8.2 THE STRATEGIST IN YOU: Managing Your Product to Maximize Success

(SHORT NOTES FROM STRATEGY TOOLS:

Marketing Strategy at http://www.mindtools.com)

 

The Product Life Cycle

Just as people go through infancy, childhood, adulthood and old age, so do products and brands.  The four phases used to describe a product's life cycle are:

·         Introduction.

o   there will most-likely be heavy promotional and advertising activity designed to raise awareness

o   it will either have a premium price so that its development costs can be recouped quickly or be priced low to encourage widespread adoption – marketers call "market penetration".

·         Growth.

o   promotional activities will tend to focus on expanding the market for the product into new segments

·         Maturity.

o   The product's features may continue to be refreshed from time to time

o   there will still be some promotion to differentiate the product from the competition and increase market share

o   the marketing activity and expenditure levels may be much lower than earlier on in the lifecycle.

·         Decline.

o   marketing support may be withdrawn completely

o   sales will entirely be the result of the product's residual reputation amongst a small market sector

o   the most important decision to be made is when to take the product off the market completely

o   it is essential that the product is not allowed to start costing its producer money, and this can easily happen if production costs increase as volumes drop

During the earlier lifecycle of the product, the cost of promoting may be larger than the revenue it brings in.  For successful products that are marketed effectively, the product will become increasingly profitable during the Growth and Maturity phases.  The duration of each lifecycle phase can be controlled, to a certain extent.  Typical tactics designed to extend the maturity phase include:

·         Increasing the amount of the product used by existing customers

·         Adding or updating product features

·         Price promotions to attract customers who use a rival brand

·         Advertising to encourage trial of the product people who don't use this category of product at all.