The Product Life Cycle

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Do curso por IE Business School

Marketing Mix Fundamentals

184 classificações

IE Business School

Marketing Mix Fundamentals

184 classificações

Curso 3 de 5 em Specialization Marketing Strategy

Marketing Mix Fundamentals prepares you for arguably the most important stage of bring your product to market - how and where are you going to market it? It sets out a detailed introduction to the four P’s of Marketing (Product, Pricing, Place and Promotion), this course forces you to strategically analyze your product and/or service. The Product session is designed to provide you with the knowledge to understand and manage the strategic role of brands and products in generating business results, whilst the focus on Pricing will cover the main concepts and techniques to formulate prices. Compliment this with skills from the “P” session Place, where you consider channels and retail strategies with the overriding objective of defining a distribution strategy for your product or service. Finally, through the Promotional activities (Communication) session, explore the different communication channels available and understand the importance of the media plan, dealing specifically with social media and omni-channel strategy. IE Professors Maria Teresa Aranzabal and Fernando Cortiñas will guide you through this incredibly important stage of marketing strategy using expert interviews with industry professionals. After this course you will be ready to decide where and how you want to market your product.

Na lição

Product and Product Policy

At the end of this module, you will understand the elements that encompass a product, including levels, lines and life cycles of a product. You will also understand the role it's life cycle plays in developing a winning product strategy, as well as various ways to categorize products/services.

Course Trailer0:51

Marketing Warfare: Intro to the Course5:18

What is a Product? Product Definition and Product Levels8:49

Product & Service Decisions4:16

What is a Brand?7:04

The Product Life Cycle6:42

Conheça os instrutores

Maria Teresa Aranzabal
Professor
Marketing
Fernando Cortiñas
Professor
Marketing

[MUSIC]

Hi, welcome back to the product module.

In today's lesson, we will introduce the notion of a product life cycle, and

why it is so important.

How could we define product life cycle?

Well, a product is a living entity, and as such it has a limited life.

It is conceived and born, it grows,

hopefully it reaches a peak until it matures, and then over time it dies.

It is important to know all the stages that a product goes through

in order to understand what to expect at every stage, and

how to manage the product over this life.

If you want to define product life cycle,

we could use Professor Kotler's definition, who said that product life

cycle is a model that describes the stages that the product or the product category

passes through, from its introduction to its removal from the market.

In a way, product life cycle is a model

that suggests that sales of a product grow and mature, and

then decline as the product becomes obsolete and customer demands change.

In short, and following the CIMA, which is the Chartered Institute of

Management Accountants, official terminology states,

we can say that product life cycle is the pattern of demand for a product over time.

We marketers are in charge of managing the product life cycles of our products and

our product portfolios, as such products are like patients, and

we are like doctors trying to keep their health.

Anticipating what is likely to happen in every life stage,

all over different sets of variables, or key performance indicators.

For instance, in the introduction stage, we can expect sales to be small, but

beginning to grow, and costs to be high related to the product's launch cost.

Births are normally and always expensive.

Because of that, profits at this stage are negative.

Customers are very few, only the innovators and the early adopters and

if the industrial sector is not mature, competitors are also very few.

At the product level, we offer only a very basic product and at a very high price.

The distribution normally is limited to a very low geographic coverage and

promotion actions are focused on educating the consumer

about the product benefits rather than on the name of the brand.

The names of the game at this stage are sales and

market expansion, customer education and customer adoption.

I'm going to give an example, when the first mobile phones were introduced in

Spain in the early 90's, the designs of the handsets would be like a shoebox,

heavy, and you could only speak in very limited areas,

because the network did not cover the whole country.

In spite of that, believe it or

not, a cell phone could cost up to 3,500 euros of today.

And it was considered like a status symbol.

It was trendy to have a cell phone and very expensive.

As time passes by and

we enter into the growth stage, we expect sales to grow fast.

As the number of clients increases, costs begin to stabilize.

And because of that, profits begin to show up.

As competitors also begin to grow attracted by growing profits, we have to

touch over price in order to keep market penetration, while simultaneously

increasing the number of features in the product to stay ahead of our competitors.

On the distribution side, we have to strengthen distribution system

in order to be able to cope with an increasing amount of customers,

while on the communication side we have to begin to educate the our customers

on the brand rather than on the product, as in the initial stage.

Following the mobile phone example

an example as many operators entered into the market in Spain in the 90's, cell

phone prices began to fall drastically helping to increase customer adoption,

and handsets began to be more commonplace and at the same time more economic.

Simultaneously, distribution and our coverage expanded significantly.

In the third phase, the maturity stage, you reach a market saturation point.

Sales reach a peak and

because of that we begin to see price wars that begin to hurt profits.

As a product becomes a commodity, competition is focused on price.

And because of that, the name of the game is market share and customer retention.

The number of competitors stabilized at this stage and there is no

room for more competitors, and the weakest disappears as the market consolidates.

Products show a high variety of models as marketers begin to target different

customer needs in order to avoid prices and margin erosion.

And as we said before the name of the game is customer retention

rather than customer adoption as in the initial stages.

Going back to the mobile phone industry, today, a mobile phone is much better

than 20 years ago, and prices are just a fraction of the initial prices.

In the last stage, the fourth phase called decline,

we may expect the sales of our product to drop as newer,

more developed products of superior entity replace our old ones.

Because of that our clients begin to disappear and

profits also decline following the sales fall.

The only thing we can do as doctors at this stage is to

accompany our patients in order to extend their lives as much we can,

minimizing the costs related to keeping them alive.

Prices normally fall, many players exit the market, and

distribution channels begin to be reduced in accordance to the customers reduction,

with the objective of keeping costs down.

Following our communication example today, there weren't this mobile and

fix telephones, which was the king until the 90's, is in this decline stage today.

And the same happens with other industries, such as financial industries.

What is the name of the game with the physical branches network today.

As online banking becomes the most important way to conduct

financial transactions, we see a sigificant reduction of branches.

And this is all for today's lessons.

Thanks a lot, and I look forward to meeting you at our next lesson where we

are going to discuss the concept of planned obsolesence, thank you very much.

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