Building a Marketing Plan: Chapter Six: Planning for Products and Brands
BEP120
January 31, 2011
CHAPTER SIX
Planning for Products and Brands
From Building a Marketing Plan
By Ho Yin Wong, Kylie Radel, and Roshnee Ramsaran-Fowda
© 2011 by Business Expert Press. All rights reserved.
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Technology from Jan 2023 to Jul 2023.
CHAPTER 6
Planning for Products
and Brands
Because of the dynamic nature of the markets, organizations need to plan
and develop existing products and search for new products in order to
survive. New products introduced or tested on the market have a failure
ate as high as 95%.1 Th us it is imperative that every area of the product
e carefully analyzed and planned so that continuing marketing decisions
can be formulated from facts relevant to the total product.
Based on the situation analysis, and information in relation to seg-
mentation, positioning, and buying behavior gathered from market
esearch, you are able to plan your marketing mix. Planning your product
strategy is usually the fi rst step in developing marketing mix strategies.
In other words, a product plan is not a stand- alone plan. It needs to be
integrated with other marketing mix tools. While planning a product
strategy, you need to understand the characteristics of the product, the
ehavior of the product life cycle, and the features that can create a strong
and. All these aspects need to be thoroughly analyzed prior to writing
a product plan.
Learning Objectives
After studying this chapter, you will be able to
• appreciate the concept of product life cycle,
• master the new product development process,
• understand the concept of positioning or repositioning,
• identify the key decisions involved in
anding.
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This document is authorized for use only by Liliana Machuca in BUS 5614 taught by CHARLES BRYANT, Florida Institute of
Technology from Jan 2023 to Jul 2023.
80 BUILDING A MARKETING PLAN
Product Life- Cycle Decisions and Strategies
Sales of an organization’s products tend to follow a typical pattern of
development over time, named the product life cycle, as shown in Figure
6.1. Taking into consideration repeat purchases, not just fi rst- time sales,
the product life cycle attempts to recognize distinct stages in the product’s
sales pattern. Th ese distinct stages are product development, introduc-
tion, growth, maturity, and decline.
During product development, a new product goes through various
stages such as product idea screening and prototype and market tests.
A new product may be dropped if it costs too much to produce or the
esponses are not positive from the market tests. Introduction is the period
during which a new product is entering a market. Th e sales of the new
product rise slowly. However, since organizations provide heavy promo-
tion to inform and educate target customers, and there is signifi cant
need to develop initial distribution networks, this usually means a loss
situation.
Growth is the stage where customers accept the product, distribu-
tion is expanding, promotion is heavy, repeat purchases are obtained
from customers after initial trial, and positive word- of- mouth publicity
spreads. Both sales and profi ts grow rapidly due to more customers and
Figure 6.1. Product life cycle.
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This document is authorized for use only by Liliana Machuca in BUS 5614 taught by CHARLES BRYANT, Florida Institute of
Technology from Jan 2023 to Jul 2023.
PLANNING FOR PRODUCTS AND BRANDS 81
lower unit costs of the product. At the same time, market growth attracts
competitors, most of whom either attempt to imitate or add new features
to the already introduced product.
Maturity is the stage characterized by the extent of competition in the
market. Product sales are stable or grow slowly, at best, since a certain
amount of product loyalty is already established. Th ere are three impor-
tant attributes of mature markets:2
1. Repeat sales become much more extensive than fi rst- time sales.
2. Customers are knowledgeable about the alternatives, so
and pref-
erences become well established.
3. Few major technical advances will be forthcoming, so it is diffi cult
to obtain technology improvement that can lead to a signifi cant
competitive advantage.
As a result, new organizations fi nd it unattractive to enter the market
while existing organizations struggle to increase their market shares. Price
competition is a normal phenomenon at this stage since the market is
already crowded with organizations.
Decline is the phase during which the product becomes obsolete and
the loss of appeal to the customer results in sales decreases with the con-
sequent rapid loss of profi ts. Two main reasons contribute to the decline
of a product:
1. A better or a cheaper product enters the market that can fulfi ll the
same need. Th e introduction of DVDs has pushed video cassettes
virtually out of the market, for example.
2. Customers grow tired of a product— for instance, a shoe style.
Strategic Implications of the Product Life Cycle
Th e product life cycle can act as a planning tool, providing indicators to
marketers about changes in behavior of a product, thus allowing mar-
keters to react in time. In other words, the product life cycle can guide
marketers who can adapt their marketing strategy to the developments
of the product life cycle. It is diffi cult to generalize the most appropriate
strategy for each stage of the product life cycle. Nevertheless, marketers
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Technology from Jan 2023 to Jul 2023.
82 BUILDING A MARKETING PLAN
might need to follow diff erent strategies for dealing with the product in
diff erent stages of the product life cycle.
Introduction Stage
During the introduction stage, a basic product is introduced to the
market. It is not a onetime eff ort. Marketers need to conduct continual
esearch and development to reduce the product’s imperfections. Further,
eff orts need to be made to enhance the product’s value. A general formula
to study the product’s value from the customer point of view is
Value = benefi ts / required resources
Marketers can provide customers with better value by enhancing the ben-
efi ts or by reducing the required resources, or doing both.
Growth Stage
During the growth stage, marketers need to compare their own product
with their competitors’ so as to improve the product. Marketers need to
enhance the product’s value with new features and benefi ts. Product lines
can also be expanded to stimulate the growth stage. An example is the
introduction of diff erent fl avors of chewing gum to expand an organiza-
tion’s chewing gum product life cycle. Extra services, such as a wa
anty,
can be included in the product mix for manufacturing goods.
Maturity Stage
Common strategies available for marketers to deal with a product during
the maturity stage of its life cycle include the following:
• Improving quality of the product with an aim to encourage
epeat purchases and building customer loyalty
• Modifying the product to attract new customers
• Seeking new applications for the product (e.g., chewing gum
may be marketed for use by smokers as a tooth- whitening
product)
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This document is authorized for use only by Liliana Machuca in BUS 5614 taught by CHARLES BRYANT, Florida Institute of
Technology from Jan 2023 to Jul 2023.
PLANNING FOR PRODUCTS AND BRANDS 83
Decline Stage
Marketers face a challenging situation during the decline stage, but a
number of strategies are available. Marketing and production programs
must go through strict scrutiny to ensure effi ciency. Marketers can ratio-
nalize the product line so that only the most competitive products are left
in the range. If none of these strategies work, the last resort is to phase out
the product. Pruning a product is not an easy task because marketers get
attached to the product after a length of time, but bold actions are neces-
sary to support a phaseout.
The Development of New Products
As discussed in the product life- cycle section, products often decline and
fi nally may fade out. Organizations need new products to replace them
to ensure growth. Th e product life cycles for many products are getting
shorter on account of intense competition. Th us the task of developing
new products becomes of even greater importance for marketers.
A number of critical issues must be examined for new product devel-
opment. Marketers should continuously think about new products and
cannot aff ord to wait until products reach the decline stage. Marketers
also will need to ensure top management’s commitment in terms of fi nan-
cial and organizational support to facilitate new product development.
New product development is a continuous process, and competitors’
products should be factored into the development process. An evaluation
of competitors’ products in the new product development process can
have a far- reaching impact on achieving a competitive advantage. New
product development should be futuristic and in line with changing mar-
ket trends, and a product new to the organization may not necessarily be
new to the market.
In principle, there are two main approaches to add new products to
an existing range. One is to acquire products from other organizations,
and the second is to develop new products internally. Th e fi rst approach
can obtain a new product faster than the second strategy. However, the
organization might need to pay a premium to buy an existing prod-
uct from another organization. Organizations have three main ways to
acquire new products:3
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This document is authorized for use only by Liliana Machuca in BUS 5614 taught by CHARLES BRYANT, Florida Institute of
Technology from Jan 2023 to Jul 2023.
84 BUILDING A MARKETING PLAN
1. By purchasing another organization or simply buying a product line
2. By obtaining a license or a franchise
3. By purchasing patents (however, this may be a cumbersome and
lengthy process)
As previously indicated, developing new products in- house usually
takes longer in comparison to the acquisition approach. However, the
organization can learn a lot if develops its own new products. Th e new
product development process can become knowledge capital for the orga-
nization that might give it a competitive advantage.
The New Product Development Process
Principally, new product development is a sequential process: “Th e new
product development process involves a series of activities by which an
organization generates new product ideas, evaluates them, and devel-
ops them into new products that enter the marketplace.”4 Facing three
options at each stage, marketers must decide whether to proceed to the
next stage (“go”), drop the product (“no go”), or seek additional infor-
mation. Th e decision of “go” from one stage to another signifi es further
commitments of time and fi nancial resources. Th e new product develop-
ment process may be divided into six stages as shown in Figure 6.2.
Figure 6.2. The new product development process.
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This document is authorized for use only by Liliana Machuca in BUS 5614 taught by CHARLES BRYANT, Florida Institute of
Technology from Jan 2023 to Jul 2023.
PLANNING FOR PRODUCTS AND BRANDS 85
Idea Generation
Th e aim of the idea generation stage is to create a pool of ideas for pos-
sible new products and to refi ne those ideas into precise