Slide 14 1 Newproduct development and product lifecycle

Slide 14. 1 New-product development and product life-cycle strategies Chapter 14

Slide 14. 25 The product life-cycle • The product life-cycle (PLC) is the course of a product’s sales and profits over its lifetime. It involves five stages: • Product development • Introduction • Growth • Maturity • Decline

Slide 14. 26 The product life cycle Figure 14. 2 Sales and profits over the product’s life from inception to demise

Slide 14. 27 The PLC as an effective marketing tool • The PLC can be applied to product classes as well as styles, fashions and fads. • The PLC will reflect these aspects in the length and type of PLC as illustrated:

Slide 14. 28 The PLC as an illustrator Figure 14. 3 Marketers need to understand predict style, fashion and fad

Slide 14. 29 Product / concept development stage • Product concept converted into meaningful consumer terms of a product image. • Concept tested to ascertain commercial appeal.

Slide 14. 30 Introduction stage – The phase where the new product is distributed and made available for purchase. – The market pioneer has much responsibility when devising the appropriate strategy as it sets the stage for the product’s introduction to the consumer. – Characterised by high promotional costs.

Slide 14. 31 Introduction stage strategies – Strategies are based upon the product and the dynamics of the market • Skim the market slowly using high price and relatively low promotional activity. • Skim rapidly by using a high price and high promotion strategy if the market is price insensitive.

Slide 14. 32 Growth stage – The product sales begin to increase rapidly. – Profit is generated as a result of effective promotional activity and the spread of costs over larger volume of sales.

Slide 14. 33 Maturity stage – The phase where sales growth slows or levels off. – Marketers then seek to extend the life of the brand by the following methods; • New market development – New usage and application • Product development and modification • Marketing innovation

Slide 14. 34 Decline stage – Sales decline. – Marketers need to determine the value of retaining the product versus the cost of divesting from the product. – This is weighed up against the market dynamics.

Slide 14. 35 Table 14. 2 Summary of product life-cycle characteristics, objectives and strategies Source: Philip Kotler, Marketing Management: Analysis, planning, implementation, and control, 11 th edn, © 2003, p. 340. Reprinted by permission of Pearson Education, Inc. , Upper Saddle River, NJ.