PRODUCT MANAGEMENT

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Product Concepts Part 3 0f 3
Product Life Cycle
All products, no matter how successful, are
mortal
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How long do things last?
Product Item vs Product Category
Years
Product

• Dishwasher 10
• Freezer 16
• Microwave 11
• Dryer/washer 13
• Gas water heater 12
• Furnace(gas or oil) 18
• Carpeting 11
• Paint,interior 5-10

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Product Life Cycle
Post Mortem
Introduction
Growth
Maturity
Decline
Sales

Profit
Time
Loss/profit
Progression of product life stages (sales
time)
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Product Life Cycles R D time)
Strategy Benefit Be Proactive in planning, not
reactive
R D Introduction Growth
Maturity Decline
Industry Sales
Industry Profits
Dollars
Stages have varied Time
Negative cash flow (12 yrs for medicines) WSJ,2001
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Youre on Candid Cellphone!
Applied Marketing
World wide National Economies
Growth stage
Source WSJ 30 Sept 03, B1
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Product Life Cycle

• Growth Stage
• Increasing sales profits
• Market expansion brings increasing competition
• Product refinement
• Profits peak
• Promote to create brand preference

• Introduction Stage
• Primary Demand
• Slow sales/Low revenue
• Promotion Gain awareness, Push or Pull Strategy
• Develop distribution channel

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• Maturity Stage Sales plateau and profits decline
  with intense selective demand

Introduction Growth Maturity Decline
Competition
Private
Industry Sales
brands
Industry Profits
Dollars
Varied length of Time
Defend brand position against competition
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• The Decline Stage

• Obsolescence
• New Technology
• Changing Consumer Tastes
• Low promotion
• Price discounting

Maturity -Decline
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TraditionalDigital Camera PLC

• Digital camera
• sales have
• increased since
• their beginnings
• in the mid-1990s
• Estimated sales
• projections are
• shown to likely
• surpass traditional
• cameras

Decline stage
Growth Stage
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Life Cycles and Marketing Strategy
Maximize distribution Build awareness obtain
trial
Introduction
Extend distribution Advertise promote heavily
Growth
Advertise product image Persuade customers to
switch
Maturity
Decline
Milk the product for profits Determine if to
terminate product
Postmortem
Plan for postmortem expenses Develop phase-out
plan
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Ad Strategy the Product life Cycle

• Stimulate Primary demand for a Product class via
  informational Ads

Stimulate selective demand for a brand via
psychological dimensions
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Product Life Extensions(Maturity/Decline Stages)
Product Modifications

• Cost Reductions retool product with less
  expensive material, production, location, etc.
• Product Quality refocus on quality level based
  on target audience satisfaction.
• Reposition change product design, image

• Domestic International product life cycle
  sewing machines/washing machines to So. Am.
  (Brazil)

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Whats In this Holiday Season
Applied Marketing
Product Life Cycle, reality competition
Flat Panel TV Units
New technology
394,000
130,000
Sept.2003
Sept.2002

• By 2010 it is predicted that CRTs will account
  for only 2.1 million of the 44 million
  televisions sold.

WSJ,Nov13, 2003 WSJ, Oct.223, 2006
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Terminology
Styles, Fashions, and Fads
Style, Fashion cycle , Fads (Hula Hoop-6 mos.)
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A Decline Stage strategy Product Re
Positioning

• Product .. Differentiate on a physical or
  psychological difference

• Focus on product Benefits and/or
• The people who use the product and/or
• The way people classify the products

• Or Focus on Brand Name

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Applied Example Product Modifications
Mayonnaise Isnt So Mayonnaise Anymore
Want to Add a Little Excitement to Your
Food? Hellmanns Plan
Garlic Paradise Bacon and Tomato Twist Herb
Sensation
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Frenchs plan Gourmayo
Krafts Plan
Create a new Stimulating line called, MAYO WITH
HEAT

• Italian Pesto, Sun-Dried Tomato
• Wasabi Horseradish
• Chipotle Chili

Just Not the Same Old Mayonnaise
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Questions?
?
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Consumer-electronic Retailers are
entering a squeeze---Some Early signs
Applied Marketing

• Flat panel TVs are siphoning sales from
  electronic gadgets that have higher profit
  margins.
• Numerous retail outlets now sell big Tvs

• Dell Inc. sells PCs at 18 gross margin compared
  to electronic retailer 30 gross margin

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PLC Flat Panel TVs are capturing consumer
enthusiasm

• Americans prefer bigger and better products to
  suit their lifestyles. When they have the money
  and space they are willing to pay more for better
  quality as well as quantity.
• The convenient size and shape of the flat-panel
  displays can be mounted to the wall like a
  painting, taking up less space than a CRT.
• Government deadlines require a switch to
  all-digital TV broadcasts by February, 2009.

• 2006 Average cost CRTs -223
• LCDs - 1,007, Plasma - 2,335

Cannibalism ? Sales of high end stereos PCs