Mark 3000 1st Edition Lecture 11Outline 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 FDiffusion: 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. IPodFirst 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 brandsIntroductory 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