Product Life Cycles

Product Life Cycles - Product Life Cycles Product Life...

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Unformatted text preview: Product Life Cycles Product Life Cycles: Theoretical & Practical Issues Dr. Kenneth N. Thompson University of North Texas Marketing Foundations 3/24/2008 University of North Texas 1 Objectives & Overview Marketing Foundations Understand the stages of the PLC Recognize the importance of managing the PLC Examine how products are managed differently as life cycle progresses y y p g Examine specific strategies for managing introduction, growth, maturity, and decline 3/24/2008 University of North Texas 2 3/24/2008 University of North Texas 1 Product Life Cycles Products at Different Stages of the PLC Personal Computers C CD Rom Vinyl Records Internet Digital Cameras Video Phone Slide Rules Refrigerators Marketing Foundations Introduction Growth Time Maturity Decline 3/24/2008 University of North Texas 4 New technologies displace older ones.... 450 Sales in Millions of Units 400 350 300 250 200 150 100 50 0 Vinyl Records Marketing Foundations CD Cassettes 72 78 80 70 74 86 19 76 82 84 19 19 19 19 19 19 19 19 Year 3/24/2008 University of North Texas 5 19 88 3/24/2008 University of North Texas 2 Product Life Cycles Why Are We Interested in Product Life cycles? Marketing strategy changes with stages Enhanced ability to manage new product introductions Profitability changes with stage Marketing Foundations 3/24/2008 University of North Texas 6 Profits and the PLC Marketing Foundations Profits Maximized Investment 3/24/2008 University of North Texas 7 3/24/2008 University of North Texas 3 Product Life Cycles Types of Product Life Cycles Marketing Foundations Product Category or Class Cigarettes g Product Form Brand Plain Filter Philip Morris 1940 1950 1960 1970 Year 3/24/2008 University of North Texas 8 Branded Product Lifecycles Marketing Foundations Source: Philip Kotler and Gary Armstrong (1991), Principles of Marketing, 5th Ed., Englewood Cliffs, NL: Prentice Hall, p. 301. 3/24/2008 University of North Texas 9 3/24/2008 University of North Texas 4 Product Life Cycles PLCs Vary In Length & Shape Marketing Foundations Refrigerators U Unit Sales Fads, such as Hula Hoops & Pet Rocks Fad with significant residual market... Time 3/24/2008 University of North Texas 10 Marketing Foundations Hoola Hoops are still around! Gary Dahl, as California advertising man, was having drinks with his buddies one night in April 1975 when the conversation turned to pets. As a lark, Mr. Dahl informed his friends that he considered dogs, cats, birds, and fish all a pain in the neck. They made a mess; they misbehaved; they cost too much money. ; y ; y y He, on the other hand, had a pet rock, and it was an ideal pet - easy and cheap, and it had a great personality. His buddies started to riff with the off-theoff-thewall idea and pretty soon they were all tossing around the notion of a pet rock and all the things it was good for. This article is from the Encyclopedia of POP Culture, by Jane and Michael Stern. Harper Perennial Press, 1992 3/24/2008 University of North Texas 11 3/24/2008 University of North Texas 5 Product Life Cycles Summary of PLC Characteristics Marketing Foundations Introduction Sales Low Growth Rapidly rising Maturity y Peak sales Decline Declining sales Costs rise Costs High unit costs Negative Innovators Lowering unit costs Rising Costs rise Profits Customers Highest Declining Early adopters Late majority Laggards Early majority Laggards Competitors None Growing Most Decline 3/24/2008 University of North Texas 16 Managing the Mix of Products Marketing Foundations Multiple products with different life cycles Life cycles should complement each other 3/24/2008 University of North Texas 17 3/24/2008 University of North Texas 6 Product Life Cycles Managing the Product Life M i h P d Lif Cycle Marketing Foundations 3/24/2008 University of North Texas 18 Managing Stages of the PLC Marketing Foundations Profits Maximized Investment 3/24/2008 University of North Texas 19 3/24/2008 University of North Texas 7 Product Life Cycles Managing Introduction Strategic Alternatives Common Tactics Marketing Foundations 3/24/2008 University of North Texas 20 Strategies for Introduction Market Skimming Marketing Foundations Setting a high price and spending heavily on promotion Position to innovators, early adopters Stress uniqueness, image, fashion, prestige, quality Att ti when Attractive h High investment, start-up costs start Market is price inelastic, attracted to innovation Effects of competition can be minimized 3/24/2008 University of North Texas 21 3/24/2008 University of North Texas 8 Product Life Cycles Strategies for Introduction Market Penetration Marketing Foundations Set price low, spend heavily on promotion low Aggressive use of price to `buy' market share Attractive when Market is price elastic, large market exists Anticipate dramatic reduction in unit costs scale economies experience effects Strong threat of potential competition exists Pioneering Advantage 3/24/2008 University of North Texas 22 Managing Growth & M i G h Maturity Marketing Foundations 3/24/2008 University of North Texas 23 3/24/2008 University of North Texas 9 Product Life Cycles Changing the P d Ch i h Product Enhance current functionality Add benefits Change style, packaging Ch t l k i Add to product line Augment the product 3/24/2008 University of North Texas Marketing Foundations 25 Enhance Current Functionality Marketing Foundations "New & Improve functionality improved" Do not add benefits strategy Laundry detergents, t Consumer L doil d t motor products... Tooth paste, mouthwash 3/24/2008 University of North Texas 26 3/24/2008 University of North Texas 10 Product Life Cycles Crest Example Marketing Foundations Crest continuously employs quality improvements! 3/24/2008 University of North Texas 27 Crest Multicare Marketing Foundations 3/24/2008 University of North Texas 28 3/24/2008 University of North Texas 11 Product Life Cycles Pert Example Marketing Foundations Quality Improvement -simple formula modification made Pert a market leader! 3/24/2008 University of North Texas 30 Pampers Example Marketing Foundations Quality Improvement -- Greater absorbency to do its job better! 3/24/2008 University of North Texas 31 3/24/2008 University of North Texas 12 Product Life Cycles Add New Benefits Marketing Foundations Additional A ii functionality Cell phones Personal computers 3/24/2008 Increased utility Fills additional wants and needs! Add cameras, blue tooth capabilities, GPS, video, MP3 PDA functionality New software applications Addition of modems, video capture, multimedia, etc. University of North Texas 35 Add to the Product Line Marketing Foundations Flanker Brands Line Extensions 3/24/2008 New products in same line Use a different brand name (individual or multiple branding) New products in same line Similar characteristics Similar function Use a `family brand' University of North Texas 39 3/24/2008 University of North Texas 13 Product Life Cycles Crest Toothpaste Line Marketing Foundations 3/24/2008 University of North Texas 40 M&M Line Extension... Marketing Foundations 3/24/2008 University of North Texas 41 3/24/2008 University of North Texas 14 Product Life Cycles M&M Crispy Line Extension Marketing Foundations 3/24/2008 University of North Texas 42 M&M Crispy Line Extension Marketing Foundations 3/24/2008 University of North Texas 43 3/24/2008 University of North Texas 15 Product Life Cycles Doritos Line Extension.. Marketing Foundations 3/24/2008 University of North Texas 44 Other Product Changes Marketing Foundations Add or i i improve services Create a better `augmented' product Package changes Style improvements Change to look and feel Fashion 3/24/2008 University of North Texas 47 3/24/2008 University of North Texas 16 Product Life Cycles Duracell Example Marketing Foundations Repackage to extend maturity 3/24/2008 University of North Texas 48 Change the package... Marketing Foundations 3/24/2008 University of North Texas 50 3/24/2008 University of North Texas 17 Product Life Cycles Breakfast Mates... Marketing Foundations 3/24/2008 University of North Texas 52 Cracker Jack... Marketing Foundations 3/24/2008 University of North Texas 53 3/24/2008 University of North Texas 18 Product Life Cycles New M k N Markets & M k Market Segments Marketing Foundations 3/24/2008 University of North Texas 56 Generic Products Marketing Foundations Generic products were meant to tap new price sensitive markets for products 3/24/2008 University of North Texas 58 3/24/2008 University of North Texas 19 Product Life Cycles J&J positioned to mother -- a new market segment! Johnson & Johnson Marketing Foundations 3/24/2008 University of North Texas 59 Domino's Example Marketing Foundations Target different ethnic groups Mission 3/24/2008 University of North Texas 60 3/24/2008 University of North Texas 20 Product Life Cycles Repositioning Marketing Foundations 3/24/2008 University of North Texas 61 Miller High Life Example Miller High Life -promoted as a substitute for table wine. Marketing Foundations Repositioned to the blue collar market 3/24/2008 University of North Texas 62 3/24/2008 University of North Texas 21 Product Life Cycles Marlboro Example Marketing Foundations Until 1954 Marlboro was a pink-tipped women's pinkcigarette with sales to a restricted market. The i tt ith l t ti t d k t Th slogan was "Mild as May." 3/24/2008 University of North Texas 63 Increasing Consumption I i C ti in Current Markets Marketing Foundations 3/24/2008 University of North Texas 65 3/24/2008 University of North Texas 22 Product Life Cycles Arm & Hammer... Marketing Foundations 3/24/2008 University of North Texas 66 Marketing Foundations Kellogg's Rice Krispies Treats ... 3/24/2008 University of North Texas 70 3/24/2008 University of North Texas 23 Product Life Cycles Mott's Example Marketing Foundations Suggesting new ways to use the product 3/24/2008 University of North Texas 72 Marketing Foundations For nicer nails, try easy, delicious Knox Orange Drinking Gelatine, with Natural Orange fl O flavor and Vit i C. Stir d Vitamin C Sti contents of one envelope of Knox Drinking Gelatine into water and drink daily. Drink at least 1/2 hour before eating or two hours after a meal. Results are usually noticeable in one to three months. Nicer Nails With Knox 3/24/2008 University of North Texas 73 3/24/2008 University of North Texas 24 Product Life Cycles Marketing Foundations 3/24/2008 University of North Texas 75 Lay's Exampleare a Food products Marketing growing area where Foundations cobranding is used. Cobrand offers new taste opportunities! 3/24/2008 University of North Texas 78 3/24/2008 University of North Texas 25 Product Life Cycles Marketing Mi M k i Mix Modifications Change price, advertising, sales promotion, distribution l ti di t ib ti channels... Marketing Foundations 3/24/2008 University of North Texas 81 Frosted Flakes Example Marketing Foundations Marketing Mi M k ti Mix Modification -Premiums and gifts 3/24/2008 University of North Texas 82 3/24/2008 University of North Texas 26 Product Life Cycles Coupon Examples Marketing Foundations Couponing can increase sales during maturity 3/24/2008 University of North Texas 83 Entertaining advertising... Marketing Foundations Novel advertising can stimulate interest, , rejuvenate or stabilize demand... 3/24/2008 University of North Texas 84 3/24/2008 University of North Texas 27 Product Life Cycles Taco Bell uproar... Marketing Foundations 3/24/2008 University of North Texas 86 Bud Lobster... Marketing Foundations 3/24/2008 University of North Texas 90 3/24/2008 University of North Texas 28 Product Life Cycles Beer or....? Marketing Foundations 3/24/2008 University of North Texas 91 Managing Decline Marketing Foundations 3/24/2008 University of North Texas 92 3/24/2008 University of North Texas 29 Product Life Cycles Managing Decline Deletion Strategies Marketing Foundations Discontinue Kodak Ultralife batteries Buick Reatta Harvest Divest GE appliances Bristol Meyers' Ipana 3/24/2008 University of North Texas 94 Ipana Example Ipana toothpaste -profiting from the item deletion decision! Marketing Foundations 3/24/2008 University of North Texas 95 3/24/2008 University of North Texas 30 Product Life Cycles Ipana... Marketing Foundations 3/24/2008 University of North Texas 96 3/24/2008 University of North Texas 31 ...
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