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Product Life Cycle (PLC)

Product Life Cycle (PLC). I. Why? 5 Causal Reasons 1. Fundamental Market Changes Ex. Health Foods Sneakers Brown Shoes Women’s Professional Wear 2. Technical Developments Ex. Hi Tech Products HD TV Internet

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Product Life Cycle (PLC)

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  1. Product Life Cycle (PLC) I. Why? 5 Causal Reasons 1. Fundamental Market Changes Ex. Health Foods Sneakers Brown Shoes Women’s Professional Wear 2. Technical Developments Ex. Hi Tech Products HD TV Internet 3. Company or Competitor Decisions Ex. MGM Talking Movies Dolby Sound Betamax Netscape & Explorer 4. Complementary Product Changes Software & Hardware Gas Prices & Autos

  2. 5. Regulatory Changes • Long Term Growth 1. Income Elastic 2. Education/Knowledge Elastic • Fashion Cycle “Seeds of its own destruction” • Managing the PLC: 1. Modify the mix A. Why? a. Needs Change b. Competition c. Technology d. Growth goals of company B. How? a. Modify Product b. Modify Market Same Customers -New Uses - Increase Use New Customers -Non Users -Competitor Customers

  3. c. Reposition Product - Reach New Market Ex. Dannon Yop New balance Carnival Cruise Line - Catch a rising trend - Reaction to competitors success 2. Criteria Used for Evaluating Introduction of New Offerings a. Consistent with existent products - Substitute or complement - Cannibalism - Same sales-force channels b. Does firm have resources to introduce and sustain? Ex. 1. Gillette $200 million on R&D for Sensor Razor 2. R.C. Cola -First can in 1954 - First diet cola in 1962 - First caffeine cola in 1980 c. Does a new market niche exist? d. How profitable?

  4. Develop New Product Uses Extending the New Product Life Cycle Develop New Product Features Intensify Segmentation Efforts Aimed at Traditional Customers Marketers Can Seek New Classes of Consumers for Current Products Seek New Classes of Consumers For Modified Products Increase Consumption Rates of Users Change Marketing Strategy

  5. How stages of the product life cycle relate to a firm’s marketing objectives and marketing mix actions Total Industry Profit

  6. THE PRODUCT LIFE CYCLE’S IMPLICATIONS FOR MARKETING STRATEGY

  7. Product Adoption and Diffusion Def. Process by which new products spread through the target market Five Adopter Categories: 1.Innovators (2.5%) -Venturesome and risk taking customers (buyers) - Cutting edge firms - Commitment to modernization 2. Early Adopters (13.5%) - Buyers who emulate innovators 3. Early Majority (34%) - Buyers who tend to avoid risk and who make purchases carefully 4. Late Majority (34%) - Buyers who avoid risk but are cautious and skeptical about new ideas 5. Laggards (16%) - Comfortable with traditional products when they become well- established alternatives

  8. Five categories and profiles of product adopters Early Adopters Laggards Innovators Early Majority Late Majority Innovators (2.5%): Venturesome, higher Educated, use multiple Information sources Early Majority (34%): Deliberate, many Informal social contact Laggards (16%): Fear of debt, neighbors And friends are Information sources Early Adopters (13.5%): Leaders in social Setting, slightly above Average education Late Majority (34%): Skeptical, below Average social status

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