Lecture 6

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary goal of promotional activities during the introduction stage of a product's lifecycle?

To inform potential customers about the product (correct)

To reduce prices to attract more customers

To increase sales rapidly

To decrease competition

Which stage of the product lifecycle is characterized by rapid market acceptance and substantial profit improvement?

Maturity

Growth (correct)

Decline

Introduction

What happens to profits during the maturity stage of the product lifecycle?

They stabilize or decline (correct)

They increase rapidly

They decrease slowly

They remain constant

What is the significance of the product lifecycle in marketing strategy?

It requires companies to change their positioning and differentiation strategies Signup and view all the answers

What is a characteristic of the decline stage of the product lifecycle?

Slow sales growth and declined profits Signup and view all the answers

What is the 'pioneer advantage' in the introduction stage of a product's lifecycle?

The advantage of being the first to market a product Signup and view all the answers

What is the advantage of being a pioneer brand?

The pioneer brand name is often recalled more easily Signup and view all the answers

What characterizes the growth stage of the product life cycle?

A rapid rise in sales Signup and view all the answers

What is one way to address the challenge of the decaying maturity phase?

Reduce prices and engage in sales promotions Signup and view all the answers

What is one way to modify a mature brand?

Modify the product attributes and benefits Signup and view all the answers

What is the goal of market modification in the maturity stage?

Increase the number of brand users and usage rate per user Signup and view all the answers

What is a marketing strategy for the decline stage?

Reposition the product by adding customer-perceived value Signup and view all the answers

What is the first stage of market evolution?

Emergence Signup and view all the answers

What is the purpose of the 'expected product' level in the customer-perceived value hierarchy?

To meet customers' expectations Signup and view all the answers

What is the main focus of the product-oriented approach?

A product or brand Signup and view all the answers

What is conformance quality, in relation to product characteristics?

The extent to which all produced units are identical and meet promised specifications Signup and view all the answers

What is the purpose of 'service differentiation' in a market offering?

To add service attributes that facilitate customer-perceived value Signup and view all the answers

What is the highest level of the product/market offering hierarchy?

Potential product Signup and view all the answers

What is the primary goal of packaging?

To build brand equity and drive sales Signup and view all the answers

What is the purpose of labeling?

To provide detailed information about the product Signup and view all the answers

What is the purpose of a warranty?

To reduce customer perceived risk Signup and view all the answers

What is a key challenge in developing new products?

Short product lifecycles and increased competition Signup and view all the answers

What is a common reason for new product failure?

All of the above Signup and view all the answers

What is the purpose of idea screening in the new product development process?

To evaluate ideas against key criteria Signup and view all the answers

What is the primary goal of concept testing in product development?

To present the product-idea concept to target customers and get their reactions Signup and view all the answers

What is the main consideration in market testing?

All of the above Signup and view all the answers

What is the primary objective of commercialization and launch?

To incur the highest costs in the process due to expenses linked to manufacturing and marketing Signup and view all the answers

What is the stage in the adoption process where the consumer becomes aware of an innovation but lacks information about it?

Awareness Signup and view all the answers

Which group of consumers is characterized as technology enthusiasts who enjoy new products and are willing to conduct testing?

Innovators Signup and view all the answers

What is the primary goal of business analysis in product development?

To evaluate the business attractiveness of a proposal Signup and view all the answers

Study Notes

Product Life Cycle Marketing Strategies

The product lifecycle is divided into four stages: Introduction, Growth, Maturity, and Decline.
Each stage requires a different marketing strategy.

Introduction Stage

Characterized by slow sales growth, low profits, and high expenditures on promotional activities.
The pioneer brand name is often recalled more easily, establishes the attributes that customers associate with the product class, and tends to capture more users and create higher brand loyalty.
Marketing strategies in this stage include:
- Informing potential customers
- Inducing customers to try the offering
- Securing distribution in retail outlets

Growth Stage

Characterized by rapid market acceptance, substantial profit improvement, and a rapid rise in sales.
New competitors enter, introducing new features and expanding distribution.
Marketing strategies in this stage include:
- Improving product quality and adding new features
- Adding new models and personalizing options
- Entering new market segments
- Increasing distribution coverage
- Shifting from product-awareness to product-preference advertising
- Lowering prices to attract more price-sensitive customers

Maturity Stage

Sales growth slows down, and the product enters a stage of relative maturity.
This stage consists of three phases: Growth, Stable, and Decaying Maturity.
Marketing strategies in this stage include:
- Finding niches
- Reducing prices and engaging in sales promotions
- Increasing advertising and promotional activities
- Developing product improvements and line extensions

Decline Stage

Sales and profits decline due to reasons such as new technology, changing consumer preferences, and increased competition.
Some firms withdraw from the market, while others reposition a mature product by adding customer-perceived value to the original offering.

Market Evolution

The product lifecycle is product-oriented, but firms need to be market-oriented and consider how a market evolves through four stages: Emergence, Growth, Maturity, and Decline.
Market evolution involves:
- Single-Niche strategy
- Multiple-Niche strategy
- Mass-Market strategy

Product Characteristics and Classifications

Product: Anything that can be offered to a market to satisfy a want or need, consisting of a set of attributes that deliver customer-perceived value.
Product levels: the customer-perceived value hierarchy, including:
- Core benefits
- Basic product
- Expected product
- Augmented product
- Potential product
Product differentiation: Form, Features, Customization, Performance quality, Conformance quality, Durability, Reliability, Repairability, Style, and Design.

Service Differentiation

Adding service attributes that facilitate customer-perceived value, including:
- Ordering ease
- Delivery
- Installation
- Customer training
- Maintenance/Repair
- Returns

Product/Market Offering Hierarchy

Goes from basic needs to specific value attributes and benefits, consisting of six levels: Need family, Product Family, Product class, Product line, Product type, and Item.

Packaging and Labeling

Packaging: All activities of designing and producing the container/presentation pack for a market offering.
Labeling: Labels range from a simple tag to a carefully designed graphic that is part of the package, conveying information about the product.

Warranties and Guarantees

Warranties: Legal statements of expected product performance by the manufacturer.
Guarantees: Reducing customers' perceived risk, especially when the company or product is unfamiliar.

Introducing New Market Offerings

New market offering options: Make or buy, innovative development, or acquisition.
Types of new products: Range from completely new products to minor improvements or revisions of existing ones.
Challenges in developing a new product: Innovation imperative, failure to develop new products, and budgeting for new product development.

Managing New Product Development

Stage 1: Ideas
- Idea generation: Searching for ideas in terms of unmet customer needs and technological innovations.
- Idea screening: Evaluating ideas through a set of key criteria.
Stage 2: Concept to Strategy
- Concept development: Facilitated through perceptual maps of products and brands.
- Concept testing: Presenting the product-idea concept to target customers.
- Market strategy development: Developing a preliminary three-part strategy plan.
Stage 3: Prototype to Commercialization
- Product and market development: Considering trade-offs and costs of meeting customer requirements.
- Customer tests: Testing ready prototypes through functional tests and customer tests.
- Market testing: Testing the new product in the market.
- Commercialization and launch: Launching the product, considering timing, geography, targets, and introductory market strategy.

Consumer Adoption Process

Adoption: The decision to become a regular user of a product.
Stages in the adoption process:
- Awareness
- Interest
- Evaluation
- Trial
- Adoption

Readiness to Try New Products

Innovators: Technology enthusiasts who enjoy new products.
Early adopters: Opinion leaders who carefully search for new technologies.
Early Majority: Mainstream market who adopts new technology when its benefits have been proven.
Late Majority: Skeptical conservatives who are risk-averse and technology-shy.
Laggards: Traditional-bound people who resist innovations until the status quo is no longer defensible.

Characteristics of Innovations

Relative advantage: The degree to which an innovation is seen as better than the idea it replaces.
Compatibility: The degree to which an innovation is consistent with the values, experiences, and needs of the adopter.
Complexity: The degree to which an innovation is difficult to understand and use.
Trialability: The degree to which an innovation can be experimented with on a limited basis.
Observability: The degree to which the results of an innovation are visible to others.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your knowledge of product lifecycle marketing strategies, including product positioning and differentiation, and how companies adapt to changes in the product, market, and competitors over time.