Chapter 11: Charting the Product Life Cycle

product life cycle
describes the stages a new product goes through in the marketplace: introduction, growth, maturity, decline
Introduction Stage
Occurs when a product is introduced to its intended target market. during this period sales grow slowly+profit is minimal.
* marketing objective is to create consumer awareness and stimulate trial- the initial purchase of a product by a consumer.
* pricing can either be high or low during this stage. A high initial price may be used for a skimming strategy. a low price could be used for penetration pricing.
primary demand
the desire for the product class rather than for a specific brand, since there are few competitors with the same product
Selective demand
the preference for a specific brand
Draw the stages of the product life cycle
Draw the stages of the product life cycle
Growth Stage
characterized by rapid increases in sales.
* this is where competitors and more aggressive pricing is that profit usually peaks during the growth stage
* advertising shifts emphasis to stimulating selective demand
*changes appear in the product in this stage
Maturity Stage
Characterized by slowing of total industry sales or product class revenue
*Marginal competitors begin to leave the market
* sales increase at a decreasing rate +few new buyers enter the market
* cost of gaining new buyers rises
Decline Stage
When sales drop
* company will either follow deletion or harvesting
Deletion
dropping the product from the company product line, the most drastic strategy
Harvesting
when a company retains the product but reduces marketing costs. product continues to be offered, but sales people do not allocate time in selling nor are advertising dollars spent. purpose is to maintain the ability to meet customer requests
Four Aspects of the Product Lice Cycle
1) the length
2) the shape of sales curve
3) how they vary with different levels of products
4) the rate at which consumers adopt products
1) Length of the product life cycle
there is no set time that it takes a product to move through its life cycle. depending on how long the introduction stage is this could cause you to change the way you market the product
2) Shape of the product life cycle
several life cycle curves: high learning, low learning, fashion, and fad products
High-learning product
is one where a significant customer education is required and there is an extended introductory period
Low-learning
product is one where there is little learning required and the benefits are readily understood.
Fashion product
one where they are introduced, declined, and seem to return.
Fad product
one where is experiences rapid sales on introduction and then an equally rapid decline. Ex. Car tattoos
Draw the product life cycle of each of the 4 curves
check w/word doc
3)How the life cycles vary with different levels of products: product class vs form
product class: refers to the entire product category or industry pre. recorded music
product form: variations within the product class ex. technology used to provide the music such as cassette tapes
4) The rate at which consumers adopt products: barriers
the life cycle of a product depends on sales to consumers. there are several factors the affect whether a consumer will adopt a new product or not:
– Usage barriers: the product is not compatible with existing habits
– Value barriers: the product provides no incentive to change
– Risk barriers: physical, economic or social
– Psychological barriers: cultural differences or image.
5 categories and profiles of product adopters
innovators, early adopters, early majority, late majority, and laggards.
Innovators
the first ones. venturesome, higher educated, use multiple information sources. in introduction stage
Early adopters
the next people after innovators. leaders in social setting; slightly above average education. in introduction stage
Early Majority
after early adopters. deliberate; many informal social contacts. in the growth stage
Late Majority
after early majority. Skeptical; below average social status. in the maturity stage
Laggards
after late majority. fear of debt; neighbors and friends are information sources. in the depletion/harvesting stage. these people won’t hear any advertisement
product modification
invovles altering one or more of a products characteristics: quality, performance, appearance. to increase the products value to customers and increase sales
market modification
when a company tries to find new customers, increase a products use among existing customers or create new situations
repositioning the product
changes the place a product occupies in a consumers mind relative to competitive products. does this by changing one or more of the 4 marketing mix elements
trading down
reducing a products number of features, quality, or price. ex airlines reduces legroom to add more chairs
Branding
an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors
brand name
any word, device, or combination of these used to distinguish a sellers products/services
trade name
commercial, legal name under which a company does business
trademark
identifies that a firm has legally registered its brand name or trade name so the firm has its exclusive use, thereby preventing others from using it.
brand personality
a set of human characteristics associated with a brand name
brand equity
the added value a brand name gives to a product beyond the functional benefits provided
how to create brand equity
1. Develop positive brand awareness and an association of the brand in consumer’s minds with a product class or need to give the brand identity
2. A marketer must establish a brands meaning in the minds of consumers.
3. Elicit the proper consumer responses to a brands identity and meaning.
4. Create a consumer-brand connection evident in an intense, active loyalty relationship between consumers and the brand.
Branding Strategies
1. multiproduct branding strategy
2. multi branding strategy
3. private branding strategy
4. mixed branding strategy
Multiproduct branding strategy
uses one name for all its products in a product class. examples
* toro makes snow blowers, lawn mower, hoses, sprinklers
* campbell soup company has different soups
– Advantages: consumers who have a good experience with the product will transger this favorable attitude to other items with the same name. makes possible product line extensions (the practice of using a current brand name to enter a new market segment in its product class), can lower ads and promotion costs because the same name is used on all products, raising the level of brand awareness.
Multibranding Strategy
involves giving each product a distinct name
examples
* P&G makes tide, cheer, ivory snow, bold
useful when each brand is intended for a different market segment. it lets you target each market market separately.
Private branding strategy
also called private labeling or reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer. example
* sears sells: kenmore, craftsman, diehard batteries
Mixed Branding strategy
a firm markets products under its own name and that of a reseller because the segment attracted to the reseller is different from its own market.
example
* michelin makes its own tires and also makes sears tires.
how to create brand equity
The rate