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20 Cards in this Set
- Front
- Back
Product life cycle
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describes the stages a really new product goes through from beginning to end
o Concerned with new types (or categories) of products in the market, not just what happens to an individual brand o Four major stages: 1. Market introduction 2. Market growth 3. Market maturity 4. Sales decline |
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Market introduction
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—investing in the future
o Sales are low as a new idea is first introduced to a market • Customers aren’t looking for the product, even if it offers amazing value, customers just don’t know about it o Informative promotion is needed to tell potential customers about the advantages and uses of the new product concept • Takes time for customers to catch on o Not uncommon for companies to experience losses during this period • Spending a LOT on Product, Place and Promotion development • Hope for future profits |
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Market growth
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—profits go up and down
o Industry sales grow fast—but industry profits rise and then start falling • Initial growth, then competitors swoon in • Some just copy the most successful product to try to improve it to compete better • Others try to refine their offerings to do a better job of appealing to some target markets o Monopolistic competition—with down-wad sloping demand curves—is typical o Biggest profits for industry o Time of rapid sales and earnings growth for companies with effective strategies o BUT it is toward the end of this stage when industry profits begin to decline as competition and consumer price sensitivity increase PROFITS ARE HIGHEST |
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Market maturity
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—sales level off, profits continue down
o Occurs when industry sales level off and competition gets tougher o Industry profits go down through out the stage • Because promotion costs rise and some competitors cut prices to attract business • Less efficient firms can’t compete with this pressure—drop out of market o New firms may still enter • Late entries skip the early life-cycle stages • Including profitable market growth stage • Have to try to steal share—difficult • Customers already have preferences and pre-established companies will fight for their market share o Persuasive promotion = IMPORTANT • Products only differ slightly→ need persuasion o Price sensitivity is a real factor o Ex’s: • Cars • Household appliances • Breakfast cereal • Soda • Laundry detergent |
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Sales decline
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—a time of replacement
o New products replace the old o Price competition from dying products becomes more vigorous—but firms with strong brands may make profits until the end • Because they have successfully differentiated their products |
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product move fast through the life cycle when:
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• Comparative advantage
• Easy to use • Easy to communicate • Can be tried • Compatible • = QUICK |
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fashion
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—the currently accepted or popular style
• _______-related products tend to have short life cycles • Ex: Zara’s quick passed changing strategy |
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fad
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is an idea that is fashionable only to certain groups who are enthusiastic about it
• These groups or so fickle that a ___ is even more short lived than a regular fashion • Ex: action figure for a movie that just came out |
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“skim”
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• —Charging a relatively high price to help pay for the introductory costs
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(penetration)
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o When the early stages of the cycle will be fast, a low initial price may make sense to help develop loyal customers early and keep competitors out
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New product
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—is one that is new in any way for the company concerned
• A product can become “____” in many ways 1. A fresh idea can be turned into a ____ product and start a ____ product cycle a. Ex: pills → skin patches 2. Variations on an existing idea can make a product new. • FTC says product is “___” only six months o Six months is the limit to calling a product “___” according to the Federal Trade Commission (FTC)—the federal government agency that policies antimonopoly laws • To be call new: • FTC says a product must be entirely ___ or changed in a “functionally significant or substantial respect” |
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New-product development process:
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1. Idea generation
2. Screening 3. Idea evaluation 4. Development (of product and marketing mix) 5. Commercialization • Process = same for consumer and business markets—and for both goods and services • **this is a major departure from the usual production-oriented approach—in which a company develops a product first and then asks sales to “get rid of it” |
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Consumer product safety act
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—set up the consumer product safety commission to encourage safety in product design and better quality control
• Set up because not all customers are willing to pay more for safer products • Firm can be held liable for safety concerns |
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• Product liability
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—the legal obligation to pay damages to individuals who are injured by defective or unsafe products
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concept testing
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(formal form of idea evaluation; informal = focus groups)
—getting reactions from customers about how well a new-product idea fits their needs • Uses market research—ranging from focus groups to surveys of potential customers • Can be online→ lower costs and faster responses • Follow up survey questions |
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Product managers/ brand managers
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manage specific products—often taking over the jobs formerly handled by an advertising manager
• Their responsibility = Promotion • Popular in larger companies that produce many kinds of products • Sometimes serve as “product champion”—concerned with planning and getting the promotion effort implemented • Companies emphasizing marketing experience –this important job takes more than academic training and enthusiasm |
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Total quality management (TQM)—
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—the philosophy that everyone in the organization is concerned about quality, throughout all of the firm’s activities, to better serve customer needs
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continuous improvement
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—a commitment to constantly make things better one step at a time
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TWO KEYS TO IMPROVING SERVICE QUALITY ARE:
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1. Training
2. Empowerment |
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Empowerment
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giving employees the authority to correct a problem without first checking with management
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