MGT301 Principles of Marketing Lecture-22

Summary of Lecture-21

Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercializa tion New Product Development

Today ’ s Topics New Product Development (cont..) New Product Development (cont..) Product Life Cycle (PLC) Product Life Cycle (PLC)

New-To-The World Repositionings Product Line Additions Product Line Additions New Category Entries New Category Entries Product Improvements Product Improvements Types of New Products Include

Communicate Availability Communicate Benefits Emphasize Advantages Motivate Consumers Ensure Satisfaction Strategy Awareness Interest Evaluation Trial Adoption Consumer Adoption Process

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Product Life-Cycle (PLC)

The Typical Product Life Cycle (PLC) Has Five Stages –Product Development, Introduction, Growth, Maturity, Decline –Not all products follow this cycle

 The four basic stages through which a successful product progresses-introduction, growth, maturity, and decline.  Some products move rapidly through the product life cycle, while others pass through those stages over long time periods.

Product Life-Cycle Strategies

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Product Development Stage

Product development Product developmentIntroductionGrowthMaturityDecline  Begins when the company develops a new-product idea  Sales are zero  Investment costs are high  Profits are negative PLC Stages

Introduction Stage

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise

Product development Introduction IntroductionGrowthMaturityDecline  Low sales  High cost per customer acquired  Negative profits  Innovators are targeted  Little competition PLC Stages

Sales Costs Profits Marketing Objectives Product Price Low sales High cost per customer Negative Create product awareness and trial Create product awareness and trial Offer a basic product Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers

Growth Stage

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise

Product development Introduction Growth GrowthMaturityDecline  Rapidly rising sales  Average cost per customer  Rising profits  Early adopters are targeted  Growing competition PLC Stages

Sales Costs Profits Marketing Objectives Product Price Rapidly rising sales Average cost per customer Rising profits Maximize market share Offer product extensions, service, warranty Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Maturity Stage

Product development IntroductionGrowth Maturity MaturityDecline  Sales peak  Low cost per customer  High profits  Middle majority are targeted  Competition begins to decline PLC Stages

Sales Costs Profits Marketing Objectives Product Price Peak sales Low cost per customer High profits Maximize profit while defending market share Maximize profit while defending market share Diversify brand and models Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits

Decline Stage

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise

Product development IntroductionGrowthMaturity Decline Decline  Declining sales  Low cost per customer  Declining profits  Laggards are targeted  Declining competition PLC Stages

Sales Costs Profits Marketing Objectives Product Price Declining sales Low cost per customer Declining profits Reduce expenditure and milk the brand Phase out weak items Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers Reduce to level needed to retain hard-core loyal customers

Overlap of Life Cycle for Products A and B

WINDOWS WINDOWS 3.1

Extending the Product Life Cycle

1.Increase frequency of use by present customers 2.Add new users 3.Find new uses 4.Change product quality or packaging Market Modification Product Modification

To prevent the product going into decline you modify the product  Adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users

Enough for today...

Consumer Adoption Process Summary

Communicate Availability Communicate Benefits Emphasize Advantages Motivate Consumers Ensure Satisfaction Strategy Awareness Interest Evaluation Trial Adoption

Time Product Development Stage Introduction Profits Sales GrowthMaturityDecline Sales and Profits ($) Sales and Profits Over the Product’s Life From Inception to Demise Product Life-Cycle (PLC)

Extending the Product Life Cycle

Review of 1 st P of Marketing Mix (4P’s)…Product Next ….

MGT301 Principles of Marketing Lecture-22