2.2 Product Life Cycles

Product Life Cycles describe changes in consumer demand over timebased on the idea that no product will be in demand

forever as consumer demands will changeallows marketers to predict when changes might

occur

2.2 Product Life Cycles

Time

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DecisionPoint

Traditional Product Life Cycle p41

2.2 Product Life Cycles 1: Introduction Stage

product launch is the moment when a new product is introduced to the market○ can be launched locally, regionally, etc.○ launch is expensiveadvertising, design, research,

training, etc.consumers who buy early are called early

adopters or trendsetters○ during the early stages, marketers target these

consumers○ galas, trendy publications, ceremonies, etc.

2.2 Product Life Cycles

in this stage celebrities are often usedLike who?

successful example: the DVD playernote that the original price of a DVD player

in Canada was $600 (now $40)

unsuccessful example: the Beta videoin pairs, come up with a list of 5 successful

and 5 unsuccessful product introductions

2.2 Product Life Cycles

Pull Strategiesads to create a positive association of the

product with the consumersamples, coupons, sales promotions

Push Strategiesfocus is often on product placement in retail

stores as the consumer does not know product

may involve consignment salesmay involve shelf allowance

2.2 Product Life Cycles

2: Growth Stagesales are increasingother consumers follow the trendsettersproduct has become more visible through

advertising (crucial in this stage) and word of mouthif product does not catch on, it may be scrappedif product is pulled before production costs are

recovered it is called a bust

2.2 Product Life Cycles

the faster it can reach this stage the faster it can make a profit

while the first company in the market with a new product has to pay more in advertising, it also has no competition

as other competitors enter the market, the companies split the market sharestated as a percentage of total sales for that

market new features are added and price drops

2.2 Product Life Cycles many factors reduce the possibility of profit

(these are called barriers to entry)ex: small market size, research & development

costs, advertising costs, lack of distribution channels, materials costs

companies using the push strategy do well here (low prices, retail displays, etc.)

2.2 Product Life Cycles

3: Maturity Stageproduct sales slowly increasing or steadymarketers promote the name of the product development costs have been recoupedlarge profits are often available, that may be used to

develop more productsbrand reputation is used to promote other products

Ex. CokeCoke Zero; PepsiPepsi Max

2.2 Product Life Cycles

4: Decline Stagecompany unable to find new customersprofits decreasemarketers need to determine what is

causing the declinemight try and reverse the process by

changing price, ads, design, etc.may remove product from market

2.2 Product Life Cycles

5: Decision-Point Stagemarketers determine the future of the

product based on researchmay reformulate, repackage, reintroduce

○ “New and Improved”○ new features (or even new uses!)○ sell with other products

2.2 Product Life Cycles

Nontraditional Product Life Cycles Fads

product that is popular for a short time onlyRubik’s Cube, Furby, Cabbage Patch Kidshighly unpredictable and riskymay be highly profitableif you can get involved at the right time, it is

greatwrong timing means big losses

2.2 Product Life Cycles

Trendslasts longer than fadsmass movement of the marketplace toward

a particular value (ex: healthy food choices)by identifying trends, marketers can predict

likely market opportunities○ this gives time to develop products in time to

get them to the market (it takes months or years to develop a product)

2.2 Product Life Cycles Niche Markets

products with short growth stage and consistent maturity stage

do not take a large market share○ ex: The Pet Hotel

Seasonal Marketsmarkets that change by the seasonex: ice-cream sales, snow blowers, air conditionersmarketers try and create more sales outside of the

season

2.2 Product Life CyclesS

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Fad Life Cycle Line Scatter Plot

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Niche Life Cycle Line Scatter Plot

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Seasonal Cycle Line Scatter Plot