A PRIMER FOR INTRODUCTORY MARKETING
CHAPTER 6
PRODUCT MANAGEMENT
Topics:
A. Consumer Goods Classification
B. Marketing Opportunities Matrix
C. Product Development
D. Product Life Cycle
E. Relationship Between the Product Life Cycle and the Adoption Process
F. Relationship Between the Product Life Cycle and Sales and Profit Planning
G. New Product Planning
H. Product Innovation
I. Conceptual Content & the Rate of Diffusion
J. Product Deletion Policies
K. Manufacturer, Dealer, and Generic Brands
L. Product Portfolio Analysis
M. Packaging
A. CONSUMER GOODS CLASSIFICATION
Consumer goods can be classified as follows:
•
•
•
Convenience Goods
Shopping Goods
Specialty Goods
There is also another category of products referred to as unsought goods.
Convenience Goods: Generally lower priced products which the consumer
expends minimal effort acquiring.
There are three types of convenience goods:
Staples
!
!
Emergency Goods
!
Impulse Goods
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Staples: Products purchased on a regular basis. Milk, bread,
butter, eggs, and sugar are examples of such a product category.
EmergencyGoods:Productspurchasedatatimeofgreatneed. When
a consumer's car is almost out of gas, the consumer will seek out
the most readily available gas station, even if it is not the most
preferred station.
ImpulseGoods: Productswhich the consumer purchases but had not
such plans prior to the purchase. The unplanned purchase of a bag
of snack food that the consumer decides to buy when he/she passes
the supermarket display would fall into this category.
Shopping Goods: Products purchased by the consumer which require a
comparison across market offerings.
There are two types of shopping goods:
!
!
Homogeneous Shopping Goods
Heterogeneous Shopping Goods
Homogeneous Shopping Goods: The different market offerings
are perceived to be the same across the relevant product
characteristics. In this case,the consumer shops (compares offerings)
on the basis of price by purchasing the lowest priced item.
Gasoline would fall into this category for many consumers.
HeterogeneousShoppingGoods: Thedifferentmarketofferingsare
perceived to be different across the relevant product characteristics.
In this case, the consumer shops seeks out (compares offerings)
the product with the characteristics desired Furniture and clothing
would fall into this category for most consumers.
Specialty Goods: These are products which possess unique
characteristics which the consumer specifically wants and is willing toput
out thenecessaryefforttoacquire.Specificbrands which the consumer prefers
would fall into this category. Brand loyalty for Coca-Cola and Pepsi Cola and
for different brands of
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cigarettes is high. In these cases, brand substitution is not an acceptable option for many consumers when
their preferred brand is not available.
B. MARKETING OPPORTUNITIES MATRIX
The Marketing Opportunities Matrix is used to determine how a company can increase sales.
Marketing Opportunities Matrix
Present Products
New Product
Present Markets
Market Penetration
Product Development
New Markets
Market Development
Diversification
Each cell of the marketing opportunities matrix varies in terms of risks and opportunities.
Market Penetration: Market penetration involves the attempt to increase sales the firm's present markets
with the present products. Specifically, the marketer can try to increase sales by:
!
increasing sales to current users of the firm's products
!
attracting the customers of the competition
!
attracting nonusers of the product categories
Product Development: Product development involves the development of new products for the marketer's
current customers.
Market Development: Market development involves the sale of the marketer's current products to new
markets. These new markets may be based on any consumer characteristic (e.g., geographic, demographic,
psychographic).
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Diversification: Diversification involves the sale of new products to new
markets.
In general, the market opportunities increase going from market penetration to
productdevelopment,to marketdevelopment and then to diversification. The
level of risk also increases in like fashion.
C. PRODUCT DEVELOPMENT
Topics:
1. Stages of Product Development
2. Types of New Products
(1) Stages of Product Development
Idea Generation
Screening
Concept Development and Testing
Economic Analysis
Technical Development
Test Marketing
Commercialization
Idea Generation: Ideas for new products can come from customers, the
competition, company employees, or an internal research and development staff.
Screening: The objective of the screening processis to eliminate the bad ideas and
to keep the good ideas. This is easier said than done. The original Cosby television
show was rejected by the first network approached because the concept of the
show was not thought effective enough to attract a large enough audience.
At this stage, the marketer does a cursory analysis of the potential of the product,
considering factors such as:
•
sales potential
•
profit potential
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•
costs
•
breakeven point
•
relationship to other products produced
•
potential to develop technical expertise
•
whether the product can be produced
•
potential competition
•
availability of raw materials
After this analysis, those ideas considered unacceptable are deleted and those that
are considered acceptable are retained for further consideration.
Concept Development and Testing: From the ideas that survive the screening
stage, the marketer selects ideas for concept development and testing. The basic
concept of the new product is presentedto agroup of consumers, perhapsin a focus
group, to see what they think. A prototype of the product mayormaynot bemade
available.
For example, these consumers may be asked to respond to the idea of combining
a shampoo and a conditioner in the same product. Consumers know that a
shampoo cleans hair and that a conditioner adds something to hair to improve its
looks, but they may not believe that the two products can be combine to work
effectively.
In the film, Not By Jeans Alone, a focus group is used to see how consumers
respond to the idea of a new men's suit line. During the focus group, the consumers
respond positively to the characteristics presented. However, when they are told
that the suit line will be made by Levi Strauss, they reject the idea that Levi can
produce such a product. They perceived Levi Strauss as a manufacturer of jeans.
The company decided to produce the product, even though the focus group
moderator recommended against it. The Classic suit line was not as successful as
the company had hoped.
Ideas that survive the concept development and testing stage are given
further consideration. Rejected ideas are given no further consideration.
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Economic Analysis: At this stage in the new product development process,
the marketer seeks "hard" quantitative data about potential of the new
product. Areas considered include the following:
sales potential
!
!
profit potential
!
breakeven point
Costs are indirectly accounted for in each of the above areas. Price is a
function of the costs and the profit goal.
Since the marketer has limited resources to develop new products, only
some of the best remaining ideas are given further consideration.
Technical Development: At this stage, the marketer tries to physically
create the product within the acceptable cost range. For example, can a
combined shampoo and conditioner product that works be developed.
Test Marketing: Once the marketer is able to develop the product, the
marketer may feel that not enough information is available about the
market acceptance for the product. The marketer may therefore decide to
do a test market.
Conducting a test market means that the marketer introduces the product to
selected markets to determine the sales potential. Varying marketing mixes
may also be tested (e.g., different prices, advertising, product versions).
The purpose of the test market is to reduce the risk of full market
introduction. A test market provides the marketer with essential
information.
If the risk of full market introduction is low, the marketer may decide
against doing a test market. A marketer may also avoid doing a test market
so that the competition does not find out about the new product before the
firm carries out full market introduction.
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During a test market, the competition may try to sabotage the test market by changing the nature of its
marketing strategy. For example, if a new brand of toothpaste is being tested, a competitor may increase its
advertising and/or reduce the price of its brands of toothpaste in order to distort the market results.
Commercialization: The final stage of the new product development stage is reached once the marketer decides
to introduce the new product to the market. A limited budget for new product introductions restricts the
number of new products a firm can introduce to the market at any given time. Once the product is introduced
to the market, the Product Life Cycle for the product begins.
Since movement from the idea generation stage to the commercialization stage leads to a reduction of the ideas
being considered, an inverted triangle can be used to illustrate the relationship across the various stages of the
new product development process.
New Product Development Process
Idea Generation
Screening
Concept Development & Testing Economic Analysis
Test Marketing Commercialization
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(2) Types of New Products:
!
New Concept
! New Process
! New to the Company
! New Model
New Concept: The company produces a new product category that
satisfies a consumer (user) need not previously satisfied in such a
way (e..g, the first television, the first computer, the first telephone,
the first Internet browser).
A company that introduces a new concept to the market is not sure
whether a consumer need really exists to the extent necessary to
make the product a viable market entry. The marketer also does
not know whether the market will accept the new product
category.
New Process: A product that reflects a new process is designed to
replace a currently existing product category already satisfies a
consumer (user) need (e.g., the transistor replaced the vacuum
tube and the micro-chip replaced the transistor in the area of
electronics; the calculator replaced the slide rule).
In this case, the marketer knows that a consumer need exists.
Therefore, the marketer only needs to be concerned with whether the
new product is a superior replacement for the currently existing
product
New to the Company: A product new to the company is just duplicating
what currently exists on the market. Since other companies are
producing and selling the product (e.g., a new brand of toothpaste), there
is a consumer (user) need and there is market acceptance of the product
category. The marketer therefore only needs to determine why the
market would buy this firm's market entry.
New Model: When a company decides to develop a new model of a
currently produced and sold product, the marketer does not need to
worry about whether there is a consumer (user) need, whether the product
category is accepted, or whether the market accepts this firm's output.
The only thing
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the marketer of a new model has to worry about is whether the new model is so
drastically different from the previous model as to have a negative impact on
market acceptance. Of course, if the new model is designed to replace an
inferior previous model of the company, then the marketer can hope for
improved market performance.
Generally, developing a new concept provides the firm with the greatest
opportunity, but it also brings the greatest risk. Introducing a new process
generally provides less opportunity but also less risk. Similarly, a product that is
just new to the company offers less opportunity still, but the risk is also less
than with the other two market entry options. Finally, a new model generally
offers the lowest level of opportunity and risk of the four market entry options.
D. PRODUCT LIFE CYCLE
Topics:
1. Definition
2. Stages
3. Profit Life Cycle
4. Areas of Application
(1) Definition
The product life cycle reflects the sales pattern of a product (brand, etc.) over
time, from the time it is first introduced on to the market until it is removed
from the market.
(2) Stages
The stages of the product life cycle are identified by the nature and direction of
the change in sales over time.
A marketer must be aware that, during the life cycle of a product,
consumers and the competition will change.
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The beginning of the product life cycle extends from the decision to enter
commercialization during the product development process.
Stages:
Introductory
Growth
Maturity
Saturation
Decline
Introductory: The product is introduced to the market and sales begin
to increase.
Growth: Sales increase at an increasing rate (i.e., greater percentage
change).
Maturity: Sales increase at a decreasing rate (i.e., sales increases
are slowing down).
Saturation: Sales are constant over time.
Decline: Sales level decreases (i.e., negative percentage change).
The product life cycle is illustrated in Figure 6.1.
Figure 6.1. The Product Life Cycle
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(3) Profit Life Cycle
A profit life cycle can also be plotted along with the product life cycle. As the product moves through the
life cycle, the profit level also changes. In particular, profits tend to peak at the breaking point between
the growth and maturity stages. During the growth stage, more competitors enter a growing market. As a
result, the different firms are getting sales from the expanding market rather than from other competitors.
However, during the maturity stage, the slowing market means that a firm that seeks greater sales may
have to become more aggressive to prevent the competition from taking these sales. This is generally
accomplished by lowering prices and increasing advertising expenditures, both of which can have a negative
impact on profits.
The profit life cycle is illustrated in Figure 6.2. Because of research and development costs and other
market entry costs, a company does not expect to make a profit at the beginning of the life cycle of the
product.
Figure 6.2. The Profit Life Cycle (4) Areas of Application
While the profit life cycle normally applies to a product category, it can also be applied in any way
deemed appropriate. A life cycle can be developed for a brand, a specific version of a brand, or a product
subcategory. For example, product life cycles can be developed for televisions overall, for black and
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white televisions, for color televisions, and for different screen sizes of
each type.
E. RELATIONSHIP BETWEEN THE PRODUCT LIFE CYCLE
AND THE ADOPTION PROCESS
During each stage of the life cycle of a product, consumers will at
various stages of the adoption process. Sales recorded in the life cycle
will be the initial sales for some customers and repeat sales for others.
Logically, during the initial stages of the life cycle, proportionately
more sales are initial sales. During the latter stages of the life cycle,
proportionately more sales will be repeat sales.
Figure 6.3 illustrates the relationship between the product life cycle and
the adoption process. The stages of the adoption process are:
(Non-awareness)
Awareness
Interest
Evaluation
Trial
Decision
Confirmation
Figure 6.3. Relationship Between the Product Life Cycle and the Adoption Process
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When a product does not have the expected sales pattern for its life cycle, the marketer can examine where
consumers are in the adoption process to determine the problem.
F. RELATIONSHIP BETWEEN THE PRODUCT LIFE CYCLE AND SALES AND PROFIT
PLANNING
The product life cycle can be used for the purposes of sales and profit planning. In terms of sales planning, a
marketer may seek to:
stabilize sales
!
!
increase sales
!
contend with irregular sales
The same concerns apply to profit planning.
Given that the sales and profit levels change over the life of a product, what does the marketer have to do with
respect to new product introductions to achieve a specific sales or profit goal.
Sales Planning.
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Profit Planning:
G. NEW PRODUCT PLANNING
Topics:
Objectives of New Product Planning
!
!
Objectives of New Product Design
«
Negative Cost of Production
»
Negative Cost of Proliferation
Objectives of New Product Planning: To increase the value received by the
target market. If this accomplished, the firm is expected to profit Offering
greater value results in greater utility which in term leads to a higher level of
consumer satisfaction.
Objectives of New Product Design: To maximize the consistency of the
component parts and to maximize the differentiation across products. All of the
elements of a product must be consistent with each other. A Cadillac
automobile should have leather seats while an escort should not to be
consistent with
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the overall image of the product. Crest toothpaste must be created to be
perceived as being different from Colgate toothpaste so as to attract its
own target market
Interestingly, retailers, particularly drugstores, sometimes develop
products to appear similar to the major brands in selected product
categories. The intent here is to make the consumer believe that the
dealer brand and the major brand are similar in nature, except for the
lower price of the dealer brand.
Negative Cost of Production: Since those consumers who buy the new
versions or models of products are less sensitive to price, they are the
ones who pay for the research and development costs. When the older
versions of these products stay on the market, the price-sensitive
consumers are more likely to be able to afford these versions because of
the lower prices. Used automobiles, earlier versions of computer
software, end-of-season fashions, end-of-model year automobiles are
always cheaper than the beginning-of-the-season prices or the newer
version prices. The consumers who buy the outdated or older versions
of the product therefore get more function for the price paid. This latter
market only exists because of the initial price-insensitive market.
These individuals buy are paying for the aesthetic and functional value
of the product. Society therefore benefits from the development of new
products when a secondary market exists.
Why are the prices of used furniture much lower in price than new
furniture while the prices of used cars are much closer to the prices of
new cars? [consider the aesthetic and functional dimensions of each
product category]
Negative Cost of Proliferation: The proliferation of new products or
product versions and brands increases consumer choice and, hopefully,
increases the level of consumer satisfaction in the overall market. New
products offer new benefits not found in the earlier versions and are
therefore priced higher. The older versions of the product offer fewer
benefits and are therefore lower in price. Anti-perspirants are more
expensive than deodorants and aerosols are more expensive per unit
than roll-ons, creams, or stick versions. As
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a result, those consumers who prefer the older versions, which offer
fewer benefits, will be able to acquire the product at a lower cost per
unit. The proliferation of products and brands therefore has a beneficial
impact on society.
H. PRODUCT INNOVATION
Topics:
!
Conceptual Focus
!
Generic (Primary) Demand
!
Selective Demand
!
Types of Innovations
!
Degrees of Innovation
Conceptual Focus
The underlying conceptual meaning of a product innovation can relate to the
functional nature of the product, the aesthetic dimensions of the product,
and/or the psychological meaning of the product.
Generic (Primary) Demand
Generic or primary demand refers to demand for the product category (e.g.,
cereal, hamburgers).
Selective Demand
Selective demand refers to demand for the market offering of a specific
marketer (e.g., Kellogg's Corn Flakes, McDonald's Big Mac). Before there
can be selective dEmand, there must be generic demand.
Example
When aspartame was introduced to the market, it replaced other natural and
artificial sweeteners. This product was marketed as Nutrasweet to the
industrial market and as Equal to the consumer market While under patent
protection, the producer only had to focus on generic demand. When the end
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of the patent was near, the producer heavily promoted the brand names in order to stimulate selective demand
once the patent protection ended and competitors entered the market.
Types of Innovations (Categories)
Using the generic/demand perspective, an innovation can be classified in one of four ways:
1.
Established in both a generic and selective
sense but marketed with no change in the major characteristics.
2.
Established in both a generic and selective
sense but marketed with a significant change in the major characteristics.
3.
4.
Established in a generic sense but new in a selective sense.
New in a generic sense. By definition, such an innovation is new in a selective sense since the
brand was never associated with this product.
The four innovation categories listed above are appropriately placed in the following matrix.
Selective Demand
Generic Demand
New
Established
New
4
Not possible
Established
3
1,2
Category 1 is not considered to be an innovation since the product is marketer in the same way as it has been in
the past (e.g., Hersey chocolate bars, Ivory soap) and the product cate-
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gory and brand are accepted by the market. There is no change in
consumer attitudes or behavior with respect to the use of the product.
Generic and selective demand exist.
Category 2 is considered to be an innovation because the product change
can have an impact on consumer attitudes and behavior with respect to
the use of the product (e.g., new mint flavor of Arm & Hammer
toothpaste, the New Coke). However, both the product and the brand are
accepted by the market since there is generic and selective demand
Category 3 is considered to be an innovation even though the product
category is accepted by the market. The new brand has an impact on the
attitudes and behavior of the consumer (e.g., new brand of shampoo) and
needs to establish selective demand.
Category 4 is also an innovation. This category of innovation will have
the greatest impact on the life style of the consumer in terms of attitudes
and behavior since the product category did not exist before. Generic
demand has yet to be established for this product category. Selective
demand also does not exist (e.g., Internet browser like NetScape when it
was first introduced to the market).
Degrees of Innovation
An innovation can be classified in terms of the degree of innovation:
Continuous Innovation
!
!
Dynamically Continuous Innovation
!
Discontinuous Innovation
Even though three discreet innovation categories can be identified,
the degree of innovation should be viewed as a continuum.
The focus of the analysis of an innovation is in terms of:
!
How the product relates to other products.
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!
The impact of the product on consumer behavior
patterns.
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation
I. CONCEPTUAL CONTENT & THE RATE OF DIFFUSION
Topics:
(1) Conceptual Content
(2) Rate of Diffusion
(1) Conceptual Content
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What does the product mean to the consumer? Magic Pantry entrees
(like TV dinners that do not need refrigeration) release the time for
preparation because they are not frozen. Cologne reflects one's selfimage.
Dimensions of Conceptual Content:
Compatibility Relative
Advantage Divisibility
Communicability
Complexity
How a product rates on each of these dimensions influences the rate of
diffusion for the product.
(2) Rate of Diffusion
How fast a new product "penetrates" the market - i.e., how fast potential
users adopt the product.
The rate of diffusion is influenced by the conceptual content of the
product. By analyzing the conceptual content of a new product, a
marketer can determine the likelihood of market acceptance before the
product is introduced to the market.
Specifically, the greater the compatibility, the greater the relative
advantage, the greater the divisibility, the greater the communicability,
and the lower the complexity, the greater the likelihood the product will
succeed.
Compatibility:
Relative Advantage:
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Economic advantage:
Social advantage:
Divisibility:
Communicability:
Complexity:
Examples
Evaluate each of the following new product examples across the five
dimensions of conceptual content to determine how likely the product
would succeed.
(a) Magic Pantry entrees - problem - lack of compatibility because the
product is not refrigerated (kept frozen like TV dinners); problem - no
economic advantage - product is expen-
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sive; advantage - product is convenient to use - functional benefit
(no need to thaw).
(b) Sterilized milk - problem - product does not need to be refrigerated
until opened - lack of compatibility; problem -lack of relative advantage
since product originally had a burnt taste; advantage - product does not
need to be refrigerated until opened - free space in refrigerator - relative
advantage.
(c) Aircrib (B. F. Skinner) - unusual type of baby crib; enclosed with
sliding windows; electrically-controlled environment; temperature and
humidity controlled so child only needs a minimum of clothing;
stretched porous sleeping surface of plastic which allows the kid to
exercise and has a sanitation advantage; used by kids up to 2 years of
age; users say the product cuts the time for child-care chores, aids the
child's development via exercise and movement, has long term
economies in terms of requiring less clothing, less laundry, less bathing,
and less labor with respect to the care of the child. The product was
introduced to the market in the 1960s and cost over $300. The product
failed primarily because of a lack of compatibility - it was not proper to
turn the care of a child over to a machine.
(d) Analoze (1960s) - combination antacid and analgesic (like Alka
Seltzer); provided minor pain relief and provided relief from upset
stomachs; had the advantage over the competition in that it was cherry
flavored, could be taken without water, contained an exclusive antacid
ingredient that prevented over alkalizing; analgesic provided extra-fast
headache relief; sold small size at 8 tablets for $0.35 and large economy
size at 24 tablets for $0.65. Product failed primarily because of a lack
of compatibility - at the time, consumer's believed that medicine could
only be effective if taken with water.
(e) Headstart - introduced in the 1980s - an analgesic; two strengths regular and extra strength; lemon flavored; trial size packages of sold for
$0.49 but included a coupon for $0.50 inside; designed to be taken
without water. Product had same problem as Analoze - lack of
compatibility - product taken without water.
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J. PRODUCT DELETION POLICIES
Topics:
(1) Factors to consider when selecting possible candi dates for deletion.
(2) Factors to consider once a candidate for deletion has been selected.
(3) Why a poor performing product is retained.
(1) Factors to consider when selecting possible candidates for deletion
Sales trend
Price trend
Profit trend
Existence of substitute products
Weakening product effectiveness
Excessive executive time
The cost trend is not directly considered since costs are indirectly reflected in the sale, price,
and profit trends. Since the product was first introduced to the market, new substitute
products may have entered the marketplace (Windows 3.1 replaced DOS; Windows 95
replaced Windows 3.1; Windows 97 is designed to replace Windows 95). The effectiveness
of a product may also decline over time. Insects adapt to pesticides, making them less
effective. A product may also be taking up too much executive time for what it is worth.
(2) Factors to consider once a candidate for deletion has been selected.
!
Timing
!
Parts and replacements
!
Inventory
!
Holdover demand
Once it has been decided that a product will be removed from the marketplace,
it is necessary to determine when such action should be taken. Informing the
market too early may lead to
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an immediate decline in demand if the product is of the type that
requires postpurchase servicing.
Even though a product is removed from the market, there may be a need to
provide parts and replacement for sometime after. In the 1960s, Polaroid
introduced the low price Swinger camera to introduce consumers to instant
photography. While the film for this camera was not available for very long,
the industrial black and white film made for the standard Polaroid camera
could be used as a substitute. Finding the AG-1 bulbs for the camera,
however, became an even more difficult task.
The marketer also needs to determine what to do with all of the inventory
throughout the channel, including raw materials, goods in process, finished
goods, and channel inventory.
Finally, even though the demand for a product may be to low for the
company, the company may be able to sell the rights to the product to
another company that would find the current sales level acceptable.
(3) Why a poor performing product is retained.
Even though a product may be a poor performer, the marketer may decide to
retain the product for two reasons:
!
to have a full line
!
because of complimentary sales
Some firms want to establish an image that they carry a full line of the
product area. For this reason, a poor performer is retained in order to be able
to advertise such a policy.
Even though a given product may not itself sell very well, it may generate
other (complimentary) sales, resulting in profitable transactions.
K. MANUFACTURER, DEALER, & GENERIC BRANDS
Manufacturer brands are those brands that identify the manufacturer of
the product on the label (e.g., Campbell's, Heinz,
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Coca-Cola, Kellogg's). These brands vary in quality and may be sold
locally, regionally, nationally, or internationally.
Dealer brands are those brands that identify the retailer, wholesaler, or
broker as the source of the product. The actual manufacturer is not
identified on the label. Kroger, A&P and Loblaw supermarkets all have
store (dealer) brands. These brands generally have a lower price and are of
a lower quality than the major brands within the respective product
categories. However, for the dealer, these brands are more profitable and
serve as a source of store loyalty, since the specific brands are not sold by
competitors. The retailer can also assign prime shelf space to these brands.
Generic brands were developed by retailers in the 1970s as a response to
the recession. The basic intent of these brands was to increase the value
received by the market. An increase in value was accomplished by
lowering both the price and the quality, but by lowering the price to a
greater extent. Using functional packaging and reducing advertising were
two the ways the stores reduced costs. A box of crackers would lack
graphics and complex colors and would only include the word "Crackers"
without any brand name. Product content and identifying the retailer as the
source of the product would be the only other information on the label.
Like dealer brands, the label of the generic brand would indicate that the
product was produced for the retailer, but would not specifically identify
who produced the product.
Each major supermarket chain created its own unique generic brands, as a
defensive move against the first competitive entry in this market. Dominion
Supermarkets packaged its products in red containers with black lettering;
Loblaw Supermarkets used yellow containers with black lettering; and A&P
Supermarkets used white containers with black lettering.
Since generic brands were only sold at stores controlled by the retailers, in a
sense, there were actually dealer brands.
In many markets, major brand manufacturers reduced the impact of generic
brands by reducing the prices on the major brands - thereby increasing the
value to be received by the
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market (i.e., lower price, same high quality). Dealer brands tended to
be hurt more by the generic brands.
L. PRODUCT PORTFOLIO ANALYSIS
Most firms have a number of products, some performing better than
others. This portfolio of products can be analyzed in order help guide
the market in terms of the development of marketing plans.
The Boston Consulting Group market growth matrix is one approach to
product portfolio analysis. This approach classifies products in terms of
its relative market share and growth potential. Products are classified in
one of four ways:
Stars
•
•
Cash Cows
•
Question Marks
•
Dogs
Relative Market Share
Growth
Rate
High
Low
High
Stars
Question
Marks
(Problem
Child)
Low
Cash
Cows
Dogs
Figure 6.4. Boston Consulting Group Market Growth Matrix
Stars:
Cash Cows::
A PRIMER FOR INTRODUCTORY MARKETING
123
Question Marks:
Dogs:
M. PACKAGING
Topics:
1. Types of Packaging
2. Evaluation of Packaging
(1) Types of Packaging
There are two types of packaging:
!
First Generation Packaging
!
Second Generation Packaging
First Generation Packaging: A first generation package is designed to protect the product
during transport, storage, and use. The tin can holding the soft drink, the cardboard box
holding the laundry detergent, and the glass jar holding the relish are all designed to
protect the physical product.Second Generation Packaging: A second generation package
is designed to communicate to the consumer. The brand name, the list of contents, the
nutritional information, the instructions on use, the symbols, the package colors, and the
name of the manufacturer are all information sources for the consumer.
(2) Evaluation of Packaging
Different package designs can be evaluated on the following four
dimensions:
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Visibility
•
• Informative
• Emotionally Appealing
• Workable
The acronym VIEW, the first letter of each dimension, is used to represent the four
dimensions.
Visibility is a perceptual dimension. The other three dimensions are attitudinal in nature.
While similar responses across consumers are expected in terms of the visibility of a
package, different responses are expected across consumers on the other three dimensions.
Visibility
The visibility of a package is important to a marketer because of the existence of
competitive products. A marketer wants its product to stand out on the store shelf and attract
the attention of the consumer. The marketer therefore tries to use the best package design
in order to achieve this objective.
Because visibility is a perceptual dimension, similarity in response to a given package is
generally expected to be the same across all consumers. A red package is expected to be
perceived as red to all consumers and a green package is expected to be perceived as green to
all consumers, except for those who are color blind. Similarly, the larger of two boxes is
expected to be perceived as the larger one by all consumers.
The following instruments are used to evaluate the visibility of a package:
Distance meter
Tachistoscope
Threshold Illumination Meter
Angle Meter
Apparent Size Meter
All of these instruments are used in a lab setting to test different package designs.
A PRIMER FOR INTRODUCTORY MARKETING__________________________125
Distance Meter: This instrument determines how far away from a
package a consumer can be and still be able to recognize the product. For
example, as a consumer walks down a supermarket aisle, do some
package designs allow a product to recognized at a greater distance than
other product designs.
Tachistoscope: This instrument allows images of different package
designs to be flashed before the consumer's eyes for a selected time
interval (e.g., l/10th of a second, 1 second, etc.). How long does a
package have to be before a consumer's eyes for it to be recognized? For
example, as a consumer walks down a supermarket aisle, any product on
the shelf will only be before the consumer's eyes very briefly. Is one
package design better than another in getting the consumer's attention
during this time period.
An interesting use of the "tachistoscope" approach was used in the
Metro (subway) system in Montreal, Quebec, during Expo 67. In some of
the subway tunnels, a series of still frames showing an Export A brand of
cigarette being lit. As the subway train past this location, the still frames
would light up in sequence showing the cigarette being lit. In order for
this advertisement to be effective, the planners had to know how fast the
train was going at this point in the tunnel, how long each frame would be
before the eyes of the consumer, and how many frames of each scene
were required for the image to register in the minds of the consumers.
Threshold Illumination Meter: Since the lighting in a store is not
always the best or constant, are there some package designs that have
better visibility under poorer lighting conditions? The threshold
illumination meter is designed to test area of concern. In a supermarket,
the bottom shelf tends to have less light than the other shelf positions.
Angle Meter: Consumers normally do not approach all products on a
retailer's shelf straight on. Since consumers generally approach products
on the shelf at given angle, are some package designs better than others in
attracting the consumer's attention? The angle meter will determine the
visibility of a given package design given the angle of approach.
126_________________________________________MARKETING MENTOR
Apparent Size Meter: Even when the actual contents of a package are
the same size, some package designs will make it appear that one
container is larger than another. Package color, lettering, borders, and
container shape can all influence the perceived size of a package. The
apparent size meter will determine how consumers perceive different
package designs in this context.
Informative
Whether a package is informative depends on the beliefs and needs of
the individual consumer. While one consumer may want nutritional
information, another consumer may not. Similarly, while one consumer
may want to know where a given product was made, another consumer
may not. And while one consumer may want to know the expiry date of
a product, another consumer may not.
Emotionally Appealing
Whether a given package design is emotionally appealing depends on
the beliefs of the individual consumer. A facial tissue box with clowns
on the exterior will be more emotionally appealing to a child than a plain
solid-color exterior. A purple-colored package may be more appealing
to one consumer than another.
Workable
Whether a given package design is workable depends on the consumer.
A workable package is one that allows the consumer to use the product
in the manner expected. A childproof package is not workable to a child.
Tag-pull tops to pudding tins are difficult for some people to remove.
Similarly, pickle jars are difficult to open for some people. A glass
household cleanser container is dangerous for consumers to use when
their hands are wet because of they may drop and break the container.