The Consumer – Chap 2.1
What is the difference between a
consumer and a customer?
Consumer Demand
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Consumer—a person who uses a product
(think of the word “consume” = use)
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Customer—a person who purchases a product
Gatekeeper—a person who purchases a
product for someone that is not able to do so
themselves
Consumer Demand
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Needs—are essential to our survival
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Food
Shelter
Protection
Affection from loved ones
Affiliation (belonging)
Consumer Demand
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Wants—are not necessary for survival
but add pleasure and comfort to our
lives
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Xbox 360 or PS3
7 Jeans
BMW 750 or Audi R8
Louis Vuitton & Coach bags
Consumer Demand
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Both customers and consumers have
basic needs and wants
In Canada & the USA, consumer
demand is driven more often by what
we want rather than what we need
(hence the term “consumerism”)
The Product Life Cycle
Chapter 2.2
The Product Life Cycle
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This cycle describes the changes in
consumer demand over time
The product life cycle is based on the
knowledge that no one product will be
in demand forever
The Product Life Cycle
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There are five stages in the product life
cycle
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Introduction Stage
Growth Stage
Maturity Stage
Decline Stage
Decision Point Stage
The Product Life Cycle
The Product Life Cycle
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Introduction Stage
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When a product is introduced in to a market
known as a product launch
The most expensive stage of the five stages
Products are priced very high at this stage
e.g. Apple iPhone 4 (16 GB) = $659 + HST
The Product Life Cycle
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Introduction Stage
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Products are bought by early adopter or
trendsetters e.g. students buying Apple iPhone 4,
Halo Reach or Fifa
Marketers use either a push or pull strategy to sell
the new product
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Push Strategy—marketing efforts are focused on product
placement in stores
Pull Strategy—marketing efforts are focused on
promotion techniques
The Product Life Cycle
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Growth Stage
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The product is highly visible in either daily
life or in the media
Manufactures of the product will advertise
heavily during this stage
This is the stage where the product will
catch on or fail
The Product Life Cycle
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Growth Stage
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There is very little competition at the
beginning of the stage
As the number of competitors increase
market share becomes important
Market Share—the company’s sales of
goods or services as a percentage of the
total sales for that market
The Product Life Cycle
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Growth Stage
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Factors that prevent competitors from making a
profit are called barriers to entry
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Small market size
The cost of R&D
Advertising expenses
Factory and equipment costs
Lack of distribution channels
Customers in this stage are the early majority
The Product Life Cycle
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Maturity Stage
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Sales in this stage increase slowly, if at all
Advertising during this stage highlights the fact
that the product has lasted for a long time
Manufactures have recouped the major costs
associated with the introduction stage
The Product Life Cycle
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Maturity Stage
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Businesses use income generated by
mature products to develop and launch
new products
Customers in this stage are called the late
majority
The Product Life Cycle
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Decline Stage
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A decrease in profits
The manufacturer is only able to find a few
new customer
Customers in this stage are called laggards
The Product Life Cycle
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Decision Point Stage
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During this stage the company decides
whether or not to continue manufacturing
the product
In order to continue manufacturing a dying
product, new uses for the product must be
developed