Setting Product Strategy and Marketing Through the Life Cycle

A product is anything that can be offered to a market to satisfy a want or need.

Product Characteristics and Classifications

In planning its market offering, the marketer needs to address five product levels. Each level adds more customer value, and the five constitute a customer-value hierarchy. The fundamental level is core benefit: the service or benefit the customer is really buying. At the second level, marketer must turn the core benefit into a basic product. At third level, the marketer prepares an expected product. At the fourth level, the marketer prepares an augmented product that exceeds customer expectation. At the fifth level is the potential product, all the possible augmentations and transformations the offering might undergo in the future.

Product Classifications

Marketers classify products on the basis of durability, tangibility, and use (consumer or industrial). Each type has an appropriate marketing-mix strategy.

Product and Services Differentiation

To be branded, products must be differentiated. Marketers face an abundance of differentiation possibilities, including form, features, customization, performance quality, conformance quality, durability, reliability, repairability, and style.

Services Differentiation

When the physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving their quality. The main service differentiations are ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. Product returns are an unavoidable reality of doing business, especially with online purchases. One basic strategy is to eliminate the root causes of controllable returns while developing processes for handling uncontrollable returns.

Design Differentiation

As competition intensifies, design offers a potent way to differentiate and position a company's products and services. Design is the totality of features that affect how a product looks, feels, and functions to a consumer. Design offers functional and aesthetic benefits and appeals to both our rational and emotional sides. Each design should reflect bold simplicity, real authenticity, the power of red, and a "familiar yet surprising" nature.

Product and Brand Relationships

Each product can be related to other products to ensure that a firm is offering and marketing the optimal set of products. A product system is a group of diverse but related items that function in a compatible manner. A product mix (product assortment) is the set of all products and items a particular seller offers for sale.

Packaging, Labeling, Warranties, and Guarantees

Many marketers have called packaging a fifth P, along with price, product, place, and promotion. Most, however, treat packaging and labeling as an element of product strategy. Warranties and guarantees can also be an important part of the product strategy.

New Product Development

Idea Generation - The process starts with the search for ideas. Some experts believe the greatest opportunities and highest leverage with new products are found by uncovering the best possible set of unmet customer needs or technological innovation.

Idea Screening - Most companies require new product ideas to be described on a standard form for a new-product committee's review. The description states that the product idea, the target market, and the competition, and roughly estimates market size, product price, development time and costs, manufacturing costs, and rate of return.

Concept Development - A product idea is a possible product the company might offer to the market. A product concept is an elaborated version of the idea expressed in consumer terms. Next, the product concept is turned into a brand concept.

Concept Testing - Concept testing means presenting the product concept to target consumers, physically or symbolically, and getting their reactions.

Marketing Strategy Development - After a successful concept test, the firm drafts a preliminary three-part strategy for introducing the new product. The first part describes the target market's size, structure, and behavior; the planned product positioning; and the sales, market share, and profit goals sought in the first few years. The second part describes the long-run sales and profit goals and marketing-mix strategy over time. This plan forms the basis for the next step, the business analysis.

Business Analysis - The firm evaluates the proposed product's business attractiveness by preparing sales, cost, and profit projections to determine whether they satisfy company objectives. If they do, the concept can move to the development stage. As new information comes in, the business analysis will undergo revision and expansion.

Product Development - The R&D department will develop a prototype that embodies the key attributes in the product-concept statement, performs safely under normal use and conditions, and can be produced within budgeted manufacturing costs; this process is being speeded by virtual reality technology and the Web.

Market Testing - After management is satisfied with functional and psychological performance, the product is ready to be branded with a name, logo, and packaging and go into a market test.

Commercialization - At commercialization, which is the costliest stage in the process, the firm contracts for manufacture or builds or rents a manufacturing facility. It also prepares its communications campaign, which can cost $25 million to $100 million for the first year of a new consumer packaged good introduced nationally.

The Consumer-Adoption Process

Adoption is an individual's decision to become a regular user of a product and is followed by the consumer-loyalty process. New-product marketers typically aim at early adopters and use the theory of innovation diffusion and consumer adoption to identify them.

 Fig. Time of Adoption of Innovations

Marketing through the Product Life Cycle

Most product life-cycle curves are portrayed as bell-shaped. This curve is typically divided into four stages: introduction, growth, maturity, and decline. In introduction, sales grow slowly as the product is introduced; profits are nonexistent because of heavy introduction expenses. Growth is a period of rapid market acceptance and substantial profit improvement. In maturity, sales growth slows because the product has achieved acceptance by most potential buyers, and profits stabilize or decline because of higher competition. In decline, sales drifted downward and profits erode.

Fig. Sales and Profit Life Cycles

Personal Point of View

Knowing the product life cycle along with the target market is the most important for me. As for new product development, we need a team consists of different background, ethnic, religon, and culture because the bigger the diverse group, the better mix of ideas will come out in order to penetrate a new market with a new product. After we learn market and develop a new product, it is all about timing to launch a new product. These days, marketers have to keep an eye on the market trends all the time or early bird gets the worm.