ADM2320X summer 2008-ch.11

ADM2320X summer 2008-ch.11 - Managing Products and Brands...

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1 Managing Products and Brands Chapter 11
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2 Product Life Cycle (PLC) Four stages are: Introduction Growth Maturity Decline
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3 Introduction Stage (e.g. HDTV and hybrid cars) Slow growth in sales Advertise to build awareness & Skimming price strategy to re-coup R&D costs or penetration pricing strategy to build sales and market share Low profits
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4 Growth Stage (e.g. DVD players, digital cameras) Rapid increase in sales Number of distribution channels increases Profits increase and peak Brand loyalty is promoted; repeat sales occur Product differentiation used to grow market share Heavy advertising & promotions to counteract competition Price competition grows
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5 Maturity Stage (e.g. conventional TVs) Profit margins narrow Competition grows intense Marginal competitors leave the market New product variations are introduced to generate new demand Market development strategy followed – introduce current product to new markets
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6 Decline Stage (e.g. cassette audio tapes) Decline in product category sales New technology makes product obsolete Market begins to shrink, profits decline Competitors pull out Apply either of two strategies:: Product deletion : phase out the product or drop it immediately (divest) Harvesting : keep product if there is residual demand from loyal customers
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7 Aspects of the Product Life Cycle Length of the PLC Shape of the PLC PLC varies with different levels of products Rate at which consumers adopt products
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8 Aspects of the Product Life Cycle Length of the PLC: Shorter for consumer goods (i.e. fashions); and technology goods (PCs, cell phones) Products have different PLC curves: High-learning product (long introduction) Fashion product (seasonal apparel) Fad product (rapid introduction & decline)
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9 Aspects of the Product Life Cycle Product class: The entire product category Video game consoles as a product category Product form: Variations of a product within the product class Individual software games
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10 Product Adoption Adoption : process by which a consumer or business customer begins to buy and use a new good, service or an idea Diffusion describes how the use of a product spreads throughout a population
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11 Stages in adoption of a new product Awareness: advertising to make consumers aware Interest: curious & wanting more information Evaluation: pros v. cons; risky v. impulse buys Trial: potential adopters “sample” it Adoption: Confirmation: satisfied purchasers become loyal customers
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12 Life Cycle and Consumers Diffusion of innovation: rate at which a product diffuses or spreads through the population Consumer population divided into 5 categories of product adopters Innovators Early adopters Early majority Late majority Laggards
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This note was uploaded on 12/08/2009 for the course TEFLER ADM1300 taught by Professor Koppel during the Fall '09 term at University of Ottawa.

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ADM2320X summer 2008-ch.11 - Managing Products and Brands...

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