management 3.

12 m ark e t i n g

Products

Use the following terms to complete the definitions below:

brand product
product line product mix
line-stretching line-filling
product elimination convenience goods
shopping goods speciality goods

1. A is a name (or sometimes a sign, symbol or design) used to identify the goods or services
of a particular manufacturer, seller or supplier, and to differentiate them from the goods or services
of competitors.

2. A is defined by marketers as anything capable of satisfying a need or want (including

services such as a bank loan, a haircut, a meal in a restaurant, or a skiing holiday).

3. A is a group of closely related products, which usually have the same function and are sold
to the same customer groups through the same outlets.

4. A is the set of all the product lines and items offered by a company.

5 are cheap and simple "low involvement" products which people use regularly and buy
frequently with little effort, without comparing alternatives.

6 are durable goods with unique characteristics that informed consumers have to go to a
particular store to buy.

7 are "high involvement" products for which consumers generally search for information,
evaluate different models, and compare prices, and take time to make a selection.

8 is the process of withdrawing products from the market when they are no longer profitable.

9 means adding further items in that part of a product range which a line already covers, in
order to compete in competitors' niches, to utilize excess production capacity, and so on.

10. . means lengthening a company's product line, either moving up-market or down-market
in order to reach new customers, to enter growing or more profitable market segments, to react to
competitors' initiatives, and so on.

Now translate the highlighted expressions in these definitions into your own language.

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 management 3.13 m ark e t in g

Branding

EXERCISE 1
Select the appropriate expressions to complete the text:

In a market containing several similar competing products, producers can augment their basic product
with additional services and benefits such as customer advice, delivery, credit facilities, a warranty or
guarantee, maintenance, after-sales service, and so on, (1) distinguish it from competitors'
offers.

Most producers also differentiate their products by branding them. Some manufacturers, such as
Yamaha, Microsoft, and Colgate, use their name (the "family name") for all their products. Others
market various products under individual brand names, (2) many customers are unaware of
the name of the manufacturing company. (3) , Unilever and Proctor & Gamble, the major
producers of soap powders, famously have a multi-brand strategy which allows them to compete in
various market segments, and to fill shelf space in shops, (4) leaving less room for competitors.
(5) also gives them a greater chance of getting some of the custom of brand-switchers.

(6) famous manufacturers' brands, there are also wholesalers' and retailers' brands.
(7) , most large supermarket chains now offer their "own-label" brands, many of which are
made by one of the better-known manufacturers.

Brand names should (8) be easy to recognize and remember. They should also be easy to
pronounce and, especially for international brands, should not mean something embarrassing in a
foreign language!

(9) a name and a logo, many brands also have easily recognizable packaging. Of course
packaging should also be functional: (10) , the container or wrapper should protect the
product inside, be informative, convenient to open, inexpensive to produce, and ecological (preferably
biodegradable).

1. a. as a result of b. in order to c. thus

2. a. although b. since c. so that
3. a. Consequently b. Despite c. For instance
4. a. for example b. however c. thus
5. a. There b. That c. This
6. a. As a result of b. In addition to c. Owing to
7. a. For example b. Furthermore c. However
8. a. i.e. b. of course c. therefore
9. a. As well as b. Despite c. So as to
10. a. although b. in other words c. on account of

EXERCISE 2
Complete the following collocations

1. to augment . 4. multi-brand .
2. facilities 5. tofill .
3. after-sales . 6 chains

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 management 3.14 marketing

Product Lines

EXERCISE 1

Match up the following words with the underlined words in the text:

additional continual discontinuing expand

goal handling phases present
production stoppages seeking unchanging weaken

Most manufacturing companies have a product mix made up of a number of products, often divided
into product lines. Since different products are always at different (1) stages of their life cycles, with
growing, (2) stable or declining sales and profitability, and because markets, opportunities and resources
are in (3) constant evolution, companies are always looking to the future, and re-evaluating their
product mix.

Companies (4) pursuing high market share and market growth generally have long product lines.
Companies whose (5) objective is high profitability will have shorter lines, including only profitable
items. Yet most product lines tend to (6) lengthen over time, as companies produce variations on
existing items, or add extra items to cover (7) further market segments. Established brands can be
extended by introducing new sizes, flavours, models, and so on.

There are, however, dangers with both line-filling and line-stretching. Adding more items within the
(8) current range of a product line can lead to cannibalization if consumers cannot perceive the
difference between products, i.e. the new product will just eat into the sales of existing products.
Stretching a line to the lower end of a market will generally (9) dilute a company's image for quality,
and a company at the bottom of a range may not be able to convince dealers and customers that it can
produce quality products for the high end.

Consequently companies occasionally have to take the decision to prune or shorten their product lines.
Quite simply, a product line is too short if the company could increase profits by adding further items,
and it is too long if they could increase profits by (10) dropping certain items.

Adding items to a product line results in a variety of costs, in design and engineering, carrying
inventories, changing over manufacturing processes, (11) processing orders, transporting goods,
promoting the new items, and so on. Producing fewer items generates savings because it allows
companies to have longer production runs with less (12) downtime because of changeovers, it requires
less plant and equipment, it reduces inventory, it simplifies planning and control, and it allows more
concentrated activity in development, design, selling, after-sales service, and so on. But of course
companies must be careful not to cut loss-leaders from their lines.

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 management 3.14 marketing

EXERCISE 2
Without looking back at the previous page, complete the spaces in the sentences below:

1. Many companies have a consisting of a number of products.

2. These products can have growing, , or declining sales, depending on where

they are in their. . . . . . . . . . . . . .. .

3. Companies looking for high generally have long product lines, while
companies seeking high will have shorter lines.

4. Yet most product lines tend to over time, as companies add extra items to
cover more .

5 can lead to , if the items are too similar.

6. A product line can be in two directions, both up-market and down-market,

although going down-market can damage a company's image for .

7. Companies also occasionally. . . . . . . . . . . . . .. their product lines.

8. Sometimes you can increase profits by certain items.

9. Adding items to a product line results in a variety of ; for example, you will
need to carry more . . . . . . . . . .

10. On the contrary, producing fewer items generates .

11. With fewer products you have longer with less caused by
changeovers.

12. But of course companies mustn't abandon .

Now translate the highlighted expressions in the text into your own language.

74 I
 rna na g e m e n t m ar k et i n g

EXERCISE 1
Match up the phrasal verbs on the left with the verbs that have a similar meaning on the right:

1. account for (the rise in profits) a. accept

2. bring out (a new product) b. decrease, become fewer or less
3. carryon (in the same old way) c. begin to be successful
4. carry out (a market survey) d. continue
5. come up with (a new idea) e. destroy or abandon
6. do without (a pay rise) f. find space to give to something else
7. (production levels) drop off g. get rid of, discard (because unwanted)
8. give up (production of the 320S) h. have, create ideas
9. go along with (the decision) i. make up, constitute a figure
10. kill off (a silly project) j. perform, undertake, or do
11. look ahead to (the future) k. produce, launch
12. look for (a new solution) l. remove (from something larger)
13. make room for (further expansion) m. agree to stop or discontinue
14. take off (after performing less well) n. survive or live while lacking something
15. throwaway (some good ideas) o. think about, prepare or plan the future
16. weed out (uneconomic departments) p. try to find

1 2 3 4 5 6 7 8
9 10 11 12 13 14 15 16

EXERCISE 2
Complete the text using the correct form of the phrasal verbs above.

Most companies regularly (1) new items, stretching and filling their product lines,
(2) opportunities to increase sales and earn more profits. But these additions are not always
successful. Some items just don't (3) , and are insufficiently profitable. So the company has
to (4) regular cost and sales analyses of the entire product line, taking account of opportunity
costs, and then (5) poorly performing products. Obviously the brand managers and the other
people involved aren't happy to see their products (6) , and may consider that months or
years of work are just being (7) but no company can (8)
I profits. The same is true
of products that were once successful but are now no longer profitable: if sales have (9) ,a
company that is (10) will abandon them to (11) new items.

It is quite often the case that about 20% of a firm's products (12) most of its sales, so there
are lots of products that could be abandoned. Their managers probably won't (13) without
a fight, but they have no choice but to (14) the financial imperatives. On the other hand,
it is more difficult to (15) ideas for ne w products than to (16) producing poorly
selling ones.

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 management 3.16 marke t i ng

Product Life Cycles

Sales

SALES
and
PROFITS

Profit

Growth Maturity Decline

TIME

Read the text, and then decide whether the statements on the next page are TRUE or FALSE.

The sales of most products change over time, in a recognizable pattern which contains distinct periods
or stages. The standard life cycle includes introduction, growth, maturity and decline stages.

The introduction stage, following a product's launch, generally involves slow growth. Only a few
innovative people will buy it. There are probably no profits at this stage because of the heavy
advertising, distribution and sales promotions expenses involved in introducing a product onto the
market. Consumers must be made aware of the product's existence and persuaded to buy it. Some
producers will apply a market-skimming strategy, setting a high price in order to recover development
costs. Others will employ a market-penetration strategy, selling the product at as low a price as possible,
in order to attain a large market share. There is always a trade-off between high current profit and high
market share.

During the growth period, 'early adopters' join the 'innovators' who were responsible for the first sales,
so that sales rise quickly, producing profits. This generally enables the producer to benefit from
economies of scale. Competitors will probably enter the market, usually making it necessary to reduce
prices, but the competition will increase the market's awareness and speed up the adoption process.

When the majority of potential buyers have tried or accepted a product, the market is saturated, and
the product reaches its maturity stage. Sales will stabilize at the replacement purchase rate, or will only
increase if the population increases. The marketing manager has to turn consumers' brand preference
into brand loyalty.

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 m an a g e m e n t 3.16 marketing

Most products available at any given time are in the maturity stage of the life cycle. This stage may
last many years, and contain many ups and downs due to the use of a succession of marketing strategies
and tactics. Product managers can attempt to convert non-users, search for new markets and market
segments to enter, or try to stimulate increased usage by existing users. Alternatively they can attempt
to improve product quality and to add new features, sizes or models, or simply to introduce periodic
stylistic modifications. They can also modify the other elements of the marketing mix, and cut prices,
increase advertising, undertake aggressive sales promotions, seek new distribution channels, and so on,
although here additional sales generally come at the cost of reduced profits

A product enters the decline period when it begins to be replaced by new ones, due to advances in
technology, or to changes in fashions and tastes. When a product has clearly entered its decline stage,
some manufacturers will abandon it in order to invest their resources in more profitable or innovative
products. When some competitors choose to withdraw from a market, those who remain will obviously
gain a temporary increase in sales as customers switch to their product.

Not all products have this typical life cycle. Some have an immediate rapid growth rather than a slow
introductory stage. Others never achieve the desired sales, and go straight from introduction to
maturity, although of course this should have been discovered during test marketing before a full-scale
launch. Fads and gimmicks - for example, toys people buy once and once only to stick on car windows
- have distinct life cycles, both rising and declining very quickly.

1. The introduction stage of a new product is not usually profitable. TRUE/FALSE

2. During the introduction stage, marketers are trying TRUE/FALSE

to create brand preference.

3. A producer seeking maximum profits will apply TRUE/FALSE

a market-penetration strategy.

4. The entry of competitors onto the market will make more TRUE/FALSE
consumers aware of the product and stimulate them to try it.

5. At the maturity stage, producers begin to benefit TRUE/FALSE

from economies of scale.

6. The maturity stage is generally the longest. TRUE/FALSE

7. Once the maturity stage is reached, marketers TRUE/FALSE

concentrate on finding new customers.

8. A product enters the decline stage when it begins TRUE/FALSE

to become obsolete.

9. A product can experience temporary sales increases TRUE/FALSE

during its decline stage.

10. Gimmicks and fads have a particularly long life cycle. TRUE/FALSE

Now translate the highlighted expressions in the text into your own language.

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