Chapter 10 - Setting Product Strategy and Marketing through the Life Cycle
I.  Chapter Overview/Objectives/Outline
A. Overview
Most firms recognize the necessity for and advantages of regularly developing new products and services.  Mature and declining products eventually must be replaced with newer products. New product development strategy thus is one of the most important activities for any firm in the contemporary marketplace. If the firm does not obsolete its own products, eventually someone else will, and all firms should remember that a good idea might not be a good investment. 
New products can fail, and the risks of innovation are as great as the rewards. The key to successful innovation lies in developing better organizational arrangements for handling new¬ product ideas and developing sound research and decision procedures at each stage of the new-prod¬uct-development process.
The new-product-development process consists of eight stages: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, market testing, and commercialization. The purpose of each stage is to decide whether the idea should be further developed or dropped. The company should minimize the chances that poor ideas will move forward and good ideas will be rejected.
With regard to the adoption of new products, consumers and/or organizations respond at different rates, depending on their characteristics and the product’s characteristics.  Manufacturers try to bring their new products to the attention of potential early adopters, particularly those with opinion leader characteristics.
Products and markets have life cycles that call for changing marketing strategies over time.  Every new need follows a demand life cycle that passes through the states of emergence, accelerating growth, decelerating growth, maturity, and decline. Each new technology that emerges to satisfy that need exhibits a demand-technology life cycle. Particular product forms of a given technology also show a life cycle, as do brands within that product form.
The sales history of many products follow an S-shaped curve made up of four stages. The introduction stage is marked by slow growth and minimal profits as the product is pushed into distribution. The company has to decide during this stage between the four strategies of rapid skimming, slow skimming, rapid penetration, or slow penetration. If successful, the product enters a growth stage marked by rapid sales growth and increasing profits. During this stage, the company attempts to improve the product, enter new market segments and distribution channels, and reduce its prices slightly. There follows a maturity stage in which sales growth slows down and profits stabilize. The company seeks innovative strategies to renew sales growth, including market, product, and marketing-mix modification. Finally, the product enters a decline stage in which little can be done to halt the deterioration of sales and profits. The company’s task during this period is to identify the truly weak products; develop for each one a strategy of continuation, focusing, or niching; and finally phase out weak products in a way that minimizes the hardship to company profits, employees, and customers.
Not all products pass through an S-shaped PLC. Some products show a growth-slump-maturity pattern, others a cycle-recycle shape, and still others a scalloped shape. Some investigators have discovered over a dozen PLC shapes, including those describing styles, fashions, and fads. Because of the globalization of the marketplace, an international PLC shape has also emerged. The PLC theory has been criticized because companies cannot predict the shapes in advance, or know what stage they are in within a given shape, or predict the duration of the stages. In addition, PLCs are the result of chosen marketing strategies rather than independent of the chosen marketing strategies.
Product life-cycle theory must be broadened by a theory of market evolution. The theory of market evolution holds that new markets emerge when a product is created to satisfy an unmet need. The innovator usually develops a product for the mass market. Competitors enter the market with similar products leading to market growth. Later growth slows down and the market enters maturity. The market undergoes increasing fragmentation until some firm introduces a powerful new attribute that consolidates the market into fewer and larger segments. This stage does not last, because competitors copy the new attributes. There is a cycling back and forth between market consolidation based on innovation and fragmentation based on competition. The market for the present technology will ultimately decline upon the discovery of superior technologies.
Companies must try to anticipate new attributes that the market wants. Profits go to those who introduce new and valued benefits early. The’ search for new attributes can be based on customer survey work, intuition, dialectical reasoning, or needs-hierarchy reasoning. Successful marketing comes through creatively visualizing the market’s evolutionary potential.
B. Learning Objectives
• Understand the characteristics of a product and how products are classified.
• Recognize the main risks in developing new products and the new-product-development process.
• Understand the elements of the consumer-adoption process.
• Understand and explain the concepts of the product life cycle (PLC).
• Distinguish the concepts and stages of market evolution from the PLC.
• How to relate marketing strategy to market evolution.
• How to identify competitive advantages of specific products in the marketplace and how to discern differentiation attributes
C. Chapter Outline
I. Introduction
      Short discussion which provides an example of how Ford maximizes customer value. By not accepting Federal Bailout money and focusing on the customer, ford brought a new product to market, Fiesta, through creative use of social media and extensive market research. 
II. Product Characteristics and Classifications
A product is anything that can be offered to a market to satisfy a want or a need
A.  Product levels - five levels that represent a customer value hierarchy refer to figure 10.1)
1. Core benefit - fundamental benefit, hotel room offers shelter for rest and sleep
2. Basic product - hotel room includes a bed, bathroom, and towels
3. Expected product - attributes normally expected, clean bed, bathroom, and towels
4. Augmented product - exceeds customer expectations, turned down bedspread, candy mints/flowers/fruit, extra linen, bathrobes and slippers, complimentary staple goods
5. Potential product - prototype, experimental, e.g., one-of-a-kind luxurious suite
B. Product classifications
1. Durability and tangibility
a) Nondurable goods - consumed quickly, purchased frequently. Strategy-wide market coverage, smaller margins, induce to try
b) Durable goods - longer use, less frequently purchased, greater consumer investment (i.e., financial, searching, and understanding) Strategy - more intensive personal selling, guarantee offerings, higher margins
c) Services - intangible, inseparable (i.e., produced and consumed simultaneously), variable, perishable. Strategy-quality control, flexibility, build trust with consumer
2. Consumer goods classification (classified by consumer shopping habits)
a) Convenience goods - frequent purchase with minimal effort (e.g., newspapers, coffee, milk)
b) Shopping goods - requires some research and decision making (e.g. home furnishings, clothing) 
c) Specialty goods - usually unique characteristics or brand identification (e.g., automobiles, jewelry)
d) Unsought goods - (e.g., smoke detector)
3. Industrial goods classification (materials and parts that enter the manufacturer’s product completely)
a) Raw materials - farm (soybean) or natural (oil) products
b) Manufactured materials and parts - component materials (iron) or component parts (small motor)
c) Capital items - long-lasting goods that facilitate manufacturing, include installations (factory)  and equipment (trucks) with much personal selling involvement
d) Supplies and business services – short-term goods and services that facilitate developing or managing the finished product which include maintenance & repair services and business advisory services.
III. Product and Services Differentiation
A. Product Differentiation – possible approaches to differentiate
1. Form – refer to the product’s size, shape or physical structure
2. Features – additions to basic function. Avoid “feature fatigue”.
3. Customization – ability to assist customer in making a product that more closely meets their needs
4. Performance Quality – level at which the product’s primary characteristics operate
5. Conformance Quality – degree to which “all” produced units are identical and meet promised specifications
6. Durability – measure of the product’s expected operating life under natural or stressful conditions
7. Reliability – measure of the probability that a product will not malfunction or fail within a specified period of time
8. Reparability – measures the ease of fixing a product when it malfunctions or fails
9. Style – describes the product’s look and feel to the buyer
B. Services Differentiation – possible approaches to differentiate
1. Ordering ease
2. Delivery – with the Internet, today’s expectations are one of speed
3. Installation – ease of installation is a true selling point
4. Customer Training – training on optimal use of product
5. Customer consulting – offer data, information systems and advice services
6. Maintenance and Repair – include 24/7 and online technical support
C. Design Differentiation
1. Design is the totality of features that affect how a product looks, feels, and functions to the customer.
2. Design offers functional and aesthetic benefits and appeals to both rational and emotional sides.
3. To the company, a well designed product is easy to manufacture and distribute
4. To the customer, a well-designed product is pleasant to look at and easy to open, install, use, repair and dispose of. 
IV. Product relationships
Product mix (also called a product assortment) is the set of all products and items that are offered for sale. A product system is a group of diverse but related items that function in a compatible manner. A product mix (also called a product assortment) is the set of all products and items a particular seller offers for sale.  It can be described in terms of width (number of product lines), length (total number of items in the mix), depth (number of product variants), and consistency (product line similarity regarding end use). Product line is a group of products within a product class that are closely related because they perform a similar function.  A product type is a group of items within a product line that share one of several possible forms of the product. An item is a distinct unit within a product line distinguishable by size, appearance or other attribute. 
A. Product line analysis - develop a basic platform and modules that can be changed to meet different customer requirements. Product maps show which competitive products compete against the company’s products.
B. Product line length
1. Line stretching - increase offering of a product line in either or both directions relative to current line in terms of value to the customer (e.g., more expensive product offerings such as Lexus by Toyota (i.e., higher end) or Four Points by Sheraton (more moderately priced)
2. Line filling - add more offerings within current range
C. Line modernization, featuring, and pruning
1. Modernize - adjust to rapidly changing markets
2. Line featuring - showcase one or more well selling items to help boost sales of lower selling items
3. Pruning - eliminate weak offerings, reduce offerings in market slowdowns or low production capacity
D. Product Mix Pricing
Must take into account the toal product mix when setting prices. Six product-mix pricing situations are shown in Table 10.1
E. Co-branding and Ingredient Branding
1. Co-branding (also called dual branding or brand bundling) combines two or more well known brands into a joint product and/or marketed together in some manner. Brands may or may not be owned by the same company
            a.     Advantages include increase in sales, from exiting market and new
                    opportunities in other markets, reduced costs due to economies of
                    scale with two rather than one brand and provides deeper insights
                    into the consumer.
            b.     Potential disadvantages are risks and lack of control in brand
                    alignment in the minds of the consumers, brand equity
                   for each brand must be kept separate and brands must be
                  complementary and not similar 
2. Other forms of Co-branding include
            a.    Joint-venture co-branding, e.g. Citibank with AAdvantage credit  
                  card
            b.   Retail co-branding – two retailers use same location to optimize
                  space and profits
            c.    Multi-sponsor co-branding
3. Ingredient branding – special case of co-branding that involves creating brand equity for materials, components, or parts that are necessarily contained within other branded products. (e.g. “Intel inside”)

V. Packaging, Labeling, Warranties, and Guarantees
A. Packaging
1. All activities of designing and producing a product’s container
2. Container can have primary (package as a product may appear on a shelf) and secondary (box that primary package sits inside)
3. Package is becoming more important to the marketing effort
a) In self-service scenarios, an attractive package can influence impulse decision or stand out in a crowded offering
b) Increasing consumer affluence has created a demand for more convenience, appearance, dependability, and prestige in packaging
c) The package supports brand recognition and can help build awareness
d) Innovative packaging can add benefits to value chain members as well as consumers
B. Labeling (can be simple or complex)
1. Identifies the product or brand
2. Demonstrate product grading (e.g., A, B, C)
3. Describe the product, define use and precautions as well as origin
4. Can facilitate promotion through attractive design
5. Comply with regulations with regard  to “open dating,” unit pricing, ingredient percentage 
C. Warranties and guarantees
1. Warranty - formal or implied promise of product performance by manufacturer with remedy to resolve non-performance
2. Guarantees reduce buyer’s perceived risk. Can be used to differentiate. Can also be applied to non-product resolution, such as competitor price match, delivery, installation, etc.
VI. Managing New Products - six categories of new products are: 1) new to the world (address entirely new market), 2) new product lines, 3) additions to existing product lines, 4) improvements and revisions of existing products, 5) re-positioning, 6) cost reductions (similar performance at lower cost)
A. The Innovation Imperative and New Product Success
1. 95% failure rate in the United States (Europe rate = 90%)
2. Failures - ignoring or misinterpreting market research, market size  over-estimations, sub-optimal distribution performance, poor design, incorrect positioning, development costs, ineffective advertising, pricing issues, and competition fighting back
3. Successes - better understanding of customer needs, higher performance to cost ratio, head start against competition, contribution margin, budget, internal teamwork, top management support, technological and marketing synergy, execution and market attractiveness. Per cooper and Kleinschmidt, unique superior products succeed 98% of the time compared to products with a moderate advantage (58% success) and those with a minimal advantage (18% success).
4. Incremental Innovation – entering new markets by tweaking products for new customers, introducing variations on a core product, and creating interim solutions for industry-wide problems.
5. Newer companies create disruptive technologies that are cheaper and more likely to alter the competitive space
B. New product development - eight-stage process (refer to Figure 10.2)
1. Idea generation - ideas come from a variety of sources. Idea-generating techniques include attribute listing, forced relationships, morphological analysis, need/problem identification, brainstorming, and synectics
2. Idea screening - not all ideas can be pursued, but must be sent to a committee where they are considered either  promising, marginal, or a rejected. In this stage the company runs the risk of either accepting a bad idea or rejecting a good one
3. Concept development and testing - attractive ideas must be refined into testable product concepts. A product concept is an elaborate version of the idea expressed in meaningful consumer terms and should be presented to an appropriate group of target consumers to gauge their reactions. Customer-driven engineering is an engineering effort that attaches high importance to incorporating customer preferences in the final design. Consumer preferences can be measured through conjoint analysis. (Refer to figure 10.3 for a product positioning map example)
4. Marketing strategy development – (three-part preliminary plan)
a) Describe target market size, structure, and behavior
b) Product positioning
c) Long run sales and profit goals, marketing mix
5. Business analysis
a) Performing sales, cost, and profit projections on the proposed product to determine satisfaction of company objectives
b) Estimating total sales - sum of three different types of sales (first-time, replacement, and repeat) must yield a satisfactory profit
c) Estimating costs and profits - break-even analysis and risk analysis 
6. Product development
a) Represents a substantial jump in investment
b) Determine feasibility
c) Translate requirements into prototype (quality function deployment, or QFD, is a methodology used to generate a list of engineering attributes from a list of desired customer attributes)
d) Alpha testing - testing the product within the organization, refine where appropriate, and prepare for consumer testing
e) Beta testing -  have consumers test refined output from alpha testing
7. Market Testing - Techniques for measuring consumer preferences - simple rank-order method, paired comparison, and monadic-rating
a) Market testing - products passing alpha and beta that meet functional, psychological, and feasibility requirements are “dressed up” with branding and packaging and used in market tests to assess four variables: trial, first repeat purchase, adoption, and purchase frequency. Four methods of testing include:
(1) Sales-wave research - consumers try product at no cost and then are offered the product (or a competitor’s product) again at a reduced price for as many as three to five times (sales waves). Metric is repeat and satisfaction
(2) Simulated test marketing - consumers are asked questions about brands, then are exposed to brand advertising, are given money to purchase product, and product purchases as well as repeat purchase intentions  are evaluated
(3) Controlled test marketing - product distributed to select  outlets and product mix as well as purchase activity are evaluated
(4) Test markets - select geographic areas, usually cities that are a representation of the targeted market, are used to evaluate marketing mix and consumer purchase activity
b) Business goods –
(1) Expensive gods usually undergo alpha and beta testing
(2) Trades shows can provide insight into customer interest
8. Commercialization – costliest stage
a) Marketing mix strategy for product rollout is defined
b) Market entry timing is planned (first, parallel, or late entry)
c) Methodologies such as critical path scheduling (CPS) are used to manage product implementation
9. 
VII The Consumer-Adoption Process - How do potential customers learn about new products, try them, and adopt or reject them?  Followed by a consumer-loyalty process
A. Stages in the adoption process - innovation diffusion process (spread of a new idea from its source of innovation or creation to its ultimate users or adopters)
1. Awareness - consumer becomes aware but has little or no information
2. Interest - consumer stimulated to seek information
3. Evaluation -  consumer considers trying the product
4. Trial - consumer tries the product in an effort to determine its value
5. Adoption - consumer decides to continue using the product
B. Factors influencing the adoption process
1. Person’s innovativeness (degree of adopting) relative to peer consumers.
2. Personal influence - effect one consumer has over another in terms of influencing the latter’s behavior. Very important in evaluation stage
3. Five factors that can influence adoption:
a) Relative advantage - degree of superiority over competition
b) Compatibility - degree to which innovation matches consumer’s values and experiences
c) Complexity - ease or difficulty of understanding or using
d) Divisibility - degree to which consumers can try on limited basis
e) Communicability - degree to which the benefits are observable or describable to others 
VIII.       Marketing Through the Product Life Cycle
A. Product life cycles
1. Stages in the product life cycle - introduction, growth, maturity, and decline
B. Marketing strategies:  Introduction stage and the pioneer advantage
1. Marketing strategies in the introduction stage - rapid-skimming, slow-skimming, rapid-penetration, and slow-penetration
2. Market pioneers - research shows those first in the market gain the greatest advantages, both consumer and producer oriented
3. Competitive cycle - sole supplier, competitive penetration, share stability, commodity competition, and withdrawal
C. Marketing strategies:  growth stage - A wide variety of strategies available
D. Marketing strategies:  maturity stage
1. Market modification
2. Product modification
3. Marketing mix modification
E. Marketing strategies:  decline stage
1. Identifying the weak products and determining decline marketing strategies
2. Increasing investment, maintaining investment, decreasing investment, harvesting, divesting, and the “drop” decision
F. Critique of the Product Life Cycle concept PLC (refer to Table 10.3 for summary of characteristics, objectives and strategies in the four product life-cycle stages
1. Good for planning control.
2. Marketers may find it difficult to identify what stage they are in.  
IX      Executive Summary
II.  Lecture
 “Product Characteristics and Classifications”
This section of the chapter focuses on the dynamics of consumer product perception and product categorization. An organization’s product strategy should incorporate consumer behavior relative to product innovation. 
Teaching Objectives
• Stimulate students to recognize how consumers perceive products in terms of hierarchy.
• Gain an understanding of how organizations define products in terms of general categories.
• Awareness of the need for a positioning policy and strategy.  
Discussion
PRODUCT LEVELS
By thinking of their products in terms of levels, organizations may enhance their efforts in product innovation. The automobile industry is a good example of demonstrating the relationships between product levels and product innovation.
• Core benefit of an auto is transportation.
• The basic product should contain lights, heat, brakes, seat belts, manual transmission, donut spare tire, etc.
• The expected product also contains a radio, air conditioning, automatic transmission, power windows and locks, ABS, power driver seat, etc.
• The augmented product in addition may contain a navigation system, five CD changer, six speakers, full spare tire, deluxe sound system, halogen lights, remote start-up, heated seats, etc.
• A potential product may include automatic speed governor tied to sensors that indicate predetermined safe proximity to other automobiles, wireless access to support automatic payment in parking garages, fast-food drive-ups, etc.
Discuss how auto manufactures know exactly which level should contain which features in the consumer’s mind, how manufacturers place certain features as options in different levels. The natural progression of feature movement through levels is also an interesting discussion point. For example, features that are augmented tend to migrate to the expected, and then to the basic offering.    
Note to the Instructor:
Have students define a similar level breakdown for another product type and challenge them to identify natural level migration. Also have them explain why the migration takes place. Homes, appliances, cell phones/landlines are potential products.  

PRODUCT CLASSIFICATIONS
A product’s classification can be a starting point for understanding basic product strategies. Convenience goods navigate to price strategy, shelf positioning, outlet location, and available inventory. There can be a tendency to commoditize so there is always the pressure of determining how to best differentiate. Differentiation plays a more important role with shopping or specialty goods. The latter probably requires more personal selling than the former  but both benefit. A shopping good can take advantage of non-personal selling activity such as promotional material, in-depth information on the organization’s web site, good keywords to optimize consumer web searches using search engines, presence on popular product comparison sites such as buy.com.
 Note to the Instructor:
Have students categorize their recent purchases into respective product classification areas.

“A NEW LOOK AT PACKAGING”

INTRODUCTION - PACKAGING: THE FIVE-SECOND COMMERCIAL
A point increasingly driven home to marketers of food, health, and beauty product lines, and over-the-counter drugs, is that the package is the brand. Once the brand has done everything possible to make the product taste good, work effectively, or cost less, it is still possible to distinguish it with a package that no competitors can copy.
As products and media channels proliferate, prospective customers split into increasingly more difficult-to-reach audience, market, and readership segments. Without an impressive return on investment from mass media advertising, the role of packaging as a key influencer on the customer, especially during the moments before and during purchase, has expanded dramatically.
THE VALUE OF PACKAGING
Many marketers are paying more attention to package design because the products increasingly are more alike in the marketplace. This is the argument of some marketing professionals who point out that when differentiation through taste, color, and other product elements has reached parity, packaging makes the critical difference.
An example of this is found in the Pepsi Co. reaction to Coca-Cola’s plasticization of its hallowed curved bottle. Pepsi found that it could not follow suit, but they responded in a manner designed again to level the playing field. Pepsi set out to do a new package, as they do every few years. As a Pepsi executive has noted, operationally it is very complicated to make a major shift like this, but clearly in this type of product category, this is necessary occasionally. Pepsi and other similar companies can build business on distribution and price, but packaging is a way for them to build excitement without changing the formula or adding products that will cannibalize the rest of their product line. That is the challenge.  
The result is that Pepsi is building a whole new round of designs based on themes such as: “Fast Break,” a 20-oz. re-sellable, curved bottle; “Big Slam,” a one-liter bottle geared to convenience stores. “Pepsi Junior” is a re-sellable 12-oz. plastic “can”; and “Block Party” is a 30-oz. can version of Coke’s “The Cube.” Pepsi’s has turned the 24-can multi-pack into a promotional tool, carrying coupons from Breyer’s (a Nabisco label), Thermos, and Spalding.
Other examples include:   
• Perrier - The firm made its distinctive package the centerpiece of promotion, shrink-wrapping original artwork onto bottles sold through restaurants. 
• McDonald’s - Licensees are cashing in on the recognizability of McDonald’s packages by selling neckties in mock fry and burger boxes in department stores.
Beyond good looks, the best designs extend the brand and its image by adding some intrinsic value to the product itself. As many marketers look at it, it is a constant dance to balance identity and utility; brands want to be different and to offer benefit to the consumer.
Packaged goods marketers are paying special attention these days to delivery systems. That is prompted in part by the success of club stores (Sam’s Club, B. J. Wholesale Club, etc.) whose giant packs sell better when they are re-sellable. A unique delivery system, like Mentadent toothpaste’s double pump, can cement a brand’s image. And designs that take into account how consumers use the product and the package make consumers feel like the manufacturer cares about them. 
Other companies also have capitalized on this as they fight off private labels: 
• Procter & Gamble has an easy-to-open yet childproof cap on its Aleve analgesic.
• Tylenol touts its Fast Cap, designed for older adults. This is a convenience move that adds value. If a competitor can copy it, it is more of a tactical move than a strategic brand protection. It ends up being a bonus for container makers, though, by giving them a ready market for innovative packages that may have required expensive retooling to produce. 
Proprietary packaging, especially patented designs, prevents knockoffs. As a result, it has become common practice for marketers to patent a specific design, and then build a moat around that design by copyrighting several similar designs.
Consumer concerns for the environment now pressure marketers to avoid wasteful packaging.  While these moves cut down the surface area for graphics, it is better for marketers in the long run. Greater ecological pressure may even reawaken interest in proprietary shapes. The most likely candidates are jarred and bottled items like condiments; glass is easy to shape, and a distinctive jar means an added value for consumers. Cartons, on the other hand, are more expensive to shape and more difficult to protect from infringement.
However, ecological advances come at a cost. When Hanes dropped the plastic egg for L’eggs hosiery in l991 and moved to a gabled box, there was no question they lost something. The egg structure had been tied to a function; without the function, it is not clear whether the shape was relevant to the future equity of the brand. And the question is, how do you capture the shape graphically?
Companies tend to adjust the graphics more often than product structure because it is a cheaper and faster way to update a brand. Category leaders often use well-recognized graphics to extend their clout into new categories. For example, Sun Diamond Growers of California developed new packaging for Sun-Maid dried fruits that uses the Sun Maid woman and bright red used by the No. l raisin brand.  Frito-Lay (Pepsi Co.) took the same approach by using the Taco Bell name and graphics with its supermarket line of Taco Bell–branded food. 
In sum, package design has to be very carefully integrated with product, distribution, and service design. Brand name companies cannot just slightly modify the package to fend off private label marketing. There has to be a more systematic design change that adds some intrinsic value. Without this, the brand will end up competing in some very small consumer niches, creating interest with either very rich or very naive consumers.

Background Articles
IV.  Case
Oscar Mayer:  Strategic Marketing Planning
       HBS Case: 597-051   TN 594-052A primary purpose of this case is to cause students to consider carefully the need to combine realistic costing and marketing issues. Through quantified company goals, they can realize that the principal pressure in marketing is the allocation of limited resources.  Also, the case points up the struggle with short and long-term sales volume and profit growth, the consideration that must be given to competing ideas, and to recognize the various perspectives in the corporate decision-making process, especially related to risk evaluation in strategic planning and new product development.

Teaching Perspectives
The marketing director of Oscar Mayer faces a series of strategic marketing options regarding established and new products, including budget and capacity allocation decisions.
This case presents a strategic planning budget and risk management issue: given the recent industry arid company data, how should the Oscar Mayer division’s advertising and promotions budget be allocated?
Students assume the role of the division’s president, Marcus McGraw, and decide upon an investment direction for the company. Decisions should try to meet McGraw’s ambitious growth objectives: +4 percent per year on sales volume and +15 percent on operating income. External and internal complexities create difficult decision-making circumstances.
Externally, a trusted consulting firm, McTiernan Corp., is advising the division that recent consumer trends are affecting sales volume growth. The focus on nutrition is adversely affecting the Oscar Mayer brand and benefiting the Louis Rich brand. The convenience trend is detrimentally affecting both brands. McTiernan also hints that the division’s changing competition will spark an expensive marketing campaign.
Internally, McGraw has to struggle with multiple issues: poor sales volume growth within the division’s largest brand, relatively inexperienced new product development, and four division leaders encouraging different investment directions.
The task for students is to balance the complicated information presented. The balancing is predicated on resource constraints.
Developing New Products
Suppose one innovation is successful in the marketplace, can it be expected to single-handedly boost the division’s sales volume?
Successful new product development is a function of experience. What does the division’s recent experience suggest about this alternative?

Questions
1. In the beginning of the case McGraw thinks he has “never encountered such a complex business challenge” as the one he currently faces. By the end of tile case, after he has read the ideas listed in the four memos, McGraw can’t believe he ever thought the investment issue was “going to be a hard one.” What changed the president’s perspective? What strategic decision-making process does McGraw pursue?
2. If McGraw chooses a strategic direction that favors only one department, what negative effects could this have on other departments? How can McGraw mitigate the damage?
3. What effect is the change in the strengths and weaknesses of competition having on the Oscar Mayer Division? How does this impact the investment decision?
4. Absent any resource constraints, which of the four departmental directions do you think is the most viable? Which is the second best strategy? Which is the least viable?
5. Given the information in the case, what strategic course do you think the division should pursue?
6. Which of Jim Longstreet’s new product ideas is less likely to succeed? Why?

给自信 更公益

中国经济管理大学《公益教育宣言》

中国经济管理大学——每个人都有受教育的权利和义务，不分民族、性别、宗教、语言、社会出身、财产或其它身份等任何区别。　

中国经济管理大学——MBA/EMBA培训不应该仅仅属于富人的专属特权，更不应该让天价学费阻碍为那些有管理潜力普通大众的求学之路。

中国经济管理大学——中国经济管理大学EMBA公益研究生院（免费学堂）勇当教育公益事业先行者，2013继续让公益培训遍结硕果。每月2-4次免费专题培训。

中国经济管理大学——为有潜力的管理人才、培训合格人才免费颁发合格证书，筹建高端管理人才库，让每一位学员享有金牌猎头服务。

中国经济管理大学

2013年05月【公益课堂】
中国经济管理大学|中国经济管理大学培训|MBA实战_中国经济管理大学
WWW.EAUC.HK