The Product Life Cycle MKTG 201 Semester 1, 2010 Sandy Bennett

Contact details Sandy Bennett Rm 408, extn Office Hour: Wednesday pm

Overview Product definitions and classifications New Product Development (NPD) process Product adoption The Product Life Cycle (PLC)

The Marketing Mix Product Price Place Promotion

What is a Product? A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. Goods and services... NOT Products and services

Product?

SS Australis

Apple iPhone

Total product concept Describes the core product, expected product, augmented product and potential product in order to analyse how the product creates value for the customer.

Lexus GS

Kia Assurance

Illustrating three levels of product

A University Degree

Consumer (B2C) Product Classifications Types of Consumer Products Convenience SpecialtyUnsought Shopping

Marketing considerations for consumer products: Customer buying behaviour: frequent purchase, little planning, little comparison or shopping effort, low customer involvement Price: low price Distribution: widespread distribution, convenient locations Promotion: Mass promotion by the producer Examples:

Marketing considerations for consumer products: Customer buying behaviour: less frequent purchase, more planning and shopping effort, comparison of brands on price, quality, style Price: higher price Distribution: selective distribution in fewer outlets Promotion: advertising and personal selling by both producer and resellers Examples:

Marketing considerations for consumer products: Customer buying behaviour: strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity Price: high price Distribution: exclusive distribution in only one or few outlets per market area Promotion: more carefully targeted promotion by both producer and resellers Examples:

Marketing considerations for consumer products: Customer buying behaviour: little product awareness, knowledge or if aware little or even negative interest Price: varies Distribution: varies Promotion: aggressive advertising and personal selling Examples:

B2B Products Part and materials: Business-to- business products that form part of the purchasing business’s products. Equipment: Capital equipment and accessory equipment used in the production of the business’s products. Supplies and services: Business-to- business products that are essential to business operations, but do not directly form part of the production process.

Product Mix A product mix is the set of all product lines and items that a particular seller offers for sale The product mix can be described as having breadth, length, depth and consistency –Breadth (or width) is the number of different product lines –Length is the total number of items the company carries –Depth is the number of versions offered of each product in the line –Consistency is how closely the various product lines are in end use, production requirements, and distribution channels.

Product Mix Example Campbell’s Product Mix Soups Chicken Mushroom Vegetable beef Chicken noodle Tomato Bean with bacon Minestrone Clam chowder French onion Sauces Mild cheese Alfredo Italian Tomato Mariana Beverages Tomato juice V-8 Juice V-8 Splash

Existing product expansion Line extensions –New products that are closely related to existing products in a product line. Product modifications: Changes to the characteristics of a product that result in a product that supersedes the original. The main types of product modification relate to: –functionality –quality –aesthetics.

Positioning Product positioning –The way in the market perceives a product in relation to competing offerings. Product deletion –The process of removing a product from the product mix.

New Product Failure Some reasons for failure:  Not listening to the market  Lack of customer sales  High R&D costs  Intense competition  Negative word of mouth (WOM)  Short product life cycle  Being too late to the market  Easy to copy or imitate

Major steps in new product development (NPD) process Idea Generation Idea Screening Concept Development and Testing Marketing Strategy Business Analysis Product Development Test Marketing Commercialisation

Product adoption Product adoption process –The sequential of process of awareness, interest, evaluation, trial and adoption through which a consumer decides to purchase a new product.

Product adoption process

Product adoption Diffusion of innovation –The theory that social groups influence the decisions made by individuals in such a way that innovations are adopted by the market in a predictable pattern over time.

Product differentiation –The creation of products and product attributes that distinguish one product from another. –Characteristics that customers may perceive to be differentiators include design, brand, image, style, quality, features and price.

The Product Lifecycle (PLC) After launching the new product, management wants the product to enjoy a long and happy life. Although it does not expect the product to sell forever, management wants to earn a decent profit to cover all the effort and risk that went into it. Management is aware that each product will have a life cycle, although the exact shape and length is not known in advance.

Product Life Cycle (PLC)

The Product Lifecycle (PLC) Product Development –Begins when the company finds and develops a new product ideas. Introduction –A period of slow sales growth as the product is being introduced to the market Growth –Period of rapid market acceptance and sales growth Maturity –A period of slowdown in sales growth as the product gained acceptance by most of buyers. Decline –Period of drop in sales and profits as customers switch to new products

Ready-to-drink juice market

DVD: BMW (part 1) (Handout provided)

Looking Bacj Product definitions and classifications New Product Development (NPD) process Product adoption The Product Life Cycle (PLC)