* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Download The product lifecycle is important to marketing
Pricing science wikipedia , lookup
Dumping (pricing policy) wikipedia , lookup
Marketing plan wikipedia , lookup
Viral marketing wikipedia , lookup
Guerrilla marketing wikipedia , lookup
Direct marketing wikipedia , lookup
Street marketing wikipedia , lookup
Neuromarketing wikipedia , lookup
Marketing mix modeling wikipedia , lookup
Target audience wikipedia , lookup
Youth marketing wikipedia , lookup
Service parts pricing wikipedia , lookup
Integrated marketing communications wikipedia , lookup
Multicultural marketing wikipedia , lookup
Planned obsolescence wikipedia , lookup
Food marketing wikipedia , lookup
Target market wikipedia , lookup
Market penetration wikipedia , lookup
First-mover advantage wikipedia , lookup
Perfect competition wikipedia , lookup
Advertising campaign wikipedia , lookup
Green marketing wikipedia , lookup
Sensory branding wikipedia , lookup
Product placement wikipedia , lookup
Marketing channel wikipedia , lookup
Global marketing wikipedia , lookup
Product lifecycle wikipedia , lookup
Pricing strategies wikipedia , lookup
Marketing strategy wikipedia , lookup
1. Strategy - Grow the core of the business a. Sales is a function of two factors – penetration (increasing the number of customers) and buying rate (increasing the number of units purchased per person) i. Buying rate 1. Encourage bulk purchases by offering promotions such as “buy 2 meals, dessert is on us” 2. McDonald’s doesn’t have to be a guilty pleasure 3. Update advertisements to emphasize the value that McDonald’s brings during time of recession 4. Improve and proliferate the products – introduce premium burger line with higher price points, develop fresh dipping sauces for chicken nuggets and fries, expand on McCafe line ii. Penetration 1. Attack competitors – advertisements should highlight points of superiority over competitors such as Burger King and Wendy’s 2. Expand into high growth geographies – new developments in the US, India, China, etc 2. What are the major stages of the product life cycle? Why is the concept of a product life cycle so important to marketing planners? From www.quickmba.com: The Product Life Cycle A new product progresses through a sequence of stages from introduction to growth, maturity, and decline. This sequence is known as the product life cycle and is associated with changes in the marketing situation, thus impacting the marketing strategy and the marketing mix. The product revenue and profits can be plotted as a function of the life-cycle stages as shown in the graph below: Product Life Cycle Diagram Introduction Stage In the introduction stage, the firm seeks to build product awareness and develop a market for the product. The impact on the marketing mix is as follows: Product branding and quality level is established, and intellectual property protection such as patents and trademarks are obtained. Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to recover development costs. Distribution is selective until consumers show acceptance of the product. Promotion is aimed at innovators and early adopters. Marketing communications seeks to build product awareness and to educate potential consumers about the product. Growth Stage In the growth stage, the firm seeks to build brand preference and increase market share. Product quality is maintained and additional features and support services may be added. Pricing is maintained as the firm enjoys increasing demand with little competition. Distribution channels are added as demand increases and customers accept the product. Promotion is aimed at a broader audience. Maturity Stage At maturity, the strong growth in sales diminishes. Competition may appear with similar products. The primary objective at this point is to defend market share while maximizing profit. Product features may be enhanced to differentiate the product from that of competitors. Pricing may be lower because of the new competition. Distribution becomes more intensive and incentives may be offered to encourage preference over competing products. Promotion emphasizes product differentiation. Decline Stage As sales decline, the firm has several options: Maintain the product, possibly rejuvenating it by adding new features and finding new uses. Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment. Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing to continue the product. The marketing mix decisions in the decline phase will depend on the selected strategy. For example, the product may be changed if it is being rejuvenated, or left unchanged if it is being harvested or liquidated. The price may be maintained if the product is harvested, or reduced drastically if liquidated. The product lifecycle is important to marketing planners for many reasons, several of which have been listed below: Timing – marketers need to have a good idea how quickly a product is expected to move through the cycle Marketing initiatives are particular to each stage – Depending on which stage the product is in, marketers need to target different demographics and use different strategies to gain maximum effectiveness. Product portfolio planning – marketers need to know how each product fits into the overall product portfolio of the company to gain maximum synergy among products, minimize cannibalization, and address any gaps in the product line up. Budgeting – Each stage of the cycle has different budgeting needs. During introduction, marketers need to build awareness and drive trial and thus require larger budgets. During the decline stage, large marketing expenditures will result in relatively low returns.