Product Strategy — PLC, Branding, and New Product Development

1. Product Classification

Consumer Products:

Convenience goods:	low-involvement, low-price (groceries, household staples)
Shopping goods:	compared before purchase (clothing, electronics)
Specialty goods:	high-involvement, brand-specific loyalty (luxury goods, cars)
Unsought goods:	products the consumer doesn’t know they need (life insurance, funeral services)

Three Product Levels:

Core benefit: what the customer is really buying
Actual product: brand, packaging, features
Augmented product: after-sales service, warranty, delivery

2. Product Life Cycle (PLC)

Introduction Stage

Low sales, high costs
Pioneer advantage, building awareness
Skimming or penetration pricing

Growth Stage

Rapid increase in sales and profits
Competitors enter the market
Focus on capturing market share

Maturity Stage

Sales peak, profits decline
Intense competition, price pressure
Differentiation and segment focus

Decline Stage

Falling sales and profits
Harvest or exit strategy
Cost reduction

3. Brand Strategy

Brand Equity

Brand awareness
Brand associations
Perceived quality
Brand loyalty

Brand Strategy Types

Individual branding: different names for different products (P&G)
Family branding: same name across all products (GE)
Line extension: new products under existing brand name
Brand extension: existing brand enters a new product category

Co-branding

Combining two brands (e.g., Nike + Apple Watch, Intel Inside)
Ingredient branding

4. New Product Development Process

Idea Generation

Internal R&D, customer suggestions, competitor analysis

Idea Screening

Feasibility, profitability, strategic fit

Concept Development and Testing

Present product concept to consumers
Gauge reactions

Marketing Strategy Development

Target market, positioning, pricing, distribution plan

Business Analysis

Demand, cost, and revenue forecasting

Product Development and Market Testing

Build prototype → test market

Commercialization

Full-scale launch, national rollout

5. Key Concept Cards

PLC = Introduction → Growth → Maturity → Decline ★★★★★ : The four stages of the product life cycle. Memory tip: every product has a lifespan — think of it like a human life arc

Maturity Stage = Sales Peak, Profit Decline ★★★★★ : Sales are at their maximum, but profits fall due to intense competition. Memory tip: Maturity = highest revenue, not highest profit

Brand Equity = Awareness · Associations · Quality · Loyalty ★★★★☆ : Four dimensions of brand equity (Keller/Aaker framework). Memory tip: AAQAL — the building blocks of a strong brand

6. Practice Quiz

Q. What determines whether a company should use skimming vs. penetration pricing at product introduction?

Skimming (high price): innovative or differentiated product, price-insensitive consumers, slow competitive entry expected. Penetration (low price): price-sensitive mass market, need to capture share quickly, economies of scale achievable. Example: new smartphone launches typically use skimming; Netflix used penetration pricing at launch.

Q. What are the benefits and risks of brand extension?

Benefits: faster awareness for the new product, lower marketing costs, leverages existing brand image. Risks: brand dilution — the existing image can be damaged. Negative associations can transfer. Example: if a luxury brand launches a low-price product line, its premium image suffers.