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
Product Modifications (Differentiation) in a mature overcrowded & declining market. Feature Modification Quality Modification Style Modification Image Modification
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
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
Pricey TVs are siphoning sales from electronic gadgets with higher price margins
A proliferation of outlets now sell fancy TVs
online merchants & Wal-Mart Stores, Inc..
computer retailers-i.e., Gateway Inc.
Prices and profit margins are plummeting
Consumer-electronic Retailers are entering a squeeze --- Some Early signs
Dell Inc.– sells PCs at 18% gross margin
compared to electronic retailer 30% gross margin
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