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Product life cycle

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  • 1. IDC 4O: Sports and Entertainment Marketing Chapter 5:Product and Price Decisions: Sports
  • 2. Product Life Cycle The traditional product life cycle consists of 5 parts: product introduction, growth, maturity, decline, and decision point
  • 3. Introduction Stage Sales are low as the new idea is first introduced to the market. Customers may not be aware of the product’s benefits and features and may not be aware of the product itself. Most companies experience losses during the market introduction stage.  A lot of money is spent on promotion and product development to build product awareness.  Promotion is aimed at innovators and early adopters. Example: Tablet/Phones, Schticky,
  • 4. Growth Stage Rapid growth in sales and profits  More product awareness Competitors see the opportunity and enter the market.  Some competitors will copy the product or may try to make it better or more appealing to other target markets.  The new entries result in more product variety. Promotion is aimed at a broader audience. More distribution channels are establishedExample: SmartPhones, 3d Tv’s, BluRay players, HDTV
  • 5. Maturity Stage Sales begin to level off. The competition gets tougher as more competitors have entered the market.  Increased competition creates a downward movement in prices. Industry profits are largest, but it is also when industry profits begin to decline. Promotion is targeted to create brand differentiation.Example: Coca-Cola, Fibreglass Hockey sticks,
  • 6. Decline Stage Sales begin to decline. New products replace the old. Firms will often try to use extension strategies. Companies may be able to keep some sales by appealing to their most loyal customers.Example: SUV’s, DVD’s, WII,
  • 7. Decision Point May decide to reformulate, repackage or reintroduce a “new and improved” product New promotions and pricing Enhance the product by finding new uses or by adding new features. Discontinue: sell the product to another firm, or liquidate inventoryExample: VCR, Tube TV, DVD’s