Product Life Cycle PDF

Product Life Cycle Marketing (BT350) Jinwoo Kim Product Life Cycle 4 Product Life Cycle Sales ($) or Volume  Evolution of a product’s sales from its initial introduction to the market u...

Product Life Cycle Marketing (BT350) Jinwoo Kim Product Life Cycle 4 Product Life Cycle Sales ($) or Volume  Evolution of a product’s sales from its initial introduction to the market until its eventual removal from the market INTRODUCTION MATURITY GROWTH DECLINE Time Some General Properties  Highly stylized picture of sales within a product category  Unit of analysis is the market, not the company  Get a dynamic view of the competitive situation, see the market potential  become forward-looking  Feedback driven, use forecasted and observed patterns to select strategy/tactics Sales or Volume Sales ($) or Volume INTRODUCTION MATURITY GROWTH DECLINE Time Profit Sales ($) or Volume INTRODUCTION MATURITY GROWTH DECLINE Profits Time Number of Firms (Competitors) Sales ($) or Volume # of Firms INTRODUCTION (Competitors) MATURITY GROWTH DECLINE Profits Time Discussion  Firms  Profits - Why does # of firms increase - Why do profits tend to start low slowly at first during the during the Introduction Stage? Introduction Stage? - Why do profits decrease during - Why does # of firms start to increase faster later on during the Introduction Stage? the Introduction Stage? - Why do profits increase during - Why does # of firms start to the Growth Stage? decrease during the Growth - Why do profits hit a “plateau” Stage? during the Growth Stage? - Why does # of firms decrease - Why do profits decrease during during the Maturity and Decline Stages? the Maturity and Decline Stages? PLC Based Tactics Introduction Growth Maturity Decline Competition Less Fierce Fiercer Fiercest Reduced Full Product Product One More Versions Best Sellers Line Skimming or Gain Market Defend Market Price Stay Profitable Penetration Share, deal Share, Profit Inform, Stress Reminder Minimal Promotion Educate Differences Oriented Promotions Maximum Place Limited More Outlets Fewer Outlets Outlets Action Grow Maintain Harvest Divest Diffusion Diffusion Cumulative Adoption Let’s Put Them Together Total number of adopters or cumulative adoption Number of new adopters or rate of adoption Examples  Hybrid Seed Corn Examples  Technology Planned Decline  Firms make products obsolete so that their customers buy the new/updated versions - iPhones/Android - Windows Types of PLC  PLC shapes vary depending on the product categories Sales Time Bass Diffussion Model Launching Strategies  Skimming: Start slow then grow - Set a high price at launch - Firm can extract maximum value from most interested customers - Used for innovative products with little or no competition - High profit margin allows recovery of development costs - Over time, price is lowered to extend sales to new segments  Penetration: Big bang! - Setting a low price to establish a significant market share - Used when trying to break into an existing market - Mass market from the beginning - Number of new adopter peaks early - Raise price as the firm becomes established - May block competitors who would like to enter but can’t beat the price Launching Strategies In Practice  Sales patterns often aren’t very smooth - Noisy data - Sometimes can’t sort out trial vs. repeat - Hard to know which stage of PLC is in effect  Conflicting factors make it hard to judge skimming vs. penetration  Questions about cause-and-effect - Does PLC drive strategy or vice versa? - Can become a self-fulfilling prophecy  Level of analysis - Generally applies for the category, not specific brands 5Cs & Marketing Mix Marketing (BT350) Jinwoo Kim  5Cs & Marketing Mix 2 5Cs  Five Factors of Marketing Plan  Customers - Company - Key decision and value drivers - Customers - Competitors - Customer Needs (vs. Wants) - Collaborators - Context - STP - Segmentation - Targeting  Company - Positioning - SWOT, BCG, brand portfolio - Customer Lifetime Value (CLV) 3 5C: Competitors  Market Space  Positioning - POP & POD - How a firm’s offerings are perceived relative to the competitive offerings 4 5C: Collaborators  Partners, suppliers, distributors, etc. - IKEA: 2000 suppliers in 50 countries Keds x Disney  Leverage strengths to reach Keds x Kate Spade common goals Keds x Rifle Paper Co 5 5C: Collaborators 6 5C: Context  Market Potential & Attractiveness  PEST: Macrotrends - Political and legal - Economic - Social - Technological 7 Marketing Mix  A set of marketing elements that firms blend to elicit a desired response from target customers  4Ps - Product  PLC - Price  Pricing I & II - Promotion  Branding I & II, Promotion I & II - Place  Channel I & II 8 Branding II Marketing (BT350) Jinwoo Kim  Building a Strong Brand 2 POD & POP  Points of Difference (PODs) - Positive attributes/benefits strongly associated with the brand, can claim superiority or exclusiveness over competitors  Points of Parity (POPs) - Associations not unique the brand, but you at least match competitors Experience & Emotion  Experiential Branding - Inviting consumers to interact with a brand - Promise + Experience = Relationship  Emotional Connection - Psychological contract - Loyalty Experiential Branding Simpson’s Kwik-E Mart JetBlue Ice Breaking IKEA Sleepover BestBuy Showrooms Dior VR Headset  Brand Personality Brand Personality  Beyond brand image  Describe the brand as if it were a person  Five Personality Dimensions by Jennifer Aaker (1997) 7 Five Personality Dimensions  Sincerity (honest, cheerful)  Excitement (new, daring, spirited)  Competence (secure, reliable)  Sophistication (glamorous, luxurious)  Ruggedness (strong, tough, outdoorsy) 8 Ads & Brand Personality  Sincerity  Excitement  Competence  Sophistication  Ruggedness 9 Cross Culture Japan Spain China Sincerity Sincerity Excitement Excitement Excitement Competence Competence Passion Sophistication (Competence) Traditionalism Sophistication (Sincerity) Peacefulness Sophistication Joyfulness (Ruggedness) Peacefulness (Ruggedness) (Ruggedness) Trendiness 10 Brand Hierarchy Brand Hierarchy MasterBrand Sub-Brands 12 Branded House  More than one type of products are sold under one name/branding umbrella 13 House of Brands  Each brand has its own brand identity to serve distinct segments 14 Brand Portfolio  Branded House - The firm is the masterbrand  Sub-Brands - Masterbrand is the key driver, or masterbrand and sub-brand are co-drivers  Endorsed Brands - Sub-brands are supported by masterbrand but independent, masterbrand acts as a quality stamp  House of Brands - Sub-brands are featured or promoted rather than the brand (the overall company brand is not listed) 15 Brand Portfolio Umbrella Individual Branding Branding Branded Sub- Endorsed House of House Brands Brands Brands 16 Brand Portfolios Brand Extension 17 Pros & Cons of Brand Extension  Pros  Cons - Transfer existing associations - Increase costs without - Reduce perceived risk compensating increase in - Increase communication revenue effectiveness  Reduce ads - Cannibalize sales of parent brand spending - Brand dilution if brand - Create new associations for the extension fails parent brand - Consumer confusion - Bring novelty or variety - Hurt parent brand - Forgo chance to develop a new brand 18 Promotion I Marketing (BT350) Jinwoo Kim Promotion  Promotion  Advertising - Marketing communication aim - Practice or techniques to increase awareness and improve to inform target customers of perception of a product, brand, or a product, service, brand, or a firm issue and influence their thoughts and behaviors  Sales Promotion - Persuasion-oriented - Media and non-media marketing - Include both advertising and communication used for a limited sales promotion time to increase consumer demand, stimulate market demand or improve product availability - Price discounts, coupons, etc. Advertising 3 Advertising Planning TARGET Who should we talk to? Motivation What is our objective? Media Message Where, when, and how often What should we say? should we say it? 5 M’s Money How much do we need to spend? What is our budget? Metrics Campaign evaluation How well did we do? Advertising Planning TARGET Who should we talk to? - Customers - Influencers - Channel Partners Motivation What is our objective? Media Message Where, when, and how often What should we say? should we say it? 5 M’s Money How much do we need to spend? What is our budget? Metrics Campaign evaluation How well did we do? Super Bowl Ad Targeting  Heineken 0.0 (2023)  Olay, “Make Space for Women” (2020)  Bud Light (2023)  Robinhood (2021) Target Segment & Controversy  March Madness Promotion (2023) - Bud Light products with Dylan Mulvaney’s face on them. - Fierce backlash from their customer base who are politically conservative 7 Advertising Planning TARGET Who should we talk to? Motivation What is our objective? Media Message Where, when, and how often What should we say? should we say it? 5 M’s Money How much do we need to spend? What is our budget? Metrics Campaign evaluation How well did we do? Motivation  Major objectives of communications: - Inform: Build awareness and help customer understand value - Persuade: Motivate customer to take action - Remind: Keeps value proposition top-of-mind, create and maintain associations  Short-term results: - Increase purchase intentions and its precursors  Long-term results: - Build brand equity  Promotional Tools & AIDA Personal selling  Personal Selling - Persuade potential Advertising customers to purchase a good or service via an Effectiveness in-person or online P.R. and publicity pitch (1:1 or 1:N)  Public Relations (PR) and Publicity - Indirectly spreading Sales promotion information about a product or firm via news, TV series, social Awareness Interest Desire Action media influencers, etc. Cognitive Stage Affective Stage Behavioral Stage Promotion I Marketing (BT350) Jinwoo Kim Message 2 Advertising Planning TARGET Who should we talk to? Motivation What is our objective? Media Message Where, when, and how often What should we say? should we say it? 5 M’s Money How much do we need to spend? What is our budget? Metrics Campaign evaluation How well did we do? Creating Ad Message  What is the “Big Idea” (or Creative Concept) - An idea that creates impact - Impact = Relevance + Originality  Characteristics of a Creative Concept: - Focus: something that is simple or single-minded - Uniqueness: something that no one has ever seen before - Generativeness: something that can extend beyond the initial execution into related ideas to permit evolution of a campaign - Truth/Honesty: reveals some truth about the product Ad Appeals  Turning the “Big Idea” into an actual ad to capture the target market’s attention and interest Image Repetition Problem-Solution Humor Straight Sell Appeals Comparative Fantasy Advertising Advertising Appeals Feel-Good Demonstration Sex Appeals Testimonial Fear Appeals Slice-of-Life Transformational 5 Ad Appeals  Affective Appeals - Feelings, mood, mind states, “emotional” - Can be both positive (humor, excitement, warmth) and negative (fear, guilt)  Cognitive Appeals - Thoughts, beliefs, attitudes, “rational” 6 Fear Appeal & Message Acceptance Facilitating effects Inhibiting effects Acceptance Level of fear Motivated to Too much elaborate on elaboration Rejection negative  Defense consequences system kicks in 9 Mixed Emotions  Nostalgia, Fear, Fun https://www.youtube.com/watch?v=z6nFo59STzY 10 Mixed Emotions 11 Ad Spokespeople  Celebrities - Grab attention - Likeable (positive affect)  Useful when they are - Credible - Consistent with image  But there are issues: - Cost - Credibility - Control 12 Super Bowl Ad & Celebrities 13 Comparative Ads 14 Comparative Ads  Two main weaknesses - Advertising for your competitor - Poor attitude towards the ad - Consumers might dislike the tone 15 Media 16 Advertising Planning TARGET Who should we talk to? Motivation What is our objective? Media Message Where, when, and how often What should we say? should we say it? 5 M’s Money How much do we need to spend? What is our budget? Metrics Campaign evaluation How well did we do? Media  What’s going down?  What’s on the rise? - Network TV news - Streaming services - Local TV - Social media - National newspapers - Shopping websites - Local newspapers - Blogs/vlogs - Magazines - Radio 18 Media Landscape 19 Media Strategy  Where - Selecting the medium or “media mix” - Need to consider efficiency (e.g., maximize reach, minimize cost) - Contextual fit  Frequency - Duplication - Wear-out  Timing - Continuous (Steady) Schedule - Flighting (Intermittent) Schedule - An advertising scheduling strategy that alternates between running a normal schedule of advertising and a complete cessation of all runs 20 Digital Media  Search - Search Engine Optimization (SEO): Organic Search - Search Engine Marketing (SEM): Pay per Click (PPC)  Display Ads SEM - Social Networks - Mobile  Online Video SEO 21 Digital Media  Advantages - Highly selective targeting (contextual, behavioral look alike) - User selects information  interactive - Direct response - Metrics (views, clicks, conversions, sales)  Disadvantages - Fragmented/limited reach - Low click through/attribution challenge - Little room for creativity, especially on mobile - Privacy and transparency 22 Digital Ad Search (SEM) Display Ad 23 Bidding for Google Ads Search (SEM)  Max Cost-per-click (CPC) Bid - Highest you would be willing to bid per click - Search network: Bid on keywords - Display network: Bid on ad units  Quality Score - Relevance, click-through rate, landing page, etc. Display Ad  How do you win? - Ad Rank = CPC x Quality Score - Higher Ad Rank - Get displayed, get higher/better position on page - Not only bid, but also attractiveness 24 Bidding for Google Ads 25 Bidding for Google Ads 26