Lecture 9 Market development

Product Life Cycle

The stages a new product goes through in the market place

5 stages of product life cycle

1. product development

2. introduction

3. growth

4. maturity

5. decline

Introduction Stage goal

Create product awareness and simulate trials

Introduction stage constraints

High costs, low sales volume, slow growth

Introduction stage advantages

No to Little Competition

Stage 1: Strategy

Limit product variations to ensure quality control

Primary demand stimulation

Primary demand stimulation is the promotion of benefits of all the available products categories than just a product brand.

Selective demand stimulation

The preference for a specific brand

Skimming pricing strategy

Start with a high initial price

Penetrative pricing strategy

Start with a low initial price

Growth stage goal

Differentiate to build brand loyalty and generate repeat purchases

Growth stage constraints

Exploding competition, High attrition

Growth stage advantages

Market growth, reduced costs

Stage 2: Strategy

Expand product offerings and distribution, create selective demand, prices remain steady or fall slightly, aggressive focuson product differentiation.

Maturity stage goal

Hold market share and maintain brand loyalty

Maturity stage constraints

Intense price competition, product proliferation

Maturity stage advantages

Slowing market demand, Increased CAC

Stage 3: Maturity

Product modification to retain share, market modification, lengthen product lines in the product mix, service and support become the top priority, heavy promotions to consumers and dealers, and marginal competitors drop out.

Decline stage goal

Stay Profitable

Decline stage constraints

Shrinking market demand

Decline stage advantages

Few players in the market, Price insensitive consumers

Stage 4: Decline

everything flops

Product class

Refers to the entire product category or industry

Product form

Pertains to variations within the product class

Barriers to adoption

•Usage Barrier

•Value Barrier

•Risk Barrier

•Psychological Barrier

Product Manager

Manages the existing products through the PLC, develops new products,approves advertising, media selection and package design

Brand name

any name, phrase, design or symbol used to identify an organization’s goods and to distinguish them from those of competitors.

Trade name

a commercial, legal name under which a company does business – e.g. Coca-Cola

Brand Equity

the added value a given brand gives to a product beyond the functional benefits provided.

Multiproduct Branding

One name for all its products

Multi-branding

Distinct brand for each product

Private branding

Selling under the brand name of the retailer

Mixed branding

Products branded under both manufacturer and retailer