The Role & Impact of Marketing (Text Pages 229 – 238) Chapter 8: Marketing The Role & Impact of Marketing (Text Pages 229 – 238)

Chapter 8: Marketing The Role and Impact of Marketing The Product Life Cycle Marketing efforts pay off in the form of consumer reaction to the brand. Successful marketing efforts increase brand equity or the value of the brand in the marketplace. The changes in popularity or sales volume of a product over time can be graphed on the product life cycle or style curve.

Chapter 8: Marketing The Role and Impact of Marketing THE PRODUCT LIFE CYCLE Product Introduction: Is the launch of a product into the marketplace. It may be done locally, all the way to internationally. Businesses need to inform potential customers about the products features, availability, package design, and brand identification. Early adopters are individuals who like to be one of the first to try a new product. Marketers often focus their early efforts on these trendsetters who can be sports icons, celebrities, or even students. Growth: As the new product sales increase competitors enter, this can decrease profitability due to decreased market share. They often compete by adding features, improving quality, or sell at a lower price;. The product line becomes very visible and is promoted on commercials, billboards, print ads, etc. Some competitors start to drop out of the competitive race at this stage. Maturity: Growth is flat; it does not increase or decrease, and brand equity is at its highest. Businesses keep advertising the product to keep it in the consumers’ eye. Products, also know as cash cows, at this stage usually make large profits and this income can be used to develop and fund new products for the company. Examples include Tide and Kellogg’s Corn Flakes. Decline: When sales decrease because customers leave to by other brands, and they are not replaced, a product can enter the decline stage. Sometimes a change in price or advertising can slow down or stop the decline. The Decision Point: The business may make an effort to regain original sales figures and brand equity or they may discontinue the product altogether. If they try to save the product a variety of options are available: Repositioning: making the product popular with a new consumer group Reformulate (new scent), repackage (new container and spout), and re-introduce (new and improved) the product. Repricing to gain popularity. New promotion. Obsolete technology utilized in the product will make such that no amount of marketing efforts will restore product position.

Chapter 8: Marketing The Role and Impact of Marketing Non-traditional Product Life Cycles Fads A fad is a product that is extremely popular with a select market for a short time, usually less than a year. Niches A niche is a section of the market in which a product dominates and into which few competitors enter. Niche marketers are often left alone because of barriers to entry—the factors that prevent competition from being profitable in a given market. Seasonal Some products are popular during a specific time or season. Balancing product quantity with seasonal sales is called inventory management. To be left with little seasonal inventory, businesses calculate the amount of product to keep on hand. NON-TRADITIONAL PRODCUT LIFE CYCLES Fads Trends are not fads, trends last longer and influences other areas. Some well-known fads are hula hoops, yo-yos, Pogs, and Tamagotchis. Businesses who plan well, and sell most of its stock and get out of the market just before the fad reaches its peak, can make an excellent profit. Some companies market knock-offs of fads, often a cheaper version. If they do not sell off their inventories before the fad quickly dies off they can stand to lose money. Niches A niche product tends to have a short growth stage and leads to a solid, but not financially spectacular, maturity stage. Niche marketers usually invent their products and hold exclusive patents or formulas. By the time the competition can produce a competitive product the niche marketers have cornered that market. Barriers to entry include the small market size, the cost of R&D, advertising expenses, factory and equipment costs, design costs, lack of distribution channels, and the cost of raw materials. Seasonal Christmas and summer are seasonal time frames within which certain products are marketed. Inventory management is the balancing of product quantity with sales.

Product FADS

Seasonal Products