managing successful products services and brands 03 17 2013 o Describes the stages a new product goes though in the Charting the product life cycle Product life cycle marketplace Introduction Growth Maturity Decline Introduction stage The introduction stage of the product life cycle occurs when a product is introduced to its intended target market During this period sales grow slowly and profit is minimal o The lack of profit is often the result of large investment costs in product development The marketing objective for the company at this stage is to create consumer awareness and stimulate trial o The initial purchase of a product by a consumer Companies often spend heavily on advertising and other promotion tools to build awareness and stimulate product trial among consumers in the introduction stage Advertising and promotion expenditures in the introduction stage are often made to stimulate primary demand o The desire for the product class rather than for a specific brand since there are few competitors with the same product As more competitors launch their own products and product progresses along its life cycle company attention is focused on creating selective demand o the preference for a specific brand gaining distribution can be a challenge because channel intermediaries may be hesitant to carry a new product o also companies often restrict the number of variations of the product to ensure control of product quality during introduction pricing can be either high or low o a high initial price may be used as part of a skimming a strategy to help the company recover the costs of development as well as capitalize on the price insensitivity of early buyers o high prices tend to attract competitors eager to enter the market because they see the opportunity for profit o to discourage competitive entry a company can price low referred to as penetration pricing this pricing strategy helps build unit volume but a company must closely monitor costs growth stage the growth stage of the product life cycle is characterized by rapid increases in sales o it is the stage that competitors appear the result of more competitors and more aggressive pricing is that profit usually peaks during this growth stage at this stage advertising shifts emphasis to stimulating selective demand product benefits are compared with those of competitors offerings for the purpose of gaining market share product sales in the growth stage grow at an increasing rate because of new people trying or using the product and a growing proportion of repeat purchasers o people who have tried the product were satisfied and bought again changes appear in the product in the growth stage o to help differentiate a company s brand from competitors an improved version or new features are added to the original design and product proliferation occurs in the growth stage it is important to broaden distribution for the product maturity stage the maturity stage is characterized by a slowing of total industry sales or product class revenue o also marginal competitors begin to leave the market most consumers who would buy the product are either repeat purchasers of the item or have tried and abandoned it profit decline due to fierce competition among many sellers and the cost of gaining new buyers at this stage rises market attention in the maturity stage is often directed towards holding market share though further product differentiation and finding new buyers a major consideration in a company s strategy in this stage is to control overall marketing cost by improving promotional and distribution efficiency decline stage the decline stage occurs when sales drop o a product enters this stage not because of any wrong strategy on the part of companies but because of environmental numerous product classes or industries are in the decline stage of changes their product life cycle products in the decline stages tend to consume a disproportionate share of management and financial resources relative to future worth o a company will follow one of two strategies to handle a declining product deletion harvesting deletion deletion o or dropping the product from the company s product line the most drastic strategy because a residual corer of consumers still consumer or use a product even in the decline stage product elimination decisions are not taken lightly o when a company retains the product but reduces marketing harvesting harvesting costs the product continue to be offered but salespeople do not allocate time in selling nor are advertising dollars spent the purpose of harvesting is to maintain the ability to meet customer requests four aspects of the product life cycle some important aspects of product life cycles are o their length o the shape of their sales curve o how they vary with different levels of products o the rate at which consumers adopt products length of the product life cycle there is not set time that it takes a product to move through its life cycle o as a rule consumer products have shorter life cycles than business products the ability of mass communication vehicles informs consumers quickly and shortens life cycles o also technological change tends to shorten product life cycles as new product innovations replace existing products shape of the product life cycle not all products have the same shape to their curve high learning product o one for which significant consumer education is required and there is an extended introductory period low learning o begin immediately because little learning is required by the consumer and benefits of purchases are readily understood this product often can be easily imitated by competitors so the marketing strategy is to broaden distribution quickly in this way as competitors rapidly enter most retail outlets already have the innovators product fashion product o is a style of the times life cycles for fashion product frequently appear in women s and men s apparel the life cycle of fashion products can be very short fad decline life cycle the product level class and form o experiences rapid sales on introduction and then equally rapid these products are typically novelties and have a short in managing a product it is often important to distinguish among the multiple life cycles class and form that may exist product class product form o refers to the entire product category or industry o pertains to variations within the product class the life cycle and consumers the life cycle of a