Product Item Vs Product Category
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  • 1. Product Life Cycle Product Concepts Part 3 0f 3 “ All products, no matter how successful, are mortal”
  • 2. How long do things last?
    • Dishwasher 10
    • Freezer 16
    • Microwave 11
    • Dryer/washer 13
    • Gas water heater 12
    • Furnace(gas or oil) 18
    • Carpeting 11
    • Paint,interior 5-10
    Product Years Product Item vs Product Category
  • 3. Product Life Cycle Introduction Growth Maturity Decline Post Mortem Loss/profit Time $ Sales Profit Progression of product “life” stages (sales & time)
  • 4. Source: WSJ 30 Sept 03, B1 You’re on Candid Cellphone! World wide National Economies Applied Marketing Growth stage
  • 5. Traditional–Digital Camera PLC
    • • Digital camera
    • sales have
    • increased since
    • their beginnings
    • in the mid-1990’s
    • • Estimated sales
    • projections are
    • shown to likely
    • surpass traditional
    • cameras
    Decline stage Growth Stage
  • 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. Product Life Cycle
    • Introduction Stage
      • Primary Demand
      • Slow sales/Low revenue
      • Promotion: Gain awareness, Push or Pull Strategy
      • Develop distribution channel
    • Growth Stage
      • Increasing sales & profits
      • Market expansion brings increasing competition
      • Product refinement
      • Profits peak
      • Promote to create brand preference
  • 8. Ad Objectives & the Product life Cycle
    • Stimulate Primary demand for a Product class via informational Ads
    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. Varied length of Time Dollars Introduction Growth Maturity Decline Industry Sales Industry Profits Competition Private brands
    • Maturity Stage : Sales plateau and profits decline with intense selective demand
    Defend brand position against competition
  • 10.
    • The Decline Stage
    Maturity -Decline
    • Obsolescence
    • New Technology
    • Changing Consumer Tastes
    • Low promotion
    • Price discounting
  • 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. 1st Nine Months 2003
    • Big screen & home theater systems
    • Profit Margins: High end TV’s 30%
    • Stereo speakers 50 %
     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. Product Life Extensions ( Maturity/Decline Stages)
    • Cost Reductions : retool product with less expensive material, production, location, etc.
    • Product Quality : refocus on quality level based on target audience satisfaction.
    • Reposition : change product design, image
    Product Modifications
    • Domestic & International product life cycle sewing machines/washing machines to So. Am. (Brazil)
  • 14. Styles, Fashions, and Fads Style, Fashion cycle , Fads (Hula Hoop-6 mos.)
  • 15. Product Modifications (Differentiation) in a mature overcrowded & declining market. Feature Modification Quality Modification Style Modification Image Modification
  • 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. 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. French’s plan: “Gourmayo”
    • Italian Pesto, Sun-Dried Tomato
    • Wasabi Horseradish
    • Chipotle Chili
    Just Not the Same Old Mayonnaise Kraft’s Plan: Create a new Stimulating line called, “ MAYO WITH HEAT”
  • 19.
    • A clean, visually attractive cabin.
    • Spacious and comfortable seats.
    • An environment that promotes safety.
    • Adequate temperature & quietness
    • On-time flights.
    • Entertainment.
    Case Example: Airlines Assess Customer Needs
  • 20. THE SOLUTION: A product redesign Smaller/bigger gyms/bars Reality: airport nightmares, lost luggage, cramped seating, arrival departure lateness, no food , service
  • 21. The Re Positioning Strategy
      • Physical or psychological Differentiation
    • Product
    • Focus on Brand Name
    • Focus on product Benefits and/or
    • The people who use the product and/or
    • The way people classify the products
  • 22.
    • 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
  • 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. iPod Revenue