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Marketing chapter 11 text notes

Marketing chapter 11 text notes - TheProductLifeCycle o...

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Marketing Chapter 11 Text Notes The Product Life Cycle o Introduction Sales grow slowly, profit is minimal-due to large investment costs in product development Marketing objective is to create consumer awareness and stimulate trial Ad and promo expenditures to stimulate primary demand (desire for product class rather than for a specific brand since there are few competitors with the same product Later the focus is on selective demand-preference for a specific brand Pricing can be high or low Initial high price-skimming strategy to help the company recover from development costs->capitalize on the price insensitivity of early buyers Penetration pricing->price low build unit volume Ex of product classes still in introductory stage: HDTV, hybrid cars o Growth stage Rapid increase in sales, competitors appear Profit usually peaks All a result of new people trying or using the product and a growing proportion of repeat purchasers Oftentimes changes in the product appear-improved version or new features added Important to gain as much distribution for the product as possible Examples: digital music players, digital cameras o Maturity Stage Slowing of total industry sales or product class revenue->marginal competitors begin to leave the market Most consumers at this stage are either repeat purchasers or have tried it and have abandoned it Sales increase at a decreasing rate Profit declines b/c of fierce price competition Cost of gaining new buyers in this stage rises Marketing attention is directed toward holding market share thru further product differentiation and by finding new buyers Examples: soft drinks, DVD players, conventional Tvs o Decline Stage Occurs when sales drop (fax machines in early 2005) Environmental changes Product deletion: dropping the product from the company’s product line - most drastic strategy Harvesting: when a company retains the product but
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Marketing Chapter 11 Text Notes reduces its marketing costs o Some Dimensions of the Product Life cycle Length of the Product life cycle
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