BUS5112 UNIT 4 DISCUSSION ASSIGNMENT

BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People Introduction This writing will discuss the three major categories of new products: ‘really new’ products (creating new product categories ); ‘new products in existing product categories’, and ‘line extensions’ and, within those discussions, answer two questions: ● How does the marketing manager’s job differ for these new kinds of products? ● How does a marketing manager forecast product demand for each of these categories? To understand the different responsibilities and marketing strategies for these different product scenarios it is useful to examine each within the Product Life Cycle (PLC) while considering the 3Cs (Consumer, Company, Competition) and the 4Ps (Product, Price, Place Promotion). The PLC, like the biological life cycle, requires development of the product before it is introduced into the market; it increasingly gains more customers; eventually the market matures and stabilizes. Later, superior products overtake the original product; it declines; and is eventually withdrawn. (Marketing Teacher, n.d.) A marketing manager may forecast product demand via (a) surveys, focus groups, online tools (like Insynch) or customer co-creation, etc. to create a ‘really new’ product; (b) surveys, focus groups, and secondary data research for the ‘new product’; or (c) primary data and secondary research for the line extension product. BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 2 ‘Really New’ Products A “product” may be defined as “a good, idea, method, information, object or service created as a result of a process and serves a need or satisfies a want… [and].. has a combination of tangible and intangible attributes (benefits, features, functions, uses) that a seller offers a buyer for purchase.” (Business Dictionary, 2018) This “really new” product, creating a new product categories would be defined as a “classically innovative product” (new to the world). (Winer, R. & Shar, R., 2011) Introduction Phase Because the product is new to the world there should be no competition within the market and distribution channels should be open. At time of introduction, the majority of target consumers wouldn't know the product and would be hesitant to buy it because no brand identity or value proposition had been defined or developed. Accordingly, the marketing manager’s marketing objectives would be to increase sufficient brand recognition and consumer demand (sales). While within the introduction phase marketing tactics may include: Target Customer: Develop brand identity and loyalty with targeted early innovators. Company: Align business systems with marketing objectives. Business systems are aligned with marketing objectives to closely monitor timing and conditions of product introduction and market response, i.e. frequent surveys of target customers, etc. During the introduction phase BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 3 substantial marketing costs are usually expected without corresponding revenue. (Winer, R. & Shar, R., 2011) Target Competition: Competition should be limited and/or non-existent with low market growth. (Winer, R. & Shar, R., 2011) Accordingly, top marketing tactics may include (4Ps) as follows: ● Product: Release a high quality core product leaving room for improvements and add-on features in the growth phase. The ability to improve the product is key because consumers prefer products which are of the highest quality, performance and features (Product Concept). (MBA Skool, n.d.) ● Price: Implement a pricing strategy to gain first mover advantage. Generally two pricing strategies may be considered- skimming or penetration. While a skimming strategy (charging the highest price allowable) is common with new technology products a marketing manager may also choose a penetration strategy to keep prices as low as possible to encourage early adoption and gain market share. Note: ‘Target costing’ is a generally useful technique to not only gauge future demand but also to hinder future competition throughout the PLC. (Winer, R. & Shar, R., 2011) ● Place: Develop exclusive distribution channels. At the introduction phase, distributors are normally hesitant to purchase an unproven product so the firm needs to connect with the right partners to promote the product (Invest Northern Ireland, 2018) i.e. BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 4 developing exclusive distributions arrangements to dominate the distribution channels. (Winer, R., & Dhar, R., 2011) ● Promotions: Clearly communicate product quality and brand identity. The marketing manager needs to ensure promotions communicate the brand identity and value proposition. The primary objective is to encourage initial purchases and repurchases. (Winer, R., & Dhar, R., 2011) Alternatively, tactics may include limiting the product or service to a specific type of consumer; thereby creating a feeling of exclusivity and boosting demand. (Invest Northern Ireland, 2018). PLC GROWTH PHASE New Products in Existing Product Categories. Throughout the PLC’s growth phase, the manager should expect increased market growth rate, increased demand, and substantial competition. Effective marketing approaches may include knowing the customer better; targeting a different market segment; and/or improving the value proposition, and using new technology to leapfrog the competition. (Winer, R., & Dhar, R., 2011), (Avlonitis, G.J. & Papastathopoulou, P., n.d.) Marketing tactics may include distinctive positioning and differentiation as well as: ● Target Customer: Target early adopters and early majority of target consumers in existing market segments. Focusing actions to develop a brand identity distinct from BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 5 the competition’s and increasing the value proposition. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) ● Company: Align systems to closely monitor responses of target customers to the firm’s marketing actions and those of the competitors’ including introduction of new competitive products. Throughout the growth phase there is great potential for substantial profits offset by substantial promotional expenses. (Winer, R., & Dhar, R., 2011); (Avlonitis, G.J. & Papastathopoulou, P., n.d.) ● Target competition: Closely monitor the positioning and concentration of competitors. Throughout the growth phase, competition increases via new competitors or competitive products. ● Product: Closely and constantly monitor competitive products to maintain differentiation and a superior value proposition. Examples include improvements in quality, warranties, or support services. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) ● Price: Implement a pricing strategy designed to maximize profits. Depending on the market conditions a price strategy may include either a skimming (high price) or penetration strategy ( low price). For example, the marketing manager may, in a high demand market supported by wealthy target consumers, adopt a skimming strategy (premiumization) to increase profit potential. BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 6 ● Place: Build distribution channels consistent with your target customer and marketing approach. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) ● Promotions: Shift marketing messages from product awareness to product preference. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) While seeming counterintuitive, the market manager may even decide to decrease promotion with the intention of increasing demand (Avlonitis, G.J. & Papastathopoulou, P., n.d.) PLC DECLINE PHASE Line extensions which are just new varieties of existing products (such as new flavors). In the PLC’s decline phase, the market normally experiences diminishing demand, negative market growth, and decreasing profitability. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) Choices facing the marketing manager include adopting a line extension strategy to stretch out the PLC; developing a niche for ongoing sales, i.e. Lansdale Semiconductor; or harvesting the product to maximize profits before withdrawal. (Winer, R., & Dhar, R., 2011). The line extension strategy can be particularly attractive because there's a greater return on marketing investment. Because of pre-existing brand equity, products may be introduced more quickly with less marketing cost. (Hill, B., n.d.) Examples of line extension strategy include (a) exploring new markets, (b) selling the product into new geographical areas or (c) creating a version targeted at different segments. (Riley, J., n.d.) BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 7 Other relevant marketing strategic actions may include: ● Customers. Target current customers (laggards) loyal to the brand and potentially new customers attracted to the new similar product. By this phase, customers are knowledgeable regarding features and benefits; often times buying products solely on the basis of price. (Winer, R., & Dhar, R., 2011) Therefore, more customers have to be found weather domestically or via expansion to foreign markets. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) ● Company: Because of pre-existing brand equity products can be introduced more quickly with less marketing cost. (Hill, B., n.d.) ● Competition: Implement agile business response systems to respond to direct competition. Competition may be most most intense in the maturity and decline phases because firms are fighting over the same customers. (Winer, R., & Dhar, R., 2011) ● Product: Make minor feature improvements and/or new packaging to modernize old packaging. (Hill, B., n.d.) ● Price: Implement price cuts and or other financial incentives to encourage purchase of the product. (Avlonitis, G.J. & Papastathopoulou, P., n.d) ● Place. Reduce the number of distribution outlets that sell them or be more selective for primary distribution points (Avlonitis, G.J. & Papastathopoulou, P., n.d.) BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 8 ● Promotion Reduce advertising to the minimum necessary level for maintaining loyal customers. (Avlonitis, G.J. & Papastathopoulou, P., n.d.) In advertising – try to gain a new audience or remind the current audience. As the above examples show the PLC is useful as a conceptual tool but is not to be followed blindly. The market manager’s decisions greatly depend upon a wide variety of factors. As the above scenarios reveal, the marketing manager is responsible for forecasting and adjusting the marketing mix accordingly. BUS5112 UNIT 4 DISCUSSION ASSIGNMENT Brian Gray 12/11/18 BUS5112 Marketing Management University of the People 9 References 1. Avlonitis, G.J. & Papastathopoulou, P. (n.d.) Chapter 3: Product Life Cycle and Marketing Strategy. http://dx.doi.org/10.4135/9781446212387.n3 2. Business Dictionary. (2018) Definitions: Product. Retrieved from: http://www.businessdictionary.com/definition/product.html 3. (Hill, B., n.d.) Product Line Extension Strategy. Retrieved from https://smallbusiness.chron.com/product-line-extension-strategy-75166.html 4. Invest Northern Ireland. (2018) Product life cycle: Product life cycle strategies. Retrieved from https://www.nibusinessinfo.co.uk/content/product-life-cycle-strategies 5. Marketing Teacher, (n.d.) Product Life Cycle (PLC) Retrieved from http://www.marketingteacher.com/product-life-cycle-plc/?highlight=PRODUCT%20LI FE%20CYCLE 6. (MBA Skool, n.d.) Product Concept. Retrieved from https://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/3037-produ ct-concept.html 7. Riley, J., (n.d.) Product Life Cycle. Retrieved from https://www.tutor2u.net/business/reference/product-life-cycle 8. Winer, R. & Shar, R. (2011). Marketing Management (4th ed.). Boston: Prentice Hall.