Slide 1

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 2

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 3

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 4

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
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Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 7

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

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Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 9

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 10

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 11

of

MARKETING

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Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 12

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 13

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 15

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 16

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 19

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 21

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 22

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 24

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 25

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
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Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 27

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 28

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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our slides!
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of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 32

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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Slide 34

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

Product Strategy

Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

Product Strategy

Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

Thank you for using
our slides!
Logon ‘www.tactguys.com’ & enjoy more and more…


Slide 35

of

MARKETING

Product
Strategy

Chapter
Chapter

11

Product Strategy

Chapter

11

Objectives
1. Explain the concept of the product mix, and indicate various mix
decisions that can be made.
2. Describe the importance of developing a line of related products.
3. Explain the concept of the product life cycle, as well as its uses
and limitations.
4. Relate product strategy to the variables of the marketing mix.
5. Identify the determinants of the speed of the adoption process.
6. Explain the methods of accelerating the speed of adoption.
7. Outline new-product strategies and the determinants of their
success.
8. Describe various organizational arrangements for new-product
development.
9. Examine the stages in the product development process.
11-1

Product Strategy

Chapter

11

Product Mix
• The assortment of product lines and
individual offerings available from a
company.

11-2

Product Strategy

Chapter

11

Product Line and Individual Offering
Product Line
• A series of related products.
Individual Offering
• Single product within a product line.

11-3

Product Strategy

Chapter

11

Table 11.1

The Maple Leaf Foods International Mix
WIDTH OF ASSORTMENT

11-4

Meats

Groceries

Nonedible

Fresh and frozen meats
Bacon
Sausages
Wieners
Luncheon meats
Canned meat
Poultry

Peanut butter
Canned vegetables & fruit
Vegetable oils
Lard
Shortening
French fries
Maple syrup
Jams

By-products
Hides

Product Strategy

Chapter

11

Cannibalizing
• Situation involving one product taking
sales from another offering in a product
line.

11-5

Product Strategy

Chapter

11

Line Extension
• The development of individual offering
that appeal to different market
segments but are closely related to the
existing product line.

11-6

Product Strategy

Chapter

11

Importance of Product Lines
• Desire to grow
• Optimal use of company resources
• Increasing company importance in the
market
• Exploiting product life cycle

11-7

Product Strategy

Chapter

11

Product Life Cycle
• A product’s progress through
introduction, growth, maturity, and
decline stages.

11-8

Product Strategy
Figure 11.1

Stages in the Product Life Cycle

11-9

Chapter

11

Product Strategy
Figure 11.2

11-10

Chapter

11

Overlap of Life Cycle for Products A and B

Product Strategy

Chapter

11

Fashions
• Currently popular products that tend to
follow recurring life cycles.
Fads
• Fashions with abbreviated life cycles.

11-11

Product Strategy
Figure 11.3

11-12

Chapter

Alternative Product Life Cycles

11

Product Strategy
Figure 11.4

Fad Cycles

11-13

Chapter

11

Product Strategy

Chapter

11

Extending the Product Life Cycle
1. Increase frequency of use by
present customers.
2. Add new users.
3. Find new uses for the product.
4. Change product quality or
packaging.
11-14

Product Strategy
Figure 11.5

11-15

Chapter

11

Decay Curve of New-Product Ideas

Product Strategy

Chapter

11

Product Improvement Strategy and
Market Development Strategy
Product Improvement Strategy
• A modification in existing products.
Market Development Strategy
• Finding new markets for existing
products.
11-16

Product Strategy

Chapter

11

Product Development Strategy and
Product Diversification Strategy
Product Development Strategy
• Introducing new products into
identifiable or established markets.
Product Diversification Strategy
• The development of new products for
new markets.
11-17

Product Strategy

Chapter

11

Table 11.3

Forms of Product Development
Old Product

New Product

Old Market

Product improvement

Product development

New Market

Market development

Product diversification

Source: Charles E. Meisch, “Marketers, Engineers Should Work Together in ‘New Product’ Development Departments,” Marketing News (November 13,
1981), p. 10. Used by permission of the American Marketing Association. Earlier discussion of these strategies is credited to H. Igor Ansoff, “Strategies for
Diversification,” Harvard Business Review (September - October 1957), pp. 113-24; see also Philip Kotler, Principles of Marketing, 2nd ed. (Englewood Cliffs,
NJ: Prentice Hall, 1983), pp. 34, 52. Reprinted with permission by the American Marketing Association.

11-18

Product Strategy

Chapter

Structure for New-Product
Development
1.
2.
3.
4.

11-19

Committee
Department
Product/Brand Manager
Venture Team

11

Product Strategy

Chapter

11

Product Managers
(Brand Managers)
• Individuals assigned one product or
product line and given responsibility for
determining its objectives and
marketing strategies.

11-20

Product Strategy

Chapter

11

Venture-Team Concept
• An organizational strategy for
developing new products through
combing the management resources of
marketing, technology, capital, and
management expertise in a team.

11-21

Product Strategy
Figure 11.6

Chapter

11

Seven Stages of the New-Product
Development Process

Business
Strategy

Develop
new-product
strategy

Develop

Generate
ideas/
concepts

Test

Screen
and evaluate

Conduct business
analysis

Commercialize

Commercialized
Product

11-22

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Chapter

11

Concept Testing
• A marketing research project that
attempts to measure consumer
attitudes and perceptions relevant to a
new-product idea.

11-23

Product Strategy
Table 11.4

Chapter

11

Basic Criteria for New-Product
Screening
1. Company’s resources and abilities. Financial resources, R& D skills,
engineering skills, marketing research, management, production, sales
force and distribution resources and skills, advertising and promotion
resources and skills.
2. Nature of the product. Newness to the market, newness to the company, how
completely the product has actually been planned and technical issues dealt
with, fit with current product line, superiority in meeting customer needs,
quality relative to current competitive products.
3. Potential customers for the product. Similarity to current customers, level of
felt need for the product.
4. Nature of competition. Similarity to current competition, intensity of
competition, presence of price bases competition, number and size of
competitors.
5. Nature of the market. Size of potential, growth rate, rate of change of needs of
customers.

11-24

Product Strategy

Chapter

11

Test Marketing
• Selecting areas considered reasonably
typical of the total market, and
introducing a new product to these
areas with a total marketing campaign
to determine consumer response
before marketing product nationally.

11-25

Product Strategy

Chapter

11

Adoption Process
• A series of stages consumers go
through, from learning of a new product
to trying it and deciding to purchase it
regularly or to reject it.

11-26

Product Strategy

Chapter

Consumer Adoption Process
1.
2.
3.
4.
5.

11-27

Awareness
Interest
Evaluation
Trial
Adoption/Rejection

11

Product Strategy
Figure 11.7

11-28

Chapter

Categories of Adopters on the Basis of
Relative Time of Adoption

11

Product Strategy

Chapter

11

Consumer Innovators
• The first purchasers -- those who buy a
product at the beginning of its life
cycle.

11-29

Product Strategy

Chapter

11

Diffusion Process
• The filtering and acceptance of new
products and services by the members
of a community or social system.

11-30

Product Strategy

Chapter

What Determines the Rate of
Adoption?
1.
2.
3.
4.
5.

11-31

Relative Advantage
Compatibility
Complexity
Divisibility
Communicability

11

Product Strategy

Chapter

11

Hazardous Products Act
• A major piece of legislation that
consolidated previous legislation and set
significant new standards for product
safety; defines a hazardous product as
any product that is included in a list
(called a schedule) compiled by
Consumer and Corporate Affairs
Canada or Health and Welfare Canada.
11-32

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Chapter

11

Table 11.5

Some Hazardous Products Act Regulations
•
•
•
•
•
•
•
•
•
•
•
11-33

Bedding may not be highly flammable.
Children’s sleepwear, dressing gowns, and robes must meet flammability
standards.
Children’s toys or equipment may not contain toxic substances (such as lead
pigments) beyond a prescribed limit.
Certain household chemical products must be labelled with appropriate
symbols to alert consumers to their hazards.
Hockey helmets must meet safety standards to protect young hockey players.
Pencils and artists’ brushes are regulated to limit lead in their decorative
coating.
Matches must meet safety standards for strength and packaging.
Safety glass is mandatory in domestic doors and shower enclosures.
Liquid drain cleaners and furniture polishes containing petroleum-based
solvents must be sold in child-proof packaging.
Toys and children’s playthings must comply with safety standards.
Crib regulations provide for increased child safety.

of

MARKETING

Chapter
Chapter

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