2-product Lifecycle

vdþCIvitplitpl Product Life cycle DUK Seyha

Marketing of Agriculture

Mr. DUK Seyha, MSc

Product Life cycle  It

is important in developing new product marketing strategies.

 It

is divided into 4 categories: 1. Product introduction 2. Market growth 3. Market maturity 4. Sales decline

Marketing of Agriculture

Mr. DUK Seyha, MSc

PRODUCT LIFE CYCLE

Sales Volume

Maturity stage Decline stage

Growth stage Introduction stage Marketing of Agriculture

Time Mr. DUK Seyha, MSc

Introduction Stage  Small

market, slow growing, very little brand competition and consumer inertia due to habitual buying and usage pattern – except for innovation consumers.

 Product

manager can skim the market with a high price and limited promotion….

Marketing of Agriculture

Mr. DUK Seyha, MSc

Penetrate the market with a low price and rapid promotion a) gives high profit margin but slow growth b) more risky, gives low profit margin but rapid market expansion. A resourceful firm ‘grow’ the market at a faster than normal rate to shorten the introduction of the life cycle.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Growth Stage  Market

expanding rapidly and many new competitive products enter  To build a strong brand franchise to achieve sales growth greater than the market average.  Strategies include : Building awareness, further product improvement, tapping new markets, cost, re-production, promotion, lowering prices. Marketing of Agriculture

Mr. DUK Seyha, MSc



Growth products require a large amount of money to sustain growth. Product development ( R & D) require significant funding.

 The desirable stage is when the most

profits are earned. Manufacturers attempt to extend the period by introducing a stream of new products or modifying them to bring back through the life cycle. Mature products tend to generate more cash to the firm.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Maturity Stage  Most

products are mature, and most of product management deals with mature products  When managed effectively, maturity is long lasting  Market growth is slow; brand shares and preferences are well established  Competitive entries are less likely, but if it occurs it will cause a major impact. Marketing of Agriculture

Mr. DUK Seyha, MSc

Decline Stage  Sales

eroding rapidly ( brands leaving the market/ contemplating to do so) ways :  leave the market gradually  price hike ( harvesting ) if successful it maximizes profit from a dying brand  focus on loyal group of core users

Marketing of Agriculture

Mr. DUK Seyha, MSc

Managing throughout the Product Life Cycle  All

products have a life cycle  If product is not managed carefully throughout its life cycle, the company may never realize full sales and profit.  Market growth rates and competitive conditions can be different at various stages of product life cycle.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Strategies Through The Life Cycle 

Throughout the life cycle of a product, the marketing and competitive strategies are adjusted to deal with the evolving opportunities and threats.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Dr. Kano’s Model for Quality

Value satisfaction perceived by the customer

Exciting quality

One dimensional quality

Implicit quality

Product or service characteristic expected by the customer Marketing of Agriculture

Mr. DUK Seyha, MSc

 The

following three factors affect product development :  Quality  Cost  Time

Marketing of Agriculture

Mr. DUK Seyha, MSc

 QUALITY

can be defined as the economic product of consistent goods and services that delight the customer. Food companies need to develop an understanding of ‘Customer Delight’.

 Quality

can be defined in three ways shown in the figure below :

Marketing of Agriculture

Mr. DUK Seyha, MSc

1- Implicit Quality These are quality characteristics that the customer takes for granted. These characteristics must be met in the product e.g safe to eat. If any implicit characteristics are not met. there is a rapid decline in the customer’s perception of value.

Marketing of Agriculture

Mr. DUK Seyha, MSc

2- One Dimensional Quality These are characteristics that the customer identifies as important.As the characteristics are added to the product the customer perceive sand increase in value or satisfaction. Various market research techniques e.g focus group can identify the one dimensional quality characteristics. Marketing of Agriculture

Mr. DUK Seyha, MSc

3- Exciting Quality These characteristics solve problems or provide satisfaction to unstated customer needs.

Marketing of Agriculture

Mr. DUK Seyha, MSc

 Customer

delight occurs when all of the implicit quality issues are presented and the one dimensional quality issues are presented in a near perfect manner from the customer’s view.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Increasing the Effectiveness of the R&D Process  Companies

can use the following steps to improve the product development process: i) Know your customer New products need to be developed to meet customer needs or requirements. Market research needs to be done before the start of a product definition and after the concept is conceived.

Marketing of Agriculture

Mr. DUK Seyha, MSc

ii) Set realistic goals Market research needs to set realistic goals for a product concept. The goals need to be based on actual customer demand. iii) Use concurrent engineering Concurrent engineering provides a method to break down barriers and increase

Marketing of Agriculture

Mr. DUK Seyha, MSc

communications between the functional groups involved in the PD process. iv) Create Gate-ways The development team and management must review projects to ensure that they meet requirements for manufacturing viability, customer acceptance, sales forecast, and budget. Marketing of Agriculture

Mr. DUK Seyha, MSc

v) Watch market tests Ensure customers to repurchase the product. Often customers try new products out of curiosity and fail to repurchase it. vi) Study all failures Conduct a formal and systematic review of what went wrong when a product fails to be a market and financial success. Marketing of Agriculture

Mr. DUK Seyha, MSc

New Product Failures : Reasons and Safeguards Failure Reason Elaboration Market too small

Marketing of Agriculture

Suggested Safeguards

Insufficient Market is demand for this defined and type of product rough potential estimated in the opportunity identification and concept test phase. Mr. DUK Seyha, MSc

Failure Reason Elaboration

Suggested Safeguards

Poor match for company

Opportunities are matched to company’s capabilities and strategic plans before starting developments.

Marketing of Agriculture

Company capabilities do not match product requirements

Mr. DUK Seyha, MSc

Failure Reason Elaboration Not new/not different

Marketing of Agriculture

Suggested Safeguards

A poor idea that Creative and really offers systematic idea nothing new generation. Also early consumer check to see how idea is perceived

Mr. DUK Seyha, MSc

Failure Reason Elaboration No real benefit

Marketing of Agriculture

Suggested Safeguards

Product does not In the design offer better stage, perceived performance benefits of concepts as well as benefits from actual product use are tested

Mr. DUK Seyha, MSc

Failure Reason Elaboration

Suggested Safeguards

Poor positioning/ Perceived Use of misunderstand- attributes of the perceptual ing of consumer product are not mapping and unique or preference needs superior. analysis to create well positioned products.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Failure Reason Elaboration

Suggested Safeguards

Inadequate support from channel

Assessment of trade response in pretest market phase

Marketing of Agriculture

Product fails to generate expected channel support

Mr. DUK Seyha, MSc

Failure Reasons

Elaboration

Forecasting error

Overestimation Use of of sales systematic methods in design, pretest, and test phase to forecast consumer acceptance

Marketing of Agriculture

Suggested Safeguards

Mr. DUK Seyha, MSc

Failure Reasons

Elaboration

Suggested Safeguards

Competitive response

Quick and effective copying by competitors

Good design and strong positioning to preempt competition. Quick diagnosis of and response to competitive moves

Marketing of Agriculture

Mr. DUK Seyha, MSc

Failure Reason Elaboration Changes in consumers taste

Marketing of Agriculture

Suggested Safeguards

Substantial shift Frequent in consumer monitoring of preference consumers before product perceptions, is successful during development, and after introductions

Mr. DUK Seyha, MSc

Failure Reason Elaboration

Suggested Safeguards

Changes in Drastic changes Incorporation of environmental in key environment constraints environmental factors in factor opportunity analysis and design phases. Adaptive control.

Marketing of Agriculture

Mr. DUK Seyha, MSc

Failure reason Elaboration

Suggested Safeguards

Insufficient investment

Careful selection of markets, forecasting of sales and costs and market response analysis to max profits

Marketing of Agriculture

Poor profile margins and high costs

Mr. DUK Seyha, MSc

Failure Reason

Elaboration

Suggested Safeguards

Organizational problems

Intra-organizational conflicts and poor management practices

Multifunctional approach to new product development to facilitate intra-organizational communication. Recommendation for a sound formal and informal organizational design.

Marketing of Agriculture

Mr. DUK Seyha, MSc