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Product Development Lifecycle: Soft Drinks vs Mobile Apps

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BUS 5112 - Unit 4 Assignment

Soft Drinks vs Mobile Apps

Michael Eydman

University of the People

BUS 5112 - Unit 4 Assignment, Soft Drinks vs Mobile Apps 1

Abstract

This paper reviews the theory of the product development lifecycle. It does this in the context of two

industries, mobile software technology, and soft drinks. Using marketing Four Ps, the paper reviews

each aspect for both industries, contrasting and comparing the two. The paper concludes with

identifying the value of Four Ps and how these changes for various industries during the product

development lifecycle.

Keywords: ​Product Development Lifecycle, Marketing Four Ps, Product Management.

BUS 5112 - Unit 4 Assignment, Soft Drinks vs Mobile Apps 2

Introduction

Every product or service introduced into the consumer market goes through four primary

stages of development, called a product lifecycle or PLC. This includes an introduction, growth,

maturity, and decline (Winer & Dhar, 2011). In order to better understand the differences in

marketing aspects between various stages of PLC, we will analyze cellphone applications and soft

drinks, which are in growth and maturity states respectively.

Product

Soft drink product category first appeared in the commercial market around the 17th century,

when vendors in Paris sold water mixed with lemon juice. Over the centuries, it has evolved to

include carbonation, sweeteners, juices and many other combinations of drinkable non-alcoholic

liquids. As a result, this is one of the more understood and analyzed product categories. As a mature

market, there is little innovation, and most of the new product introduction comes from line

extensions. Consumer behavior, driving soft drink customers is also well understood. In this category,

consumers have likely already tried most of the competitor’s products and have settled on the one

they like (Dudka, 2015). The few new products which do end up being launched have a high chance

of failure, as demonstrated by New Coke, which involved a recipe change and did not go well with

consumers, eventually forcing the company to stop its production (Benedictus, 2016). In the software

industry, things are somewhat different. While traditional software applications have been around for

a while and could be considered to be a mature category, cellphone or mobile applications are

relatively new and most have just started to reach growth stages. Here, innovation is the key, with

every new app coming to the market, introducing lots of new features. There is little loyalty within

the consumer base, as evident, for example, by a large number of messaging apps available in the
BUS 5112 - Unit 4 Assignment, Soft Drinks vs Mobile Apps 3

market. Consumer behavior is not well understood and competition is fierce, with multiple copycat

applications flooding the market at once (Sareen, 2017).

Price

Pricing strategies for these two markets are strikingly different. In an established mature

category like soft drinks, consumers expect stability in price. As a result, most products in this

category adopt a neutral pricing strategy, keeping prices in line with their competitors (Stiving,

2012). Soft drink producers follow this approach and a quick survey of the corresponding section in

the nearest supermarket will reveal just how close these prices are. On the other hand, mobile

applications run a full gamut of pricing strategies. The most prevailing being value-based, which

means setting the price at a level consumers are willing to pay (Stiving, 2012). However, as the case

if often in an emerging market, significant competition forces developers to reduce prices below the

cost, a penetration strategy often used in a growing market in order to gain the advantage. One

popular tactic follows what’s called a “freemium” model, where apps are downloaded for free with

limited features, and the user has the ability to purchase a full version or specific features, once they

start using the app (Reynolds, 2014).

Distribution / Place

In a mature market, product availability is tantamount. In order to keep consumers loyal, soft

drink manufacturers have to ensure their products are available everywhere. A disruption in

availability may have a lasting impact as consumers will quickly switch to a competing product. This

means building a vast distribution network with many moving pieces. PepsiCo, one of the major

players in this industry has a three-channel approach, delivering its product directly to retailers,

warehouses and through third-party distribution networks (Bailey, 2012). Options for mobile

software distribution are relatively limited and are controlled by the marketplaces of mobile
BUS 5112 - Unit 4 Assignment, Soft Drinks vs Mobile Apps 4

platforms, as the only way to acquire new products. Being an intangible product, mobile apps do not

require distribution networks or retailers. Once the application is added to the marketplace, which

includes Apple, Google, and Microsoft App Stores, it becomes perpetually available to the consumer.

Promotion

Promoting soft drinks has become challenging in recent times. As a result of a significant

backlash from high sugar content health impacts, such as obesity and diabetes, there has been a

decline in soft drink sales. This may be an indicator of a market turning to decline. Manufacturers

have been focusing on advertising which eases health fears while also streamlining and reducing

spend on advertising, as evident in Coke’s new unified branding plan (Taylor, 2016). In contrast,

mobile advertising follows a traditional new product launch approach, focusing on narrow audiences,

through advertising based on targeted demographic criteria, as well as through the trial approach,

which essentially equates to the “freemium” model. Since younger audiences are more likely to try

new products, especially mobile software, social network channels are widely used to promote new

apps.

Conclusion

This analysis demonstrates the differences between marketing strategies for products at

various stages of PLC. While there are some generalizations that can be assumed in both soft drink

and mobile software categories, each one consists of many more granular categories, which may also

be in different stages. For example, carbonated soft drinks are considered to be almost in decline,

while new organic and healthy drinks, like teas, are still in growth mode. The same is evident in the

mobile apps category, with many subcategories like games, productivity and messaging are at various

stages, each requiring a unique marketing strategy.

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BUS 5112 - Unit 4 Assignment, Soft Drinks vs Mobile Apps 5

References

Bailey, S. (2012). PepsiCo’s three-channel distribution network. Market Realist. Retrieved from

http://marketrealist.com/2014/12/pepsicos-three-channel-distribution-network/

Benedictus, L. (2016). Fizzled out: a history of Coca-Cola flops. The Guardian. Retrieved from

https://www.theguardian.com/business/shortcuts/2016/jan/17/fizzled-out-a-history-of-coca-co

la-flops

Dudka, A. (2015). Consumer buying behavior: New vs. Mature markets. Funnel Clarity. Retrieved

from http://www.funnelclarity.com/blog/consumer-buying-behavior-new-vs-mature-markets

Sareen, H. (2017). The Evolution of an Underground Copycat App Environment. Wired. Retrieved

from

https://www.wired.com/insights/2013/08/the-evolution-of-an-underground-copycat-app-envir

onment/

Reynolds, E. (2014). Freemium, Paidmium, What-mium? Phunware. Retrieved from

http://www.phunware.com/blog/freemium-paidmium-mium-latest-pricing-strategies-mobile-a

pps/

Stiving, M. (2012). What You Need to Know About Pricing. Entrepreneur. Retrieved from

https://www.entrepreneur.com/article/224121

Taylor, K. (2016). Inside Coke's 3-part master plan to save soda. Business Insider. Retrieved from

http://www.businessinsider.com/cokes-plan-to-save-the-soda-industry-2016-9

Winer, R., & Dhar, R. (2011). Marketing management (4th ed.). Boston: Prentice Hall. Ch. 2.