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C HAPTER 11: M ANAGING S UCCESSFUL P RODUCTS AND B RANDS Charting the Product Life Cycle 1) Introduction Stage a) Occurs when a product is introduced to its intended target market, sales grow slowly, and profit is minimal. b) Create consumer awareness and stimulate trial —the initial purchase of a product by a consumer Marketing Objective Gain Awareness Stress Differentiation Maintain Brand Loyalty Harvesting Deletion Competition Few More Many Reduced Product One More versions Full product line Best sellers Price Skimming or Penetration Gain market share, deal Defend market share, profit Stay profitable Promotion Inform, educate Stress points of difference Reminder oriented Minimal promotion Place (distribution) Limited More outlets Maximum outlets Fewer outlets c) Ads and promotion expenditures often stimulate primary demand , the desire for the product class rather than for a specific brand As more competitors launch their own products, the company focuses on selective demand , the preference for a specific brand. 2) Growth Stage a) Rapid increases in sales, profit usually peaks in the growth stage, changes occur a.i) Repeat purchasers are people who tried the product, were satisfied, and bought again a.ii) Important to gain as much distribution for the product as possible. 3) Maturity Stage a) Characterized by a slowing of total industry sales or product class revenue. a.i) Marginal competitors begin to leave the market a.ii) Sales increase at a decreasing rate because fewer new buyers enter the market a.iii) Profit declines due to price competition among many sellers a.iv) Cost of gaining new buyers rises b) Marketing attention b.i)Directed toward holding market share through further product differentiation and finding new buyers b.ii) Control overall marketing cost by improving promotional and distribution efficiency 4) Decline Stage a) Occurs when sales drop b) Tend to consume a disproportionate share of management and financial resources relative to their future worth. b.i) Deletion : dropping the product from the company’s product line b.ii) Harvesting : retains the product but reduces marketing costs Four Aspects of the Product Life Cycle 1) Length of the Product Life Cycle a) There is no set time that it takes a product to move through its cycle b) Consumer products usually have shorter life cycles than business products c) Technological change tends to shorten product life cycle as a new-product innovation replaces existing products. 2) Shape of the Product a) High-learning
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a.i) One for which significant customer education is required and there is an extended introductory period. b) Low-learning b.i)Begins immediately because littler learning is required by the consumer, and benefits are readily understood b.ii) Broaden distribution quickly because it is easy to copy b.iii) Have the manufacturing capacity meet demand* c) Fashion Style of the times d) Fad e) Rapid sales on introduction and then an equally rapid decline The Product Level: Class and Form 1)
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