Developing, Differentiating, and Positioning Products Through the Life Cycle
Kotler, Chapter 9
Dr. Johnston, Marketing 710
Chp. 9 Discussion by Tony O’Dell
September 27, 2001
Objective
Products and the marketing of products are continually changing. In the current chapter, we explore the challenges
that companies face in developing and introducing new products. We’ll discuss the main stages of new product
development and ways to improve the management of the process as well as the factors affecting the rate at which
consumers adopt new products. Every product exists on a continuum referred to as the product life cycle where
various marketing strategies are appropriate depending on the particular stage.
Challenges in New Product Development
Companies are able to acquire new products in two ways: By buying another company or through its own product
development effort. Booz, Allen, Hamilton have classified the types of new products as: 1) New-to-the-world
Products, 2) New Product Lines, 3) Additions to existing product lines, 4) Improvements and revisions to existing
products, 5) Repositionings, 6) Cost reductions. A research firm observed that successful products come from firms
which: have a better understanding of consumer needs, a higher performance-to-cost ratio, a “jump” on competition, a
higher that expected contribution margin, a higher development budget, a cross-functional development team, and top
management support. Conversely, products fail for many reasons. Kotler identifies the primary ones as: executive
management push despite negative research, over-estimated market size, poor design, over-priced, lack of promotion,
excessive development costs, and competitor strength.
Managing New Products: Ideas to Strategy
The process has eight stages: (1) Idea generation holds that the customer needs and wants are the best place to start in
identifying new products or changes to existing ones. (2) Idea Screening - weeds out weak ideas. (3) Concept
Development “possible” product for which a product-position map. Concept testing - target consumers are presented
the proposed product. (4) Marketing Strategy Development - the product is outlined for price, sales projections, etc.
(5) Business Analysis, the company evaluates profit potential to determine whether it meets company objectives. (6)
Product Development – a working proto-type is created. (7) Market Testing: a) saleswave research, b)simulated test
marketing, c)controlled test marketing, and d) test markets are explored. (8) Commercialization - answers the when,
where, to whom, and how regarding the new product release.
Consumer Adoption Process
Adoption is the decision when a person has chosen to be a regular consumer of a new product. The different stages
are: Awareness, Interest, Evaluation, Trial, & Adoption. The five characteristics that influence the rate of adoption
are: Relative Advantage, Compatibility, Complexity, Divisibility, and Communicability.
Marketing Through the Product Life Cycle
The concept of the product life cycle states that all products have a limited life, products pass through various stages,
profits rise and fall at different stages, and products require various marketing, financial, manufacturing, strategies at
each different stage. The four stages are: Introduction, Growth, Maturity, and Decline. See Table 9.1, pg. 172 of
Kotler, “Summary of Product Life Cycle Characteristics, Objectives and Strategies” for a matrix of these various
strategies. Marketing Strategies – Intro stage: Objectives are to create product awareness and encourage trial use.
Market pioneer achieves dominance initially. Growth stage: time to add product features/improvements, new models,
enter new segments, increase distribution coverage, shift to product pref. promotion, lower prices. Maturity stage:
Market modifications, Product modifications, Marketing-mix modifications. Decline stage: Increasing firm’s
investment to dominate, maintaining investment to hedge against uncertainties, decreasing investment in unprofitable
groups and concentrate on niches, Harvesting the firm’s investment to recover cash, or Divesting the business to be rid
of marginal value.
Critique of Product Life Cycle Concept
Advantages of the PLC concept – used to interpret product and market dynamics, help managers characterize potential
marketing challenges and may provide management with product performance. Criticisms – life-cycle patterns are too
variable to be of any value as a precursor to anything. Product life cycle patterns are actually the result of marketing
strategies as opposed to the converse. Marketers can seldom ascertain what stage a product is in.
Differentiation and Positioning Strategy
Attempt to set apart from competition: Differentiation. Five Dimensions: Products, Services, Personnel, Channel,
Image. Positioning: designing its offering and image to be distinctive in the target market. Attempt to create an
intellectual basis for why the target market consumer should buy the product.
