CHAPTER 11 – Managing Successful Products, Services and Brands
PRODUCT LIFE CYCLE
 Describes the stages a new product goes
through in the marketplace.
= In the new product development, you are
just investing money on the product.
 Introduction Stage
o Occurs when product is
introduced to its intended
target market.
 SALES grow slowly.
 PROFIT is minimal.
o Companies often spend heavily on advertising and other promotion tools to build awareness
among customers.
 Gillette budgeted $200 million in advertising to introduce “Fusion Shaving
System.” As a result, 60% of male shavers became aware of new razon or 26%
tried the product.
 Companies advertise to stimulate primary demand  the desire for the product class
(Category) rather than for a specific brand, since there are few competitors the same
product.
o Pricing
 Skimming strategy  Initial high price to help company recover the costs of
development.
 Penetration Pricing  Company prices low, this strategy helps build unit volume, but a
company must closely monitor costs.
 Growth
o SALES increase rapidly
o PRICE decreases do to competition and increase in sales.
 Occurs do to new people using the product and growing proportion of repeated
purchases.
o Competition starts to appear.
 As more competitors launch their own products, companies tend to focus on selective
demand  preference for a specific brand.
 Competition force CHANGES to differentiate company’s brand from others. (IMPROVED
VERSIONS OR NEW FEATURES)
 Fax machines added models with built-in telephones.
 Maturity
o
o
o
o
Slowing of total industry sales (decrease at an increasing rate) and product class revenue.
Competitors begin to leave the market.
Consumers are repeat purchases.
Marketing attention is often directed towards holding market share through further product
differentiation and finding new buyers.
 Fax machines were designed smaller, suitable for small businesses or home.
 LOTS OF INVESTMENT IN MAINTAINING PRODUCT RELEVANT!!!
 Decline
o SALES drop.
o Product enters this stage because of environmental changes.
 Digital music pushed compact discs into decline in the recorded music industry.
o Strategies to handle a declining product:
 Deletion  Dropping product from company’s production line.
 Most drastic because some customers still consume product.
 Harvesting  Company retains the product but reduces his marketing costs.
 Money is no longer invested in advertising product.
 PURPOSE = maintain the ability to meet customer’s requests.
PRODUCT ADOPTION
 Innovators
o Above average education
o LOVES to try new things.
o BIG IDEA PEOPLE – Steve Jobs, Elon Musk
 Early Adopters
o Slightly above average education
o Leaders in social setting. = LOVE TO BE THE FIRST.
 Want buy because they feel like other people
are looking to them for advice.
 Stand in line to see the new Star Wars for 8
hours even though you can just go in a week
without waiting.
 They thought that was a good use of
time and money
 Early Majority
o Average income.
 Many informal social contacts.
 Late Majority
o Skeptical
 Below average social status (restricted
resources)
 Laggards
o HIGHLY RESISTANT TO CHANGE – Do not like to try new things.
 The only reason why these people do something is because they have no more choice.
o Fear of debt (Very limited Income)
 Neighbors and friends are information sources

EXAMPLE - According to an auto industry analyst: “the innovators and early adopters have purchased
all electric vehicles, but mainstream consumers have not followed.” Not surprisingly, all electric
powered automobiles remain in the introductory stage of the production lifecycle
SIMON SINEK REGARDING CURVE OF STANDARD DEVIATION – CULTURAL
TRANSFORMATION
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EARLY and LATE MAJORITY are practical, “what’s in it for me?” “Are you gonna pay me extra if I have to
stay late?”
Innovators and Early adopters are the kind of people who will do something because they think its
great and they want to be a part of it.
LAW OF DIFUSION  you cannot achieve mass-market success or stickiness for a new idea, until
you achieve 15% to 18% market penetration. (it is the tipping point)
o How do you get it? By NOT talking to early and late majority AT ALL. You IGNORE them. And
you aim at the early adopters.
 Because these people do not want to try anything new until someone else has tried it
first. (Ignore them and we’ll get him later.)
RATE OF ADOPTION

Competitive advantage
o Company

Compatibility
o How big of a change do I have to make? The bigger the change, the longer it will take.

Observability
o VISIBLE – more likely to catch up sooner.

Complexity
o How hard is it to use?

Trialability
o Can I see if I like the product before I buy it?
CONCEPTS IN BRANDING
 Brand
o  Name, phrase, design, symbol or combo of these to identify its products and distinguish
themselves.
 Brand Name
o
Any
word, design, sound, shape or color or combo of these to distinguish
the seller’s products.
 Trade Name
o
A
commercial or legal name, under which a company does business.
 COCA COLA COMPANY is the trade name of the firm.
 Trademark
o
Identifies a
firm has legally registered it’s brand name or trade name so the firm has exclusive
use, thereby preventing others from using it.
 COCA COLA COMPANY has trademark HASTAGS that make reference to their brands.
BRAND EQUITY (the bigger the brand, the bigger the brand equity)  Added value given by brand name.

1. Offers a competitive advantage
a. Disney brand defines children’s entertainment.
2. Consumers are often willing to pay a higher price for a product with brand equity
a. BOSE Audio Systems
Provides a financial advantage for the brand owner. (Gillette, Louis Vuitton, Nike, Gatorade and Apple
have an economic value in the sense that they are intangible assets.)
o When Procter & Gamble bought the Gillette Company for $57 billion, the Gillette brand name
alone was valued at $24 billion. (42% of the company’s purchase price)
 Brand-Name Awareness
o Do people recognize the brand? How well-known are you?
 Perceived Brand Quality
o Quality ADDS VALUE
 Brand Associations
o Whatever the brand is known for outside the product.
 Brand Loyalty
o Loyalty from customers towards brand.
 Brand personality
o  set of human characteristics associated with brand name.
 Pepsi: young and exciting.
Creating Brand Equity (should be done in this order)
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Key component is to develop positive brand awareness and an association of the brand in customer’s
minds with a product class or need to give the brand an identity.
o Gatorade has achieved this in the sport drink classes.
Marketer must establish a brand’s meaning in the minds of the customers. Meaning arises from what
brand stands for (functional, performance-related OR abstract,
imagery-related.)
o Nike has done this through continuous product development
and improvement and improvement; and linked their brand
to peak athlete performance in its integrated marketing
communications program.
Draw out (elicit) the proper customer responses to a brand’s
identity and meaning. Here, attention is place on how customers
think and feel about a brand.
 Thinking focuses on brand’s perceived quality,
credibility and superiority relative to other brands.
 Feeling relates to the customer’s emotional reaction
to a brand.
o Michelin elicits both responses for its tires.
The most difficult step is to create a customer-brand connection evident in an
intense, active loyalty relationship between customers and the brand.
 A deep phycological bond characterizes a consumer-brand connection
and the personal identification customers have with the brand.
 Brands who have achieved this status: Apple.
Choosing a Good Brand Name
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Name should suggest the product benefits.
Name should be memorable, distinctive and positive.  Mustang
Name should fit the company or product image.
o Eveready, Duracell, and DieHard suggests reliability and longevity.
Name should have no legal or regulatory restrictions.  The US Food and Drug Administration
discourages the use of the word HEART in food brand names. Restriction let to changing the name of
Kellogg’s Heartwise to Fiberwise.
Name should be simple and emotional.  AXE Deodorant and body spray.
Name should have favorable phonetic and sematic associations in other languages.  7UP name in
Shanghai means “Death through drinking” in the local dialect. Sales have suffered as a result.
BRANDING STRATEGIES

Multi-Product Branding
o Company uses ONE NAME for ALL products in product class
 Microsoft, Samsung, Sony =their company’s trade name and brand name are IDENTICAL.
o This brand strategy makes possible product line extensions  the practice of using a current
brand name to enter a new market segment in its product class.
o BENEFITS
 Consumers who have a good experience with the product will transfer this favorable
attitude to other items in the product class with the same name.

Multi-Branding
o Giving each product a distinct name.
 Useful strategy when each brand is intended for a different market segment
 Marriot international offers 18 hotel and resort brands, each suited for a particular
traveler experience and budget.
 Advertising and promotion tend to be higher. (when compared to multi-product
branding)
 DISADVANTAGES
 Company must generate awareness among consumers and retailers for each
new brand name without the benefit of any previous impressions.
 ADVANTAGES
 Each brand is unique to each market segment and there is no risk that the
product failure will affect other products in the line.

Mixed Branding

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Product exclusively manufactured for a retailer.
 Toyota in the U.S. was perceived as a "value" brand and Lexus targeted the
more expensive market.
Private Branding
o Company uses it when it manufactures products but sells them under the brand name of a
wholesaler or retailer (product that carries retailer’s name, but produced by another company)
 They are popular because it typically produces high profit for manufacturers and
retailers.
PACKAGING AND LABELING PRODUCTS

Package  Any container in which it is offered for sale and on which label (identifies product or brand,
where and when it was made, and how it is to be used and when and where to use it) information is
conveyed.
o Packaging provides storage, convenience or protection or ensuring product quality.
o Perception created in the customer’s mind. Package and label shape, color and graphics
distinguish one brand from another, covey a brand’s positioning and build brand equity.
 Packaging is important because it enhances brand recognition and facilitate the
formation of strong, favorable, and unique brand associations.
o Sofia Wine: can’t consume wine outside because people drink it out of a glass. So they
designed a can for it to facilitate the consumption outdoors (beaches, pool, park). You can use a
straw to avoid wine from getting in contact with the aluminum can.

Package and label designers face FOUR Challenges:
1. Connecting with customers.
a. Packaging labels must be continually updated to connect with customers; such as
creating aesthetic and functional design features that attract customer attention
and deliver customer value in their use.
2. Environmental Changes.
a. Widespread global concern about the growth of solid waste and the storage of
viable landfill site, the amount, composition, and disposable packaging material
continue to receive much attention.
i. PEPSI and COCA-COLA have decreased the amount of plastic in their
beverage bottles to reduce solid waste.
b. Recycling packaging materials is another mayor thrust.
i. Procter & Gamble now uses recycle cardboard in over 70% of its paper
packaging.
3. Health, safety, and security issues – concerns of packaging materials.
a. Most consumers believe companies should make sure their packages are safe and
secure, regardless of the cost.
i. Scripto lighters contain a child-resistant safety latch to prevent misuse and
accidental fire.
ii. Childproof caps on pharmaceutical products and household cleaners are now
common.
4. Cost Reduction.
a. 80% of packaging material used in the world consists of paper, plastics, metal and
glass. As the cost of those materials rise, companies are constantly challenged to
find innovative ways to cut packaging costs while delivering value to their
customers.
CHAPTER 9 – Market Segmentation, Targeting and Positioning
WHY MARKETS SEGMENTS?
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A business firm segments is markets so it can respond more effectively to the wants of groups of
potential buyers and thus increase its sales and profits.
o You segment a large market to have a better understanding of a smaller group. Satisfying these
small markets should be easy if you execute the marketing mix effectively.
o Identify people with the same purpose and put them all together, make sure purpose for buying is
NOT THE SAME as other groups.
o Should only be done if they increase profit. ($)
Market Segmentation  involves aggregating prospective buyers into groups, or segments that (1)
have common needs and (2) will respond similarly to a marketing action. (Consumption behavior)
o Market segmentation is only a means to an end, it leads to tangible marketing actions that can
increase sales and profitability.
Product Differentiation  involves a firm using different marketing mix actions, such as product
features and advertising, to help customers perceive the product as being different and better than
competing products.
There is a five-step process used to segment the market and select the target segments on which an
organization wants to focus. Segmenting a market requires both detailed analysis and large doses of
common sense and managerial judgment.
STEP 1 – GROUP POTENTIAL BUYERS INTO SEGMENTS
WHY AND WHEN TO SEGMENT? (Criteria to use in forming the segments)
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Simplicity and Cost-Effectiveness of assigning potential buyer to segments
o Marketing manager must be able to put a market segmentation plan into effect. This means
identifying the characteristics of potential buyers in a market and then cost-effectively assigning
them to a segment.
Potential for increased profit
o The best segmentation approach is one that maximizes the opportunity for future profit & ROI.
o For nonprofit organizations, the criterion is the potential for serving clients more effectively.
Similarity of Needs of Potential Buyers within Segment (Similar Needs)
o Potential buyers within segment should have common needs that in turn, lead to common
marketing actions (product features or advertising media used)
Differences of needs of buyers among segments (Segment Differences)
o Combine segments that aren’t very different to reduce number of marketing actions.
 A different segment usually requires a different marketing action that, in return, means
greater costs.
Potential of Marketing Action
o Reaching a segment requires a simple but affective marketing action. If no such action exists,
don’t segment.
WAYS TO SEGMENT CUSTOMER MARKETS

88%
Geographic Segmentation
o Segmentation is based on where prospective customers live or work (region, city size)
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53%
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43%
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65%
(region) Campbell Soup Company found that its canned nacho cheese sauce, which
would be heated and poured directly onto nacho chips, was too spicy for Americans in
the East and not spicy enough for those in the west and southwest. As a result,
Campbell’s plants in Texas and California now produce hotter nacho cheese sauce to
serve their regions better.
o What is sold in which places… = Need is different for people based on location; where you live
affects what you purchase.
 Size of car
 Costco won’t be selling in big cities like New York because people have little
storage room.
 Culture impact (food is geographically distinctive, people rarely eat ice-cream in winter.)
 Climate (affects clothing selection, grass on Florida is ugly, so people don’t invest in
garden.)

Demographic Segmentation
o Segmentation is based on some objective physical (gender, race, religion), measurable (age,
income), or other classification attribute (birth era, occupation) of prospective customers.
 You need more information to truly understand the customer.
 (Household size) More than half of all of the US households are made up of only one or
two persons, so Campbell Soup Company packages meals with only one or two servings
for this market segment.
Psychographic Segmentation
o Segmentation based on some subjective mental or emotional attributes (personality),
aspirations (lifestyle), or needs of prospective customers.
 How people see us. What we take pride in.
o NEEDS – What is important to you.
o LIFESTYLE – Habits + Interests.
 IDENTITY – what are you particular about.
o A particular clothes brand.
 (Lifestyle) Nielsen’s lifestyle segmentation is based on the belief that “birds of a feather
flock together.” Thus, people of similar lifestyles tend to live near one another, having
similar interests, and buy similar offerings.
 Sharpie does not sell their products to the person who uses it occasionally to label
something, they sell to the creative minds, to the BOLD IMPRESSION MAKERS.
Behavioral Segmentation:
  Segmentation based on some observable actions or attributes by prospective
customers, such as where they buy, what benefits they seek, how frequently they buy,
and why they buy.
o PRODUCT FEATURES
 Understanding what features are important to different customers is a useful way to
segment markets because it can lead directly to specific marketing actions, such as a
new product or an ad campaign.
o 20% of customers buy 80% of your revenue, the rest will follow.
 Purchase Location (gas for car, grocery store, coffee)
 College dorm residents frequently want to keep and prepare their own food to
save money or have a late-night snack. However, their dorm spaces are often
limited. MicroFridge understands this and markets a combination microwave,
refrigerator, freezer, smoke sensor, and charging station appliance targeted to
these students.
o USAGE RATE
  Is the quantity consumed or patronage – store visits – during a specific period. It
varies significantly among different customer groups.
 Airlines have developed frequent-flyer programs to encourage passengers to use
the same airline repeatedly to create customer loyalty. (ConnectMiles) – Special
groups of customers that identify with your brand.
o Frequency Rate  technique focuses on usage rate.
 AMAZON makes change of behavior pretty easy. They are price competitive on a
lot of many things. People buy here what they used to buy on store =PRACTICITY
STEP 2 – GROUP PRODUCTS TO BE SOLD INTO CATEGORIES

Groupings must be closely related to the way purchases are actually made.
STEP 3 – DEVELOP A MARKET-PRODUCT FRID AND
ESTIMATE THE SIZE OF MARKETS

Developing a market-product grid means identifying and labeling the markets and product groupings .
o LARGE MARKET – 3
o MEDIUM MARKET – 2
o SMALL MARKET – 1
o NO MARKET AT ALL – 0
STEP 4 – SELECT TARGET MARKET
 Firm must choose target market carefully. If it picks too narrow a set of segments, it may fail to reach
the volume of sales and profit it needs. If it selects too broad a set of segments, it may spread its
marketing efforts so thin that the extra expense exceeds the increased sales and profits.
CRITERIA TO USE IN SELECTING THE TARGET SEGMENTS
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Market Size
o Estimated size of market in the segment is an important factor in deciding whether its worth
going after.
Expected Growth
o Although size of market in the segment may be small now, perhaps it is growing significantly or
is expected to grow in the future.
Competitive Position
o Is there a lot of competition in the segment now or is there likely to be in the future? The less
the competition, the more attractive the segment is.
Cost of reaching the segment
o Segment that is inaccessible to a firm’s marketing actions should not be pursued.
 EXAMPLE – A few nonstudents who live in the area may not be reachable with ads in
newspapers or other media. As a result, you should not waste money trying to advertise
for them.
Compatibility with the organization’s objectives and resources
o As is often the case in marketing decisions, a particular segment may appear attractive
according to some criteria and very unattractive according to others.
STEP 5 – TAKE MARKETING ACTIONS TO REACH TARGET
MARKETS

The purpose of developing a market-product grid is to trigger marketing actions to increase sales and
profits. This means that someone must develop and execute an action plan in the form of a marketing
program.
o Product, advertisement, and mission should represent those people in the target market.
POSITIONING THE PRODUCT
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Product Positioning  refers to the place a product occupies in consumers’ minds based on important
attributes relative to competitive products.
o How people understand the brand; the message should resonate with consumer.
o EXAMPLE 1 – If a car company says their main feature is safety, but someone had a bad
accident in that car, nothing will change the customer’s mind about the brand.
o Example 2 – Black and Decker is not tough enough. People cannot use them
for their daily jobs. So the company changed the COLOR and added MORE
POWER.  Variation of tool based on what people want.
Product repositioning  changing the place a product occupies in a customer’s mind relative to
competitive products.
Marketers follow two main approaches to positioning a new product in the market:
1. Head-to-Head Positioning – Involves competing directly with competitors on similar
product attributes in the same target market.
2. Differentiation Positioning – Involves seeking a less-competitive, smaller market niche in
which to locate a brand.
a. McDonald’s tried to appeal to health-conscious segment with its low-fat McLean
Deluxe hamburger to avoid competing directly with Wendy’s and Burger King.
PRODUCT POSITIONING USING PERCEPTUAL MAPS
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1.
2.
3.
4.
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A key to positioning a product or brand effectively is discovering the perceptions on the minds of
potential customers by taking four steps:
Identify the important attributes for a product or brand class.
Discover how target customers rate competing products or brands with respect to these attributes.
Discover where the company’s product or brand is on these attributes on the minds of potential
customers.
Reposition the company’s product or brand in the minds of potential customers.
From this Data, its possible to develop a perceptual map.  A means of displaying in two dimensions
the location of products or brands in the minds of customers. This enables managers to see how
customers perceive competing products or brands, as well as the firm’s own product or brand.
o Chocolate Milk for Adults:
 US dairies decided to reposition chocolate milk in the minds of American adult to
increase its sales. This is how they did it:
1. Identify the important attributes (or scales) of adult drinks. Research reveals the
key attributes adults use to judge various drinks are: a) low versus high nutrition
and b) children’s drinks versus adult drinks.
2. Discover how adults see various COMPETING drinks. Locate various adult drinks on
these axes.
3. Discover how adults see chocolate milk. Adults see chocolate milk as moderately
nutritious (on the vertical axis) buts as mainly a child drink (on the horizontal axis).
4. REPOSITION chocolate milk to make it more appealing to adults. What actions did
US dairies take to increase sales? They repositioned chocolate milk to the location
of the red star shown in the perceptual map.
i. Took out the cartoon
ii. Improved bottle design
iii. Changed to darker colors
iv. Increased serving side
v. More balance between sugar and protein
b. Nutritionally powerful arguments. WOMEN: chocolate milk provides calcium,
critically important in female diets. And dieters get a more filling, nutritious
beverage than with a soft drink for about the same calories.
i. RESULT – chocolate milk sales increased dramatically, much of it
because of adult consumption.  Due to “nutritional respectability”
**** Change product to meet demand.
**** Create new product to develop a way to meet demand.
POSITION BY WHAT?
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Attributes and Benefits – Features differentiate what they do.
o Apple – how is newer model better than previous model?
Price and Quality – increase in price = increase in quality
o Diapers. POMPERS is more for first time parents (want everything perfect). LUVS is for 2 or 3
time parents (practical- already know what you are doing)
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Use or Application –
Product class – entire product category or industry.
Product user –
Competitor – mentioning another brand.
Cultural symbols – things that represent ideas and concepts on a specific culture. Cultural symbols
evoke deep feelings. Strengthen identity.
EXAMPLES
 NEW KETCHUP – Product User
 MULTI-SURFACE CLEANER – Product cost + Attributes and benefits.
 COOKIE DOUGH READY FOR OVEN – User application + attributes and
benefits
 CHICK-FILL A – Cultural symbol + product cost
COMMUNICATION AND DELIVERY OF POSITION
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We will try to define our position, but at the end of the day, customer decides. = STRONG STAND.
Marketing mix must support everything company stands for and does.
o Southwest – Dedication to the highest quality of customer service delivered with a sense of
warmth, friendliness, individual pride, and Company Spirit.