®
dry ice
magic marker®
trampoline
 dumpster®
nylon
vaseline®
escalator
ping-pong®
yo-yo

The brand allows the

product to be
differentiated from
others and serves as
an indicator of quality
to consumers

Because a familiar
brand is more quickly
accepted by
consumers.

eputation.

The value of
company and
brand names.
the added value a
given brand name
gives to a product
beyond the
functional
benefits provided.
 Often represented
by the premium a
consumer will pay
for one brand
over another
when the
functional
benefits provided
are identical
Consistent
preference for one
brand over all others.
Leads to repeat
purchases.
important to
developing brand
loyalty
A brand so dominant
in consumers' minds
that they think of it
immediately when a
product category,
use situation, product
attribute, or
customer benefit is
mentioned.
t class or need to give a

ween consumers and the

nd name, patent, trade

Describe product
benefits.
Be memorable,
distinctive, and
positive.
Fit the company
or product image.
Have no legal or
regulatory
restrictions.
Be simple and
emotional.
Be carefully
checked for prior
impressions or
undesirable
images in
different
languages and
cultures..

Use one name for

all its products.
Called blanket
branding strategy
Called family
branding
strategy.
giving each
product a distinct
name.
n.

Advantages of
Private Brands
to retailers or
wholesalers
Higher gross margin
Manufacturer can not discontinue
ties consumer to dealer
ties salespeople to dealer
dealer controls marketing mix

Disadvantages (risks)
of
Private brands to
retailers or
wholesalers
Higher marketing
costs
Must buy in large
quantities
Dealer gets the
blame for
problems
risk of lower
perceived quality
any
contai
ner in
which
it is
offere
d for
sale
and
on
which
label
infor
matio
n is
conve
yed.
Integr
al
part
of the
packa
ge
Typic
ally
identi
fies
th
e
pr
od
uc
t
or
br
an
d
W
ho
m
ad
e
it
 W
he
re
an
d
w
he
n
it
w
as
m
ad
e
H
o
w
it
is
to
be
us
ed
Pa
ck
ag
e
co
nt
en
ts
an
d
in
gr
ed
ie
nt
s.

Packagin
1. spoilage g
2. tampering Promotes
3. children Products
4. Theft
Conve
nienc
e and
utility
of the
packa
ge
can
differ
entiat
ea
produ
ct
from
the
comp
etitio
n
Last
oppor
tunity
to
influe
nce
shopp
ers
befor
e
they
buy.
Brand
Image
is
often
closel
y
linked
to
packa
ging 

Are
easy
tosh
st
ip
or
e
st
oc
k
on
sh
el
ve
s.
Prote
ct the
produ
ct
Preve
nt
spoila
ge or
break
age
Exten
d
shelf
life.

Easy
to
handl
e
Easy
to
open
Easy
To
reuse
ention.

sitivity.

d consumers outside the EU as well.

aging at every stage from raw material

ucts and packages are safe, regardless

ent spoilage is being developed with

Focuses on a
promotional
theme or logo
Information for
the consumer is
secondary.
 Helps consumers
in making proper
product selections
Helps lower
cognitive
dissonance
May include care
and use
information
may explain
construction
figures

Introduced in
1974
Many Retailers
will not stock
products without

s.
and customers.

A protection and
information
device for
consumers.

Guarantees the
quality or
performance of a
good or service.

made in writing

has no limits of
noncoverage.
specifically states
the bounds of
coverage
areas of
noncoverage.
Unwritten
guarantee that a
good or service is
fit for the purpose
for which it was
sold.
All sales have an
implied warranty
under the Uniform
Commercial Code.
Often assign
responsibility for
product
deficiencies to the
manufacturer.

Manufacturer that
promises a full
warranty must
meet certain
minimum
standards.
A limited warranty
must be
conspicuously
promoted by the
manufacturer
Otherwise a full
warranty is
assumed.