Product Lifecycles & Adoption Curve Presented by Bob Perry

The Entrepreneur One who: – organizes, – manages, and – assumes the risks of a business or enterprise Risk Takers…Market Finders

The Marketing Mix ProductPrice PlacePromo C Customers

Product The needs satisfying agent that is offered. Convenience Goods – Staples – Impulse – Emergency Shopping Goods – Homogeneous Goods – Heterogeneous Goods – Specialty Goods

Product Life Cycle Products (like customers) have a life cycle. Sometimes these life cycles can be short, but often the life cycle of a product can be longer. Generally, a product will go through four stages during its life cycle: – Introduction/Development (Birth) – Growth – Maturity – Decline (Death)

Product Life Cycle Development & Introduction GrowthMaturityDecline Sales / Profits

Introduction Stage Typical Characteristics Sales grow slowly Few if any established customers Frequent product modification Skimming price strategy High failure rate Profit minimal to negative Limited product models Little competition High Promotional Cost Focus is on creating awareness of product Promotion strategies need to create demand Intensive personal selling to distribution channel common

Growth Stage Typical Characteristics Sales grow at an increasing rate More customers are established Profits increase as sales increase with more limited competition Prices start falling as competitors are added Large companies may acquire smaller, pioneering firms Heavier brand advertising and focus on differentiation between brands Economies of scale start to influence pricing

Maturity Stage Typical Characteristics Sales continue to increase as the market place grows with adapters Profit margins begin to shrink as more competitors enter market place Product lines are widened or extended Emphasis on product style more than just function Marginal competitors begin to drop out of marketplace Heavy promotion to maintain market share Maturity stage can last for an extended period of time.

Decline Stage Typical Characteristics Sales decline or disappear Sometimes new products with more utility replace older products Falling demand forces many and eventually most competitors out of the marketplace Some specialty firms may stay in the market for a long time as competition leaves the marketplace. Sales are generally low and the only way to survive is to find niches for the product that can support higher pricing

Adoption Curve The Adoption Curve is adapted from a Everett Rogers Diffusion of Innovations and is used to show how quickly differing consumer groups adopt new products The Adoption Curve segments include: – Innovators (3% to 5%) – Early Adopters (10% to 15%) – Early Majority (about 34%) – Late Majority (about 34%) – Laggards (5% to 16%)

Adoption Curve is basically a statistical Bell Curve

Innovators Do not rely on norms or past standards First to adopt any new product, service, or idea. Tend to be younger with higher social or economic status Rely less on group norms and like to get their information from technical sources and experts. Generally 3% to 5% of the population

Early Adopters Relatively high is social status and often opinion leaders. Typically younger, more mobile, and more creative than majority Rely on input from innovators and technical sales

Early Majority Early Majority consumers collect more information about the product and will weigh the pros and cons before they make a decision. They listen to their opinion leaders and will rely on their groups opinions instead of forming them for themselves. Early Majority group members are positioned between the earlier and later adopters and are deliberate in their data collection process.

Late Majority Late Majority consumers adopt a new product mainly because their friends have all adopted them and they feel the need to conform. This group is typically older and may have below average income and social status. They listen to word-of-mouth communication over mass media, since they trust their friends more.

Laggards Laggards do not rely on group norms and values, just like Innovators, which makes them difficult to reach. Their past heavily influences their current decision process. By the time Laggards adopt an innovation it has been possibly outmoded and replaced by something new and flashy. They are extremely suspicious and feel alienated from a rapidly changing society. This group probably bought their first black-and-white TV after color television was already dominantly used. Marketers and advertisers tend to ignore Laggards since they are not motivated by advertising or personal selling and will only purchase a new product when they absolutely have to.

Adoption Curve Time InnovatorsEarly AdoptersEarly MajorityLate Majority Laggards Percent of adoption 5% 20% 50% 90%

Product Life Cycle Development & Introduction GrowthMaturityDecline Shoes Crocs Oculus Rift Tablets Atari Cassette players VCR Players Vinyl Records MS Windows Microsoft Surface Pro Moccasins