chapter_11-marketing - Marketing- chapter 11 The Product...

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Marketing- chapter 11 The Product Life Cycle describes the stages that a new product goes through in the market place. They are; introduction, growth, maturity and decline. 1) Introduction Stage: -occurs when a product is first introduced to its intended target market. Sales grow slowly and profit is minimal due to large investment costs in product development. -marketing objective in this stage is to create consumer awareness and stimulate trial of the product. Companies spend heavily on advertising to stimulate primary demand which is desire for the product class rather than the specific brand since there are few competitors. As competitors introduce their products the company will shift to creating specific demand or demand for a specific brand. -in this stage, the company often restricts the number of variations of the product to ensure control of product quality. -pricing can either be high or low. High prices initially may be apart of the skimming strategy to recover costs of development and take advantage of price insensitivity by buyers. High prices draw competitors to the market because they see an opportunity for profit. The way to prevent competitors is penetration pricing or low prices. -examples of products in the introductory stage are flat panel tv’s and hybrid cars 2) Growth Stage: -characterized by rapid increases in sales. This stage sees the emergence of competitors. With competitors comes more aggressive pricing and the peak of profits as a result. -emphasis on advertising shifts to stimulating selective demand, where a products benefits are compared to those of a competitors -product sales during this stage also grow at an increasing rate because a growing proportion of repeat customers buy again. Failure to obtain repeat purchasers for a product usually means an early death. The ratio of repeat to trial purchasers grows as well. -to help differentiate a company’s brand from competitors, an improved version/new features are added to the original design. -in this stage, it is important to gain as much distribution for the product as possible. -examples are DVD players and digital cameras. 3) Maturity Stage: -stage where total industry sales begin to slow and weaker competitors begin to leave market. -sales increase a much slower rate because of fewer new buyers entering market. -profits decline as a result of fierce price competition among numerous sellers. -marketing is focused on holding market share though further product differentiation and new buyers. -examples are soft drinks, cars, conventional tvs 4) Decline Stage: -occurs when sales begin to drop.
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-technological innovation often comes before the decline stage as newer technologies replace older ones. Ex. Word processing over typewriters, CD’s over cassette tapes. -Two strategies to handle a declining product:
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This note was uploaded on 03/25/2008 for the course MKTG 3104 taught by Professor Ebcoupey during the Spring '08 term at Virginia Tech.

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chapter_11-marketing - Marketing- chapter 11 The Product...

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