resources or changes to the marketing mix are needed Firms measure the success of a new product by 3 interrelated factors: o Its satisfaction of technical requirements (i.e. performance) o Customer acceptance o Its satisfaction of the firm’s financial requirements, such as sales and profits If the product is not performing sufficiently well, poor customer acceptance will result, which leads to poor financial performance The Product Life Cycle Product life cycle (PLC): defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning
Introduction stage: stage of the PLC when innovators start buying the product Growth stage: stage of the PLC when the product gains acceptance, demand and sales increase, and competitors emerge in the product category Maturity stage: stage of the PLC where industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them o If these efforts succeed, the product achieves new life Decline stage: stage of PLC where sales decline and the product eventually exits the market Not every product follows the same life cycle curve o i.e. Home appliances stay in the maturity period for a very long time o It seems unlikely to enter the decline stage unless some innovative, superior solution comes along to replace it Offers a useful tool for managers to analyze the types of strategies that may be required over the life of their products o The emphasis of a firm on marketing mix (four Ps) strategies can be adapted from insights about the characteristics of each stage of the cycle Introduction Stage The introduction stage for a new, innovative product or service usually starts with a single firm, and innovators are the ones to try the new offering o i.e. The telephone (Alexander Bell), transistor semiconductor (Bell Laboratories), Walkman portable cassette player (Sony), the Internet (Netscape), iTunes (Apple) etc. Sensing the viability and commercialization possibilities of this market-creating new product, other firms soon enter the market with similar or improved products at lower prices The same pattern holds for less innovative products such as apparel, some music, or even a new soft-drink flavour The introduction stage is characterized by initial losses to the firm because of high start-up costs and low levels of sales revenue as the product begins to take off o If successful, firms may start seeing profits toward the end of this stage Growth Stage
The growth stage of the product life cycle is marked by a growing number of product adopters, rapid growth in industry sales, and increases in both the number of competitors and the number of available product versions The market becomes more segmented and consumer preferences more varied, which increases the potential for new markets or new uses of the product/service
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- Fall '11