Product life cycles
Appendix AA:
Marketing and the
Product Life Cycle
Introduction
Growth
Maturity
Decline
Sales
Time
Lamb, Hair, McDaniel, “Marketing,” Cincinnati, Ohio: South-Western College Publishing. 1996.
Life Cycle
• For media products and
high-technology products,
lif
life-cycles
l can be
b short
h t andd
intense
Implications of Product Cycle
for Marketing Management
• Different strategies for each
phase
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
1
Pre-Introduction
• 1. Development Stage: a
company tries to win a new
market.
• Idea generation
• Product generation
– Product testing
– Market testing
1. Introductory Phase
• Sales Ç
• Profits negative
• Few competitors
• Costs high
Source: www.apple.com
Introductory Phase
• Marketing costs high
–High dealer margins to obtain
distribution
–High advertising costs
–educational effort required
Introductory Phase
• Market leadership strategy:
–give away product to build market
share loyalty (OpenSource,
share,
(OpenSource Google
search)
–Google offering free email (gmail) –to
gain market share from Yahoo.
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
2
2. Growth Phase
• Sales Ç
• Profits Ç
• Competitors Ç
• Shift from
f
primary
i
demand
d
d to
t
aggressive brand specific advertising.
• Distribution key to establishing
position
• Example: Mobile Wireless ca. 2002
3. Maturity Phase
• Slow growth
• Profits stable, decreasing
• Consolidation
C
lid ti beginning
b i i
• Distinction segments
• Prices stabilize, decline
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Maturity Phase
• Market saturation, longest phase
of life cycle
y
rather than functional
• Stylistic
modifications
• Heavy consumer promotion to
maintain market share
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Maturity Phase
• Dealer margins shrink,
promotion to dealers to
retain loyalty
• Example: Mobile Wireless
post 2004
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
3
• Marketing strategies to sustain maturity
phase:
– Promotion of more frequent use of product
– Find new uses for product
– Pricing below market price
– New distribution channels to reach new
markets
– Adding elements to product mix
– Raise network effects
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
4. Decline Phase
• Long-run drop in sales
• Profits decline
• Niche marketing targets
narrow segments of market.
• Non-essential marketing
dropped
Lamb, Hair, McDaniel, “Marketing,”Cincinnati, Ohio: South-Western College Publishing. 1996.
Case Discussion: Condé Nast
• What are the product stages
for “Fly & Sky” Magazine?
• How might
i h “Fly
l andd Sky”
k
marketing change over its
life-cycle?
• How does the promotional
message for “Fly & Sky”
change as the product
matures?
4