MKT 500 Week 5 Scenario: The Stages of the Product Life Cycle Slide # Scene # Narration Slide 1 Scene 1 [Ed, Samantha – Ed’s Office] Ed and Samantha meet in the morning to discuss the next steps in the tablet PC launch. MKT500_5_1_Ed-1: Hello, Samantha. How are you this morning? MKT500_5_1_Samantha-1: I’m doing fantastic. I’m really excited about this project. I felt energized after our meeting with Carl last week when we presented our ideas for our branding strategy. MKT500_5_1_Ed-2: I’m glad to hear that! I just left Carl’s office, and he had some valid questions. The most important question for us to consider next was, “Once we launch the new tablet and enjoy the honeymoon period, what is in store for Golds Reling in the years that follow?” MKT500_5_1_Samantha-2: I see, so Carl wants us to focus on the life cycle of the product next? MKT500_5_1_Ed-3: Correct. As you may recall from various Strayer marketing classes, the product life cycle is a popular metaphor in marketing to describe the evolution and duration of a product in the marketplace. MKT500_5_1_Samantha-3: Yes. I recall that the stages within this life cycle are market introduction, market growth, maturity, and decline. Sales and profits behave predictably during the different stages, and the marketing actions that are thought to be optimal during each stage are also clearly prescribed. MKT500_5_1_Ed-4: You’re absolutely right. You’ll also recall, what occurs in each stage of the product life cycle. Slide 2 Interaction Click the stages of the product life cycle to learn more about each. Market Introduction: During this stage a company brings a new product, including both goods and services, into the marketplace with heavy marketing spending. Promotion techniques used include advertising, samples, coupons, et cetera. Strategically, prices might start low, a strategy known as penetration, but they often start high in order to recoup development costs, a strategy known as skimming. The company uses limited distribution and sales are also low. Market Growth: This stage is characterized by accelerated sales, rise in profits, stronger customer awareness, greater distribution channel coverage, and entry of competitors. The company might be able to begin increasing prices. Advertising is intended to persuade customers as to the brand’s superiority compared to competitors. Market Maturity: During this stage the advertising continues to persuade customers about the brand’s relative advantages and serves as a reminder to buy the product; products may proliferate to a fuller product line to satisfy more segments of customers. There is more competition; sales grow but profits decline; strong competitors gain market share and weaker firms begin to fall out of the marketplace; and the product offerings of different firms often begin to homogenize. Instead of reducing prices, the firms should try to find new benefits and either increase, or at least maintain current prices. Market ...

1. MKT 500 Week 5 Scenario: The Stages of the Product Life
Cycle
Slide #
Scene #
Narration
Slide 1
Scene 1
[Ed, Samantha – Ed’s Office]
Ed and Samantha meet in the morning to discuss the next steps
in the tablet PC launch.
MKT500_5_1_Ed-1: Hello, Samantha. How are you this
morning?
MKT500_5_1_Samantha-1: I’m doing fantastic. I’m really
excited about this project. I felt energized after our meeting
with Carl last week when we presented our ideas for our
branding strategy.
MKT500_5_1_Ed-2: I’m glad to hear that! I just left Carl’s
office, and he had some valid questions. The most important
question for us to consider next was, “Once we launch the new
tablet and enjoy the honeymoon period, what is in store for
Golds Reling in the years that follow?”
MKT500_5_1_Samantha-2: I see, so Carl wants us to focus on
the life cycle of the product next?
MKT500_5_1_Ed-3: Correct. As you may recall from various
Strayer marketing classes, the product life cycle is a popular
metaphor in marketing to describe the evolution and duration of
a product in the marketplace.

2. MKT500_5_1_Samantha-3: Yes. I recall that the stages within
this life cycle are market introduction, market growth, maturity,
and decline.
Sales and profits behave predictably during the different stages,
and the marketing actions that are thought to be optimal during
each stage are also clearly prescribed.
MKT500_5_1_Ed-4: You’re absolutely right. You’ll also recall,
what occurs in each stage of the product life cycle.
Slide 2
Interaction
Click the stages of the product life cycle to learn more about
each.
Market Introduction: During this stage a company brings a new
product, including both goods and services, into the
marketplace with heavy marketing spending. Promotion
techniques used include advertising, samples, coupons, et
cetera.
Strategically, prices might start low, a strategy known as
penetration, but they often start high in order to recoup
development costs, a strategy known as skimming. The company
uses limited distribution and sales are also low.
Market Growth: This stage is characterized by accelerated sales,
rise in profits, stronger customer awareness, greater distribution
channel coverage, and entry of competitors. The company might
be able to begin increasing prices. Advertising is intended to
persuade customers as to the brand’s superiority compared to
competitors.
Market Maturity: During this stage the advertising continues to
persuade customers about the brand’s relative advantages and
serves as a reminder to buy the product; products may
proliferate to a fuller product line to satisfy more segments of

3. customers. There is more competition; sales grow but profits
decline; strong competitors gain market share and weaker firms
begin to fall out of the marketplace; and the product offerings
of different firms often begin to homogenize. Instead of
reducing prices, the firms should try to find new benefits and
either increase, or at least maintain current prices.
Market Decline: This phase is characterized by declining sales
and profit. New products start replacing older ones. The firm
may divest, harvest, or rejuvenate the old product.
The lengths of product life cycles vary a lot. The length of
product-category life cycles tends to be longer than those of
individual brands.
MKT500_5_1_Ed- 5: Click the stages of the product life cycle
to learn more about each.
MKT500_5_1_Ed-6:
Market Introduction: During this stage, a company brings a new
product, including both goods and services, into the
marketplace with heavy marketing spending. Promotion
techniques used may include advertising, samples, and coupons.
Strategically, prices might start low, a strategy known as
penetration, but they often start high in order to recoup
development costs, a strategy known as skimming. The company
uses limited distribution, and sales are also low during market
introduction.
MKT500_5_1_Ed-7:
Market Growth: This stage is characterized by accelerated sales,
rise in profits, stronger customer awareness, greater distribution
channel coverage, and entry of competitors. The company might
be able to begin increasing prices as the product is accepted by
the target market. Advertising is intended to persuade customers
as to the brand’s superiority compared to competitors.

4. MKT500_5_1_Ed-8:
Market Maturity: During this stage, the advertising continues to
persuade customers about the brand’s relative advantages and
serves as a reminder to buy the product; products may
proliferate to a fuller product line to satisfy more segments of
customers. There is more competition; sales grow but profits
decline, typically because of pressures from competition; strong
competitors gain market share and weaker firms begin to fall
out of the marketplace; and the product offerings of different
firms often begin to homogenize. Instead of reducing prices, the
firms should try to find new benefits, and either increase, or at
least maintain, current prices.
MKT500_5_1_Ed-9:
Market Decline: This stage is characterized by declining sales
and profit. New products start replacing older ones. The firm
may divest, harvest, or rejuvenate the old product.
The lengths of product life cycles vary a lot. The length of
product-category life cycles tends to be longer than those of
individual brands.
Slide 3
Scene 1, cont.
[Ed, Samantha – Ed’s Office]
MKT500_5_1_Ed-10: I also have a video here with a bit more
information about the product life cycle.
Slide 4
Traditional Product Life Cycle
http://www.youtube.com/watch?v=wYeXCeBZhjE
Slide 5

5. Scene 1, cont.
[Ed, Samantha – Ed’s Office]
(Displayed on screen)
(Displayed on screen)
MKT500_5_1_Samantha-4: Thanks for that summary of the
stages of the product life cycle, Ed. Thinking about the
introduction stage, a product such as ours needs a lot of
promotions for the launch.
MKT500_5_1_Ed-11: Exactly. We have to cut through all of the
clutter out there and make our tablet the first one that customers
think of when they are considering their purchase. We have to
create good top-of-the-mind awareness, not just spontaneous
awareness.
MKT500_5_1_Samantha-5: Remind me again of the difference
between the two?
MKT500_5_1_Ed-12: Top-of-the mind awareness is the first
brand that a customer thinks of when asked an unprompted
question about a particular product category. Companies that
are well known advertise heavily and have attention-getting ads
that tend to receive the highest top-of-the-mind awareness
scores in ad tracking studies. I am sure that we can think of
some products that fall into this category. Let's think of some...
When I say, “gaming system”, what do you think of?
MKT500_5_1_Samantha-6: Xbox. How about, “foreign car”?
MKT500_5_1_Ed-13: BMW. I’ve got one: “education”.
MKT500_5_1_Samantha-7: (Laughing) Strayer University!
What can you tell me about spontaneous awareness?
MKT500_5_1_Ed-14: Well, spontaneous, or unaided, awareness

6. refers to the other brands a customer thinks of when asked an
unprompted question about a particular category. For example,
when asked about cereal, a customer may first think of
Cheerios, so Cheerios would have top-of-the-mind awareness.
However, the customer may next think of Apple Jacks, meaning
Apple Jacks has spontaneous awareness.
For top-of-the-mind awareness, consider this question, “When
the need arises for a particular service or product, what is the
first thing, name, company, or store that comes to mind?”
Whether it's a person or a business, whoever pops into your
mind first has successfully achieved top-of-the mind awareness.
The goal of PR, and all of marketing, is to park your product in
your customers' minds right next to the “need” button; this
button rests right at the top of their mind.
MKT500_5_1_Samantha-8: That makes perfect sense! Can you
explain a little more about the purposes of top-of the mind
awareness and spontaneous awareness?
(Display graph on screen)
MKT500_5_1_Ed-15: Top-of-the-mind awareness is an
important purchase driver, but spontaneous awareness is
important for brand recognition, which establishes a customer’s
trust in the product and removes any associated risk with
making a purchase.
The more buzz about a product or service, the more awareness
exists. The more awareness exists, the higher the probability of
being in that top-of-the mind position.
MKT500_5_1_Samantha-9: So how can we here at Golds-Reling
go about creating buzz for our new tablet launch?
MKT500_5_1_Ed-16: Creating buzz and awareness is done by
many things, such as an Internet blog or website, usually all

7. working together synergistically.
Getting that label and moniker starts with announcing to the
world, usually announcing to your particular target market, that
you are in business. We would do this with a press release that's
sent to the media, handed out to prospects and customers, or
used as a direct-mail piece. We could also post the press release
on our website, which has been a very effective form of
communication for us in the past.
MKT500_5_1_Samantha-10: Yes, I remember from my classes
at Strayer University that top-of-the-mind awareness is often
difficult to achieve for a new product.
MKT500_5_1_Ed-17: Right. The primary purpose of our
advertising, PR, and social media efforts will be to create top-
of-the-mind awareness.
(Display figure on screen)
Here is a diagram that will help explain how consumers adopt a
new product. In addition to the marketing actions underlying the
product life cycle, during these phases, marketers have also
developed a theory about what customers are doing.
Marketers are of the opinion that when a new product is
introduced, the person to try it first goes and shows it to others;
the others appreciate it, buy it, and then tell others. This word-
of-mouth or “viral marketing” helps activate the process of the
diffusion of innovations.
Slide 6
Interaction
Click the sections of the Diffusion of Innovation figure to learn
more about each group.
MKT500_5_1_Ed-18: This figure shows the diffusion process as

8. a normal curve and partitions the customer base into five
groups.
MKT500_5_1_Ed-19: Click the sections of the Diffusion of
Innovation figure to learn more about each group.
MKT500_5_1_Ed-20: The innovators are the first three to five
percent who like to try new ideas and are willing to take risks.
MKT500_5_1_Ed-21: The early adopters are the next group, or
the ten to fifteen percent who are even more influential as
opinion leaders, primarily because they are a bigger group.
MKT500_5_1_Ed-22: The early majority, who make up thirty-
four percent, are more risk averse than the first two groups.
MKT500_5_1_Ed-23: The late majority, who make up thirty-
four percent, are even more cautious, often older and more
conservative, and wish to buy only proven products.
MKT500_5_1_Ed-24: The final group, the laggards or non-
adopters, who account for five to fifteen percent, are the most
risk averse. They are typically skeptical of new products and
stereotypically lower in income.
Slide 7
Scene 1, cont.
[Ed, Samantha – Ed’s Office]
Display formula here:
nt = [ p + q (Nt – 1 / M)] (M – Nt – 1)
MKT500_5_1_Samantha-11: And the innovators are who we
want to target with our advertising, PR, and social media during
our launch. Correct?
MKT500_5_1_Ed-25: Absolutely. In fact, I have a formula right
here that I think will be helpful for a successful launch.

9. (Display formula on screen)
In the equation given in the figure, we are trying to forecast n
subscript t, which is, the number of units we will sell during
time period, t. N subscript T minus one represents the number
of units we have sold so far, or cumulative sales in units. M is
the max on the likely market potential. The term on the right, M
– N subscript t minus one, means “how we are doing so far?”:
what is the difference between what we could sell, M, and what
we have sold so far, which remember, is N subscript t minus
one. p is called the coefficient of innovation—it’s the likelihood
that someone will buy or adopt the new product due to
information obtained from the marketer. q is the coefficient of
imitation—the likelihood that someone will buy or adopt the
new product due to word-of-mouth information obtained from
another consumer.
MKT500_5_1_Samantha-12: Hmmm…I can think of two
different ways we can use this diffusion model. First, we can
observe early sales data, fit the model, and make predictions
about the future. Alternatively, we can use past results on
products similar to ours and plug in those numbers to make
predictions about the future even before launching the product.
MKT500_5_1_Ed-26: That’s correct, Samantha! The imitation
effect, or q is usually bigger; p in ratio to q is about one to ten.
The percentage of innovators and early adopters, the customers
who are driving p, is about ten to fifteen percent of the market,
whereas the remainder of the market is eighty-five to ninety
percent, and they are driving q. We can speed up innovators;
that is, make p bigger, by introducing price decreases early, or
speed up imitators; that is, make q bigger, by introducing price
decreases later.
We need to interact with our customers throughout these phases.
During the new product launch, we will heighten awareness

10. through advertising.
In the diffusion process, word-of-mouth increases the size of q,
the imitation effect. Thus based on our formula, we need to do a
lot of buzz marketing aimed at innovators and early adopters,
which comes by the way of our website and PR.
MKT500_5_1_Samantha-13: This is excellent research, Ed, and
I believe that Carl will be impressed with your efforts, but how
do we know that our new tablet is hitting the mark and will be
accepted in the marketplace?
MKT500_5_1_Ed-27: Well, we began our new product plan
internally, by identifying the corporate and marketing missions
and objectives to be achieved via the new product or service.
We’ve been careful to remember that customers are important in
the feedback they provide in the new product development
process.
However, a number of factors influence the customers’
acceptance of new products and the diffusion of the innovation
throughout the marketplace. Consumer acceptance tends to be
higher when the new product:
A. Has a clear relative advantage over existing products
B. Is compatible with the customer’s lifestyle
C. Is not overly complex, or the complexity is masked by a
user-friendly interface
D. Is easily tried or sampled, to facilitate initial assessment
MKT500_5_1_Samantha-14: I see. Utilizing the factors of
compatibility tends to make acceptance of innovations better, so
I’m convinced that this will help make the launch of Golds
Reling’s new tablet very smooth.
MKT500_5_1_Ed-28: Exactly. We had better start organizing
our data if we want to be ready for our update meeting with Carl

11. this afternoon.
MKT500_5_1_Samantha-15: You’re right. Let’s get started.
Slide 8
Scene 2
[Ed, Samantha, Carl – Conference Room]
Ed and Samantha meet with Carl in the conference room to
share the next steps for the tablet launch.
MKT500_5_2_Ed-1: Hello, Carl. I hope you had a good lunch.
We have a lot to share with you regarding the product life cycle
of our new tablet.
Much like the personalities of people, the product life cycle and
the diffusion of innovation process will vary. Some companies
are innovators, whereas others are reactors. Golds Reling is an
innovative company.
MKT500_5_2_Carl-1: I agree.
MKT500_5_2_Ed-2: Our research shows that the first to market
is often the first to fail because a new concept takes a while to
sink into the minds of customers. By comparison, first movers
may have advantages in launching new products because there
is less risk. In either case, after the first to market, the next few
“early follower” firms have approximately the same survival
risks when launching either totally new or incrementally new
products. Next generation products such as ours are easier to
launch because there is an existing customer base, channels of
distribution, and much more predictability.
MKT500_5_2_Samantha-1: So, based on our research after
completion of the test marketing process, prior to our launch,
this data will be used in an attempt to predict the tablet’s likely
success. If the predictions of sales are not promising, this stage
is the last opportunity for Golds Reling to abort before
launching. If the predictions are promising, we will proceed to

12. commercialize.
Here is the formula that we will use to make our predictions.
Slide 9
Interaction
Click the segments of the equation to learn more about sales
predictions.
$SP = MP x PI x Pr.
MKT500_5_2_Samantha-2: Click the segments of the equation
to learn more about sales predictions.
MKT500_5_2_Samantha-3: We have constructed a forecasting
model, and it will be used to estimate the sales potential, or
dollar sign S.P.
MKT500_5_2_Samantha-4: The first estimate needed for this is
market potential, known as M.P., which is how many units we
might possibly sell. We will use some data from our previous
launches to decide on potential unit projections. Secondary data
or other relevant benchmarking data are also used.
MKT500_5_2_Samantha-5: Next, P.I., the estimate of the
purchase intention, or the likelihood that the target segment will
buy the product, has to be determined. This number comes from
the most recent marketing research that was conducted.
MKT500_5_2_Samantha-6: Finally, the component we need to
consider which is under our control is Pr., the price the
company intends to charge. All of these components are put into
the equation: dollar sign SP equals market potential times
purchase intention times price charged.
Slide 10
Scene 2, cont.
[Ed, Samantha, Carl – Conference Room]

13. MKT500_5_2_Carl-2: This is very impressive, and Golds
Reling is in good hands with both of you in charge of this
launch. I’m eager to see your plans for the next steps of setting
the price and determining the distribution channels. Good work!
Slide 11
Interaction - Check Your Understanding.
Select the answer that best completes the sentence.
During the introduction stage of the product life cycle, sales
grow slowly and____:
A. competition becomes tough
B. profit is minimal
C. more product is needed
D. advertising expenditures are low.
E. the promotion is complete.
A: Incorrect Feedback: Competition becomes tough in the
growth stage.
B. Correct Feedback: Profit is minimal because the company has
invested heavily in research and development.
C: Incorrect Feedback: Product development has already
occurred.
D: Incorrect Feedback: Advertising expenditures are really high
during the introduction stage.
E: Incorrect Feedback: Promotion is a big part of the growth
and maturity stages.
MKT500_5_2_Ed-3: Select the answer that best completes the
sentence.
Slide 12
Scene 3
[Ed, Samantha – Hallway]

14. MKT500_5_3_Samantha-1: I’m glad Carl appreciated the
research we’d done for each stage of the tablet’s product life
cycle. I really do believe that with the right strategies, Golds
Reling will be able to achieve both top-of-the-mind and
spontaneous brand awareness with the new tablet.
MKT500_5_3_Ed-1: I agree. With buzz marketing, we’ll attract
the innovators and early adapters that we identified in the
diffusion model, and we’ll be able to successfully penetrate the
market.
Remember that we have an e-Activity and the weekly threaded
discussion on new product development and the product life
cycle where we can discuss this further. See you next week!
"New Product Development and the Product Life Cycle" Please
respond to the following:
1. From the scenario, analyze the goals, product, price, and
promotion for the new product launch in each stage of the
product life cycle. Recommend two (2) marketing tactics and
strategies that the marketing intern should consider in order to
increase product revenue over time. Provide rationale for your
response.
2. From the e-Activity, imagine that your company is a
smartphone manufacturer that is launching a new product.
Recommend the approach that you would take in order to brand
the new product. Determine the primary way in which you
would convey the advantage of your company’s product versus
the top retailers in the industry. Provide a rationale for your
response. Note: You may create and / or make all necessary
assumptions needed for the completion of this discussion. (e-
Activity: Use the Internet to research two to three (2-3) of the
top smartphone manufacturers. Focus on the new smartphones
that each company is rolling out. Be prepared to discuss.