Principles of marketing: Lecture 22

MGT301
Principles of Marketing
Lecture­22


Summary
of  
Lecture­21


New Product Development 
Marketing
Strategy
Concept
Development
and Testing
Idea
Screening
Idea
Generation

Business
Analysis
Product
Development

Test
Marketing
Commercializa
tion

Today’s Topics
 New Product Development (cont..)
 Product Life Cycle (PLC)


Types of New Products Include
New-To-The
New-To-The World
World
Repositionings
Repositionings
New
New Category
Category
Entries
Entries
Product
Product
Improvements
Improvements
Product
Product Line
Line
Additions
Additions


Consumer Adoption Process
Awareness

Awareness

Strategy

Interest
Interest

Strategy

Evaluation
Evaluation

Strategy

Trial
Trial

Strategy

Adoption
Adoption

Communicate
CommunicateAvailability
Availability

Communicate
CommunicateBenefits
Benefits

Emphasize
EmphasizeAdvantages
Advantages

Motivate
MotivateConsumers
Consumers
Strategy
Ensure
EnsureSatisfaction
Satisfaction


Product Life­Cycle 
(PLC)
Sales and
Profits ($)
Sales

Profits

Time
Product
Development
Stage

Introduction

Growth

Maturity

Decline

Sales and Profits Over
the Product’s Life
From
Inception to Demise


The Typical Product Life Cycle (PLC) Has Five Stages
– Product Development, Introduction, Growth, Maturity, 
Decline
– Not all products follow this cycle




The four basic stages through which a successful product 
progresses­introduction, growth, maturity, and decline.



Some products move rapidly through the product life cycle, 
while others pass through those stages over long time periods .


Product Life­Cycle Strategies

Product Development Stage
Sales and
Profits ($)

Sales

Profits

Time
Product
Introduction
Development
Stage

Growth

Maturity

Decline

Sales and Profits
Over
the Product’s Life
From
Inception to Demise


PLC Stages 




Begins when the 
company develops a 
new­product idea



Sales are zero



Investment costs are 
high



Profits are negative

Product development

Introduction
Growth
Maturity
Decline


Introduction Stage

Sales and
Profits ($)
Sales

Profits

Time
Product
Development
Stage

Introduction

Growth

Maturity

Decline

Sales and Profits Over
the Product’s Life
From
Inception to Demise


PLC Stages 
Product development




Low sales



High cost per customer 
acquired



Negative profits



Innovators are targeted



Little competition

Introduction

Growth
Maturity
Decline


Sales
Sales

Low
Low sales
sales

Costs
Costs

High
High cost
cost per
per customer
customer

Profits
Profits

Negative
Negative

Marketing
Marketing Objectives
Objectives

Create
Create product
product awareness
awareness
and
trial
and trial

Product
Product

Offer
Offer aa basic
basic product
product

Price
Price

Use
Use cost-plus
cost-plus

Distribution
Distribution

Build
Build selective
selective distribution
distribution

Advertising
Advertising

Build
Build product
product awareness

awareness among
among early
early
adopters
adopters and
and dealers
dealers


Growth Stage


Sales and
Profits ($)

Sales

Profits

Time
Product
Development
Stage

Introduction

Growth

Maturity

Decline

Sales and Profits
Over
the Product’s Life
From
Inception to Demise


PLC Stages 
Product development
Introduction


Growth

Maturity
Decline



Rapidly rising sales



Average cost per 
customer



Rising profits



Early adopters are 
targeted



Growing competition


Sales
Sales

Rapidly
Rapidly rising
rising sales
sales

Costs
Costs

Average
Average cost
cost per
per customer
customer

Profits

Profits

Rising
Rising profits
profits

Marketing
Marketing Objectives
Objectives

Maximize
Maximize market
market share
share

Product
Product

Offer
Offer product
product extensions,
extensions, service,
service,
warranty
warranty

Price
Price

Price

Price to
to penetrate
penetrate market
market

Distribution
Distribution

Build
Build intensive
intensive distribution
distribution

Advertising
Advertising

Build
Build awareness
awareness and
and interest
interest in
in the
the
mass
mass market
market


Maturity Stage
Sales and

Profits ($)

Sales

Profits

Time
Product
Development
Stage

Introduction

Growth

Maturity

Decline

Sales and Profits
Over
the Product’s Life
From
Inception to Demise


PLC Stages 
Product development
Introduction
Growth



Maturity

Decline



Sales peak



Low cost per customer



High profits



Middle majority are 
targeted



Competition begins to 
decline


Sales

Sales

Peak
Peak sales
sales

Costs
Costs

Low
Low cost
cost per
per customer
customer

Profits
Profits

High
High profits
profits

Marketing
Marketing Objectives
Objectives

Maximize
Maximize profit
profit while
while defending

defending
market
market share
share

Product
Product

Diversify
Diversify brand
brand and
and models
models

Price
Price
Distribution
Distribution
Advertising
Advertising

Price
Price to
to match
match or
or best
best competitors
competitors
Build
Build more

more intensive
intensive distribution
distribution
Stress
Stress brand
brand differences
differences and
and benefits
benefits


Decline Stage


Sales and
Profits ($)
Sales

Profits

Time
Product
Development
Stage

Introduction

Growth

Maturity

Decline

Sales and Profits Over
the Product’s Life From
Inception to Demise