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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