the product life cycle mktg 201 semester 1, 2010 sandy bennett
TRANSCRIPT
The Product Life Cycle
MKTG 201Semester 1, 2010Sandy Bennett
Overview
• Product definitions and classifications• New Product Development (NPD) process• Product adoption• The Product Life Cycle (PLC)
The Marketing Mix
• Product• Price• Place• Promotion
What is a Product?
A product is anything that can beoffered to a market for attention,acquisition, use or consumption thatmight satisfy a want or need.
Goods and services... NOTProducts and services
Product?
SS Australis
Apple iPhone
Total product concept
Describes the core product, expected product, augmented product and potential product in order to analyse how the product creates value for the customer.
Lexus GS
Kia Assurance
Illustrating three levels of product
A University Degree
Consumer (B2C) Product Classifications
Types ofConsumerProducts
Convenience
Specialty Unsought
Shopping
Marketing considerations for consumer products:
• Customer buying behaviour: frequent purchase, little planning, little comparison or shopping effort, low customer involvement
• Price: low price• Distribution: widespread distribution,
convenient locations• Promotion: Mass promotion by the
producer• Examples:
Marketing considerations for consumer products: • Customer buying behaviour: less frequent
purchase, more planning and shopping effort, comparison of brands on price, quality, style
• Price: higher price• Distribution: selective distribution in fewer
outlets• Promotion: advertising and personal selling
by both producer and resellers• Examples:
Marketing considerations for consumer products:
• Customer buying behaviour: strong brand preference and loyalty, special purchase effort, little comparison of brands, low price sensitivity
• Price: high price• Distribution: exclusive distribution in only
one or few outlets per market area• Promotion: more carefully targeted promotion
by both producer and resellers • Examples:
Marketing considerations for consumer products:
• Customer buying behaviour: little product awareness, knowledge or if aware little or even negative interest
• Price: varies• Distribution: varies• Promotion: aggressive advertising and
personal selling • Examples:
B2B Products
• Part and materials: Business-to-business products that form part of the purchasing business’s products.
• Equipment: Capital equipment and accessory equipment used in the production of the business’s products.
• Supplies and services: Business-to-business products that are essential to business operations, but do not directly form part of the production process.
Product Mix• A product mix is the set of all product lines and items
that a particular seller offers for sale• The product mix can be described as having breadth,
length, depth and consistency– Breadth (or width) is the number of different product
lines– Length is the total number of items the company
carries– Depth is the number of versions offered of each
product in the line– Consistency is how closely the various product lines
are in end use, production requirements, and distribution channels.
Product Mix Example
Campbell’s Product Mix
Existing product expansion
• Line extensions– New products that are closely related
to existing products in a product line.• Product modifications: Changes to the
characteristics of a product that result in a product that supersedes the original. The main types of product modification relate to:– functionality– quality– aesthetics.
Positioning
• Product positioning– The way in the market perceives a
product in relation to competing offerings.
• Product deletion– The process of removing a product
from the product mix.
New Product Failure
Some reasons for failure: Not listening to the market Lack of customer sales High R&D costs Intense competition Negative word of mouth (WOM) Short product life cycle Being too late to the market Easy to copy or imitate
Major steps in new product development (NPD) process
IdeaGeneration
IdeaScreening
ConceptDevelopmentand Testing
MarketingStrategy
BusinessAnalysis
ProductDevelopment
TestMarketing
Commercialisation
Product adoption
• Product adoption process– The sequential of process of
awareness, interest, evaluation, trial and adoption through which a consumer decides to purchase a new product.
Product adoption process
Product adoption
• Diffusion of innovation– The theory that social groups influence
the decisions made by individuals in such a way that innovations are adopted by the market in a predictable pattern over time.
Product differentiation
• Product differentiation– The creation of products and
product attributes that distinguish one product from another.
– Characteristics that customers may perceive to be differentiators include design, brand, image, style, quality, features and price.
The Product Lifecycle (PLC)
• After launching the new product, management wants the product to enjoy a long and happy life.
• Although it does not expect the product to sell forever, management wants to earn a decent profit to cover all the effort and risk that went into it.
• Management is aware that each product will have a life cycle, although the exact shape and length is not known in advance.
Product Life Cycle (PLC)
The Product Lifecycle (PLC)
• Product Development– Begins when the company
finds and develops a new product ideas.
• Introduction– A period of slow sales
growth as the product is being introduced to the market
• Growth– Period of rapid market
acceptance and sales growth
• Maturity– A period of slowdown in
sales growth as the product gained acceptance by most of buyers.
• Decline– Period of drop in sales
and profits as customers switch to new products
Ready-to-drink juice market
DVD: BMW (part 1)(Handout provided)
Looking Bacj
• Product definitions and classifications• New Product Development (NPD) process• Product adoption• The Product Life Cycle (PLC)