Marketing (tactics continuation)

What is the product life cycle?

It describes the stages a product goes through from when it is first introduced into the market until its sales eventually decline.

What are the 5 stages of the product life cycle?

Product development, introduction, growth, maturity and decline.

Product development

The company researches and develops the product idea. It spends money on research, design and testing but sales are zero and profits are negative because there is no product being sold yet.

Introduction

The product is launched. Sales are low because consumers are still learning about it. Marketing and production costs are high, market share is small and the price may be high.

Growth

More consumers discover and buy the product. Demand increases, sales and profits grow and the company may benefit from economies of scale. competitors may start entering the market.

Maturity

The product is well established and sales growth slow or levels off. Competition is often intense, so the company tries to maintain market share through improvements, modifications and promotions.

Decline

Demand decreases, perhaps because consumer preferences change, the market becomes saturated or newer products replace the old one. The company may reduce investment, find a new market, modify the product or discontinue it. A company can sometimes revive a declining product through innovation or repositioning.

What is diffusion of new innovations?

The process by which the acceptance of an innovation is spread by communication to members of a social system over a period of time.

Elements of the diffusion process

The innovation, the channels of communication, the social system and time.

The innovation

This is the new product, idea of practice being introduced to consumers. Consumers must see some value in the innovation for them to consider adopting it.

Communication channels

These are the methods through which info about the innovation spreads between people.

Time

This refers to how long it takes for consumers to learn about, decide to adopt and begin using an innovation.

The social system

This is the group of people or community within which the innovation spreads. It includes their values, culture, relationships, norms and social influences.

When asked how the innovation changes the consumer’s behavior?

We look at factors like continuous innovation, dynamically continuous innovation and discontinuous innovation

Continuous innovation

This involves a relatively minor improvement to an existing product. Consumers generally don’t need to change their usual habits or learn a completely new way of doing something.

Dynamically continuous innovation

This involves a more noticeable improvement or change to an existing product. Consumers may need to adjust some of their habits but the product doesn’t completely change how they meet their needs.

Discontinuous innovation

This introduces a product or technology that requires consumers to learn new behaviors or significantly change their existing habits.

Modern social systems accept more innovation due to their:

Positive attitude toward change

• Advanced technology and skilled labor force

• Respect for education and science

• Emphasis on rational and ordered social relationships

• An outreach perspective where members interact with outsiders

• A system where members can see themselves in different roles

What does rate of adoption refer to?

How long does it take a new product to be adopted by the members of a social system?

Adopter categories

These describe who adopts an innovation and when?

Adopter categories

• Innovators: First to try new products; comfortable with risk.

• Early adopters: Adopt early and may influence others.

• Early majority: Adopt before the average consumer, but usually want evidence that the product works.

• Late majority: Adopt later, often because of social pressure or because the product has become common.

• Laggards: Adopt last, often preferring familiar products and established practices.

Product death cycle