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 is important at this phase From just convenience stores and supermarkets to vending machines

Maturity Sales begin to slow down for the product – Repeat customers may stop buying the product – New buyers are difficult to attract Defend market share

Decline When sales and profits begin to drop – Technological advances can cause entire 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 Ipod going to touch screen – Appearance Ipod mini – Packaging Design Ketchup

Market Modification Find new customers – Wii Encourage current customers to use more of the product – Asprin (once daily to prevent heart attacks) – Cream Cheese

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.