Business Finance
Product Life Cycle Stories

Question Description

Guided Response:

1. Review section 3.2 in our text regarding product life cycles.

2. Identify an appropriate product, product category or brand.

3. Research your brand/product/category to answer the following:

  • The approximate timing of each life cycle phase
  • The key events that marked the start or end of each phase
  • Use at least three sources

4. Post this information to the discussion forum below.

  • In the title of your post identify your product/brand/category.
  • Please read the chapter of my text that i have provided especially 3.2

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3 Tom Sibley/Corbis The Marketing Mix: Products Learning Objectives After studying this chapter, you should be able to: • Recall three ways of describing a product, each of which can affect customer value. • Describe the implications of the product life cycle for marketers. • Explain how the proliferation of product choice has affected marketers’ product strategies. • Discuss four aspects of service as a “product” that demand a strategic marketing response. • Identify the three stages of change required in social marketing. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 63 4/8/16 10:35 AM Section 3.1 Designing Products for Customer Value CHAPTER 3 Introduction T he subject of what marketers sell—the goods and services on offer and the packaging, customer service, brand reputation, and more that surround them—is covered by the term Product as one of the four p’s of marketing management. Under the umbrella term marketing mix, the four p’s of product, place, price, and promotion represent the elements of a strategy that marketers control. This chapter, and the three that follow it, will take up the topic of each “P” in turn. This chapter focuses on concepts necessary to understand strategic decisions about products, but we are not talking merely about the tangible goods that come home from stores in boxes. Product strategy encompasses all the elements that enable a product to serve its owner. The size and shape of a potato peeler’s handle, the location of menus in a software application, the brightness of a car’s headlights—these are all elements of form that render service. As you learn about offerings ranging from pure goods to pure services, about where new products come from and the life cycles they experience, keep in mind that every purchase transaction has its roots in service-dominant logic. Seen in this light, the Product “P” is really an “S” for service. 3.1 Designing Products for Customer Value W hen we say “products,” what exactly are we talking about? The American Marketing Association (AMA) defines the term as a “bundle of attributes (features, functions, benefits, and uses) capable of exchange or use; usually a mix of tangible and intangible forms” (, 2011). Thus a product may be a physical entity, a service, an idea, or any combination of the three. An organization, person, place, or idea can be a product. Consider Oprah Winfrey. Her company, Harpo Productions, is an organization that creates content for motion pictures, television, and radio. That content is a tangible output— a product. For her fans, being in the audience during taping of the “The Oprah Winfrey Show” was thrilling; seats in the television studio were a product for sale as well. And finally, Oprah’s core idea of “Live your best life” was a product that anchored the place, person, and organization together as a brand experience. Table 3.1 demonstrates that all product offerings can be positioned somewhere on a continuum from pure good (composed of tangible attributes) to pure service (composed entirely of intangible attributes). To identify a product’s position on this continuum, consider if anything is taking up space after you make the purchase. With a bar of soap, the answer is definitely yes. With completion of a medical exam, the answer is no. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 64 4/8/16 10:35 AM CHAPTER 3 Section 3.1 Designing Products for Customer Value Table 3.1: Continuum of products Pure Good Characteristics Tangible Examples Soap, salt Pure Service Combination Blend of tangible and intangible Tailored suit Starbucks coffee Cell phone Intangible Restaurant meal Auto tune-up Medical exam Haircut Bank transaction Hotel stay All products for sale occupy a position somewhere on the continuum from pure good to pure service. The tangibility of pure goods can create the illusion that people purchase them solely to take possession of physical objects. Not true—behind every purchase is the desire for a benefit that derives from possession. This reflects the current marketing thought regarding service-dominant logic—the understanding that customers buy offerings that render services (Lusch & Vargo, 2007). Over the past decades, the view that products could be classified on a continuum has been augmented with this understanding that even pure goods have value only to the extent they render service (utility) to their owners. Tangibles like soap and salt serve their owners, for example, by loosening dirt or enhancing the flavor of a dish. All products on the continuum shown in Table 3.1 fall into two broad classifications—those bought by consumers and those bought by businesses to make products for consumers. Consider the humble paper clip. Individuals and families—especially those including students—buy a box from time to time. But do they buy a shrink-wrapped cube of 12 boxes? Rarely. The big-volume purchasers of paper clips are businesses. Until the modern office goes completely paperless, the simple bent wire will be consumed by the case to organize the paperwork in the offices that manage the making of products for consumers. Where can we begin to study the marketers’ perspective on all these “somethings” for sale, as diverse as Oprah and a paper clip? The answer lies in a fundamental concept introduced in Chapter 1. All products, whether tangible or intangible, are designed to deliver customer value. “Designing products for customer value” means putting into the product enough features that deliver the benefits customers are looking for, but not so many that the product costs more than they’re willing to pay. As consumers, all of us expect the things we buy to deliver a certain degree of reliability and fitness for use at a reasonable price. The more reliable the offering is, the better its functionality, the higher the price we are likely to consider reasonable. When a company gets the balance between value and price right, customers say, “Now, that is a good deal.” © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 65 4/8/16 10:35 AM CHAPTER 3 Section 3.1 Designing Products for Customer Value Product Strategy: Three Perspectives Imagine that you have been invited to sit in on a strategy session of the Acme Paper Clip Company’s new product development committee. In the room are Eugene from engineering, Sally from sales, and Alvin from accounting. As an engineer, Eugene’s perspective on paper clips is purely focused on what paper clips are and do—the form they take, the functionality they deliver. As a salesperson, Sally’s perspective is more expansive. She thinks about the paper clip’s value as customers perceive it—not just how the paper clip attaches paper, but the price and the packaging that go into the product, that make it easier for her to sell. Alvin from accounting sees the paper clip purely in terms of what it does for the company. He’s counting costs against income to calculate profit, worrying about liability issues, and wondering what will happen to Acme Paper Clip if paper clips become obsolete in the future. These three points of view add up to a product strategy for Acme Paper Clip. A product strategy describes the product offering from three perspectives: core, expanded, and concept, as shown in Figure 3.1. Figure 3.1: Product strategy perspectives Core product Expanded product Product concept The three perspectives of the product strategy are increasingly comprehensive. The core product describes the product in terms of its solution for sale—the form/function utility that creates the set of benefits that allow it to fill a need. The expanded product description includes the mix of tangible attributes and intangible product support that come with the product. This includes how the product is packaged, plus all the factors categorized as part of “ease of possession,” one of the four utilities © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 66 4/8/16 10:35 AM Section 3.1 Designing Products for Customer Value CHAPTER 3 of customer value discussed in Chapter 1. The expanded product (referred to by some marketers as the augmented product) includes the price, payment plan, and any warranties or guarantees that go with a purchase. What differentiates one offering from others on the market? The expanded product, which establishes the customer’s perception of its value equation. Finally, the product concept is the company’s long-range perspective on the product. It describes the market niche to be served by this product, the life cycle it will experience in the marketplace, and the impact of manufacturing and selling it on the company itself. Consumers’ perception of the brand, the company’s social responsibility in producing it, and customers’ experience with the company after they make the purchase all contribute to the product concept. These three perspectives form the product strategy—the “Product” P in the four p’s of the marketing mix. Consider how Trader Joe’s Candy Cane Joe Joe’s (an Oreo-like cookie product) would be described in terms of the three perspectives of core product, expanded product, and product concept. The core product is a tasty, generously stuffed chocolate-peppermint cookie. The expanded product is the affiliation of one cookie with all products sold under the Trader Joe’s private label, a widely trusted seal of approval. The product concept, the “big idea” behind this tasty treat, is Trader Joe’s corporate strategy of creating exclusive private-label products that compete with national brands on price to gain a long-term competitive advantage (Private Label Magazine, 2009). Product Strategy Captures Value The product strategy is made up of dozens of decisions. Marketing strategists choose which market the product will serve and what the product will do for the people in that market. Other departments make decisions about manufacturing processes and materials sourcing, which affect the cost to produce the product and thus how it can be priced. All these decisions come together in a product strategy that allows an offering to stand out from similar items for sale, due to specific promises of service utility designed to appeal to specific market segments. The product strategy defines the limits of what the product will do, to avoid promising to be all things to all people. When consumers know exactly what a product will do, they can put a value on it. Only then can they differentiate between several offerings and decide which option best suits their needs. Decisions about branding, packaging, support, and quality give products points of competitive differentiation by which consumers can compare options and assess value. Associated Press © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 67 4/8/16 10:35 AM CHAPTER 3 Section 3.1 Designing Products for Customer Value The goal of the product strategy is to achieve competitive differentiation. This takes discipline. Decisions add up to a strategy that promises one product offering delivers value that no competing product does. When a product is truly designed for customer value, it can command a premium price. That is a company’s reward for taking a disciplined approach to competitive differentiation. Marketers’ decisions that affect customer value can be grouped into four areas: 1. Branding—a company’s use of its name, reputation, and trademark to attract consumers’ attention; 2. Packaging—form attributes designed to attract the eye, prevent damage in shipping, and convey information to serve both the sellers’ and the buyers’ needs, like nutrition labels and UPC codes; 3. Support—post-sale services and policies that create customer satisfaction by affirming that a company stands behind its products; and 4. Quality—technical conformance to a standard set by experience, enabling the offering to render the service for which it is intended. More quality creates a better value for the consumer, delivering greater satisfaction with the purchase. Packaging plays a large part in marketing. Customers want packaging that is attractive, safe, and opens easily. PR Newswire/Associated Press To summarize, here’s how product strategy creates the customer’s perception of an offering’s value equation: From the manufacturing company’s point of view, product strategy begins with identifying a target market and a need to fill. Then, strategic decisions about the core product, expanded product, and product concept fill out the picture of what that product is and does. Decisions about branding, packaging, support, and quality give the product its positioning and points of competitive differentiation—the means by which a consumer can compare it to similar options and decide its value. Product Classifications: The Marketing Orientation To those who manufacture and sell products, their output can be classified as items, which are part of product lines, which make up the assortments of goods on offer. These terms are defined as follows: • • • Items: Individual products with specific characteristics; one item equals one SKU (stock-keeping unit). Lines: A set of closely related individual products. Assortments: All the lines and products a company sells. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 68 4/8/16 10:35 AM Section 3.1 Designing Products for Customer Value CHAPTER 3 That’s how a manufacturing company or retailer looks at products. But in any company, the marketing department plays the crucial role of representing the customer. Marketers are the ones who keep their buyers’ (and end users’) perspective in mind, bringing a marketing orientation into every discussion of business strategy. Holding this perspective can be difficult; it’s all too easy to slip into the habit of seeing the company’s products from an internal vantage point. That’s why it is important to understand the difference between manufacturers’ and marketers’ thinking about products. Let’s start our examination of these different points of view by looking at how marketers classify products into distinct groups. Classification matters, because marketers sell different products to different people in different ways. Marketing decisions about branding, product strategy, and benefit statements will all be based on the class in which a specific product fits. Products can be categorized by the type of customer the company sells them to: consumers or businesses. The terms B2B and B2C—abbreviations for “business to business” (B2B) and “business to consumer” (B2C)—are frequently used in marketing to describe these two sales orientations, so it’s good to be familiar with them. B2B describes transactions between businesses, such as between a manufacturer and a wholesaler or between a wholesaler and a retailer. B2C describes transactions between businesses and consumers. A less frequently used term is B2G, for business-to-government transactions. Products for consumers are classified based on the way people shop, while products for businesses are classified based on how the product will be used. A B2C company sells products that fall into four categories, based on how consumers make buying decisions: 1. Convenience: These products are inexpensive, frequently needed, and easily substituted by something else. Consumers buy with a minimum of comparison or effort. Example: soap. 2. Shopping: These products are less frequently needed and typically evaluated based on suitability of style or image. Consumers compare brands, price, and quality. Example: clothing. 3. Specialty: These products require a high investment and are infrequently needed. Consumers research and make careful comparisons. Example: cars. 4. Unsought: These products can be new innovations or simply not a high consumer priority. Consumers must be convinced to want them. Example: charitable donations. To some extent, B2B products can be classified based on how business consumers shop for them. A purchasing manager will likely shop for printer paper like a convenience product, but a computer printer like a specialty product. Products for businesses have one thing in common: derived demand. The need for them springs from the demand for something else. Business buyers don’t purchase a printer and paper because they want to own them—they buy them because they help their company construct its end product. © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 69 4/8/16 10:35 AM Section 3.1 Designing Products for Customer Value CHAPTER 3 A B2B company sells products that other businesses buy, which fall into seven categories: 1. Raw materials: Basic substances in their natural, modified, or semi-processed state, used as an input to a production process. 2. Component parts: Pieces, assemblies, or subassemblies that are required to finish an activity, item, or production process. 3. Process materials: Substances purchased for incorporation into a product, which cannot be recognized in the finished activity or item. 4. Manufacturing installations: Assemblies or systems required to conduct manufacturing processes, usually custom-designed and installed. 5. Accessory equipment: Assemblies purchased for use in production, administrative, clerical, or marketing activities, not directly used as an input to a production process. 6. Operating supplies: Items used in production, maintenance, or administrative activities. 7. Business support services: Activities required for successful completion of a process or to support administrative functions. To understand these categories, consider a mustard company. It buys mustard seeds and spices (raw materials); plastic bottles (component parts); laundry soap for washing the workers’ uniforms (process materials); a bottling line (manufacturing installation); a photocopier for the office (accessory equipment); copy paper (operating supplies); and finally, the services of an accountant, an advertising agency, and a food distributor (business support services). Most companies specialize in selling products, services, or a combination that fit one niche in either the consumer or business product classification, as shown in Table 3.2. Table 3.2: Product classifications Consumer Products Business Products Convenience Shopping Specialty Unsought Raw materials Component parts Process materials Installation Accessory equipment Operating supplies Business support services (distribution or consulting) Companies sell products, services, or a combination thereof that fit one niche in either the consumer or business product classification. Now let’s take product classification a step further. To a marketer, it makes more sense to look at how consumers shop and use items. Marketers gain insights into how to promote products when they think of them in the following classifications: © 2016 Bridgepoint Education, Inc. All rights reserved. Not for resale or redistribution. whi80045_03_c03_063-094.indd 70 4/8/16 10:35 AM Section 3.1 Designing Products for Customer Value • • • CHAPTER 3 Usage groups: Items that go together to fill a need. Complementary products: Items whose use is related to the use of the original product to fill a need. Substitute products: Offerings that have some characteristics in common with the original ite ...
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The Life Cycle of Floppy Discs
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