Lecture 6

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.