CHAPTER 9
PRODUCT STRATEGY
PRODUCT STRATEGY
• Developing New Products
• Product Life Cycle
• Branding Strategy
DEVELOPING NEW PRODUCTS
• New Product Process
• New Product Failures
NEW PRODUCT PROCESS
Creative Ideas
Creative Business Ideas
Development and Testing
Introduce New Product
Time
SEARCH FOR CREATIVE IDEAS
• Create cross-functional committees
• Collect stakeholder ideas
• Listen to customers
TYPES OF CREATIVE IDEAS
• Never been done before
• Improved product technology
• Creative twist of an existing idea
CREATIVE IDEAS EXAMPLES
• Charles Schwab
• Ralph Lauren Polo Shirts
• Houston National Bank
• Blue Chip Forecast
Ralph Lauren Polo Shirt for Dogs
CREATIVE BUSINESS IDEAS
• Company Fit
• Financial Analysis
- Feasibility study
- Business Plan
COMPANY FIT
• Existing Production Fit
• Existing Distribution Fit
• Product Strategy Fit
FEASIBILITY STUDIES
Studies of potential new products, with evaluations
of resources and time in screening creative ideas
FEASIBILITY STUDY PROCESS
Potential New Products
Financial Viability
Time and Resources
Proceed or Drop Creative Idea
PRODUCT DEVELOPMENT
AND TESTING
• Product development
- Types of new products
- Product design
• Testing
- Beta testing
- Store audits
COMMERCIALIZATION
• Launch new product
• Design and place promotions
• Fill distribution pipeline
NEW PRODUCT FAILURES
• Failure to define target market
• Lack of customer knowledge
• Poor product performance
NEW PRODUCT FAILURE
EXAMPLES
• Betamax
• Harley Davidson Perfume
• Susan B Anthony Dollar
PRODUCT LIFE CYCLE
Sales
Introduction
Time
Growth
Maturity
Decline
STAGES OF PRODUCT LIFE CYCLE
Stage
Sales
Profits
Introduction
Growth
Maturity
Decline
Low
Climbing
Stable
Dropping
Negative
Rising
Peaking
Declining
CHARACTERISTICS OF THE
INTRODUCTION STAGE
• Negative Profits
• Heavy Promotion Cost
• Heavy Distribution Cost
INTRODUCTION STAGE
EXAMPLES
• Electric vehicles
• Life Straw
• Astrata
ASTRATA THEFT BOX
• Stops motor on stolen trucks
• Locks doors remotely, trapping
thieves
• Programmed to notify police
CHARACTERISTICS OF THE
GROWTH STAGE
• Increasing Revenue
• Experience Curve
• Increasing Profits
GROWTH STAGE EXAMPLES
• Kindle
• Greek Yogurt
• Smart Phones
• Zip Lines
• Audio Books
SALES OF KINDLES
2009
2 million
2011
12 million
AUDIO BOOK SALES
1997
$480 Million
2013
$1,200 Million
CHARACTERISTICS OF THE
MATURITY STAGE
• Intense Competition
• Maintain Promotion
• Layering Strategy
MATURE STAGE EXAMPLES
• Crayola
• Baby carrots
• Campbell soup
CONCEPT OF LAYERING
Sales
Time
LAYERING EXAMPLES
• Chicken Soup for the Soul
• Movies
• Dental Services
MOVIE EXAMPLES OF LAYERING
• Shrek
• Star Trek
• Halloween
LAYERING OF DENTAL SERVICES
• Cosmetic
• Straighten Teeth
• Bonding Teeth
• Whiten Teeth
DECLINE STAGE STRATEGIES
• Simplify Product Line
• Minimize Promotional Cost
• Discontinue Product Line
• Sell Product Line
DECLINE STAGE EXAMPLES
• Hostess Brands
• Kodak
• Yellow Pages
• PC Decline
YELLOW PAGES REVENUE
2005
14 Billion
2011
9 Billion
BRANDING STRATEGY
• Product Names
• Major Types of Branding
• Multiple Branding Strategy
• Brand Extension
PRODUCT NAMES
Commodity
Any company can use
Grade
Defined by government
Brand
Owned by a company
COMMODITY EXAMPLES
• Aspirin
• Gasoline
• Nylon
GRADING EXAMPLES
• Grade AA eggs
• Choice beef
• Organic foods
MAJOR TYPES OF BRANDING
• National Brands by Manufacturers
• Store Brands by Retailers
MANUFACTURING BRANDS ARE
LOSING TO STORE BRANDS
• Mass media universe has shattered
• Mass channel universe has consolidated
• High gross margins for store brands
MULTIPLE BRANDING STRATEGY
• BLANKET BRANDS
- Same brand name
• INDIVIDUAL BRANDS
- Different brand names
EXAMPLES OF BLANKET BRANDS
• IBM
• Whole Foods (365)
• Costco (Kirkland)
EXAMPLES OF INDIVIDUAL BRANDS
• Yum Brands
• Sears
YUM BRANDS
• Pizza Hut
• Taco Bell
• Kentucky Fried Chicken
SEARS RETAIL BRANDS
• Kenmore
• Craftman
• Diehard
BRAND EXTENSION
A company with a well-known brand uses that
brand to market to a different product category.
BRAND EXTENSION SUCCESSES
• Visio
• JELL-O pudding
• IAMS pet insurance
BRAND EXTENSION FAILURES
• New Coke
• BIC pantyhose
• Hooter’s airline
MOST POWERFUL BRANDS IN 2013
#1) Apple
#2) Microsoft
#3) Coca Cola
#4) IBM
#5) Google