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Product Life cycle

DUK Seyha

Marketing of Agriculture Mr. DUK Seyha, MSc

Product Life cycle
 It
is important in developing new product
marketing strategies.

 Itis divided into 4 categories:

1. Product introduction
2. Market growth
3. Market maturity
4. Sales decline

Marketing of Agriculture Mr. DUK Seyha, MSc

 Sales Volume PRODUCT LIFE CYCLE

Maturity
stage
Decline
Growth stage
stage

Introduction stage Time

Marketing of Agriculture 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

One dimensional
perceived by the
customer

quality
Value satisfaction
Exciting
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 Suggested
Safeguards
Market too Insufficient Market is
small demand for this defined and
type of product rough potential
estimated in the
opportunity
identification
and concept
test phase.

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Reason Elaboration Suggested
Safeguards
Poor match for Company Opportunities are
company capabilities do matched to
not match company’s
product capabilities and
requirements strategic plans
before starting
developments.

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Reason Elaboration Suggested
Safeguards
Not new/not A poor idea that Creative and
different really offers systematic idea
nothing new generation. Also
early consumer
check to see
how idea is
perceived

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Reason Elaboration Suggested
Safeguards
No real benefit Product does not In the design
offer better stage, perceived
performance benefits of
concepts as well
as benefits from
actual product
use are tested

Marketing of Agriculture 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 Product fails to Assessment of
support from generate trade response
channel expected in pretest market
channel support phase

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Elaboration Suggested
Reasons Safeguards
Forecasting Overestimation Use of
error of sales systematic
methods in
design, pretest,
and test phase
to forecast
consumer
acceptance

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Elaboration Suggested
Reasons Safeguards
Competitive Quick and Good design
response effective and strong
copying by positioning to
competitors preempt
competition.
Quick diagnosis
of and response
to competitive
moves

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Reason Elaboration Suggested
Safeguards
Changes in Substantial shift Frequent
consumers in consumer monitoring of
taste preference consumers
before product perceptions,
is successful during
development,
and after
introductions

Marketing of Agriculture 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 Poor profile Careful
investment margins and selection of
high costs markets,
forecasting of
sales and costs
and market
response
analysis to max
profits

Marketing of Agriculture Mr. DUK Seyha, MSc

Failure Reason Elaboration Suggested
Safeguards

Organizational Intra-organizational Multifunctional approach

problems conflicts and poor to new product
development to facilitate
management intra-organizational
practices communication.
Recommendation for a
sound formal and
informal organizational
design.

Marketing of Agriculture Mr. DUK Seyha, MSc