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5.1. mlc development stage
1.
][Welcome to Marketing Strategy Marketing
Strategies In Market Life Cycles Phases
2.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 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 1-2
3.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. PRODUCT LIFE CYCLE
4.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Stages of Product Life Cycle 1-4
5.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 1-5
6.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 8-6 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 8-3
7.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. MARKET LIFE CYCLE
8.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. Marketing Strategies During The Development Stage
9.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 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. 1-9
10.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. 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. 1-10
11.
McGraw-Hill/Irwin © 2006
The McGraw-Hill Companies, Inc. All rights reserved. THANK YOU
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