Chapter 10
Developing,
Positioning, and
Differentiating
Products through
the Life Cycle
PowerPoint by Yu hongyan
Business of Jilin University
Objectives
10.1 Challenges in New-Product Develop.
10.2 Managing New Products
10.3 Product Life Cycle
10.4 Positioning and Differentiation
10.1 Challenges in NPD
1. Type of new product
2. Why new product fail and succeed
10.1 Challenges in NPD
Types of New
Products
Six
Categories
of
New
Products
New-To-The-World
New Product Lines
Product Line Additions
Improvements/Revisions
Repositioned Products
Lower-Priced Products
10.1 Challenges in NPD (cont’d)

New Product Failure is Rampant:
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95% of new U.S. consumer products
90% of new European consumer products
Reasons for failure include:
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Ignoring unfavorable market research
overestimating market size
Product is not well designed
marketing mix decision errors
Development costs higher than expected
Competitors is stronger than anticipated
shun
10.1 Challenges in NPD (cont’d)

Successful new products:

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Offer a strong relative advantage
Better understanding of customer needs, and
beat the competition to market
Higher performance-to-cost ratios and higher
contribution margins
Launched with larger budgets
Have stronger top management support
Discussion Scenario
Identify three or four new products
(successful and unsuccessful) that have
launched in the last 12 months.
Discuss the specific factors that either
contributed to the new product’s failure,
or that contributed to its successful
introduction.
10.2 Managing New Products
10.2 Managing NP (cont’d)
Customers
Employees
1. Idea
Generation
Sources of
New-Product
Ideas
Distributors
Competitors
R&D
Consultants
Creative Thinking
10.2 Managing NP (cont’d)

2. Idea Screening
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The company should motivate the employees
to submit their ideas to an idea manager
Three kinds ideas
Promising ideas
 Marginal ideas暂时搁置
 Rejects

10.2 Managing NP (cont’d)

3 Concept development and testing
 A Product idea is a possible product the
company might offer to the market
 A product concept is an elaborated详述
version of the idea expressed in meaningful
consumer terms
Concept Development & Testing
1. Develop Product Ideas into
Alternative Product Concepts
2. Concept Testing - Test the Product
Concepts with Groups of Target Customers
3. Choose the Best One
Concept Development
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Example
A company get a idea of producing a
powder to add to milk to increase its
nutritional value, but it is a idea
Idea Turn Into Concept
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Who will use this product?
What primary benefit should this product
provide?
When will people consumer this drink?
By answering these questions, a company
can form several concept:
Concept:

Concept1:
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Concetp2:
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An instant breakfast drink for adults who wants a
quick nutritious breakfast without preparing a
breakfast
A tasty snack drink for children to drink as a midday
refreshment
Concept3:

A health supplement for older adults to drink in the
late evening before they go to bed
Concept Define the Competition

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It needs to position
Instant breakfast compete against bacon
and eggs
Tasty snack drink – soft drink
Expensive
High price/oz.
Bacon
and
eggs
Pancakes
Hot
cereal
Cold
cereal
Instant
breakfast
Inexpensive
Low in calories
b) Brand-positioning
map
(instant breakfast market)
Brand C
Brand B
Brand A
Low price/oz.
High in calories
(a) Product-positioning
map
(breakfast market)
Quick
Slow
Product & Brand Positioning
Concept Testing

Concept testing involves presenting the
product concept to appropriate target
consumers and getting their reactions
Conjoint Analysis
Brand name
1.0 -----|
0 $1.19
|
|
Glory Bissell
|
|
$1.39 $1.59
Good Housekeeping Seal?
1.0-----|
|
0
No
Yes
Utility
Money-Back
Guarantee?
1.0-----|
|
0 No
Yes
Utility
Utility
Utility
1.0 -----0 K2R|
Retail Price
10.2 Managing NP (cont’d)

4. Marketing Strategy Development

There are three parts

Describes the target market etc
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Outline the planned

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Size, structure, behavior, position,market share
Price, distribution strategy, marketing budget for the first
year
Describe the long-run

Sale and profit goals, marketing mix strategy
10.2 Managing NP (cont’d)
. Business Analysis
5
Preliminary Demand
Considerations
in
Business
Analysis Stage
Sale
Cost
Profitability
10.2 Managing NP (cont’d)
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6. Product Development

Quality function deployment QFD
List desired customer attributes Cas
 Turn them into a list of engineering attribute EAs
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Improve communication between marketers,
engineers, and the manufacturing people
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Quality Function Deployment (QFD) was
developed to bring this personal interface to
modern manufacturing and business alike.
In today's industrial society, where the growing
distance between producers and users is a
concern, QFD links the needs of the customer
(end user) with design, development,
engineering, manufacturing, and service
functions.
It helps organizations seek out both spoken and
unspoken needs, translate these into actions
and designs, and focus various business
functions toward achieving this common goal.
QFD empowers organizations to exceed normal
expectations and provide a level of
unanticipated excitement that generates value.
QFD is
Understanding Customer Requirements
2. Quality Systems Thinking + Psychology +
Knowledge/Epistemology认识论
3. Maximizing Positive Quality That Adds
Value
4. Comprehensive Quality System for
Customer Satisfaction
5. Strategy to Stay Ahead of The Game
1.
Consumer Testing

The form of consumer testing

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Laboratory
Drop off
Consumer preferences
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The rank-order method
The paired-comparison method
The monadic-rating method
7. Market Testing
Consumer-Goods Market Testing
Simulated
Test Market
Controlled
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
A few stores that have
agreed to carry new
products for a fee.
SalesWave
Research
Test offering trail to
a sample of
consumers in
successive
periods.
Standard
Test Market
Full marketing campaign
in a small number of
representative cities.
8. Commercialization
Whom
When
Where
Product
Price
Place
Promotion
Sales & profits ($)
10.3 Sales & Profit Life Cycles
Introduction
Growth
Maturity
Time
Decline
Stages of the Product Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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Low sales
High costs per
customer
Negative profits
Innovator customers
Few competitors
Stages of the Product Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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Rising sales
Average costs
Rising profits
Early adopters
customers
Growing competition
Stages of the Product Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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Peak sales
Low costs
High profits
Middle majority
customers
Stable/declining
competition
Stages of the Product Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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Declining sales
Low costs
Declining profits
Laggard customers
Declining competition
Objectives and Strategies for the Product
Life Cycle
PLC Stages

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Introduction
Growth
Maturity
Decline
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Objective: to create
awareness and trial
Offer a basic product
Price at cost-plus
Selective distribution
Awareness – dealers and
early adopters
Induce trial via heavy
sales promotion
Objectives and Strategies for the Product
Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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Objective: maximize
market share
Offer service, product
extensions, warranty
Price to penetrate
Intensive distribution
Awareness and interest
– mass market
Reduce promotions due
to heavy demand
Objectives and Strategies for the Product
Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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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
Objectives and Strategies for the Product
Life Cycle
PLC Stages
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Introduction
Growth
Maturity
Decline
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Objective: reduce costs
and milk the brand
Phase out weak models
Cut price
Selective distribution
Reduce advertising to
levels needed to retain
hard-core loyalists
Reduce promotions to
minimal levels
9.4 Positioning and Differentiation
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Positioning
Differentiation
9.4 Positioning and Differentiation (cont’d)
Positioning
•
What is positioning?
•
•
•
•
•
Positioning According to Ries and Trout
Positioning According to Tracy and Wiersema
How Many Differences to Promote
Communicating the Company’s Positioning
9.4 Positioning and Differentiation (cont’d)

What is positioning?

Positioning is the act of designing the
company’s offering the image to occupy a
distinctive place in the target market’s mind
9.4 Positioning and Differentiation (cont’d)

Ries and Trout
 Positioning starts with product. A price of
merchandise, a service, a company, an
institution, or even a person….But positioning
is not what you do to a product. Positioning is
what you do to the mind of the prospects.
That is, you position the product in the mind
of prospect.
9.4 Positioning and Differentiation (cont’d)
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Treacy and Wiersema:
positioning value disciplines
Product leader firm (technology )
 Operationally excellent firm (good performance)
 Customer intimate firm ( customer management)

9.4 Positioning and Differentiation (cont’d)

Three strategic alternatives
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Strengthen its own current position in the
consumer’s mind
Grab an unoccupied position
Deposition or reposition the competition
9.4 Positioning and Differentiation (cont’d)

How Many Differences to Promote
 Unique selling proposition(USP)
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Best quality, best service, lowest price舒肤佳:杀菌
Double benefit positioning 高露洁:安全洁白
Triple benefit positioning
Avoid four major positioning errors
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Underpositioning：使消费者不能感觉其独特之处
Overpositioning：吹牛
Confused positioning：无所适从
Doubleful positioning：
9.4 Positioning and Differentiation (cont’d)

How to select the positioning?
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A theme park company want to build a new
park on the Los Angeles area to cater to the
large number of tourists
Seven theme parks now operate in this area
Perceptual Map
Live shows
Easy to reach
Good food
Fantasy
Exercise
Fun rides
Disneyland
Knott’s
Berry
Farm
-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2
-0.2
Magic
Mountain
1.0
Little waiting
0.8
Educational,
animals
Marineland
0.4
of the
Japanese
Pacific
0.2 Deer Park
0.6
0.2
0.4
0.6 0.8 1.0 1.2 1.4 1.6
-0.4
-0.6
-0.8
Busch
Gardens
Economical
Lion
Country
Safari
Beer perceptual map
有不同的规格，如大瓶、小瓶装
经常可以看到广告
日常在家中饮用购买方便
顺牌
华丹
喝起来口感顺，有些杀口
含糖分低，有益健康
质量好，价格又不贵
有易拉盖，方便开启
银瀑
开启方便
看起来颜色透明
由本地企业生产 由知名企业生产
水质应当经过国家有关部门认证
喝起来味道清爽
闻起来有很好的香味
含热量低，常喝不会使人发胖
水质应当是矿泉水
金士百
饭店或娱乐场所饮用时包装应当精美
9.4 Positioning and Differentiation (cont’d)
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Different positioning strategies
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Attribute positioning
Benefit positioning
Use of application positioning
User positioning
Competitor positioning
Product category positioning
Quality or price positioning
9.4 Positioning and Differentiation (cont’d)
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Positioning statements:
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To (target group and need) our (brand) is (concept)
that (point-of-difference)
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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.
Once the company has developed a clear
positioning strategy, it must communicate that
positioning through all facets of the marketing mix
and manage it through every point of contact.
9.4 Positioning and Differentiation (cont’d)

Discussion Scenario

Think about the current television advertising
campaign for Hair, FW-VW, JLU, Nike,
China mobil .
Using the preceding example as your guide,
develop a positioning statement consistent
with the current ad campaign for your
chosen product.
9.4 Positioning and Differentiation (cont’d)

Communicating the Company’s
Positioning
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Once the company has developed a clear
positioning strategy, it must communicate that
position effectively
Ex
Best-in-quality
 Japp 1 2 3

万宝路
Levis 1 2
Honda
9.4 Differentiation and Positioning (cont’d)

Differentiation

Differentiation is the act of designing a set of
meaningful differences to distinguish the
company’s offering from competitors’
offerings.
Important
Profitable
Distinctive
Differences Worth
Establishing
Affordable
Superior
Preemptive
不可模仿
9.4 Differentiation and Positioning (cont’d)
PRODUCT
SERVICES
PERSONNEL
CHANNEL
Form
Features
Performance
Conformanc
e
Durability
Reliability
Repair ability
Style
Design
Ordering
ease
Delivery
Installation
Customer
training
Customer
consulting
Maintenanc
e and repair
miscellaneo
us
Competence Coverage
Expertise
Courtesy谦
恭
performance
Credibility
Responsiven
ess
Communicati
on
IMAGE
Symbols
Media
Atmosphere
Events
9.4 Differentiation and Positioning (cont’d)
Product Differentiation
Form
Features
Performance
Durability
Reliability
Repairability
Quality
Style
Conformance
Quality
Design
Services Differentiation
Customer
Consulting
Installation
Delivery
Customer Maintenance
Training
& Repair
Miscellaneous
Services
Ordering
Ease
Personnel Differentiation

Better trained people
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Competence:posses skill and knowledge
Courtesy:friendly, respectful,considerate
Credibility:trustworthy
Reliability:consistently and accurately
Responsiveness: respond quickly to
customers request and problem
Communication: understand
9.4 Differentiation and Positioning (cont’d)

Channel Differentiation
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Coverage
Expertise
Performance
Image Differentiation
Media
Atmosphere
Symbols
Events
Review

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Develop New Products
Product Life Cycle
Positioning Strategy

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Two views
Differentiation Strategy