Product Concepts

Product Life Cycle

 Product Item vs Product Category
How long do things last?
Product Years
■ Dishwasher 10
■ Freezer 16
■ Microwave 11
■ Dryer/washer 13
■ Gas water heater 12
■ Furnace(gas or oil) 18
■ Carpeting 11
■ Paint,interiorNFCU, 3rd quarter 2000,Homeport
5-10
 Product Life Cycle
Post
Introduction Growth Maturity Decline Mortem

$ Sales

Profit Time

Loss/profit
Progression of product “life” stages (sales & time)
 Product Life Cycles & R & D
time)
Strategy Benefit: Be Proactive in planning, not reactive

R&D Introduction Growth Maturity Decline

Industry
Sales

Industry
Profits
Dollars

Stages have varied Time

 Product Life Cycle
■ Introduction Stage ■ Growth Stage
– Primary Demand – Increasing sales &
– profits
Slow sales/Low revenue
– Market expansion
– Promotion: Gain awareness,
brings increasing
Push or Pull Strategy
competition
– Develop distribution channel
– Product refinement
– Profits peak
– Promote to create
brand preference
Maturity Stage: Sales plateau and profits
decline with intense selective demand

Introduction Growth Maturity Decline

C P b Industry
o r r Sales
m i a
p v n
e a d
t t s Industry
i e Profits
Dollars

t
i
Varied length of Time
o
n Defend brand position
against competition
■ The Decline Stage
 Obsolescence
 New Technology
 Changing
Consumer Tastes
 Low promotion
 Price discounting

Maturity -Decline
Life Cycles and Marketing
Strategy
Maximize distribution
Introduction
Introduction Build awareness & obtain trial

Extend distribution
Growth
Growth Advertise & promote heavily

Advertise product image

Maturity
Maturity Persuade customers to switch

Decline Milk the product for profits

Decline Determine if to terminate product

Postmortem Plan for postmortem expenses

Postmortem
Develop phase-out plan
 Ad Strategy & the Product life Cycle

Stimulate Primary demand

40
for a Product class via
35informational Ads
30
SALES

25 Stimulate selective
20 demand for a brand via
15
psychological
10
dimensions
5
0
Introduction Growth Maturity Decline

Primary Extensive Reminder Minimal

deman advertising & if any
d: spending: emotional
Inform Persuade ads :

Remind
 Product Life Extensions
(Maturity/Decline Stages)
Product Modifications
■ Cost Reductions: retool product with less
expensive material, production, location, etc.
■ Product Quality: refocus on quality level based
on target audience satisfaction.
■ Reposition: change product design, image

■ Domestic & International product life cycle

sewing machines/washing machines to So. Am.
(Brazil)
Applied
Marketing Product Life Cycle, reality competition
What’s In this Holiday Season*
Flat Panel TV Units

New technology 394,000

130,000

Sept.2002 Sept.2003
 By 2010 it is predicted that CRT’s will account for only
2.1 million of the 44 million televisions sold.** *WSJ,Nov13, 2003
**WSJ, Oct.223,
 PLC: Flat Panel TV’s are
capturing consumer enthusiasm
■ Americans prefer bigger and better products to suit their
lifestyles. When they have the money and space they are willing
to pay more for better quality as well as quantity.
■ The convenient size and shape of the flat-panel displays can be
mounted to the wall like a painting, taking up less space than a
CRT.
■ Government deadlines require a switch to all-digital TV
broadcasts by February, 2009.

2006 Average cost: CRT’s -

■
$223
■ LCD’s - $1,007, Plasma -
Cannibalism:  Sales of high end stereos &
Applied Example:
Product Modifications
Mayonnaise Isn’t So Mayonnaise
Anymore
Want to Add a Little Excitement
to Your Food?

Hellmann’s Plan:
 Kraft’s Plan: Create a new
Stimulating line
called,
“MAYO WITH HEAT”

French’s plan: “Gourmayo”

■ Italian Pesto, Sun-Dried Tomato
■ Wasabi Horseradish
■ Chipotle Chili

Just Not the Same Old Mayonnaise

Terminology
Styles, Fashions, and Fads

Style, Fashion cycle , Fads (Hula Hoop-6 mos.)

 The Re Positioning Strategy
■ Product
– Physical or psychological Differentiation

 Focus on product Benefits and/or

 The people who use the product and/or
 The way people classify the products

 Focus on Brand Name

Consumer-electronic Retailers
are entering a squeeze---Some Early
signs
■ Flat panel TV’s are siphoning sales from
electronic gadgets that have higher
profit margins.
■ Numerous retail outlets now sell big
Tv’s

■ Dell Inc.– sells PCs at 18% gross margin

compared to electronic retailer 30% gross
margin
.
Applied
Marketing iPod Revenue