Post on 20-Aug-2015
3 Unit 2
Product Life Cycles• Product life cycles describe the
changes in consumer demand over a time. No product can be in demand forever. Trends, technology and lifestyles change, which affects consumer demand.
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Product Life Cycles
• The traditional product life cycle consists of five stages.
Sales
Time
introduction
growth
maturity
decline
decisionpoint
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Product Life Cycles• Introduction Stage• When a product is first
introduced a product launch occurs. It may occur regionally, provincially, or nationally, depending on predicted demand.
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Product Life Cycles• Introduction Stage• Launching a new product is very
expensive, so initially the price is high. Costs involved include: machinery, set-up, training, promotion, storage, packaging, market research.
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Product Life Cycles
• Introduction Stage• Who buys at this stage?• Curious people, those
who always want new things first:
- early adopters- trendsetters.
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Product Life Cycles• Introduction Stage• Main purpose of marketing is
to inform the consumer about new products and to establish the value equation as early as possible.
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Product Life Cycles• Growth Stage• After adopters find and use a
product, others will follow. The product is visible, consumers see/hear others use it. Reputation spreads through word of mouth and advertising.
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Product Life Cycles• Growth Stage• The faster a product reaches the
growth stage, the sooner it starts making a profit.
• The first company to enter a market will pay the most for development and advertising, but it will have a major advantage: No competition.
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Product Life Cycles
• Growth Stage• As competitors enter the market,
companies strive to maintain their market share: the company’s sales as a percentage of the total for the market.
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Product Life Cycles
• Maturity Stage• The period during which
sales start to level offSales
Time
maturity
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Product Life Cycles
• Maturity Stage• Marketers keep the brand
name in front of consumers. Often the success and longevity of the product is highlighted.
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Product Life Cycles
• Maturity Stage• Because major costs have been
recuperated and the cost of sales and distribution is low, products usually make large profits during this stage.
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Product Life Cycles• Maturity Stage• Often times companies will take this
profit to develop new products and product launches.
• EXAMPLE: Disney took profits from its amusement parks to launch a cruise ship line. This also expands their brand name into a new market.
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Product Life Cycles• Decline Stage• Occurs when a company cannot find
new consumers for their product. Profits decrease; marketers try to find the reason for the decline.
Sales
Time
decline
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Product Life Cycles• Decline Stage• If it is a temporary decline– it may be reversed by a small price – change in the design – new ad campaign– Change in the packaging
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Product Life Cycles• Decision Point Stage• The final stage of the product
life cycle. Marketers must make important decisions regarding a product’s future.
Sales
Time
decisionpoint
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Product Life Cycles• Decision Point Stage• A product may be reformulated,
repackaged, and reintroduced.• Most often maintenance of a product
involves new promotion and new pricing.