The Product Life Cycle
Product Life Cycle - the stages a new product goes through in the marketplace
The introduction Stage of the product life cycle occurs when a product is first introduced to its intended target market.
* Sales grow slowly
* Profit is minimal due to large investment costs in product development
* The marketing objective for the company is to create customer awareness and
Companies often spend heavily on advertising and other promotion tools to build product awareness.
Other marketing mix variables are important at this stage.
May be hesitant to carry a new product.
Skimming strategy is used to help the company recover the costs of develop-
Ment as well as capitalize on the price insensitivity of early buyers.
For profit, a company can price low, referred to penetration pricing, to build unit volume.
The growth stage of the product life cycle is characterized by rapid increases in sales and when competitors appear.
Are compared with those of competitors’ offerings to gain market share.
Product sales grow at an increasing rate because new people try or use the product and a growing proportion become repeat purchasers - people who tried the product, were satisfied and bought again.
*Failure to achieve substantial repeat purchasers usually means an early death for a product
The maturity stage is characterized by a slowing of total industry sales for the product class.
Of the item or have tried and abandoned it.
Further product differentiation and finding new buyers.
The decline stage occurs when sales and profits begin to drop due to changes in the marketing environment.
*Technological innovation often precedes the decline stage as newer technologies
Replace older ones.
II MANAGING THE PRODUCT LIFE CYCLE
Marketers rely on three ways to manage a product through successive stages of its life cycle.
Modifying the Product
Quality, performance, or appearance, to try to increase the product’s sales.
Modifying the Market
With market modification strategies, a firm tries to do three things:
1. Find new users - new market niches
2. Increase use - promote more frequent consumption especially during low
3. Creating new use situations - identify new applications
Repositioning the Product
Product repositioning is changing the place a product occupies in a consumer’s mind relative to competitive products. This is done to increase sales by changing one or more of the four marketing mix elements.
Reasons to reposition a product include:
Trading up - adding value through additional features or higher quality materials
Trading down - reducing the number of features, quality or price.
III Branding and Brand Management
A basic decision in marketing products is branding, in which an organization uses a name, phrase, design, symbol or combination of these to identify its products and distinguish them from those of competitors. Create a unique identity.
Of these to create an identity and distinguish a seller’s goods or services.
1. Avoid products they are dissatisfied with
2. Become more loyal to those they like
Successful and established brands take on a brand personality, a set of human characteristics associated with a brand name.
Consumers often assign personality traits to products - traditional, romantic, rugged, sophisticated, rebellious - and choose brands that are consistent with their own or desired self-image.
Brand Equity - the added value a given brand name gives to a product beyond the functional benefits provided.
To build brand equity you must:
Brand equity provides a financial advantage for the brand owner.
Not well managed.
Allows its brand name(s) or trademark(s) to be used with products or services
Offered by another company (licensee) for a royalty or fee.
1. Multiproduct branding - when a company uses one name for all its products in
A product class. Sometimes called family branding or corporate branding.
2. Multibranding - give each product a distinct name and is useful when each
Brand is intended for a different market segment.
2. Private branding or Private Labeling - when it manufacturers products but
Sells them under the brand name of a wholesaler or retailer.
IV CREATING CUSTOMER VALUE THROUGH PACKAGING AND LABELING
The packaging component of a product refers to any container in which it is offered for sale and on which label information is conveyed.
brand, who made it, how it is to be used, package contents and ingredients
Are an expensive and important part of marketing strategy.
Account for about 15 cents of every dollar spent by consumers for products.
What the product is made of. These are legal requirements of disclosure.
Protection, or product quality ( theft prevention)
V MANAGING THE MARKETING OF SERVICES
The marketing of services also uses the four P’s framework but with some differences.
A Service (product)
Exclusivity - a major difference between products and services is that services cannot be patented, which results in many imitators.
Branding - because services are intangible, the brand name is particularly important in the consumer purchase decision. Brand names help make the abstract nature of services more concrete.
Most services have a limited capacity due to the inseparability of the service from the service provider and the perishable nature of the service (time).
In the service industry price is referred to in various ways - hospitals (charges), lawyers have (fees), airlines have (fares), and hotels have (rates).
Price plays two essential roles in services:
Price can indicate quality of the service.
Price during different times of the day or days of the week or seasons.
C. Place (distribution)
Place is a major factor in developing a service marketing strategy because of the inseparability of services from the producer.
Global coverage for some services.
The value of promotion for many services is to show the benefits of purchasing the service by stressing availability, location, quality, competitive advantage, etc.
*In the past advertising has been viewed negatively by many nonprofit
And professional organizations.
Services and some professional organizations.
Web site to visit: http://occonline.occ.cccd.edu
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