Chapter 10 – Managing Successful Products, Services, and Brands
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CHAPTER CONTENTS
PAGE
POWERPOINT RESOURCES TO USE WITH LECTURES …………………………………… 10-2
LEARNING OBJECTIVES (LO) ……………………………………………………………………………. 10-3
KEY TERMS ………………………………………………………………………………………………………….. 10-3
LECTURE NOTES
• Chapter Opener: Gatorade: Bringing Science to Sweat for more than 50 Years ……… 10-4
• Charting the Product Life Cycle (LO 10-1) ………………………………………………………. 10-5
APPLYING MARKETING KNOWLEDGE …………………………………………………………… 10-29
BUILDING YOUR MARKETING PLAN ………………………………………………………………. 10-31
VIDEO CASE (VC)
IN-CLASS ACTIVITIES (ICA)
• ICA 10-1: Using Brainstorming and N/3 Techniques for Breathe Right®……………10-36
CONNECT EXERCISES …………………………………………………………………10-42
• Creating Customer Value and Competitive Advantage Click and Drag*
• Relating the Product Life Cycle to Marketing Mix Actions Click and Drag*
• Alternative Branding Strategies for Philip B Case Analysis
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POWERPOINT RESOURCES TO USE WITH LECTURES
PowerPoint
Textbook Figures Slide
Figure 10-1 How stages of the product life cycle relate to a firm’s marketing objectives and
marketing mix actions …………………………………………………………………………………….. 10-4
Figure 10–1A Product life cycle stages and its total industry sales and profit ………………….. …………….10–5
Figure 10–1B How stages of the product life cycle relate to a firm’s marketing objectives and
marketing mix actions ………………………………………………………………………… …………….10–6
Applying Marketing Metrics
Knowing Your CDI and BDI [See UMD10CDIBDI.xls] ……………………………………………………….. 10-21
Marketing Matters and/or Making Responsible Decisions
Marketing Matters—Customer Value: Will E-Mail Spell Extinction for Fax Machines? ……………. 10-12
Videos
10-1: Gatorade Ad ……………………………………………………………………………………………………………… 10-3
10-3: Dr Pepper Ad …………………………………………………………………………………………………………… 10-26
10-4: Justin’s Video Case ………………………………………………………………………………………………….. 10-39
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LEARNING OBJECTIVES (LO)
After reading this chapter students should be able to:
LO1: Explain the product life-cycle concept.
LO2: Identify ways that marketing executives manage a product’s life cycle.
KEY TERMS
brand equity
product class
brand name
product form
brand personality
product life cycle
branding
product modification
market modification
seven P’s of marketing
multibranding
trading down
multiproduct branding
trading up
off-peak pricing
Chapter 10 – Managing Successful Products, Services, and Brands
LECTURE NOTES
GATORADE: BRINGING SCIENCE TO SWEAT FOR MORE THAN 50
YEARS
• Gatorade is synonymous with sports drinks, constant product improvement, and
masterful brand management.
• Creating the Gatorade Brand:
a. Stokely-Van Camp Co.:
b. Quaker Oats:
c. PepsiCo purchased Quaker Oats in 2001 and accelerated brand development.
• Today, Gatorade is a global brand sold in more than 80 countries, making it a global
brand.
• In 2009, Gatorade:
a. Unleashed a bevy of enhanced beverages in bold new packaging.
• In 2010-2011, created the ‘G’ Series to provide “fuel that goes beyond hydration.”
• Organic Gatorade introduced in 2016. Also introduced a microchip-fitted smart cap
bottle and sweat patch to communicate digitally.
[Video 10-1: Gatorade Ad]
Chapter 10 – Managing Successful Products, Services, and Brands
I. CHARTING THE PRODUCT LIFE CYCLE [LO 10–1]
• [Figure 10-1] The product life cycle describes the stages a new product goes through
in the marketplace: introduction, growth, maturity, and decline.
A. Introduction Stage
• The introduction stage of the product life cycle occurs when a product is first
introduced to its intended target market. During this period:
a. Sales grow slowly.
b. Profit is minimal due to large investment costs in product development.
• The marketing objective is to create consumer awareness and stimulate trial—the
initial purchase of a product by a consumer.
• Companies often spend heavily on advertising and other promotion tools to build
product awareness among consumers.
b. A firm focuses on creating selective demand, the preference for a specific
brand. As:
• Other marketing mix variables also are important at this stage.
a. Gaining distribution can be a challenge because channel intermediaries may
be hesitant to carry a new product.
b. A company often restricts the number of variations of the product to ensure
control of product quality.
c. During introduction, pricing can be either high or low.
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C. Maturity Stage
• Total industry or product class sales slow during the maturity stage.
• Weaker competitors begin to leave the market.
• Most consumers either:
• Sales increase at a decreasing rate as fewer new buyers enter the market.
• Profit declines due to fierce price competition among many sellers.
• The cost of gaining new buyers rises.
D. Decline Stage
• The decline stage occurs when sales and profits begin to drop:
• Product classes in the decline stage of their product life cycle include analog TVs
and desktop personal computers.
• A company will follow one of two strategies to handle a declining product:
1. Deletion. Product deletion drops a product from the company’s product line.
a. Is the most drastic strategy.
b. Is not taken lightly since there is a residual core of loyal consumers.
Chapter 10 – Managing Successful Products, Services, and Brands
MARKETING MATTERS
Customer Value: Will E-Mail Spell Extinction for Fax Machines?
Technological substitution often causes the decline stage in the product life cycle.
Will the Internet and e-mail replace fax machines? Not yet—because the two technologies do
2. Harvesting.
b. The purpose of harvesting is to maintain the ability to meet customer requests.
E. Three Aspects of the Product Life Cycle
Important aspects of product life cycles are:
1. Length of the Product Life Cycle.
There is no exact time that a product takes to move through its life cycle.
a. Consumer products have shorter life cycles than business products.
2. Shape of the Product Life Cycle.
• The product life cycle sales curve shown in Figure 10-1 is the generalized life
cycle, but not all products have the same shape to their curve.
• [Figure 10-3] There are several distinctive life cycle curves, each type
suggesting different marketing strategies:
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• Has an extended introductory period.
b. A low-learning product.
• Sales begin immediately because:
• Competitors can easily imitate this product, so the marketing strategy is to
broaden distribution quickly.
• It is important to have the manufacturing capacity to meet demand.
c. A fashion product.
• Is a style of the times, is introduced, declines, and then returns, such as
d. A fad. Is a novelty product that experiences rapid sales on introduction and
then an equally rapid sales decline.
3. The Product Level: Class and Form.
• The product life cycle shown in Figure 10-1 is a total industry or generalized
product class sales curve.
4. The Product Life Cycle and Consumer Behavior.
• The product life cycle depends on sales to consumers.
• The shapes of product life cycle curves indicate that most sales occur after the
product has been on the market for some time.
• A product diffuses, or spreads, through the population, a concept called the
diffusion of innovation.
Chapter 10 – Managing Successful Products, Services, and Brands
b. [Figure 10-5] The consumer population divided into five categories of
product adopters based on when they choose to buy a new product.
c. Innovators and early adopters must purchase a product for it to be
successful.
d. Once innovators and early adopters accept them, the adoption of new
products moves to the early majority, late majority, and laggard
categories.
• Several barriers affect whether a consumer will resist a new product:
a. Usage barriers. Product is incompatible with existing habits.
• To stimulate initial trial of new products and overcome these barriers, firms
provide warranties, money-back guarantees, usage instructions,
demonstrations, and free samples.
LEARNING REVIEW
10-1. Advertising plays a major role in the __________ stage of the product life cycle, and
__________ plays a major role in maturity.
10-2. How do high-learning and low-learning products differ?
10-3. What are the five categories of product adopters in the diffusion of innovations?
II. MANAGING THE PRODUCT LIFE CYCLE [LO 10–2]
Product managers shepherd a product through successive stages of its life cycle.
A. Role of a Product Manager
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• The product manager, also called a brand manager, manages the marketing
efforts for a close-knit family of products or brands.
a. Consumer goods and industrial firms use the product manager style of
marketing organization.
• Product managers analyze extensive data related to their products and brands.
a. Sales, market share, and profit trends are closely monitored.
b. Managers often supplement these data with two measures:
• A category development index (CDI) and a brand development index
(BDI).
• These indexes:
B. Modifying the Product
• Product modification involves strategies that alter a product’s characteristic, such
as its quality, performance, or appearance, to increase the product’s value to
customers and increase sales.
C. Modifying the Market
Market modification involves strategies in which a company tries to find new
customers, increase a product’s use among existing customers, or create new use
situations:
1. Finding New Customers. Targeting new market niches.
2. Increasing a Product’s Use. Promoting more frequent usage or consumption.
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APPLYING MARKETING METRICS
Knowing Your CDI and BDI
Category Development Index (CDI) and Brand Development Index (BDI)
Product managers often ask, “Where are sales for my product category and brand
strongest and weakest?” Data related to this question are often displayed in a marketing
dashboard using the category development index and brand development index.
Your Challenge.
Hawaiian Punch is the #1 fruit punch drink sold in the U.S. brand among households
that consume prepared fruit drinks (the product category). To examine the performance and
CDI = [(% of Product Category’s Total U.S. Sales in a Market Segment) ÷
[See UMD10CDIBDI.xls]
A CDI over 100 indicates above-average product category purchases by a market
segment; a number under 100 indicates below-average purchases. A BDI over 100 indicates a
strong brand position in a segment; a number under 100 indicates a weak one. The dashboard
displays the CDI and BDI for four household segments that consume fruit drinks.
Your Findings.
The BDI and CDI measures show that households with children, and particularly
those with children under age 12, consume Hawaiian Punch. The Hawaiian Punch BDI is
Your Actions.
An opportunity for Hawaiian Punch exists among households with children 13 to 18
years old—teenagers.
• Reposition Hawaiian Punch for teens.
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MAKING RESPONSIBLE DECISIONS
Ethics: Consumer Economics of Downsizing—Get Less, Pay More
Starkist, Frito-Lay, P&G, Haagen-Dazs, Kimberly-Clark, Unilever, Georgia-Pacific,
and many other consumer product marketers have reduced the amount they put in a package
LEARNING REVIEW
10-4. How does a product manager manage a product’s life cycle?
10-5. What does “creating a new use situation” mean in managing a product’s life cycle?
10-6. Explain the difference between trading up and trading down in repositioning.
III. BRANDING AND BRAND MANAGEMENT [LO 10–3]
• Branding is a marketing decision in which an organization:
a. Uses a name, phrase, design, symbols, or combination of these to…
b. Identify its products and distinguish them from those of competitors.
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• A brand name:
a. Is any word, device (design, sound, shape, or color), or combination of these…
b. Is used to distinguish a seller’s goods or services.
• Consumers benefit most from branding because they can recognize:
• A trade name is a commercial, legal name under which a company does business.
• A trademark:
a. Identifies that a firm has legally registered its brand name or trade name…
b. So the firm has its exclusive use, thereby preventing others from using it.
• Consumers benefit most from branding because they can recognize:
a. Competing products by their distinct brand names and trademarks, which allows
them to be more efficient shoppers.
A. Brand Personality and Brand Equity
• Brands offer both product identification and a means to distinguish their products
from competitors.
• A brand personality is a set of human characteristics associated with a brand
name that successful and established brands take on.
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[Video 10-3: Dr. Pepper Ad]
• Consumers often:
a. Assign personality traits to products—traditional, romantic, rebellious, etc.
• Brand equity is the added value a brand name gives to a product beyond the
functional benefits provided. This value has two distinct advantages:
a. Brand equity provides a competitive advantage.
1. Creating Brand Equity.
a. Brand equity:
• Is carefully nurtured by marketing programs to…
b. [Figure 10-6] Brand equity arises from a sequential 4-step building process:
• Develop positive brand awareness and an association of the brand in
consumers’ minds with a product class or need to give a brand an identity.
• Establish a brand’s meaning in consumers’ minds in terms of:
• Elicit proper consumers’ responses to a brand’s identity and meaning
based on how they think and feel about the brand.
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2. Valuing Brand Equity.
a. Brand equity provides a financial advantage for the brand owner.
• Successful, established brands have an economic value in the sense that
b. Brand licensing:
• Is a contractual agreement whereby one company (licensor):
B. Picking a Good Brand Name
• Companies spend a lot of money to identify and test a new brand name.
• The criteria for selecting a good brand name are:
a. The name should suggest the product benefits. Example: Easy Off (oven
cleaner).
b. The name should be memorable, distinctive, and positive. Example: Ford
Mustang.
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g. The name should be emotional. Example: Joy.
C. Branding Strategies
[Figure 10-7] Companies have several strategies when branding a product.
1. Multiproduct Branding Strategy.
a. Multiproduct branding:
• Is a branding strategy in which a company uses one name for all its
products in a product class. Example: Samsung phones.
b. There are several advantages to multiproduct branding. This brand strategy:
• Capitalizes on brand equity among consumers…
• Makes product line extensions possible:
– Is the practice of using a current brand to enter a new market segment
c. With a product line extension:
• The risk is that sales may come at the expense of other items in the
company’s product line (cannibalism).
d. Some companies employ subbranding, which.
e. A strong brand equity also allows for a brand extension:
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• Is the practice of using a current brand name to enter a completely
e. Co-branding opportunities are possible from strong brand equity.
• Co-branding is the practice of pairing 2 or more strong brands to
2. Multibranding Strategy.
a. Multibranding:
• Is a branding strategy that gives each product a distinct name when…
• Each brand is intended for a different market segment.
• Example: Black & Decker (household) and DeWalt (professionals).
b. Multibranding is applied in these ways:
• Other companies introduce fighting brands:
c. With multibranding:
d. The advantages of a multibranding strategy: