PRODUCT LIFE CYCLES
Types of Goods and Services
� There are 4 classifications of G & S ◦ Industrial Goods ◦ Consumer Goods ◦ Industrial Services ◦ Consumer Services
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Definitions
� Industrial Good ◦ Raw materials, equipment, supplies used to
make our consumer goods
� Consumer Good ◦ End products we (the consumer) buy to use
Definitions
� Industrial Service ◦ Service provided from one business to
another
� Consumer Service ◦ Service provided to the final buyer
Industrial vs Consumer Goods � With a partner – Discuss the changes and/or
give an example of the following industrial goods as they are converted from raw material to a processed good to a finished good. Describe whether your example of a finished good is still an industrial good or is now a consumer good.
◦ Tree ◦ Tomato ◦ Wheat ◦ Coal
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Answers Tree � Is cut down by a logging company, sold to a pulp mill
who convert it into pulp, sold to a paper manufacturer who converts it into a paper product, sold to Office Depot. Is a consumer product at Office Depot.
Tomato � Is harvested by a farmer, sold to a ketchup maker
who converts it to ketchup. Is a consumer product at the grocery store.
� Or is harvested by a farmer and sold to a grocery store. Is a consumer product at the grocery store.
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Answers Wheat � Is harvested by a farmer, sold to a flour mill who
converts it to flour, sold to a bread manufacturer who converts it to bread which is now a consumer product.
Coal � Is mined by a mining company, sold to a Steel
Factory who converts it to a steel product, sold to a car part maker who converts it to a car part, sold to a car manufacturer who makes it a component of a car, sold to a car dealership. Is a consumer product at the car dealership.
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Product Life Cycle � Demand for any product or service will
change over time.
� Most things do not remain in demand forever. They experience periods where demand is impacted, causing companies to change up their marketing.
� A change in demand is an indicator to marketers to consider new strategies.
Product Life Cycle
4 Stages of the Product Life Cycle
� 1) Introduction ◦ Involves significant startup costs to research,
manufacture, package and advertise your product. (Big Money Needed!)
◦ Product is launched into the market.
◦ Marketing/Sales – need to pull/create demand – have a strategy � Ideas?
4 Stages of the Product Life Cycle � 2) Growth ◦ Companies begin to grow their sales (hopefully)!
Consumers start becoming aware of your product and begin to purchase.
◦ Marketing strategies – continue to work to locate retailers to carry your product – growing your business
◦ Might begin to see competitors coming out as well, using your idea and capitalizing on your marketing to sell their own product and take your share.
Example: The Blackberry (email capable handhelds) comes out, then we see Nokia and Sony entering the marketplace
4 Stages of the Product Life Cycle � Maturity ◦ Successful companies will have earned profits to cover
start-up costs and begin to get themselves “into the black”
◦ Often there is a lot of competition at this stage – new marketing strategy – how to stay on top?
◦ Weaker competitors start to leave the market (failures) ◦ Begin to consider expanding into other markets, using
their success in the market to build on their reputation and create success in other markets
Example: Disney expansion into cruise holidays was helped by their reputation as a quality vacation destination for theme parks.
Non-Traditional Product Life Cycles
� We’re going to watch the following video on “Non-Traditional Life Cycles”
� You need to take notes for potential test questions, unless you have the mind of a steel trap J
� Video
