AEM 240 Ch. 11 Outline - Chapter 11 Managing Products...

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Chapter 11: Managing Products, Services, and Brands The Product Life Cycle Product life cycle has 4 stages: Introduction When a product is first introduced to its target market o Sales grow slowly- profit is minimal if any Marketing Objective: Create consumer awareness and stimulate trial (first purchase) o stimulate primary demand (demand for the product in general (not the brand) while specific demand is demand for the brand o Prices can either be too high or too low High price is skimming (this helps cover the costs to make it) and may take advantage of the price insensitivity of early buyers This attracts competitors into the market Low price is penetration pricing Growth Occurs when sales grows at an increasing rate because of repeat purchasers (as product moves through life cycle more and more repeat purchasers grow) Maturity Stage Occurs when sales increases at a decreasing rate Weaker competitors leave the market Decline Stage Occurs when sales begin to drop This usually occurs because of environmental changes Ways to cope with a declining product: o Deletion o Harvesting: Company keeps the product but reduces its marketing costs Product Life cycle analysis Length of PLC: Shape of PLC: Most products adhere to the generalized life cycle unless: High learning has a long introduction period Low learning: has lots of sales initially, can easily be imitated, most retail outlets have these products Fashion product : length is very long Fad product: rapid sales on introduction and an equally rapid decline
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Diffusion of innovation: some ppl are attracted to a product early, but others only buy it
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