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Chapter 10

Product and Service Strategies

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McGraw-Hill/Irwin

Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

After studying this chapter you

should be able to:
Understand the different characteristics
of a product mix.
Recognize the stages and
characteristics of the product life cycle.
Identify appropriate marketing strategies
for products in different life cycle stages.
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After studying this chapter you

should be able to:
Describe the limitations of the product
life cycle concept.
Discuss different product-mix and
product-line strategies.

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Product Mix
Product
ProductMix:
Mix:

The
Thetotal
totalassortment
assortmentofofproducts
products
and
services
marketed
by
and services marketed byaafirm.
firm.

Product
ProductLine:
Line:

AAgroup
groupofofindividual
individualproducts
productsthat
that
are
areclosely
closelyrelated
relatedininsome
someway.
way.

Individual
IndividualProduct:
Product:

Any
Anybrand
brandor
orvariant
variantofofaabrand
brandinin
aaproduct
productline.
line.

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Product Mix Characteristics

Product Mix Width:
The number of product lines in the
product mix.

Product Line Length:

The number of products in a
product line.

Product Mix Consistency:

The relatedness of the different
product lines in a product mix.

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Product and Service Strategies

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Individual Product Strategies

Product
Product Life
Life Cycle
Cycle (PLC):
(PLC):
Describes
Describes the
the advancement
advancement of
of products
products through
through
identifiable
identifiable stages
stages of
of their
their existence.
existence.

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The Product Life Cycle

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The
The Product
Product Life
Life Cycle
Cycle Concept
Concept
is
is Based
Based on
on Four
Four Premises
Premises

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Products have a
limited life.

Profits from a product

vary at different stages
in the life cycle.

Product sales pass through

distinct stages, each with
different marketing
implications.

Products require different

strategies at different
life cycle stages.

The Diffusion Process

Innovators
(2.5%)
Early Adopters
(13.5%)
Early Majority
(34%)
Late Majority
(34%)
Laggards
(16%)
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The Diffusion Process

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PLC Stages and Characteristics

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PLC Length and Shape

Style
Sales

Sales

Time

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Fashion

Fad
Sales

Time

Time

PLC Marketing Strategies

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Stage
Stage

Objective
Objective

Marketing
Marketing Strategy
Strategy

Introduction
Introduction

Awareness
Awareness&&trial
trial

Communicate
Communicatebenefits
benefits

Growth
Growth

Usage
Usageof
offirms
firmsbrand
brand

Specific
Specificbrand
brandcommunication,
communication,
lower
lowerprices,
prices,expand
expanddistribution
distribution

Maturity
Maturity

Maintain
Maintainmarket
marketshare
share
Extend
Extendlife
lifecycle
cycle

Sales
Salespromotion,
promotion,drop
dropprice,
price,
expand
expanddistribution,
distribution,new
newuses
uses
&&new
newversions
versionsof
ofproduct
product

Decline
Decline

Decide
Decidewhat
whatto
todo
do
with
withproduct
product

Maintain,
Maintain,harvest,
harvest,or
ordivest
divest

Limitations of the PLC

1.
1. The
The life
life cycle
cycle concept
concept applies
applies best
best to
to product
product
forms
forms rather
rather than
than to
to classes
classes of
of products
products or
or
specific
specific brands.
brands.
2.
2. The
The life
life cycle
cycle concept
concept may
may lead
lead marketers
marketers to
to
think
think that
that aa product
product has
has aa predetermined
predetermined life,
life,
which
which may
may produce
produce problems
problems in
in interpreting
interpreting
sales
sales and
and profits.
profits.
3.
3. ItIt is
is only
only aa descriptive
descriptive way
way of
of looking
looking at
at the
the
behavior
behavior of
of aa product
product and
and the
the life
life cycle
cycle can
can
not
not predict
predict the
the behavior
behavior of
of aa product.
product.
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Product-Line Strategies

Strategic
Strategic Alternatives:
Alternatives:
1.
1. To
Toincrease
increase the
the length
length of
of aa
product
product line.
line.
2.
2. To
Todecrease
decrease the
the length
length of
of aa
product
product line.
line.

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Increasing the Product Line

Downward-stretch Strategy
Upward-stretch Strategy
Two-way-stretch Strategy
Line-filling Strategy
Cannibalization occurs when a new
Product takes sales away from
existing products.

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Decreasing the Product Line

Product Line Contraction:
Firms must consider deleting products
when:
They are not successful.
They reach the decline stage of PLC.
Long product line marketing costs are
too high.

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Product-Mix Strategies

The Product Mix consists of all

product lines and individual products
marketed by the firm.

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Strategic Alternatives

Add New
Product Lines?

Delete Existing
Product Lines?

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Branding Strategies
Individual
IndividualBrand
Brand
Name
NameStrategy
Strategy

Product
ProductMix
Mix
Branding
BrandingStrategies
Strategies

Family
FamilyBrands
Brandsor
or
Product
ProductTypes
Types

Family
FamilyBrand
Brand
Name
NameStrategy
Strategy

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Family
Family&&Individual
Individual
Brand
BrandName
Name

Company
Company
Name
Name

Ethical Issues in Product and

Service Strategies
Is
Is the
the product
product safe
safe when
when
used
used as
as intended?
intended?
Is
Is the
the product
product safe
safe when
when
misused
misused in
in aa way
way that
that is
is
foreseeable?
foreseeable?
Have
Have any
any competitors
competitors
patents
patents or
or copyrights
copyrights
been
been violated?
violated?
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Ethical Issues in Product and

Service Strategies
Is
Isthe
theproduct
productcompatible
compatiblewith
withthe
the
physical
physicalenvironment?
environment?
Is
Isthe
theproduct
productenvironmentally
environmentally
compatible
compatiblewhen
whendisposed
disposedof?
of?
Do
Doany
anyorganizational
organizational
stakeholders
stakeholdersobject
objectto
tothe
the
product?
product?

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