UNIT 4

Product Decisions- Product Development and Life-Cycle

 PRODUCT
• Product is defined as anything that can be offered to a market for attention, acquisition, use or
consumption that might satisfy a want or need.

• Products include more than a tangible object, such as cars, computers or cell phones. It also includes
services, events, persons, place, organizations, ideas, or mix of these.

• For example, Apple iPod, a Maruti Swift, and a Caffe Mocha at caffe Coffee Day, trip to Essel World in
Mumbai etc are products.

• Companies differentiate their offers, beyond simply making products and delivering services there are
creating and managing customer experiences with their brand or company.

• For example, Nike has long declared, “Its not much the shoes but where they take you”, Kingfisher flight
involves a lot more than just travel.
 PRODUCT CONCEPT
• Product concept states that customer or consumer prefers product which is of highest quality,
performance and innovation related feature.

• It is a mandatory concept in order to give the best possible product to the customers.

• Continuous evolution during the life cycle of the product to maintain the attention of the potential
customers is the main focus of the organizations that follow this concept.

• Advantage: 1.Using this concept, organization can give identity to the product & add functional value
so that customer can derive the benefits and buy the products.

2. Innovation is more in this concept

3. Quality is the central focus rather than quantity

4. Raises the overall benchmark

5. Develops Curiosity
 Example
• Apple is a company which works highly on product concept to get best products to its customers.
Apple products are perceived to be of very high quality with innovative feature and great
performance.

• Gucci: It is worlds leading luxury fashion brand. The company offers latest fashionable products.

• Louis Vuitton: It provide ready-to-wear watches, clothes, sunglasses, shoes, accessories etc. This
company provides quality, luxury, fashionable products.
 PRODUCT LEVELS
• The Five Product Levels was developed by Philip Kotler in 1960’s.
1. Core Benefit: It is the fundamental need or want that the customer satisfies when they buy the
product. It is the basic good or service purchased, aside from its packaging or accompanying services.

• Example: 1. Core benefit of hotel is to provide rest.

2.Soap core benefit is to clean skin.

2. Generic or Basic Product: It is the basic version of the product made up of those features necessary for it
to function.

• Example: The basic product for hotel is bed, bathroom, towel, mirror.

3. Expected Level: It is the set of features which the customers expect when they buy the product.

Example: In hotel example. Customer expect clean bed, fresh towels, clean bathroom.

4. Augmented Product: Refers to any product variation, extra feature or service.

Example: The Hotel can include TV, Flower rooms, prompt check-in & check-out
5. Potential product: Adding benefits to their products that not only satisfy customers, but also
surprise and delight them.

Example: Gift placed in the hotel room.

 Product and Service Classifications
Products and services fall into two broad classes based on the types of
consumers; consumer products and industrial products

1. Consumer Products: These are products and services brought by

final consumers for personal consumption. These products
includes;

A) Convenience Products: Customers usually buy frequently these

products, as soon as they feel need for them, and with minimum
of comparison and buying effort. They require minimum or no
planning before purchase. These are low priced, has widespread
distribution and are at convenient locations. Example; Toothpaste,
drinks, chocolates, magazines, fast foods, laundry detergent.
B) Shopping Products: These are less frequently purchased
products and services that customer compare on price,
quality and style. Customer spend much time and effort in
buying these products. These are high priced, and are
available at selective distribution in fewer outlets. Example;
furniture, clothing, cars, jewelry, airline services etc.
C) Specialty Products: These products and services have unique characteristics or brand identification
for which the buyers are willing to make special a special purchase effort. These are more expensive
than convenience products and are not purchased frequently. Example; specific brand of cars, designer
clothes, TVs, Washing machine, etc. Buyers do not compare these products, Spend lot of time in
planning the purchase.
D) Unsought Products: Such products that the consumers either does not know about or know but
does not normally think of buying. Most major new innovations are unsought until the consumer
become aware of them through advertising. Example; life insurance, donation for charity, preplanned
funeral services, blood donations. These products requires lot of advertising, personal selling and other
marketing efforts.

2. Industrial Products: These products are purchased for further processing or for use in conducting a
business. The difference between the consumer and industrial product is based on the purpose for
which the product is bought.

For example, if a consumer buys a lawn mover for use around home, the lawn mover is a consumer
product. If the same consumer buys the same lawn mover for use in a landscaping business, the lawn
mover is industrial product.
• The three groups of industrial products and services includes;

A) Material and Parts: Includes raw materials and manufactured materials and parts. Raw material
consists of farm products (wheat, cotton, live stock, fruits, vegetables) and natural products (fish,
crude, petroleum, iron ore).

B) Capital Items: This aids the buyers production or operations, including installations and accessory
equipment. Installation for purchase of building (factories, offices) and for fixed equipment
(generator, drill presses, large computer systems, elevators). Accessory equipment includes
portable factory equipment's and tools (hand tools, lift trucks), and office equipment (computers,
fax machines, desks).

C) Suppliers and Services: Suppliers includes operating supplies (lubricants, coal, paper, pencils) and
repair maintenance items (paints, nails, brooms). Business services includes maintenance and repair
services (computer repair) and business advisory services (legal, management consulting).
Industrial products are produced for further processing or for commercial use
 Product and Service Decisions
• Marketers make product and service decisions at three levels; individual product decision, product
line decisions and product mix decisions.

INDIVIDUAL PRODUCT AND SERVICE DECISION

Below figure shows the important decisions in the development and marketing of individual products
and services. The focus of all these five decisions is to create core customer value.
 1. Product and Service Attributes
• Developing a product or service involves defining the benefit that it will offer. These benefits are
communicated and delivered by product attributes such as; quality, features and style and design.

A) Product Quality: It is one of the marketers major positioning tools. Quality has a direct impact
on product or service performance; thus it is closely linked to customer value and satisfaction.
Quality is defined as, “freedom from defects”.

• Total Quality Management (TQM) is a approach in which all the company’s people are involved
in constantly improving the quality of the products, services and business processes.

• Product quality has two dimensions; level and consistency.

i) Quality level: It will support the products positioning. Here product quality means performance
quality, the ability of a product to perform its functions. For example, Rolls-Royce provides higher
performance quality than a Chevrolet; it has a smoother ride, provides more creature comforts.
ii) Quality Consistency: Beyond quality level, high quality also can men high levels of quality
consistency. Here product quality means conformance quality; i.e., freedom from defects and
consistency in delivering a targeted level of performance. Example, although a Chevrolet does not
perform at the same level as a Rolls-Royce, it can deliver as consistently the quality that customers par
for and expect.

B) Product Features: Features are a competitive tool for differentiating the company’s product from
competitors products. Being the first producer to introduce a valued new feature is one of the most
effective way to compute.

• The company should predatorially survey buyers who have used the product and ask these questions;
how do you like the product? Which specific feature od the product you like the most? Which feature
could we add to improve the product? The answers will provide the company with a rich list of
feature ideas.
C) Product Style and Design: Style describes the appearance of a product. Style can be eye-catching
or yawn producing. Design is a larger concept than style. Design begins with a deep understanding of
customer needs. More than simply creating product or service attribute, it involves shaping the
customer produce-use experience. For example, the design philosophy and process followed while
developing Tata Nano- the small wonder- at an astonishing price of RS. 1,00,000.
 2. Branding

• A brand is a name, term, sign, symbol, or design or a combination of these that identifies the maker
or seller of a product or service. Consumers view brand as an important part of a product and
branding can add value to a product. For example, most consumers would perceive a bottle of White
Linen perfume as a high quality, expensive product. But the same perfume in an unmarked bottle
would likely be viewed as lower in quality, even if the fragrance was identical.

• Branding has become so strong that today hardly anything goes unbranded. Salt is packaged in
branded containers, common nuts and bolts are packaged with distributor’s label. Even fruits,
vegetables, diary products and poultry are branded-Amul Mati Dahi, Amul Milk.
 3. Packaging
• It includes all the activities of designing and producing the container or wrapper for a product.

• Cool water comes in a bottle (primary package), inside the cardboard box (secondary package),
shipped in a corrugated box (shipping package) containing six dozen bottles in cardboard box.

• Advantages: Package is important because it is the buyers first encounter with the product.

• It protects the product from any physical harm and damage.

• It gives the information to buyers about direction for use, storage instruction, helpline information
etc.

• It helps in increasing sales as it adds to the aesthetic value of the product.

• It keeps the product hygiene by preventing adulteration and hampering.

 4. Labelling
• Labelling is the display of label in a product. It contains information about
the product or its brand name. It also has warning in it. For example; in
some products, it is written that the product contains trace of nut’s and
should not be consumed by the person who is allergic nuts.

• Functions of Labelling: 1. Identify the product or brand

2. Grade the product: Canned peaches are grade-labelled A,B and C.

3. Describe the product: Who made it, where and when, what it contains,
how it is to be used.

4. Promote the product: Through attractive graphics.

Advantage: Helps the product to stand out in the market, and identifies it as
a part of particular brand, support positioning and connect with customers.
Example: Pepsi recently recrafted the graphics on its soft drink cans as part of a broader effort to
give the brand more meaning and social relevance to its youth audience
 5. Product Support Service
• A company’s offer usually includes some support services, which can be a minor or major part of
the total offering. Once the company has assessed the quality of various support services to
customers, it will take steps to fix problem and add new services.

• Many companies are now using a mix of phone, e-mail, fax, internet, and interactive voice and data
technologies to provide support services. For example; HP offers a complete set of sales and after
sales services.
 PRODUCT LINE DECISIONS
• Product line is a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same types of outlets, or
fall within given price ranges.

• For example, Nike produces several lines of athletic shoes and apparel, and Marriott offers several
lines of hotels, PepsiCo has hundreds of foods, snacks and beverage brand.

• The major product line decision involves product line length- the number of items in the products
line. Product line length is influenced by company objective and resources.

• Company can expand its product lines in two ways; by line filling or by line stretching.

• Product line filling involves adding more items within the present range of the line. It is done for
reaching extra profits, satisfying dealers, using excess capacity, being a leading company. Example
Sony added waterproof and solar powered Walkman to its current Walkman.
• Product line stretching occurs when a company lengthens its product line beyond its current range.
It has three dimensions downwards , upward or both way.

• A) Downwards Stretching: Means adding a new product to the current line, but at a lesser price. For
example, Mercedes in a joint venture with Swatch, introduced a $10,000 Smart Micro Compact Car.

• B) Upward Stretching means adding new products but at higher prices. Companies stretch upward
because they want prestige, growth rate, or high-profit margins. For instance, General Electric
successfully added its current Monogram premium kitchen appliance to target the higher-end
consumer.

C) Two-way Stretching means adding new products in both directions. Marriot did this significantly
and started the Renaissance Hotel target high-end consumer and Town suites to cater to the needs of
lower-end consumers
 PRODUCT MIX
• Also known as product assortment or portfolio, refers to complete set of products or services
offered by firm to its customers.

• It consists of several product lines, which are associated items that consumers purchase.

• Example: company might sell multiple lines of products with the product lines being fairly similar,
such as toothpaste, toothbrush, or mouthwash. All these are under the same brand umbrella.
Example: Each Sony business consists of several product lines. Sony electronics includes camera and
camcorders, Computers, TV and home entertainment products, mobile electronics etc.
 Dimensions of Product Mix
1. Width or Breadth: Number of product lines offered by company. Example; Kellogg’s product line
consists of a) ready to eat cereals b) pastries and breakfast snacks c) cookies d) Forzen/organic/natural
goods. Sony markets a wide range of consumer and industrial products from TVs and Play stations
consoles to Semiconductors.

2. Length: Total number of items in firms product line. Example: Car company has two product lines (3
series and 4 series). Within each product line series there are three types of cars. So, the product length of
the company would be six. Sony has many products within each line. The camera and camcorders line,
includes digital cameras, camcorders, photo printers, memory media, and accessories.

3. Depth: Refers to number of variations within a product lin. Example: Continuing with car example,3
series product line may offer several variations such as coupe, sedan, truck, and convertible. So, the depth
of the 3 series product line would be four. Sony markets and makes about any kind of TV you ever want to
buy; tube, flat panel, rear projection, front projection, HD etc.
4. Consistency: Refers to how closely the products in a product line are related to each other. For
example, within each major business, Sony’s product line are fairly consistent in that they perform
similar functions for buyers and go to the same distribution channels.
 New Product Development
• It is a process of improving the existing product or to introduce a new product in the market.

• A company can add new product through acquisition or development.

• Acquisition: It can be in three forms. The company can buy other companies, it can acquire patents
from other company, or it can buy a license or franchise from another company.

• Development: It can be in two forms. The company can develop new products in its own
laboratories, or it can contract with independent researchers or new product development firms to
develop specific new products.
• New product means original products, project improvements, product modifications and new brands
that the firm develops through its own research-and-development efforts.

• New products are important to both the company and the marketers. For company new products are a
key source of growth. For customers they bring new solutions and variety to their lives.
 Categories of New Product
• Booz, Allen and Hamilton have identified three categories of new products;

1. New-to-the-world products: New products that create an entirely new market.

2. New Product lines: New products that allow a company to enter and establish market for the first
time.

3. Addition to existing product lines: New products that supplements a companies established
product lines (Package sizes, flavours etc)

4. Improvements and revision of existing products: New products that provides improved
performance or greater perceived value and replace existing products.

5. Repositioning: Existing products that are targeted to new markets or market segments.

6. Cost Reduction: New product that provide similar performance at a lower cost.
New Product Development Process
 1. Idea Generation
• New product development starts with idea generation, the systematic search for new product ideas.
A company generates hundreds of ideas, in order to find a few good ones. For example, IBM
recently held an, “Innovation Jam”; a kind of online suggestion box, in which it invited IBM
and customer employees worldwide to submit ideas for new products and services.

• Major sources of new product ideas includes, internal and external sources.

A) Internal sources: Using internal sources the company can fine new ideas through formal research
and development, executives, manufacturing department, sales people, top management, employee
suggestion system, distribution channels. For example; Cisco has set up an internal wiki called
Idea Zone or I-Zone, through which any Cisco employee can purpose an idea for a new product.

• Some company’s have developed successful “intrapreneurial” programs that encourages

employees to think up and develop new product ideas.
• A new product idea that created a lot of buzz in India in recent times is that of the Tata Nano; a
small, affordable four-passenger city car with a rear engine from Tata Motors. In India a father
driving a two wheeler with the older child standing in front and the wife holding a baby at the back is
a very common sight. This image got Ratan Tata thinking, and he toyed with the idea of creating a
safer form of family transport.
B) External Sources: Companies can also obtain good new–product ideas from number of external
sources. For example; distributers, suppliers, competitors, trade magazines, government agencies,
advertising agencies, marketing research firms, universities and commercial laboratories etc.

• The most important source of new-product ideas is customer themselves. The company can analyze
customer questions and complaints to find new products that better solve customer problem. For
example, Indian car customers were looking for a spacious, fuel efficient, and affordable personal car
for a long time. Tata Motors developed the first indigenously designed car in India, the Indica,
around the customer need.
Methods or Techniques to generate new product idea:

1. Focus Groups: Consists of a moderator leading a group of people through an open in-depth
discussion.

2. Attribute Listing: Listing of existing attribute of a product idea and modifying it until a new
combinations of attribute emerges that will improve the idea.(Eg: Adapt, modify, substitute,
rearrange, reverse, combine etc).

3. Forced Relationship: Many new ideas are first listed. Then the new product ideas are considered in
pairs.

4. Brainstorming: Rapid generation of original thoughts based on a meeting at which many ideas are
given for a elected subject.

5. Reverse Brainstorming: Modification of the earlier one. A particular product is taken at a time and
generate a list of its shortcomings.
6. Mind mapping: Start with an idea, then thinking of next idea and link, then think of the next
association.

7. Problem Inventory Analysis: Consumers are provided with a list of problems from the general
product category say food. Then they are asked to state what products have the listed problems.
 2. Idea/Concept Screening
• The purpose of idea generation is to create a large number of ideas. The purpose of succeeding stages
is to reduce that number. The first idea reducing stage is idea screening.

• Filtering the ideas to pick out good ones. In other words, all ideas generated are screened to spot
good ones and drop poor ones.

• Product development cost rise greatly in later stage, so the company wants to go ahead only with the
product ideas that will turn into profitable products.

• One marketing expert proposes an R-W-W (“real, win, worth it”) new product screening framework
that asks three questions. First, Is it real? Is there real need and desire for the product and will the
customer buy it? Second, Can we win? Does the product offer a sustainable competitive advantage?
Finally is it worth it? Does the product set the company’s overall growth strategy? The co. should be
able to answer yes to all these R.W.W questions before developing the new product idea further.
Screening Methods

1. Check list method: It enumerates desirable product characteristics on a scale providing guidance to
the screener.

2. Idea Rating Method: It takes into account the significant sphere of product performance on one
hand and each sphere is given due weight-age on other.
 3.Concept Development and Testing
• A product idea is an idea for a possible product that the company can see itself offering to the
market. A product concept is a detail version of the idea stated in meaningful consumer terms. A
product image is the way consumer perceive an actual or potential product.

• Concept development involves coming up with a detail description of an idea, explained from the
perceptive of your customer. It highlights the best feature of the solutions in terms of convenience,
quality, usability, functionality, price, performance, values and experience.

• For example; initial tesla electric car goes from 0 to 60 mph in 4 seconds, travel 250 miles on a
single charge and cost about a penny a mile to power. The marketer task is to develop this new
product into alternative product concept, find out how attractive each concept is to customers and
choose the best one.
• Concept testing calls for testing new product concepts with groups of target consumers. It is
concerned with measuring customer reactions to the idea or concept of the product. The
response of the customers is checked and only if it is found encouraging, then the development of the
prototype is taken up.

• Testing involves surveying potential users for their opinion on the concept. For example the
organizations ask them; are they interested in the product? What features they like the
most/least? What price point they find appealing? What would they like to change about the
product? Etc

• Many firms routinely test new product concepts with consumers before attempting to turn them into
actual new products.

• For example; Tesla electric car provides practical and reliable transportation with no pollution. It is
sensible, responsible alternative to todays pollution producing gas guzzlers.
 4. Marketing Strategy Development
• It involves all kinds of marketing strategy that are used by companies to market the product.

• It consists of three parts and should be formulated carefully;

1. A description of the targeted market, the planned value proposition, and the sales, market share
and the profit goals for the first few years. For example; the Tesla target market is younger, well
educated , moderate to high income individuals, couples or small families seeking practical,
environmentally responsible transportation.

2. An outline of the product’s planned price, distribution and marketing budget for the first year. For
example; the battery powered electric Tesla car, it will sell at a retail price of dollar 25,000 with
15% off the list price to dealers. Dealers who sell more than 10 cars per month will get an
additional discount of 5% on each car. A marketing budget of dollar 50 million will be split 50-50
between a national media campaign & local event marketing.
3. The planned long term sales, profit goals and the marketing mix strategy. For example, Tesla
company intend to capture 3% long-run share of the total auto market and realize an after-tax return on
investment of 15%. To achieve this, the product quality will start high and be improved over time.
 5. Business Analysis
• Business analysis involves a review of sales, costs, and profit projection for a new product to find
out whether they satisfy the company’s objectives. It is an in-depth study of the estimated economic
feasibility of new product idea. If they do, the product can move to the product development stage.

• It is the evaluation of product idea in-depth to determine its financial, competitive, manufacturing
and marketing viability in an accepted business environment.

• The purpose is to determine the long-term contribution of the proposed product by projecting future
sales, profit and profitability of the proposed new product.
 6. Product Development
• In this stage the ‘idea-on-the-paper’ is turned into ‘product-on-hand’ i.e idea converted into product.

• This stage is also called as Technical development. This involves the design and formulation of the
product and development of a technically and commercially method of manufacturing.

• This stage marks the making up of a actual prototype of the product and tested, refined and
marketing campaign is planned.

• Product Prototype: A prototype is an initial creation of a product that shows the basics of what the
product will look like, what the product will do, and how the product operates.

• Prototype helps to get solid idea of what the product will be and make alterations while the concept
is still in concept mode.
• Often products undergo rigorous tests to make sure that they perform safely and effectively, or the
consumer will find value in them. Companies can do their own product testing or outsource testin to
other firms that specialize in testing.

• For example Gillette uses employee volunteers to test new shaving products. The volunteers evaluate
razors for sharpness of blade, smoothness of glide and ease of handling. “We bleed so you’ll get a
good shave at home”, says one Gillette employee.

• A new product must have the required functional features and also convey the intended psychological
characteristics. For example, the battery powered electric car, should strike consumers as being well
built, comfortable, and safe.
 6. Test Marketing
• Test marketing is the stage at which the product and marketing program are introduced into realistic
market settings. It lets the company test the product and its entire marketing program i.e., targeting
and positioning strategy, advertising, distribution, pricing, branding and packaging and budget
levels. For example, KFC test marketed its new Kentucky grilled chicken product for three years
before rolling it out nationally.

• When using test marketing, consumer products companies usually choose one of the three
approaches namely; standard test markets, controlled test markets or stimulated test markets.

1. Standard Test Markets: Using this the company find a small number of representative test cities,
conducts a full marketing campaign in these cities and uses store audits, consumer and distributor
surveys and other measures to gauge product performance. The result are used to forecast national
sales and profits, discover potential problems, and fine-tune the marketing program.
• For example, KFC use standard test markets for its new Kentucky Grilled Chicken in cities such as
Indianapolis, Colorado Springs, Texas in US etc. At these cities KFC tested both the new products
and its full marketing program, including new store signage and a series of ads.

2. Controlled Test Markets: Several research firms keep controlled panels of stores that have agreed to
carry new products for a fee. Controlled test marketing system such as ACNielson’s Scantrack and
Information Resources, Inc.’s (IRI) BehaviorScan track individual consumer behavior for new products
from the television set to the checkout counter.

3. Simulated Test Markets: The company shows ads and promotion for a variety of products,
including the new product being tested, to a sample of consumers. It gives consumers a small amount
of money and invites them to a real or laboratory store where they may keep the money or use it to buy
items. The researcher note how many consumers buy the new product and competing brands. This
simulation provides a measure of trial and the commercial effectiveness against competing commercials
 7. Commercialization
• Introducing the new product in the market. The company may need to build or rent a manufacturing
facility. And in the case of a major new consumer packaged good, it may spend hundreds of millions of
dollars for advertising, sales promotion and other marketing efforts in the first year. For example, when
Unilever introduced its Sunsilk hair are line, it spent dollar 200 million in the US alone.

• The company launching new product must first decide on introduction timing. For example, if the car
makers new battery-powered electric car will eat into the sales of the company’s other cars, its
introduction may be delayed.

• Next the company must decide whereto launch the new product, in a single location, a region, the
national market or the international market. For example, Microsoft launched its new Windows Vista
operating system in a swift global rollout. Its mammoth “Wow” advertising blitz hit more than 30
markets worldwide, creating 6.6 billion global impression in just few months.
Concept of Product Life Cycle
• As living beings progresses through the stages of birth, growth, maturity, decline and death, so
also the product passes through similar stages during its market entry and exit.

• The stages of PLC in product performance in market are introduction, growth, maturity,
saturation and decline.

• The term was first used by Theodore Levitt in 1965 in Harvard Business Review article.

• This is a normative and descriptive model.

• According to Philip Kotler. “ The PLS is an attempt to recognize distinct stages in the sales
history of a product.

• According to Kollet, Blackwell Robeson, “ PLC is a generalized model of sales volume and
profit.
Cont
• The product life cycle is sequence of stages that every product progresses through until it reaches
the stage were it is finally abandoned or discontinued from the market. It is in bell-shaped curved
form.
• Not all the products follow the PLC. Some product are introduced and die quickly, others stay in the
mature stage for a long, long time. Some enter the decline stage and then are cycled back into the
growth stage through strong promotions or repositioning.

• It seems that a well managed brand could live forever. Such venerable brands such as Coca-Cola,
Gillette, American Express, Lifebuoy, Lux, Dalda, Lipton, TABASCO for instance are still going
strong after more than 75 years.
The PLC concept can describe a product class, a product form or a brand.

• Product Class: Have the longest life cycles. The sales of many product classes stay in the matured
stage for a long time. Example, gasoline-powered automobiles.

• Product Form: Tend to have a standard PLC shape. Product forms such as, manual type writers, dial
telephones and VHS tapes passed through a regular history of introduction, rapid growth, maturity and
decline.

• Brand: Specific brand life cycle can change quickly because of changing competitive attacks and
responses. For example, todays leading brands of powered laundry soap are Surf, Tide, Nirma and
Wheel; the leading brand 75 years ago were Sunlight and 501 bars.
The PLC concept also can be applied to what are known as style, fashions and fads.

• Style: A style is a basic and distinctive mode of expression. For example, style appears in homes
(colonial, ranch, transitional), clothing (formal, causal), and art (realist, surrealist, abstract). A style
has a cycle showing several periods of renewed interest.

• Fashion: Is currently accepted or popular style in a given field. For example, more formal business
attire look of corporate dresses of the 1980s and 1990s gave way to the business casual look today.
Fashion tend to grow slow, remain popular for a while and then decline slowly.

• Fads: Are temporary periods of unusually high sales driven by consumer enthusiasm and immediate
product or brand popularity. It may be part of normal life cycle, as in the case of recent surges in the
sales of Poker chips and accessories. Or the fads may comprise a brand or products entire life cycle
like Pet rocks.
 Introduction Stage
• This stage starts when the new product if first launched.

• Introduction takes time and sales growth is apt to be slow. Well known product such as instant coffee,
frozen foods, and HDTVs lingered for many years before they entered a stage of more rapid growth.

• At this stage product awareness and acceptance among customers are minimal.

• Sales are low and high promotional cost (i.e., cost on advertising, sales promotion etc.)

• The consumer acceptance of new product is low as very few customers are ready to accept the new
product. Only innovative customers buy the product.

• They may be little to no competition.

• Demand must be created through promotion and awareness campaigns.

• Little or no profits because of low sales and high distribution and promotion expenses.
Possible Strategies During Introduction Stage
1. Rapid Skimming: Introducing new product at high price & high promotional expenses.

2. Slow Skimming: Introducing a product at a high price & low promotion.

3. Rapid Penetration: Introducing the product at low price & high promotion.

4. Slow Penetration: Introducing the product at low price & low promotion.
 Growth Stage
• If the new product satisfies the market, it will enter a growth stage.

• This is the stage of rapid market acceptance i.e., positive response from market.

• Rapid climb in sales. Profit follows the sales (i.e., increases) Seller shift his promotional attempts from
“try-my-brand” to “buy-my-brand”.

• The early adopters will continue to buy and the later buyers will start following their lead, especially if
they hear favourable word of mouth.

• Company develops an effective distribution network.

• Company increases selling and promotional efforts to educate the market & meet competition.
 Growth Stage
Strategies used: Improving product quality

• Adding new product features or support services to grow market share.

• Entering new market segments and new distribution channel

• Keeping high price such as to keep demand and profits high.

• Shifting advertising from building product awareness to building product conviction and purchase, and
it lowers price at the right time to attract more buyers.
Cont
• Increasing distribution channels to cope with growing demand.

• Shifting marketing message from product awareness to product preference.

• Skimming price if profits re too low.

 Maturity Stage
• At this stage the product reaches its maximum sales and profits i.e., saturation.

• End of maturity stage is slow decline in profits and sales. Sales continues to rise but at decreasing rate.

• This stage is the longest and the most challenging stage for marketers (Severe competition).

• Sales curve is pushed downwards, like inverse U shape. In this stage for certain period of time, sales
remain stable. This level is called ‘Saturation’. Profits also decline.
Strategies Used in Maturity Stage
1. To-Do-Nothing: Continue only routine efforts and starts planning for new products. New
strategies are not formulated, Marketers tries to conserve money.

2. Market Modification: Try to expand the market by converting nonusers, entering new market
segments (as Johnson and Johnson did when promoting baby shampoo for adult use) or winning
competitors customers ( the way pepsi-cola tries to woo away coca-cola users).

3. Product Modification: Stimulate sales by modifying the product characteristics through quality,
feature or style improvement. For example TABASCO pepper sauce have added full line of
flavors (such as Garlic, sweet and spicy, and chipotle) and a kitchen cabinet full of new products
under the TABASCO name.

4. Marketing Mix Modification: Stimulate sales by modifying other marketing mix element like
price, distribution, advertising, sales promotion, personal selling.
Decline Stage or Obsolescence Stage
• Product experiences a dramatic decrease in sales and profit. The decline may be slow as in the
case of oatmeal cereal, or rapid, as in the case of cassette and VHS tapes. Sales may plunge to
zero or they may drop to a low level where they continue for many years.

• Technological advancements, increased competition and shift in consumer tastes all leads to a
product to enter in decline stage.

• It is difficult for a product to reverse out in this stage due to the cost.

• Company can maintain its brand without change in the hope that competitors will leave the
industry, or harvest the product which means reducing various costs (plant and equipment,
maintenance, R & D, advertising, sales force), or company may decide to drop the product from
the line. It can sell it to another firm or simply liquidate it at salvage value.
Decline Strategies by Harrigan
• Increasing the firms investment: To dominate the market or strengthen its competitive position.

• Maintaining the firms investment level: Until the uncertainties about the industry are resolved.

• Decreasing the firms Investment level Selectively: By dropping the unprofitable customers.

• Harvesting: (“milking”) the firms investment to recover cash quickly.

• Divesting: the business quickly by disposing of its assets.