4. SELECTED PROCUCT LIFE CYCLE PATTERNS
F. Revival or Nostalgia
E. Seasonal or Fashion
D. Extended Fad
B. Boom or Classic
5. •Total Company
•Total Company Sales
7. • Introduction
– Innovators/early adopters
– Buyers at a maximum
– Repeat sales become more important
– Sales slow down
– Adopters = dropouts
– dropouts > adopters/first time users
8. • Is the product life cycle concept useful? Why
or why not?
– The product life cycle is concerned with the sales
history of a product or product class. The concept holds
that a product’s sales change over time in a predictable
– Each of these stages provides distinct opportunities and
threats, thereby affecting the firm’s strategy as well as
its marketing programs.
– Despite the fact that many new products do not follow
such a prescribed route because of failure, the concept
is valuable in helping management look into the future
and better anticipate what changes will need to be
made in strategic marketing programs.
9. • What are the product life-cycle limitations?
– The product life-cycle model’s major weakness
lies in its normative approach to prescribing
strategies based on assumptions about the
features or characteristics of each stage.
– It fails to take into account that the product
life cycle is driven by market forces expressing
the evolution of consumer preferences (the
market), technology (the product), and
competition (the supply side).
10. Categories of New Products Defined
According to Their Degree of Newness to
the Company and Customers in the Target
Market (Exhibit 8.4.)
Newness to the company
Newness to the market
Source: New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982).
11. Discussion Question
1.Is it better to be a market pioneer, or a
What are the advantages for pioneers?
First choice of market segments and positions
Defines the rules of the game
Economies of scale and experience
High switching costs for early adopters
Possibility of positive network effects
Possibility of preempting scarce resources to
13. • What are the advantages for followers?
• Ability to take advantage of pioneer’s positioning
• Ability to take advantage of pioneer’s product
• Ability to take advantage of pioneers marketing
• Ability to take advantage of pioneer’s limited
14. Discussion Question
2. When, and for whom, does it make
sense to pursue a pioneer strategy?
15. A pioneering firm stands the best chance for long-term
success in market-share leadership and profitability
• The new product-market is insulated from the entry of
competitors, at least for a while, by strong patent
protection, by proprietary technology (such as a
unique production process), by substantial investment
requirements, or by positive network effects.
• The firm has sufficient size, resources, and
competencies to take full advantage of its pioneering
position and preserve it in the face of later competitive
16. Discussion Question
3. When, and for whom, does it make
sense to pursue a follower strategy?
17. • A follower will most likely succeed when:
• There are few legal, technological, or
financial barriers to inhibit entry.
• It has sufficient resources or competencies
to overwhelm the pioneer’s early
18. Discussion Question
4. If you want to be a pioneer, what are
your strategic options?
Strategic options for pioneers
Skimming and early withdrawal
20. • Mass-market Penetration
– Aims at convincing as many potential customers
as possible to adopt the new product quickly to
drive down unit costs and build a large contingent
of loyal customers before competitors enter the
• Niche Penetration
– Focus efforts on a single market segment instead
of pursuing the object of capturing and sustaining
a leading share of the entire market.
21. • Skimming; Early Withdrawal
– Setting a high price and engaging in limited
advertising and promotion to maximize per unit
profits and recover the product’s development
costs as quickly as possible.
– At the same time, the firm may work to develop
new applications for its technology or the next
generation of new technology.
– When competitors enter the market and margins
fall, the firm is ready to cannibalize its own product
with one based on new technology or move on to
22. Discussion Question
5.Under what circumstances might each
option be more likely to succeed?
23. Discussion Question
6. How might introductory marketing plans
differ under each of these new market
24. Pioneer Global Market Strategy
Export Merchant (reseller)
Export Agent (commission)
Cooperative Organizations (for several producers)
Contractual Entry Modes
25. Some Advice for Would-Be
• First mover advantage is trumped by
pioneers who are better. Best beats first.
Concentrate on being best.
• Being a pioneer without the basis for
sustainable competitive advantage is a