Product Life Cycle Product Concepts Part 3 0f 3 “ All products, no matter how successful, are mortal”
How long do things last? <ul><li>Dishwasher  10 </li></ul><ul><li>Freezer  16 </li></ul><ul><li>Microwave  11 </li></ul><u...
Product Life Cycle Introduction Growth Maturity Decline Post Mortem Loss/profit Time $ Sales Profit Progression of product...
Source: WSJ 30 Sept 03, B1 You’re on Candid Cellphone! World  wide National Economies Applied Marketing Growth stage
Traditional–Digital Camera PLC   <ul><li>•  Digital camera </li></ul><ul><li>sales have  </li></ul><ul><li>increased since...
Product Life Cycles &  R & D time ) Stages have varied Time Dollars R & D   Introduction  Growth  Maturity  Decline Indust...
Product Life Cycle <ul><li>Introduction Stage </li></ul><ul><ul><li>Primary Demand </li></ul></ul><ul><ul><li>Slow sales/L...
Ad Objectives & the Product life Cycle <ul><li>Stimulate Primary demand  for a  Product class  via informational Ads </li>...
Varied length of Time Dollars Introduction  Growth  Maturity  Decline Industry Sales Industry Profits Competition Private ...
<ul><li>The Decline Stage </li></ul>Maturity -Decline <ul><li>Obsolescence </li></ul><ul><li>New Technology </li></ul><ul>...
What’s In this Holiday Season 130,000 394,000 Flat Panel TV Units Sept.2003 Sept.2002 Source: WSJ,Nov13, 2003 Product Life...
1st Nine Months 2003 <ul><li>Big screen & home theater systems </li></ul><ul><li>Profit Margins: High end TV’s  30% </li><...
Product Life Extensions ( Maturity/Decline Stages) <ul><li>Cost Reductions : retool product with less expensive material, ...
Styles, Fashions, and Fads Style, Fashion cycle , Fads (Hula Hoop-6 mos.)
Product Modifications (Differentiation) in a mature overcrowded & declining market. Feature Modification Quality Modificat...
Life Cycles and Marketing Strategy Introduction Growth Maturity Maximize distribution Build awareness & obtain trial Decli...
Want to Add a Little Excitement to Your Food? Hellmann’s Plan : * Garlic Paradise * Bacon and Tomato Twist * Herb Sensatio...
French’s plan: “Gourmayo” <ul><li>Italian Pesto, Sun-Dried Tomato </li></ul><ul><li>Wasabi Horseradish </li></ul><ul><li>C...
<ul><li>A clean, visually attractive cabin. </li></ul><ul><li>Spacious and comfortable seats. </li></ul><ul><li>An environ...
THE SOLUTION:  A product redesign Smaller/bigger gyms/bars Reality: airport nightmares, lost luggage, cramped seating, arr...
The Re Positioning Strategy <ul><ul><li>Physical or psychological Differentiation </li></ul></ul><ul><li>Product </li></ul...
<ul><li>Pricey TVs are siphoning sales from electronic gadgets with higher price margins </li></ul><ul><li>A proliferation...
Apple looks to Sell Videos…and iPods to Play Them Music videos make sense because of the iPod's ready-made audience of mus...
iPod Revenue
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Product Item Vs Product Category

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  • Product Item Vs Product Category

    1. 1. Product Life Cycle Product Concepts Part 3 0f 3 “ All products, no matter how successful, are mortal”
    2. 2. How long do things last? <ul><li>Dishwasher 10 </li></ul><ul><li>Freezer 16 </li></ul><ul><li>Microwave 11 </li></ul><ul><li>Dryer/washer 13 </li></ul><ul><li>Gas water heater 12 </li></ul><ul><li>Furnace(gas or oil) 18 </li></ul><ul><li>Carpeting 11 </li></ul><ul><li>Paint,interior 5-10 </li></ul>Product Years Product Item vs Product Category
    3. 3. Product Life Cycle Introduction Growth Maturity Decline Post Mortem Loss/profit Time $ Sales Profit Progression of product “life” stages (sales & time)
    4. 4. Source: WSJ 30 Sept 03, B1 You’re on Candid Cellphone! World wide National Economies Applied Marketing Growth stage
    5. 5. Traditional–Digital Camera PLC <ul><li>• Digital camera </li></ul><ul><li>sales have </li></ul><ul><li>increased since </li></ul><ul><li>their beginnings </li></ul><ul><li>in the mid-1990’s </li></ul><ul><li>• Estimated sales </li></ul><ul><li>projections are </li></ul><ul><li>shown to likely </li></ul><ul><li>surpass traditional </li></ul><ul><li>cameras </li></ul>Decline stage Growth Stage
    6. 6. Product Life Cycles & R & D time ) Stages have varied Time Dollars R & D Introduction Growth Maturity Decline Industry Sales Industry Profits Be Proactive in planning not reactive Negative cash flow (12 yrs for medicines) WSJ,2001
    7. 7. Product Life Cycle <ul><li>Introduction Stage </li></ul><ul><ul><li>Primary Demand </li></ul></ul><ul><ul><li>Slow sales/Low revenue </li></ul></ul><ul><ul><li>Promotion: Gain awareness, Push or Pull Strategy </li></ul></ul><ul><ul><li>Develop distribution channel </li></ul></ul><ul><li>Growth Stage </li></ul><ul><ul><li>Increasing sales & profits </li></ul></ul><ul><ul><li>Market expansion brings increasing competition </li></ul></ul><ul><ul><li>Product refinement </li></ul></ul><ul><ul><li>Profits peak </li></ul></ul><ul><ul><li>Promote to create brand preference </li></ul></ul>
    8. 8. Ad Objectives & the Product life Cycle <ul><li>Stimulate Primary demand for a Product class via informational Ads </li></ul>Stimulate selective demand for a brand via psychological dimensions 0 5 10 15 20 25 30 35 40 SALES Introduction Primary demand: Inform Growth Extensive advertising spending: Persuade Maturity Reminder & emotional ads : Remind Decline Minimal if any
    9. 9. Varied length of Time Dollars Introduction Growth Maturity Decline Industry Sales Industry Profits Competition Private brands <ul><li>Maturity Stage : Sales plateau and profits decline with intense selective demand </li></ul>Defend brand position against competition
    10. 10. <ul><li>The Decline Stage </li></ul>Maturity -Decline <ul><li>Obsolescence </li></ul><ul><li>New Technology </li></ul><ul><li>Changing Consumer Tastes </li></ul><ul><li>Low promotion </li></ul><ul><li>Price discounting </li></ul>
    11. 11. What’s In this Holiday Season 130,000 394,000 Flat Panel TV Units Sept.2003 Sept.2002 Source: WSJ,Nov13, 2003 Product Life Cycle, reality competition New technology
    12. 12. 1st Nine Months 2003 <ul><li>Big screen & home theater systems </li></ul><ul><li>Profit Margins: High end TV’s 30% </li></ul><ul><li>Stereo speakers 50 % </li></ul> Sales of high end stereos & PC’s Plasma and LCD TV’s are in the early stages of PLC Panasonic 42 in. Plasma HDTV Monitor/PC Monitor, Widescreen Stereo Amplifiers  18% PCs  28% CD Players  22%
    13. 13. Product Life Extensions ( Maturity/Decline Stages) <ul><li>Cost Reductions : retool product with less expensive material, production, location, etc. </li></ul><ul><li>Product Quality : refocus on quality level based on target audience satisfaction. </li></ul><ul><li>Reposition : change product design, image </li></ul>Product Modifications <ul><li>Domestic & International product life cycle sewing machines/washing machines to So. Am. (Brazil) </li></ul>
    14. 14. Styles, Fashions, and Fads Style, Fashion cycle , Fads (Hula Hoop-6 mos.)
    15. 15. Product Modifications (Differentiation) in a mature overcrowded & declining market. Feature Modification Quality Modification Style Modification Image Modification
    16. 16. Life Cycles and Marketing Strategy Introduction Growth Maturity Maximize distribution Build awareness & obtain trial Decline Extend distribution Advertise & promote heavily Advertise product image Persuade customers to switch Milk the product for profits Determine if to terminate product Postmortem Plan for postmortem expenses Develop phase-out plan
    17. 17. Want to Add a Little Excitement to Your Food? Hellmann’s Plan : * Garlic Paradise * Bacon and Tomato Twist * Herb Sensation Mayonnaise Isn’t So Mayonnaise Anymore Applied Example
    18. 18. French’s plan: “Gourmayo” <ul><li>Italian Pesto, Sun-Dried Tomato </li></ul><ul><li>Wasabi Horseradish </li></ul><ul><li>Chipotle Chili </li></ul>Just Not the Same Old Mayonnaise Kraft’s Plan: Create a new Stimulating line called, “ MAYO WITH HEAT”
    19. 19. <ul><li>A clean, visually attractive cabin. </li></ul><ul><li>Spacious and comfortable seats. </li></ul><ul><li>An environment that promotes safety. </li></ul><ul><li>Adequate temperature & quietness </li></ul><ul><li>On-time flights. </li></ul><ul><li>Entertainment. </li></ul>Case Example: Airlines Assess Customer Needs
    20. 20. THE SOLUTION: A product redesign Smaller/bigger gyms/bars Reality: airport nightmares, lost luggage, cramped seating, arrival departure lateness, no food , service
    21. 21. The Re Positioning Strategy <ul><ul><li>Physical or psychological Differentiation </li></ul></ul><ul><li>Product </li></ul><ul><li>Focus on Brand Name </li></ul><ul><li>Focus on product Benefits and/or </li></ul><ul><li>The people who use the product and/or </li></ul><ul><li>The way people classify the products </li></ul>
    22. 22. <ul><li>Pricey TVs are siphoning sales from electronic gadgets with higher price margins </li></ul><ul><li>A proliferation of outlets now sell fancy TVs </li></ul><ul><ul><li>online merchants & Wal-Mart Stores, Inc.. </li></ul></ul><ul><ul><li>computer retailers-i.e., Gateway Inc. </li></ul></ul><ul><li>Prices and profit margins are plummeting </li></ul>Consumer-electronic Retailers are entering a squeeze --- Some Early signs <ul><li>Dell Inc.– sells PCs at 18% gross margin </li></ul><ul><ul><li>compared to electronic retailer 30% gross margin </li></ul></ul>
    23. 23. Apple looks to Sell Videos…and iPods to Play Them Music videos make sense because of the iPod's ready-made audience of music lovers. For Example, when a user pays $9.99 for the latest album by the White Stripes, they get a video for a song by the rock duo called Blue Orchid that can be downloaded to a computer. Apple has a joint venture with SONY to license music videos to sell on I pods
    24. 24. iPod Revenue
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