Do Now Opening Act – Page 188

7.4 Product Marketing Strategies

Product Life Cycle 4 stages that every product goes through – Introduction stage – Growth stage – Maturity stage – Decline stage

Product Life Cycle Marketing strategies for different stages

1. Introduction Stage Product is somewhat of a novelty in the market place and 1 brand new product is available.

Introduction Stage Ex. Gatorade – 1 st to industry – Educate consumers – Convince store owners

Introduction Stage 2 types of pricing strategies used: – Skimming price strategy – Penetration price strategy

1. Introduction Stage Skimming price strategy: – Introduces new products at a very high price Quality/ uniqueness emphasized Higher profits Encourages others to enter market

1. Introduction Stage Skimming price strategy: – Ex. Beanie babies Attracted other companies – Prices increased due to consumer demand – Become a collector’s market

1. Introduction Stage Penetration Price Strategy – Uses low prices to help capture a large market share only Establishes a consumer base Discourage competition

1. Introduction stage Penetration Price Strategy – Ex. New Water Park Low tickets to temporarily attract customers

2. Growth Stage Sales of a product and profits increase – Target market familiar – Ads focus on satisfaction – Product modified/ new models Maintains customer loyalty

2. Growth Stage Ex: Reality Shows – American Idol America’s Got Talent – Why? Success of 1 or 2 made these appealing to networks that wanted to capture a share of the market…

3. Maturity Stage Sales level off or slow down and most of the target market has already purchased the product – Marketing costs increase Fight off competition Maintain market share

3. Maturity Stage Sales prices offered – Hold off competition

4. Decline Stage Sales decrease and may not generate enough revenue to justify continued marketing of the product – Technological advanced can cause entire categories to enter decline stage

4. Decline Stage Several choices: – Drop a product – Sell/ license – Discount – Regionalize – Modernize/ alter – Recommit Major impact on future of product and company

Decline Stage Drop a product – Cut company losses – Ex. Amusement Parks Old: Giant slide New: Thrilling rides

Decline Stage Sell/ License to another company – Assumes all risk – Licensing agreement Still get a percentage of sales

Decline Stage Sell/ License to another company – Ex. Mossimo Licensed to target Designer clothes at reasonable prices

Decline Stage Discount – Reduce prices to sell faster – Encouraged to buy vs. competition – Higher volume of sales Justify keeping product around

Decline Stage Regionalize – Committing to area where product is most popular/profitable Ski Equipment – Regionalized to Colorado

Decline Stage Modernize/Alter – May reignite enthusiasm – New and improved – More effective Must think of what alterations/ modernizations will increase sales

Decline Stage Modernize/ alter – Ex. VW Bug Popular in the 1970s Reappeared because of: – Nostalgia – Higher fuel cost

Decline Stage Recommit – Other purpose for the product are found and promoted

Decline Stage Recommit – Ex. Aspirin Originally: pain reliever Now: Prevent heart attacks

Decline Stage Recommit – Ex: Sports Drinks Originally: Re-charge athletes Now: Refreshing for health conscious

Positioning a Product Used to differentiate its products/ services from competitors – Status – Price – Brand recognition – Quality – Features – Benefits

Positioning a Product Making comparisons Products grouped together as a product line

Positioning a Product Ex. Nike – Positioning: Brand recognition and status Celebrity endorsed=status

Positioning a Product Ex. New Balance – Positioning: Features Older market with foot problems/wider feet No longer had to compete with Nike/Adidas Promote to podiatrists for recommendations