5.1. mlc development stage

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Marketing Strategy
Marketing Strategies
In Market Life Cycles Phases

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Product Life Cycle Market Life Cycle
Development Stage
Introduction Stage New Market Entries
Growth Stage Growth Markets
Maturity Stage Mature Markets
Decline Stage Declining Markets
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PRODUCT LIFE CYCLE

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Stages of Product Life Cycle
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How do opportunities evolve over time?
Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West
Publishing Company. All rights reserved.
Time (years)
Productcategorysales
(realdollars)
Profitperunit
(realdollars)
Profit/unit
Sales
Life cycle
extension
Growth
Competitive
turbulence
Maturity Decline or
extension
Introduction
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MARKET LIFE CYCLE

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Marketing Strategies During The
Development Stage

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Marketing Strategy During The Development Stage
• As Exhibit 7.8 indicates, a firm has no sales revenue during the
development stage. In fact, the firm experiences a net cash outflow due
to the expenses involved in product innovation and development. For
most innovations, the firm assumes a great deal of financial, market,
and opportunity risk due to the uncertainty involved in developing new
products and brands. For example, the pharmaceutical industry
understands the challenges of new product development like no other
industry. Firms such as Merck, Pfizer, and AstraZeneca spend millions
each year developing new drugs. Upon identifying a new drug, it takes
years of testing before earning FDA approval. Then, once the new drug
is on the market, the firm has only a few years to recoup their
investment before patent protection expires and the market opens to
generic competition. In this highly competitive industry, pharmaceutical
firms live or die based on the umber and quality of drugs they have in
their development pipelines.
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Marketing Strategy During The Development Stage
(cont’d)
• The development stage usually begins with a concept, which has several
components: (1) an understanding of the specific uses and benefits that target
customers seek in a new product, (2) a description of the product, including its
potential uses and benefits, (3) the potential for creating a complete product line
that can create synergy in sales, distribution, and promotion, and (4) an analysis
of the feasibility of the product concept, including such issues as anticipated
sales, required return on investment, time of market introduction, and length of
time to recoup the investment. Given the odds stacked against most new
products, it is not surprising that over 80 percent of all new products fail. This
unfortunate fact of life underscores the need to correctly identify target
customer needs before developing the product strategy. Through effective test
marketing, the firm can gauge customer response to a new product before the
full-scale launch.
• New products that closely match customers’ needs and have strong advantages
overncompeting products are much easier to market as the new product enters
the introduction stage of its life cycle.
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