9) Product Life Cycle

New-Product Development Strategy

A firm can obtain new products through:

• Acquisition refers to the buying of a whole company, a patent, or a license to produce someone else’s product.

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• New product development refers to original products, product improvements, product modifications, and new brands developed from the firm’s own research and development.

Reasons for new product failure

• Overestimation of market size
• Poor design
• Incorrect positioning
• Wrong timing
• Priced too high
• Ineffective promotion
• Management influence
• High development costs
• Competition

New-Product Development Strategy

Product Life-Cycle Strategies

• the stages the product goes through after development, from introduction to the end of the product. Just as children grow up.

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• helps marketers manage the stages of a product’s acceptance and success in the marketplace.

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• In chapter 2, we looked at other tools to help manage and make decision about products: Boston Consulting Group Matrix (Cash Cow, Star, etc)

Product Life-Cycle Strategies

• Product life-cycle (PLC) is the course that a product’s sales and profits take over its lifetime.
• Product development
• Introduction
• Growth: gaining popularity
• Maturity: peek
• Decline: declining sales

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Product Life -Cycle Strategies

Sales and profits over the product’s life from inception to decline

• Introduction stage is when the new product is first launched.
• Characteristics: Low sales, negative profits due to high promo and distribution costs, few competitors, Innovators customers.

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Product Life-Cycle Strategies

Product Life-Cycle Strategies

Sales and profits over the product’s life from inception to decline

Product Life-Cycle Strategies

2) Growth stage is when the new product satisfies the market. Most crucial stage: either catch or fail.

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Characteristics: increasing sales, rising profits, Early adopters, growing competition. Goal: Max Market Share.

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Strategies: product extension, penetration pricing, reduce promo to take advantage of heavy demand.

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Product Life-Cycle Strategies

Product Life-Cycle Strategies

3) Maturity stage is a long-lasting stage of a product that has gained consumer acceptance.

• Characteristics: Slowdown in sales, Many suppliers/Substitute products, Increased promotion and R&D to support sales and profits. (Max profit while defend market share)
• Companies are challenged to develop strategies to extend the maturity stage of their products so they remain competitive

Product Life-Cycle Strategies

Maturity stage - Modifying Strategies

• Market modifying : Finding new users, new market segments, or new usage occasions.
• A toothpaste company markets the same toothpaste to kids with fun flavors
• Johnson’s Baby Shampoo began targeting adults with sensitive scalps.
• Baking soda promoted for use as a deodorizer, not just for baking.
• Product modifying: Improving the product to renew interest (e.g. quality, features, style, packaging, or technology)
• iPhones release new camera features and performance upgrades.
• Pepsi offers limited-edition flavors or healthier formulas.
• Marketing mix modifying modify the 4 Ps: Changing price, promotion, place, or packaging.
• Coca-Cola uses seasonal packaging and localized campaigns.
• Tide offers smaller packs for budget-conscious shoppers.

Increase usage of existing users

Product Life-Cycle Strategies

Sales and profits over the product’s life from inception to decline

4) The decline stage is when a product’s sales consistently drop due to:

• Changing technology
• Shifts in consumer preferences
• New and better alternatives
• Market saturation
• Profits fall, and companies must decide what to do next.

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Product Life-Cycle Strategies

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Strategies to manage products in decline:

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Maintain the product

• Add new features, packaging, or promotions.
• Find new uses or new markets to extend its life.

Harvest the product

• Reduce marketing and production costs.
• Continue to sell the product with minimal investment to maximize remaining profits.

Drop the product

• Discontinue the product entirely.
• Remove it from the market to focus on more profitable products.

Product Life-Cycle Strategies

However, not all products go through all stages, and the length of a stage varies. 

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Product Life-Cycle Strategies

• The Typical PLC has five stages. Not all products follow this cycle however:
• Style distinctive mode of expression. (comes, goes, comes back) (70s style)
• Fashion is a currently accepted popular style in a given field. Grow slowly, stay for a while, then decline.(Comes, goes away slowly) (season colors)
• Fads are temporary periods of unusually high sales and immediate product or brand popularity. (The Dress, hoverboard, spinners)

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