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Product Life Cycle

Product Life Cycle. Sales and Profits ($). Sales. Profits. Time. Product Develop- ment. Introduction. Growth. Maturity. Decline. Losses/ Investments ($). Introduction Stage of the PLC. Sales. Low sales. Costs. High cost per customer. Profits. Negative.

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Product Life Cycle

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  1. Product Life Cycle Sales and Profits ($) Sales Profits Time Product Develop- ment Introduction Growth Maturity Decline Losses/ Investments ($)

  2. Introduction Stage of the PLC Sales Low sales Costs High cost per customer Profits Negative Create product awareness and trial Marketing Objectives Product Offer a basic product Price Use cost-plus Distribution Build selective distribution Advertising Build product awareness among early adopters and dealers

  3. Growth Stage of the PLC Sales Rapidly rising sales Costs Average cost per customer Profits Rising profits Marketing Objectives Maximize market share Product Offer product extensions, service, warranty Price Price to penetrate market Distribution Build intensive distribution Advertising Build awareness and interest in the mass market

  4. Maturity Stage of the PLC Sales Peak sales Costs Low cost per customer Profits High profits Marketing Objectives Maximize profit while defending market share Product Diversify brand and models Price Price to match or best competitors Distribution Build more intensive distribution Advertising Stress brand differences and benefits

  5. Decline Stage of the PLC Sales Declining sales Costs Low cost per customer Profits Declining profits Marketing Objectives Reduce expenditure and milk the brand Product Phase out weak items Price Cut price Distribution Go selective: phase out unprofitable outlets Advertising Reduce to level needed to retain hard-core loyal customers

  6. Branding Elementsand Strategies • The nature, scope, and importance of branding in product planning • The various branding elements • The different types of brands • How to classify branding strategies • The right name is an important part of every successful business. The name and symbols of a business or a product project the personality of the company, product, or service.

  7. private distributor brand • generic brand • brand extension • brand licensing • mixed-brand strategy • co-branding strategy • brand • brand name • brand mark • trade name • trade character • trademark • manufacturer brand

  8. Branding • A brand is a name, term, design, or symbol (or combinations of them) that identifies a business or organization and the products that they offer. Brands are divided into two categories: • corporate brands • product brands

  9. It is important that customers who are satisfied with a product can easily recognize and find a company’s branded products when they want to buy them again • Nine out of ten people will pay 25% more for a GE Soft White light bulb over a private or generic brand because it is perceived by customers to be better than the competitors PRODUCT RECOGNITION

  10. Top Ten Brands Brands are often a company’s most valuable asset. What is the total 1999 advertising spending for these top ten brands? Do you think these brands would continue to be valuable if the companies reduced or eliminated their advertising? Rank Brand Company 1999 Advertising (in millions of dollars) 1 Chevrolet General 762.4 vehicles Motors Corp. 2 AT&T AT&T Corp. 711.4 telephone services 3 Dodge Daimler- 651.7 vehicles Chrysler 4 Ford Ford Motor 629.5 vehicles Company 5 McDonald's McDonald's 627.2 restaurants Corp. 6 Toyota Toyota Motor 569.4 vehicles Corp. 7 Sears Sears, 556.1 department stores Roebuck & Co. 8 Sprint Sprint Corp. 470.1 telephone services 9 Chrysler Daimler- 426.5 vehicles Chrysler 10 Nissan Nissan Motor 416.9 vehicles Co.

  11. Importance of Brands in Product Planning • The use of brands is important in product planning for several reasons. Branding: • builds customer loyalty • assures customers that products carrying the same brand are of a consistent quality • addresses new target markets • establishes an image for a product or company

  12. Helps companies extend their products into new target markets, new product lines, and new categories • Customers are more willing to try new products that carry a name they are familiar with • Example: GLAD family of products • Started with trash bags and has now moved into food storage containers and baggies BRAND EXPOSURE

  13. Generating Brands • Seventy-five percent of companies introduce a new product name each year. Brand names are generated by: • company employees • specialized computer software programs • branding agencies, naming consultants, and public relations agencies • Half of all corporate name changes occur because of company mergers and acquisitions.

  14. Types of Brands • Three classifications of brands are: • manufacturer brands (national or producer) • private distributor brands • generic brands

  15. National Brands (producer brands) owned by national manufacturers • Generate the majority of sales for most categories • Examples: Hershey Foods, Whirlpool, Ford, Hilton, American Airlines, Kraft and Nestle • Internet based national brands • Amazon.com, eBay, Monster TYPES OF BRANDS

  16. Private Distributor Brands private brands, store brands, or dealer brands • Developed and owned by wholesalers and retailers • Examples: Arizona for JC Penney, George for Wal-Mart, Villager for Kohl's TYPES OF BRANDS Both are private distributor brands from SEARS

  17. Generic Brands Does not carry a company identity • Packaging usually features a description of the product • Example: Pancake Mix, Paper Towels • Usually sold in supermarkets and discount stores • Often sold for 30 – 50% less than name brands TYPES OF BRANDS

  18. Brand Extension • Brand Licensing • Mixed Brands • Co-Branding BRAND STRATEGIES

  19. A branding strategy that uses an existing brand name to promote a new or improved product in a company’s product line BRAND EXTENTION

  20. Some companies allow other organizations to use their brand, brand mark, or trade character through brand licensing Licensing company gets a fee (royalty) in return for authorization Has licensing agreements with BRAND LICENSING

  21. Offer a combination of manufacturer, private distributor, and generic brands MIXED BRANDS Their own National Brand tires Private Brand for SEARS

  22. Combines one or more brands in the manufacture of a product or in the delivery of a service Co-BRANDING

  23. Rebranding • Rebranding - a change to the brand name, logo, or image of a product or company • brand owner revisits the brand with the purpose of updating or revising Re-Branding

  24. Situations when a brand has been firmly established yet is simply outdated or needs to be refreshed. • Tweaking is required • Not a full rebrand Partial Rebrand

  25. Situations when a brand’s intent to erase any previous brand identity and replace it with completely new imagery Total Rebrand

  26. Rebranding can help change a businesses: • Quality • Target Market • New Product Line • Repositioning and Image • Altered Public Image Why Rebrand?

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