The Product Life Cycle
MKTG 201
Semester 1, 2010
Sandy Bennett
Contact details
Sandy Bennett
Rm 408, extn 87353
s.bennett@auckland.ac.nz
Office Hour: Wednesday 1.30-2.30 pm
Overview
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Product definitions and classifications
New Product Development (NPD) process
Product adoption
The Product Life Cycle (PLC)
The Marketing Mix
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Product
Price
Place
Promotion
What is a Product?
A product is anything that can be
offered to a market for attention,
acquisition, use or consumption that
might satisfy a want or need.
Goods and
services...
NOT
Products
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
Convenience
Shopping
Types of
Consumer
Products
Specialty
Unsought
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-tobusiness 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-tobusiness 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
• Mild cheese
• Alfredo
• Italian
Tomato
• Mariana
Beverages
• Chicken
• Mushroom
• Vegetable
beef
• Chicken
noodle
• Tomato
• Bean with
bacon
• Minestrone
• Clam
chowder
• French onion
Sauces
Soups
Campbell’s Product Mix
• Tomato juice
• V-8 Juice
• V-8 Splash
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:
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Not listening to the market
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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
Marketing
Strategy
Concept
Development
and Testing
Idea
Screening
Idea
Generation
Business
Analysis
Product
Development
Test
Marketing
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
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Product definitions and classifications
New Product Development (NPD) process
Product adoption
The Product Life Cycle (PLC)