ch 11 product3 p life cycle 15june08 n21

8/9/2019 Ch 11 Product3 P Life Cycle 15June08 n21

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Product Life CycleProduct Life Cycle

Introduction Growth Maturity DeclinePostMortem

Loss/profit

Time

$ SalesSales

ProfitProfit

Progression of product life stages (sales & time)


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Product Life Cycles &Product Life Cycles & R & DR & D

timetime))

Stages have varied TimeD

oll

ars

R & DR & D Introduction Growth Maturity DeclineIntroduction Growth Maturity Decline

IndustryIndustry

SalesSales

IndustryIndustry

ProfitsProfits

Strategy Benefit: Be Proactive in planning, not reactive


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Product Life CycleProduct Life Cycle

s Introduction StageIntroduction Stage

Primary DemandPrimary Demand

Slow sales/Low revenueSlow sales/Low revenue

Promotion: Gain awareness,Promotion: Gain awareness,Push or Pull StrategyPush or Pull Strategy

Develop distribution channelDevelop distribution channel

s Growth StageGrowth Stage Increasing sales &Increasing sales &

profitsprofits

Market expansionMarket expansionbrings increasingbrings increasing

competitioncompetition

Product refinementProduct refinement

Profits peakProfits peak Promote to createPromote to create

brand preferencebrand preference


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Varied length of TimeD

oll

ars

Introduction Growth Maturity DeclineIntroduction Growth Maturity Decline

IndustryIndustry

SalesSales

IndustryIndustry

ProfitsProfits

C

o

m

p

e

t

it

i

o

n

P

r

i

v

a

t

e

b

ra

n

d

s

Maturity Stage: Sales plateau and profits

decline with intense selective demand

Defend brand position

against competition


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s The Decline StageThe Decline Stage

Maturity -Decline

ObsolescenceNew Technology

Changing

Consumer Tastes

Low promotion

Price discounting


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Life Cycles and MarketingLife Cycles and Marketing

StrategyStrategy

IntroductionIntroduction

GrowthGrowth

MaturityMaturity

Maximize distributionMaximize distribution

Build awareness & obtain trialBuild awareness & obtain trial

DeclineDecline

Extend distributionExtend distribution

Advertise & promote heavilyAdvertise & promote heavily

Advertise product imageAdvertise product image

Persuade customers to switchPersuade customers to switch

Milk the product for profitsMilk the product for profitsDetermine if to terminate productDetermine if to terminate product

PostmortemPostmortemPlan for postmortem expensesPlan for postmortem expenses

Develop phase-out planDevelop phase-out plan


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0

5

10

15

20

25

30

35

40

SALES

Introduction

PrimaryPrimary

demandeman

d:d:

InformInform

Growth

ExtensiveExtensive

advertisingadvertising

spending:spending:

PersuadePersuade

Maturity

ReminderReminder

&&

emotionalemotional

ads :ads :

RemindRemind

Decline

MinimalMinimal

if anyif any

Ad Strategy & the Product life CycleAd Strategy & the Product life Cycle

Stimulate Primary demandStimulate Primary demandfor afor a Product classProduct class viaviainformational Adsinformational Ads

Stimulate selectiveStimulate selectivedemand for a brand viademand for a brand viapsychologicalpsychologicaldimensionsdimensions


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Product Life ExtensionsProduct Life Extensions

((Maturity/Decline Stages)Maturity/Decline Stages)

s Cost ReductionsCost Reductions: retool product with less: retool product with less

expensive material, production, location, etc.expensive material, production, location, etc.

s Product QualityProduct Quality: refocus on quality level based: refocus on quality level based

on target audience satisfaction.on target audience satisfaction.

s

RepositionReposition: change product design, image: change product design, image

Product Modifications

s Domestic & International product life cycleDomestic & International product life cycle

sewing machines/washing machines to So. Am.sewing machines/washing machines to So. Am.

(Brazil)(Brazil)


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130,000

394,000

Flat Panel TV Units

Sept.2003Sept.2002

Whats In this Holiday Season*Whats In this Holiday Season*

*WSJ,Nov13, 2003*WSJ,Nov13, 2003**WS Oct.223**WS Oct.223

Product Life Cycle, reality competition

New technology

Applied

Marketing

By 2010 it is predicted that CRTs will account for only2.1 million of the 44 million televisions sold.**


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s Americans prefer bigger and better products to suit theirAmericans prefer bigger and better products to suit theirlifestyles. When they have the money and space they are willinglifestyles. When they have the money and space they are willingto pay more for better quality as well as quantity.to pay more for better quality as well as quantity.

s The convenient size and shape of the flat-panel displays can beThe convenient size and shape of the flat-panel displays can bemounted to the wall like a painting, taking up less space than amounted to the wall like a painting, taking up less space than aCRT.CRT.

s Government deadlines require a switch to all-digital TVGovernment deadlines require a switch to all-digital TVbroadcasts by February, 2009.broadcasts by February, 2009.

s 2006 Average cost: CRTs -2006 Average cost: CRTs -

$223$223

s

LCDs - $1,007, Plasma -LCDs - $1,007, Plasma -Cannibalism: Sales of high end stereos &

PLC: Flat Panel TVs arePLC: Flat Panel TVs are

capturing consumer enthusiasmcapturing consumer enthusiasm


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Want to Add a Little Excitement

to Your Food?

Hellmanns Plan:

Mayonnaise Isnt So MayonnaiseMayonnaise Isnt So Mayonnaise

AnymoreAnymore

Applied Example:

Product Modifications


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Frenchs plan: GourmayoFrenchs plan: Gourmayos Italian Pesto, Sun-Dried TomatoItalian Pesto, Sun-Dried Tomato

s Wasabi HorseradishWasabi Horseradish

s Chipotle ChiliChipotle Chili

Just Not the Same Old MayonnaiseJust Not the Same Old Mayonnaise

Krafts Plan:Create a new

Stimulating linecalled,

MAYO WITH HEAT


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Styles, Fashions, and Fads

Style, Fashion cycle , Fads (Hula Hoop-6 mos.)

Terminology


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The Re Positioning StrategyThe Re Positioning Strategy

Physical or psychological DifferentiationPhysical or psychological Differentiation

s ProductProduct

Focus on Brand Name

Focus on product Benefits and/or

The people who use the product and/or

The way people classify the products


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..


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iPod RevenueiPod RevenueApplied

Marketing

ch 11 product3 p life cycle 15june08 n21

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