Mark 3000 1st Edition Lecture 11 Outline of Last Lecture I Brand and Line extensions II Packaging III Product Mix IV New Product Development Outline of Current Lecture I Diffusion II Product Life Cycle Concept Current lecture F Diffusion How new products are adopted over time and across different categories of adopters Pioneers establish a new market or radically change rules of competition and consumer preferences ex IPod First movers the first to create market or product category become recognizable to customers and have early market share lead ex Apple Types of buyers Innovators buyers who want to be first on the block to have new product Early adopters Second group of consumers don t like rusk but wait and purchase product after careful review Early majority 34 of population don t take much risk and wait until bugs are worked out on a product Late majority Last group of buyers to enter the new product market 34 Laggards like to avoid change and rely on traditional products until they are not available anymore 16 Factors Affecting rate of diffusion Relative Advantage If the product is perceived to be better than rate of diffusion will be quick Compatibility If a product is compatible with users then it will diffuse faster These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute Observability If products are easily observable then their benefits is communicated to users increasing the diffusion process Complexity Products that are less complex are easier to try Trialability If you can try a product then it will diffuse faster Product Life Cycle Concept Most products follow similar pattern of growth and decline Length varies but pattern is similar Is descriptive not predictive Best used for product categories not brands Introductory Stage High failure rates Little competition Limited disruption High marketing and production costs Negative profits with slow increase in sales Promotion focusing on awareness and information Communication challenge is to stimulate primary demand Growth Stage Increase rate of sales Entrance of competitors Market Consolidation Initial profits Aggressive advertising of differences between brands Wider distribution Maturity Stage Sales increase at decreasing rate Saturated market Annual models appear Lengthened Product lines Service and repair assume important roles Heavy promotions to consumers and dealers Marginal competitors drop out Attempt to reach at niche markets Declining Stage Drop in sales Large inventories of unsold items Eliminate nonessential marketing expenses Organized abandonment How to extend time in the PLC Increase the frequency of use by the same customers Increase the number of users o Expand into different target market with same product Find new uses o Identify new applications of product