Product life-cycle strategies

It is not a surprise that we talk about the product life cycle. It describes the story of a product, from the development to the decline. For some product, the lifecycle can be determined in advance. For a company to launch a new product, the company must first be sure that the product is going to sell in order to hope for a good margin. We can find 5 different steps.

The first step is product development. It starts when a new company arrives and develops a new product idea. Sales are null and costs are already beginning to appear.
The second step is the introduction. It represents a period of slow sales growth. The product is introduced to the market. You may encounter heavy expenses at this stage, and no income.
The third is a period of growth, with a rapid market acceptance and increasing profits.
After this growth, generally, the product reaches its maturity. There is a slowdown in sales growth. The product has been accepted by most buyers. Depending on the competition profits, level may increase or decrease.
Finally, at the end of the product lifecycle, the decline sets the decrease of sales and profits.
Another way to describe a product life cycle is to define the type of trend that the product is defining. A new product can be following a style, a fashion, or can describe fads. A style is a long life cycle, it has different period of renewed interest. As a result the style doesn’t die. It can be applied to important products, day to day product, for example the architecture, furniture, or clothing.
A Fashion grows slowly, remains on top for a while, and decreases slowly. A fashion will be accepted during a set period of time, then will be disappearing little by little.
Fads are specials. They describe very short life cycles, with very high sales. This is driven by an unusual customer enthusiasm for the product, which doesn’t last long. Products in fads are products that attract the attention, but are not sufficiently solid to live longer.

How to design a new product?

When a company is designing a new product, it has to go through eight phases which will help it launch a successful product. In order to launch a product, the firm must know its customers, and deliver superior value to customers.

The first point is the idea generation. Before finding the right idea, the company has to go through lots of ideas. These are internal idea sources, when they come from the employees of the company, external, when they come from distributors, suppliers or another company, and ideas can be crowdsource, when it comes from the customer itself. In crowdsourcing, the more people are involved, the better the project.

After that you must be able to visualize all your ideas in order to reduce the amount. At this point, marketers have to write a summary about the idea. This write-up describes the product, the customer value proposition, the target market, and the competition. In this document, you also find estimation of market size, product price, development time and costs, manufacturing costs and rate of return. This goes in front of a committee who will assess the RWW. The real- win- worth doing. Is the value real, what will the company be able to sustain the product, and does the product shows enough potential. The idea that answers yes to these questions have more chances to be received.

Then the firm must work on the idea and develop a product concept which will be a detailed version of the product. Here the concept should be able to define every aspect of the product and propose multiple versions of it which will be soon tested to see if their reliability on the market is verified. Groups of target customers are chosen and will give their first impression of the concept.

During the next phase, which is the marketing strategy development, will design a simple marketing strategy for the product which will introduce it to the market. All this is described in the marketing strategy statement.

Once the product marketing statement has been ratified, the business analysis can be conducted. During the business analysis every financial aspect is being forecasted in order to find out if the product is valid.

During the product development, the investments are being made, and the product will soon be developed by the R&D teams. This will create a first prototype. As a matter of fact, tests a conducted to be sure that the product remains viable to the consumers.

After this phase comes the test marketing phase, when the whole product is test, from the starting point to the whole marketing process. This can take years before a company is definitely sure about the new product it is launching.

Finally, at the commercialization phase, the company decides on the timing to when to launch the new product. The company will face high cost so the product must be launched at time, depending on competitors, suppliers, distributors.

Product line and product mix

Two major point are important in Marketing. When we talk about a product, there’s a need for a definition, a way to say how the product will be, and how it will be placed compared to other products. As a result, we talk about the product line and the product mix.

The product line is a way to refer to products when they are similar on different factors. Product can have a similar function, they target the same customers, the can have the same marketing or they follow the same price range. The product line length defines the number of items in the product line. The global performance of the product line is impacted by each and every item. Sometimes marketing strategist have to define a product line strategy by adding products to the line or by removing a product from the line.

We can figure out two different strategies for the product line. Product line filling and product line stretching. When you fill the product line, you add product within the range of your current product line. This way you can prevent competition and find profit. The product line stretching happens when the company decides whether to add a product at the upper or at the lower end of the range. This is a good away to attract t new competitors or to respond to a competitor’s attack.

We talk about the product mix when a company has different types of product. The product mix will define the whole panel that the company is offering in store. We can define it in terms of width, length, depth and consistency. We can also call it a product portfolio.

A product width will define the number of lines a company is carrying. The company can sell a whole product mix, and in it different kinds of products.

The product length expresses the number of product that we have within a specific line of product. For example a line can have many brands selling the same product.

The depth is when you sell different version of your product within the same line. It’s the same product but the features you are selling with the product are not the same.

The consistency is the coherence of the product mix. If the product inside the product mix are closely related to one another, the product mix is consistent or coherent. If the products of the product mix differ from one another, the product mix is incoherent, inconsistent.

How to develop a product

In order to define the specificities of the products, we have to define four important factors that will explain what the product is. We have to give the product quality, its features, the style and the design. By giving these attributes, we will talk about the benefits that I can bring to the consumer.
The quality of the product has a direct impact on product or service performance. Quality can be used to describe the value of the product, if it’s going to break or not. But we can explain it by saying that it describes whether the product is capable to satisfy the customer needs and the customer satisfaction, it can be stated or implied needs.
There is two way to express the quality of a product. There is the performance quality and the conformance quality. Performance quality expresses the ability of a product to perform its functions. Conformance quality expresses the freedom form defects, and the product must deliver a certain level of performance.
The features of a product a being used when a product is delivered with the possibility to add more to it. This can be a way to differentiate you products from the competitors. You can add value to a product by giving it new features.
Finally, a distinctive product style and design can often make the difference between your products and the others. Style simply describes the appearance of a product, design is more at the core of the product. It determines how the product will be used, and how the user will interact with the object or service.

Market segmentation

With marketing, finding the proper customer has become easier. Marketer have tools for determining the customers they are dealing with. It is possible to evaluate what is your preferred customer base and develop it. As a result market segmentation is the best way to define the markets. The segments differs in wants and needs. They dont have the same buying behaviors. Depending on what you sell, you don’t usually have the same market segments as other companies. We might be able to figure out some important market segments yet.

First the location of a customer is an important factor to take into account. The area can be wide or narrow. A company can decide wether it will be present in a single area or in many areas. For example the blue ocean strategy takes this into account. Following this strategy, a company can take action on one specific area, with a lot of value, or on a large area, with a more spread out value.

A demographic segmentation, makes a marketer thinks in terms of age, gender, family, family life cycle, income, occupation, education, religion, nationality. This is the most popular way to divide customer. Needs and wants often vary depending on the demographic segment. If you are a male or a female you don’t go to the same brand, you don’t buy the same amount.

Another segmentation that marketers can do is the psychographic segmentation. In this segmentation the market is divided considering social class, lifestyle, or personnality characteristics.
The behavioral segmentation divides buyers according to their attitudes. It is possible to monitor the buying behavior of the customer and get in return the way they are buyin products. You can find loyal customers, and analyse their out and abouts of why they are buying your products. This will help you define what you can accomplish for them and what you can do to acquire new customers and retain the other ones.

The decision buying process

The decision buying process is an important part of the customer’s journey. It is where marketers should focus on in order to gain the best results. Major companies have to study and research the consumer buying decisions. Understanding this process is really hard as it is most of the time locked in the consumer’s mind. The important question is « how do consumers respond to the stimuli of the marketers ? ». The stimuli enters the customers « black box » and produces certain responses. As a result, depending on the product, the decision buying process is not the same.

There is the complex buying behavior, the dissonance reducing buying behavior, the habitual buying behavior, and the variety seeking buying behavior. The complex buying behavior is called like that because the consumer has to go through a learning process before acquiring the product itself. Sometimes, when the product is specific or technical, the customer, in order to buy the good quality product, has to find details about the product in order to understand what he is buying better.

The dissonance reducing buying behavior takes place in an expensive, frequent or risky purchase. The brands and the products look the same, but the customers needs a global vision of the market before buying the product.

The habitual buying behavior is under conditions of low involvement and little significant brand differenece, in other words, we are talking about the most common products, grocery shopping for example is a place for habitual buying behavior.

The variety seeking buying behavior happens when there is low customers involvement, and significant perceived brand difference. In this situation, the customer will buy a common product but will change regularly the brand to try something else.

Customer relationship management

Around 2000 a new category of worker arrived on the market. Basically, marketers realized soon that they gathered too much information. As companies often searches for data at every moment possible through customer purchase, sales force contacts, service and support calls, web site visits, satisfaction survey, credit and payment interactions, market research studies- thus making data management an issue at hand.

Indeed, these information are provided by different department within the company. Each department collect information through their own way of doing, and might be reluctant to give them to anyone at first contact. To face this problem, Customer relationship management has been in some companies the best department to handle this. The department is able to manage precise details about individual customers and manage customer touch points to maximize customer loyalty.

Main companies providing this service are Oracle, Microsoft, Salesforce and SAS. They provide simplified information system where to gather customer data. These information systems consist of software and anlytical tools. Part of the customer relationship management consist of using data warehouse to stock information for example, or datamining to search for deep customer data.

To have the software integrated is only a step in CRM. It is not enough. Once you have the information, another job is important, it is to get to the relationship with the customers. This is the most important part because information with no implementation is plain information. Marketers often make the mistake of only talking about the tools, the software. Yet it is just a part of a more important customer relationship management strategy.

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Managing marketing information to gain customer insights

Deep customer insights lead to meaningful customer relationships.

Information about customers are hard to get. You need them to understand the customer's behavior, but when even the customer doesn't know precisely what he needs or what are his demands, marketers cannot easily tell what are their wants. In order to do marketing you need strong understanding of your ecosystem. Furthermore, you need deep customer insights that will tell you how to act.

Sometimes customer have to go and look for information. Yet, you can find cases when customers provide direct information to the brand. The first way customers where able to communicate through brands were handwritten documents. Then you had the call centers, then e-mail and text messaging and finally, blogging, Facebook, Twitter and so on. An organization that can gather and use these data can provide richer and precise customer insights at a lower cost.

Now you can find cases in which marketers have too much information. We call this data glut. Marketers cannot process it. What is nice, is when they have the right information. They need relevant data, not more data. They also need to better use the information they already have. Therefore marketers join and think together in what we call “customer insights teams”. A marketing information system consists of people and procedures for assessing information needs, developing the needed information, and helping decision makers use the information to generate and validate actionable customer and market insights.

Marketers find information from internal data marketing intelligence and marketing research. Each department has its own internal database and delivers these information to the other parts of the company. Marketing intelligence is when you keep a track of what people are doing on the markets, your clients, competitors and R&D. Market researches start by defining the problem and objectives, developing a research plan to collect information, then implementing the research plan, collecting and analyzing the data, and finally interpreting and reporting the findings. The company with better insights gets rewarded with greater customer value and satisfaction.

Measure and manage the ROI

By the past, some campaigns were expensive, with low financial returns on the spendings. Marketers used to be spending like rock stars on big marketing programs, trying to impress the customers. They were saying that marketing produces intangible creative outcomes, which you cannot translate in financial terms.

Nowadays, marketing ROI is a big issue for marketers and the economy. Marketers must be able to justify their expenses. They also need to be able to measure perfectly is the combination of strategy and tactics they are implementing is about to generate the most in terms of profit.

The return on Investment is now possible to measure. It is the net return from a marketing investment divided by the cost of it, and helps us measure the profit generated by investment in marketing activities.

It is still hard to measure. Harder than any other business expenses. If you buy a piece of equipment and then measure the productivity gain, you have the ROI of this investment. In marketing, benefits such as advertising impact can't be put into dollar returns.

A solution was found by some companies to capitalize all marketing performance (brand awareness, sales, or market share) into one marketing dashboard. This dashboard displays all the information needed to implement new strategic programs.

Increasingly, beyond the sole performance of marketing, marketers are using customer centered measures of marketing impact such as customer acquisition, customer retention, customer lifetime value and customer equity. These measures showcase not only sound marketing performance, but also future performance benefiting from stronger customer relationships.

Improving investment in marketing should increase customer value and satisfaction. Thus it improves also customer attraction and customer retention. Finally this delivers an increase in customer lifetime value and customer retention. Customers equity in relation to the cost of marketing determines the return on investment of the marketing program.

The Zero moment of truth

The ZMOT, or zero moment of truth, is a marketing term that has been developed by Google in 2011 by Jim Lecinski. It has been influenced by the original moments of marketing unraveled by the teams of Procter and Gamble in 2005. They are the First moment of truth (FMOT) and the Second moment of truth (SMOT). This was possible through the stimulus at the beginning of the marketing process. This was so important to Procter and Gamble that they decided to create a position for this as Director of FMOT. The job was filled with Dina Howell.
According to Procter and Gamble CEO, A.G. Lafley, there are two moments of truth. The first one happens at the store shel, when the consumer has to choose between the brands. The second one happens at home, when the customer uses the brand and is deeply satisfied by it. As a result, we use to see the marketing stigma as, first the Stimulus, then the Shelf, then the Experience.

The ZMOT introduced by Google ads another moment of truth. The zero moment of truth is made possible thanks to our connected environment. The consumer is now able to search for a product on his/ her laptop or his/ her smartphone. He can see which brand fits the best it's needs before the shelf. As a result, the ZMOT is volatile and is hard to visualize for a brand. The new "mental model" as Lecinski calls it, is Stimulus, ZMOT, FMOT, SMOT. First, the consumer sees the ad on TV, he makes research about the product, and finds the best brand. When his decision is made, he goes to the shelf, buys the product and enjoys it at home. The weakness of the first model was that the decision was made at the shelf. The consumer was able to get help from the seller. He could directly see if there was a specific promotion or a bundle of the product he was buying. Yet he was directly influenced by the advertisement on the point of sale. The product that would win would be the one standing in front of the customer at that specific moment. Now the consumer's decision happens far away from the point of sale. The consumer doesn't waste any more time wandering in the alleys, he already knows why he came to the shop. He is still able to ask advices from an employee and might still be influenced on his way to get the product. The ZMOT ads up a whole new  dimension to the customers experience. The content is richer, through videos, pictures and buzz marketing. The brand have to take this into account and find their ways to adapt their strategy to customers.

As a result ZMOT is a big part of our buying process. ZMOT stands as the perfect solution to describe the online marketing and sales. The search engine is the best suited to do the job as they regularly receive tons of questions. They are the best at engaging with customers and providin them with the best product they would need, at the right time. When a customer searches a "shampoo for bright hair" for example or a "soft toothbrush", you have to do it right. When is the best moment to show your product to the customers?

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Marketing planning and implementation

In marketing, in order to be efficient, you must always be one step ahead and act in prevision of what will or can happen. As a result, we deliver strategic marketing plan that will be able to lead people, to show how the strategy is going to be implemented overtime.

(Marketing plan: Executive summary, current marketing situation, threats and opportunities analysis, objectives and issues, marketing strategy, action programs, budgets, controls)

A marketing plan comprises an executive summary. This column is a little recap of the projects, the goals, the recommendations that has been going through around it.

After that, you must include a marketing analysis of the current situation.

The SWOT analysis helps you analyse and group internal and external forces, and turn them into positive or negative factors.

SWOT stands for Strenghts, Weaknesses, Opportunities and Threats.

Strenghts are internal capabilities and resources. It is a positive situational factors and will help you deliver the right value to customers and atteign its objectives.

Weaknesses are internal limitations and negative situational factors. It interfere with the company's performance.

Opportunities are trends or favorable factors in the internal environment. Companies may exploit opportunities to reach their goals.

Finally Threats are unfavorable external trends that may present challenges to performance.

Finally, you conclude the marketing plan by explaining the objectives and how to achieve them.

In order to make the strategic planning possible, you must go through the process of marketing implementation. You must put into action the marketing plan. The focus of the organisation is then on how to implement the planning and it is made possible thanks to managers and leaders inside the company's team.

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Market Segmentation, Targeting, Positioning

One first concept of marketing that we need to explain is market segmentation. In order to find value, the marketer must choose the best segment for the best opportunities.
You can group each consumers in terms of geographic, demographic, psychographic and behavioral factors. Each group will become a segment of the market, and this process of differentiating customers is called market segmentation.
According to your product, one must find the proper segment that are relevant to his market. If you sell cars, you don't find useful the same segments as a toothbrush company. You must pay attention to how you segment your market in order to stay relevant.


After you have done this market segmentation, another process takes place in marketing, which is market targeting. After finding the segment, you evaluate, test and mark the segments' attractiveness and select one or more segment to enter. Of course, one must chose the target segment that will provide him with the most benefice over the most number of years. You can chose to develop your product just for one specific market niche, or to sell it to a broader number of people. The best strategy is to enter a new market by serving a single segment, and if the campaign is a success, then you can add more segments.


Finally, sound marketing is about market differentiation and positioning. When you've decided about the market segment you are entering, you must decide how you will differentiate it from the others, and the position you want your product to have. A product position depends of the perception of the product through a customer's eyes. A customer will classify the product according to its needs. So you want to develop unique market positions for you products. A product that is exactly the same as the others won't be bought by customers.

As a result positioning is an important process to work on. You have to plan and improve this position by putting effort into your marketing teams.

The product/ market expansion grid

The product/market expansion grid is a device used to identify growth opportunities.

Depending on the product and the market, you will be able to implement 4 different strategies.

First, the market penetration is when you produce a product in order to enter a new market. The products already existed before, but you want to create your own brand. This helps your company improve sales. If you chose a market in a fast development state, then you will be able to get your slice of market shares.

Then you can do a market development. This happens when you identify new markets for your currently owned products. For example, you target a new customer, one that you traditionally don't have buying your products, or when you target a new geographical market, Asia or Africa for example.

After that, you can find the product development strategy. A product development is when you improve, change or create a new product and apply it to currently owned markets. This might put you in competition with strong players so be careful.

Finally, you may encounter the diversification strategy. The diversification happens when you are starting up a new business in a field that you never tackled before. You are not used to interact with the markets so that makes it sometimes difficult, yet promises growth opportunities and renews you customer base. The company must be careful not to overextend their brands positioning. The issue is that you might lose your customers in the process, if they don't understand your strategies.

The 4 types of Strategic Business Units

The different parts of a company are called Strategic Business Unit. It can refer to a division, a product, or a brand within the company.
A marketer may need to assess them by doing a portfolio analysis. This paper tells you where to invest and what you can expect from your company in the following years by categorizing them in order of attractiveness and strength in terms of market share.
The most famous way to deal with this is the Boston Consulting Group approach.
By using a matrix, you can classify the SBUs in 4 types. Stars, Cash Cows, Question Marks, and dogs.
The star is your best product. It has high growth, and high market shares. They need high investment to finance their rapid growth.
The cash cows are usually stars that has seen its growth rate decline. They are established successful SBUs, and need less investments. As they have high market shares, they produce a lot of cash, and the company can use this cash flows to cover the bills of the other SBUs that need investments.
The Question Marks are new products that are positioned in high growth market. The company has to assess wether it continues investing and make it become a star, or wether it should be left aside.
Finally, dogs are low growth, low share businesses, that may generate enough to survive, but do not promise to become a source of profit.


With this approach, you have to chose a strategy different according to the product. You can build a share of a business unit by investing. You can invest enough to maintain the SBUs share level the same over time to hold. You can also harvest the SBU, for example with the cash cows, milking for the short term cash flows. Finally, you can divest the SBUs by phasing it out and using the investments elsewhere.

Now you have to be careful with this approach. It can be difficult to assess and define the SBUs. You may find it time consuming and costly. Measuring their market share and market growth can be hard. Also, it makes it true for a specific time, but whenever the whole system change, the matrix must be reevaluated. As a result it becomes hard for future planning.

The 4 types of customers of marketing

An important idea about marketing is delivering the right relationships to the right customers.

Some customers are worth your time, some others aren't worth the investment you want to make.

As a result it is important to classify your consumers, and to target the most profitable ones.

You can classify customer by using their lifetime values, the consumer equity and their loyalty.

As a result we end up with 4 types of customers.

The first ones are strangers. Your company must not invest into strangers. They don't plan to be loyal to your company, they are showing low potential profitability. As a result, you don't have to do business with these customers.

The second types of customers are butterflies. Butterflies are not loyal but can show some profits over a short period of time. As a result you can enjoy them while they are at your company, but you shouldn't spend any effort into gaining them back once they are away.

True friends are your most profitable and most loyal customers. Their is a strong link between them and your company and you want to create the best relationship over time with them, in order to make them as comfortable as possible. They can become true believers, in that case, they come back often and tell others about their good experience with your company.

Finally, barnacles are highly loyal. But they are not profitable at all. Like barnacles, they lag your ship behind and you have to push them away to go faster. You can either try to make them profitable by creating specific products made for barnacles. If they cannot become profitable, you have to fire them.

As a result, you have to adapt your strategy depended on the customer your talking with. This is an important fact about customer relationship management strategies.

The Marketing Mix

Once a business has assessed the marketplace, and targeted its customer, it can finally design its marketing strategy.

A Marketing strategy is put simply by using common tools.

A useful tool is the marketing Mix. It is also famously named the 4P's of the marketing.

In order to create satisfy a customer, a company must first design a good product. This will be the first P. The product must fit with the ideas of the customer, according to what the consumer expect to have, when buying a product.

The second P stands for price. In order to have a good product, a company must find a good price. With a specified target price, a company can easily integrate a market. There is a balance between the price the customer is expecting and the margin the company is making upon selling its product. In fact, some companies sell sometimes way below their margin, so that the customer is attracted by the low price.

After that we have the third P for place. In order to sell these products, you must find the proper seller, retailer or wholesaler. You also must find the good area where you want to sell these products. Depending on the country, you might sell the same experience, but not the same products. For example, in Asia, Mac Donald has designed specific burgers for chinese taste, as they don't eat the same as americans.

Finally, the last one stands for promotion. When you are selling you product, you want the customer to know about it. You have to make him understand that your product is for sale and that it is able to satisfy his needs. To do this you have to run advertisement campaign on TV, radio, internet, or even on the point of sale, in that case it is called merchandising.

Then you combine all of this into one comprehensive integrated marketing program that communicates and delivers the intended value to chosen customers.

Needs, wants and demands

During the marketing process, you might use terms like needs wants and demands. These words are fundamental when conducting marketing analyses. These concepts are used to describe the different motivations behind a customer buying process. 

 

First, the principle of the needs. Needs are described as states of felt deprivation. Something is missing or something isn't right. The consumer is looking for a way to satisfy the needs. According to the pyramid of Needs, made by Maslowe, we categorize the needs into 5 different ideas. Physiological needs, like drinking, eating, shelter, cold. Safety needs, health, employment. Love needs, like friendship, family. Esteem, for example respect. Finally self actualization, like self expression.

Second, the wants are part of the process. Wants are what are human needs, when they are shaped by the culture and the preferences of the individual. It is as simple as eating rice in Asia, where it is the most common dish, or eating a hamburger in the US. Depending on where you lived and your education, you will not have the same wants as your neighbors.

Finally, when you have wants and buying power, you can formulate demands. When you have enough resources, you may have better demands, and ask for products that will satisfy you better. Usually, the customer claims for the product with the best benefit and the best price, but demands can change that.

Once you have these ideas in mind, you can then learn and understand your customers behavior and adapt to him. You are able to target them and be more precise when offering them your products. 

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