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Product Strategies. Managing Life Cycle Strategies. Product Life Cycles Marketing Strategies throughout the PLC Market Evolution Stages. The Product Life Cycle. Demand/Technology Life Cycle

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Presentation Transcript
managing life cycle strategies
Managing Life Cycle Strategies
  • Product Life Cycles
  • Marketing Strategies throughout the PLC
  • Market Evolution Stages
the product life cycle
The Product Life Cycle
  • Demand/Technology Life Cycle
    • describes changing need levels as well as the level of technology available to satisfy these changing needs
  • Product Life Cycle presumes:
    • products have limited life
    • products pass through distinct phases
    • profits rise and fall at different stages
    • different strategies are required at dif. stages
the product life cycle4
The Product Life Cycle
  • Stages
    • Introduction
      • product is introduced
      • slow sales growth
      • profits non-existent
      • heavy expenses
    • Growth
      • rapid market acceptance
      • substantial profit improvement
the product life cycle5
The Product Life Cycle
  • Stages (cont)
    • Maturity
      • slowdown in sales growth
      • profit stabilization/decline
      • expenses rise to defend against competition
    • Decline
      • sales show downward drift
      • profits erode
slide6

Figure 11.8

Stages in the Product Life Cycle

Introduction

Growth

Maturity

Decline

Food

Processors

Cassette

Tapes

Cellular

Phones

Network

Computers

Sales and Profits

Industry

Sales

Industry

Profits

Time

the product life cycle7
The Product Life Cycle
  • PLC can be applied to:
    • product categories
      • have longest life cycles;indefinite maturity stage
      • examples: cigars, newspapers, cell phones, bottled water
    • product forms
      • example: manual, electric, electronic typewriter
    • products
    • branded products
the product life cycle8
The Product Life Cycle
  • PLC Shapes
    • Growth-slump-maturity pattern
    • Cycle-recycle pattern
    • Scalloped pattern
  • Style-Fashion-Fad Life Cycles
    • Style - distinctive mode of expression
    • Fashion - currently accepted or popular style
    • Fad - quick-peak, quick-decline fashions
the product life cycle9
The Product Life Cycle
  • Fashion Stages
    • distinctiveness
    • emulation
    • mass-fashion
    • decline
the introduction stage
The Introduction Stage
  • Slow growth of new products caused by:
    • delays in production capacity expansion
    • technical problems
    • distribution channel delays
    • customer reluctance to change behaviors
    • small number of buyers who can afford product
the introduction stage11
The Introduction Stage
  • Negative or low profits caused by:
    • low sales
    • heavy distribution/promotion expense
  • High levels of promotion required to:
    • inform potential customers about product
    • induce trial
    • secure the readiest to buy
introduction stage strategies
Introduction Stage Strategies
  • Rapid-skimming
    • high price
    • high promotion
  • Slow-skimming
    • high price
    • low promotion
introduction stage strategies13
Introduction Stage Strategies
  • Rapid-penetration
    • low price
    • high promotion
  • Slow-penetration
    • low price
    • low promotion
market pioneers
Market Pioneers
  • Research shows “first to market” gain greatest advantages, both consumer and producer-oriented
  • Over 40% market share = 38.5% ROI
  • At 11% market share = 10 % ROI
market pioneers15
Market Pioneers
  • Source of Pioneer’s Advantage
    • consumers may prefer pioneering brands
    • pioneer’s brand establishes attributes of product class
    • economies of scale
    • technological leadership
    • ownership of scarce assets
    • barriers to entry
stages of competitive cycle for the pioneer
Stages of Competitive Cycle for the Pioneer
  • Pioneer understands competition will eventually enter and cause prices and market share to fall
  • Pioneer must anticipate stages of competitive cycle
    • sole supplier
    • competitive penetration
    • share stability
    • commodity competition withdrawal
growth stage
Growth Stage
  • Characteristics
    • new competitors enter market
    • competitors introduce new product features
    • competitors expand distribution chain
    • prices remain constant or fall slightly (depends on demand)
    • sales rise much faster than promotional expenditures
    • profits increase (mfg/promo. costs spread)
    • rate of grown eventually decelerates
marketing strategies in the growth stage
Marketing Strategies in the Growth Stage
  • improve product quality
  • add new product features
  • add new models and “flanker” products
    • different sizes, flavors to protect main product
  • enter new market segments
  • increase distribution channels/coverage
  • shift to product-preference advertising
  • lower prices
maturity stage
Maturity Stage
  • Characteristics
    • growth rate starts to decline; (growth maturity)
    • then declines per capita; (stable maturity)
    • then declines absolutely (decaying maturity)
    • overcapacity occurs
    • leads to intensified competition
    • profits erode
    • industry shakeout occurs /remainder stabilization
marketing strategies in maturity stage
Marketing Strategies in Maturity Stage
  • Market Modification
    • where volume = number of brand users x usage rate per user
    • increase users
      • convert nonusers
      • enter new market segments
      • win competitors’ customers
    • increase uses
      • more frequent use; more usage per occasion
      • new and more varied uses
marketing strategies in maturity stage21
Marketing Strategies in Maturity Stage
  • Product Modification
    • quality improvement
    • feature improvement
    • style improvement
  • Marketing Mix Modifications
    • prices distribution advertising
    • sales promotion personal selling
    • services
decline stage
Decline Stage
  • Characteristics
    • technological advance
    • shifts in consumer tastes
    • increased domestic and foreign competition
    • some firms withdraw
    • remainder reduce number of products
marketing strategies in decline stage
Marketing Strategies in Decline Stage
  • Increase investment to dominate
    • “dowager” brands
  • Maintain investment to reduce risk
  • Decrease investment selectively - niching
  • Harvest - milk - investment to produce cash
  • Divest
market evolution
Market Evolution
  • Emergence Stage
    • one company enters to satisfy need/want of “latent” market ( product does not exist)
  • Growth Stage
    • new firms enter attractive market
  • Maturity Stage
    • heavy compet.; market fragment./consolidation
  • Decline Stage
    • total need declines; new technology arrives
slide25

Figure 11.10

Overlapping Life Cycles for Two Products

Introduction

Growth

Maturity

Decline

Product A

Industry Sales

Product B

Time

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