Chapter 10
Developing, Positioning,
and Differentiating
Products through
the Life Cycle
PowerPoint by Karen E. James
Louisiana State University - Shreveport
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 0 in Chapter 10
Objectives
 Understand the challenges a company
faces in developing and introducing
new products.
 Learn the main stages in developing
new products and how they can be
better managed.
 Know the factors that affect the rate at
which consumers adopt new products.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 1 in Chapter 10
Objectives
 Learn what marketing strategies are
appropriate at each stage of the
product life cycle.
 Understand how a company can
choose and communicate an effective
market position.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 2 in Chapter 10
New Product Development
 What is a “New” Product?
– New-to-the-world products
– New product lines
– Additions to existing product lines
– Improvements and revisions of existing
products
– Repositioned products
– Cost reduction products
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 3 in Chapter 10
New Product Development
 New Product Failure is Rampant:
– 95% of new U.S. consumer products
– 90% of new European consumer products
 Reasons for failure include ignoring
unfavorable market research,
overestimating market size, marketing
mix decision errors, and stronger than
anticipated competitive actions
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 4 in Chapter 10
New Product Development
 Successful new products:
– Offer a strong relative advantage
– Reflect better understanding of customer
needs, and beat the competition to market
– Exhibit higher performance-to-cost ratios
and higher contribution margins
– Are launched with larger budgets
– Have stronger top management support
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 5 in Chapter 10
Managing New Products
New Product Development Process:
Ideas to Strategy
 Idea generation  Concept testing
 Idea screening  Marketing strategy
development
 Concept
development
 Business analysis
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 6 in Chapter 10
Managing New Products
New Product Development Process:
Development to Commercialization
 Product development
 Market testing
 Commercialization
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 7 in Chapter 10
Consumer Adoption Process
 Adopters of new products move
through five stages:
– Awareness
– Interest
– Evaluation
– Trial
– Adoption
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 8 in Chapter 10
Consumer Adoption Process
 People adopt new products at
different rates
– Innovators
– Early adopters
– Early majority
– Late majority
– Laggards
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 9 in Chapter 10
Consumer Adoption Process
 Five product characteristics
influence the rate of adoption:
– Degree of relative advantage
– Degree of compatibility
– Degree of complexity
– Degree of divisibility (trialability)
– Degree of communicability
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 10 in Chapter 10
Marketing Through the
Product Life Cycle
 Five product characteristics
influence the rate of adoption:
– Degree of relative advantage
– Degree of compatibility
– Degree of complexity
– Degree of divisibility (trialability)
– Degree of communicability
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 11 in Chapter 10
Stages of the Product Life Cycle
PLC Stages
 Introduction
 Growth
 Low sales
 High costs per
customer
 Negative profits
 Maturity
 Innovator
customers
 Decline
 Few competitors
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 12 in Chapter 10
Stages of the Product Life Cycle
PLC Stages
 Rising sales
 Average costs
 Introduction
 Rising profits
 Growth
 Early adopters
customers
 Maturity
 Decline
©2003 Prentice Hall, Inc.
 Growing
competition
To accompany A Framework for Marketing Management, 2nd Edition
Slide 13 in Chapter 10
Stages of the Product Life Cycle
PLC Stages
 Peak sales
 Low costs
 Introduction
 High profits
 Growth
 Middle majority
customers
 Maturity
 Decline
©2003 Prentice Hall, Inc.
 Stable/declining
competition
To accompany A Framework for Marketing Management, 2nd Edition
Slide 14 in Chapter 10
Stages of the Product Life Cycle
PLC Stages
 Declining sales
 Low costs
 Introduction
 Declining profits
 Growth
 Laggard
customers
 Maturity
 Decline
©2003 Prentice Hall, Inc.
 Declining
competition
To accompany A Framework for Marketing Management, 2nd Edition
Slide 15 in Chapter 10
Objectives and Strategies for the
Product Life Cycle
PLC Stages
 Introduction
 Objective: to create
awareness and trial
 Offer a basic product
 Price at cost-plus
 Growth
 Selective distribution
 Maturity
 Awareness – dealers
and early adopters
 Decline
 Induce trial via heavy
sales promotion
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 16 in Chapter 10
Objectives and Strategies for the
Product Life Cycle
PLC Stages
 Introduction
 Growth
 Objective: maximize
market share
 Offer service, product
extensions, warranty
 Price to penetrate
 Intensive distribution
 Maturity
 Awareness and interest
– mass market
 Decline
 Reduce promotions
due to heavy demand
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 17 in Chapter 10
Objectives and Strategies for the
Product Life Cycle
PLC Stages
 Introduction
 Growth
 Maturity
 Decline
©2003 Prentice Hall, Inc.
 Objective: maximize
profit while defending
market share
 Diversify brands/items
 Price to match or beat
competition
 Intensive distribution
 Stress brand differences
and benefits
 Increase promotions to
encourage switching
To accompany A Framework for Marketing Management, 2nd Edition
Slide 18 in Chapter 10
Objectives and Strategies for the
Product Life Cycle
PLC Stages
 Objective: reduce costs
and milk the brand
 Phase out weak models
 Introduction
 Cut price
 Growth
 Selective distribution
 Maturity
 Decline
©2003 Prentice Hall, Inc.
 Reduce advertising to
levels needed to retain
hard-core loyalists
 Reduce promotions to
minimal levels
To accompany A Framework for Marketing Management, 2nd Edition
Slide 19 in Chapter 10
Positioning and Differentiation
 Two views of positioning:
– Ries and Trout: products are
positioned in the mind of prospect
– Treacy and Wiersema: positioning
via value disciplines
 Product
leader firm
 Operationally excellent firm
 Customer intimate firm
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 20 in Chapter 10
Positioning and Differentiation
 Positioning statements:
– To (target group and need) our (brand) is
(concept) that (point-of-difference)
 Example:
To young, active soft-drink
consumers who have little time for sleep,
Mountain Dew is the soft drink that gives
you more energy than any other brand
because it has the highest level of
caffeine.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 21 in Chapter 10
Positioning and Differentiation
 Differentiated products feature
meaningful and valuable differences
that distinguish the company’s
offering from the competition.
 Differences are stronger when they
are important, distinctive, superior,
preemptive, affordable, and profitable.
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 22 in Chapter 10
Positioning and Differentiation
Product Differentiation Tools
 Form
 Reliability
 Features
 Repairability
 Performance
 Style
 Conformance
 Design
 Durability
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 23 in Chapter 10
Positioning and Differentiation
Services Differentiation Tools
 Ordering
ease
 Customer
consulting
 Delivery
 Maintenance
and repair
 Installation
 Customer
training
©2003 Prentice Hall, Inc.
 Miscellaneous
To accompany A Framework for Marketing Management, 2nd Edition
Slide 24 in Chapter 10
Positioning and Differentiation
Personnel Differentiation Tools
 Competence
 Reliability
 Courtesy
 Responsiveness
 Credibility
 Communication
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 25 in Chapter 10
Positioning and Differentiation
Channel Differentiation Tools
 Coverage
 Performance
 Expertise
Image Differentiation Tools
 Symbols
 Atmosphere
 Media
 Events
©2003 Prentice Hall, Inc.
To accompany A Framework for Marketing Management, 2nd Edition
Slide 26 in Chapter 10