Product Life CycleProduct Life Cycle

5.1 continued

Product Life CycleProduct Life Cycle

Life cycle represents the stages that a product goes through during its life in the marketplace– Four stages a product goes through

Introduction Growth Maturity Decline

IntroductionIntroduction

Occurs when the product is first introduced into the marketplace– Focus on promoting consumer awareness and

getting customers to try the new product– Skimming Pricing: high pricing to cover

research and development costs– Penetration Pricing: price a new product low in

comparison to other products in order to quickly create demand

GrowthGrowth

More competitors enter the market if they see that a new product is successful– Power Aid and Sportsade in response to Gatorade– To be competitive at this stage, the product may be

improved by adding new features or new products in that line

– Adding distribution outlets in important at this phase From just convenience stores and supermarkets to vending

machines

Maturity Maturity

Sales begin to slow down for the product category or just the product– Repeat customers may stop buying the product– New buyers are difficult to attract

DeclineDecline

When sales and profits begin to drop– Technological advances can cause enter

product categories to enter the decline stage– Companies end up dropping products in the

decline phase from their product line

Some ConsiderationsSome Considerations

Not all products fit the life-cycle patterns– FADS: products that become popular quickly

and lose popularity just as quickly Koosh Balls

Management of the Management of the Product Life CycleProduct Life Cycle

Product managers need to manage a product through its life cycle– Three Ways

Modify the product Market the product Reposition the product

Product ModificationProduct Modification

Changing the product’s characteristics– Features– Appearance– Packaging Design

Gatorade Fierce, Gatorade Ice, Gatorade Xtremo

Market ModificationMarket Modification

Strategy to find new customers or to encourage current customers to use more of the product– Gatorade Frost

RepositioningRepositioning

Involves changing a product’s image in relation to its competitor’s image– A change in any one of the 4 P’s can cause this change

– New Balance: redesign its athletic shoes for older people who have wider feet

No longer have to compete with Nike and Reebok directly Change their promotions to reach older people.