Product Life Cycle 5.1 continued

Product Life Cycle Life cycle represents the stages that a product goes through during its life in the marketplace Four stages a product goes through Introduction Growth Maturity Decline

Introduction Occurs when the product is first introduced into the marketplace Focus on promoting consumer awareness and getting customers to try the new product Skimming Pricing: high pricing to cover research and development costs Penetration Pricing: price a new product low in comparison to other products in order to quickly create demand

Growth More competitors enter the market if they see that a new product is successful Power Aid and Sportsade in response to Gatorade To be competitive at this stage, the product may be improved by adding new features or new products in that line Adding distribution outlets in important at this phase From just convenience stores and supermarkets to vending machines

Maturity Sales begin to slow down for the product category or just the product Repeat customers may stop buying the product New buyers are difficult to attract

Decline When sales and profits begin to drop Technological advances can cause enter product categories to enter the decline stage Companies end up dropping products in the decline phase from their product line

Some Considerations Not all products fit the life-cycle patterns FADS: products that become popular quickly and lose popularity just as quickly Koosh Balls

Management of the Product Life Cycle Product managers need to manage a product through its life cycle Three Ways Modify the product Market the product Reposition the product

Product Modification Changing the product’s characteristics Features Appearance Packaging Design Gatorade Fierce, Gatorade Ice, Gatorade Xtremo

Market Modification Strategy to find new customers or to encourage current customers to use more of the product Gatorade Frost

Repositioning Involves changing a product’s image in relation to its competitor’s image A change in any one of the 4 P’s can cause this change New Balance: redesign its athletic shoes for older people who have wider feet No longer have to compete with Nike and Reebok directly Change their promotions to reach older people.