1. Product Life Cycle The Product Life-Cycle
This CTR corresponds to Figure 9-2 on p. 288 and relates to the material on pp
Instructor’s Note: This CTR can be used to overview the life cycle concept. Strategies appropriate for each stage are discussed on the following CTRs.
Product Life Cycle
Sales and
Profits ($)
Sales
Product Life Cycle Stages
Product Development. Development begins when the company finds and develops a new product idea. During development the product has costs but no sales. Development costs must be strategically weighed against the projected length of the product's PLC.
Introduction. During the introduction of new products initial sales growth is slow as the market is just becoming aware of the product. Profits are usually nonexistent at this stage due to heavy promotional spending.
Growth. This stage is characterized by rapid market acceptance of the product and increasing profits.
Maturity. In maturity there is a slowdown in sales growth as the product has achieved acceptance by most potential customers. Profits may level off or decline as marketing costs increase to defend existing market share.
Decline. In this period sales begin to fall off and profits decline dramatically.
Profits
Time
Product
Develop-
ment
Introduction
Growth
Maturity
Decline
Losses/
Investments ($)

2. Introduction Stage of the PLC
Product Life-Cycle Strategies
This CTR relates to the material on pp. 289 and 293.
Introduction Stage of the PLC
Sales
Low sales
Product Life Cycle Strategies
Costs
High cost per customer
Introduction. In this stage marketers spend heavily on promotions to inform the target market about the new product's benefits. Low or negative profits may encourage the company to price the product high to help offset expenses. companies can concentrate on skimming strategies to generate high profits now or on penetration strategies to build market share and dominant the market for larger profits once the market stabilizes.
Profits
Negative
Marketing Objectives
Create product awareness
and trial
Product
Offer a basic product
Price
Use cost-plus
Distribution
Build selective distribution
Advertising
Build product awareness among early adopters and dealers

3. Growth Stage of the PLC Sales Costs Profits Product Price Distribution
Product Life-Cycle Strategies
This CTR relates to the material on pp and 293.
Growth Stage of the PLC
Sales
Rapidly rising sales
Product Life-Cycle Strategies
Growth. In this stage the company experiences both increasing sales and competition. Promotion costs are spread over larger volume and strategic decisions focus on growth strategies. Strategies include adding new features, improving quality, increasing distribution, and entering new market segments.
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Product
Offer product extensions, service, warranty
Price
Price to penetrate market
Distribution
Build intensive distribution
Advertising
Build awareness and interest in the mass market

4. Maturity Stage of the PLC
Product Life-Cycle Strategies
This CTR relates to the material on pp and 293.
Sales
Peak sales
Costs
Low cost per customer
Product Life Cycle Strategies
Maturity. In this stage the company must manage slower growth over a longer period of time. Strategic decisions made in the growth stage may limit choices now. Marketing managers must proactively seek advantage by either market modification to increase consumption, product modification to attract new users (quality, feature, and style improvements), or marketing mix modification in an attempt to improve competitive position.
Profits
High profits
Marketing Objectives
Maximize profit while defending
market share
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits

5. Decline Stage of the PLC
Product Life-Cycle Strategies
This CTR relates to the material on pp
Sales
Declining sales
Costs
Low cost per customer
Product Life Cycle Strategies
Decline. In this stage the costs of managing the product may eventually exceed profits. Rate of decline is a major factor in setting strategy. Management may maintain the brand as competitors drop out, harvest the brand by reducing costs of support for short term profit increases, or drop the product (divest) altogether.
Profits
Declining profits
Marketing Objectives
Reduce expenditure and milk the brand
Product
Phase out weak items
Price
Cut price
Distribution
Go selective: phase out unprofitable outlets
Advertising
Reduce to level needed to retain
hard-core loyal customers

6. Branding Elements and Strategies
The nature, scope, and importance of branding in product planning
The various branding elements
The different types of brands
How to classify branding strategies
The right name is an important part of every successful business. The name and symbols of a business or a product project the personality of the company, product, or service.

7. private distributor brand
generic brand
brand extension
brand licensing
mixed-brand strategy
co-branding strategy
brand
brand name
brand mark
trade name
trade character
trademark
manufacturer brand

8. Branding
A brand is a name, term, design, or symbol (or combinations of them) that identifies a business or organization and the products that they offer. Brands are divided into two categories:
corporate brands
product brands

9. PRODUCT RECOGNITION
It is important that customers who are satisfied with a product can easily recognize and find a company’s branded products when they want to buy them again
Nine out of ten people will pay 25% more for a GE Soft White light bulb over a private or generic brand because it is perceived by customers to be better than the competitors

10. Top Ten Brands
Rank Brand Company Advertising
(in millions of dollars)
Brands are often a company’s most valuable asset. What is the total 1999 advertising spending for these top ten brands? Do you think these brands would continue to be valuable if the companies reduced or eliminated their advertising?
1 Chevrolet General 762.4
vehicles Motors Corp.
2 AT&T AT&T Corp
telephone services
3 Dodge Daimler
vehicles Chrysler
4 Ford Ford Motor 629.5
vehicles Company
5 McDonald's McDonald's
restaurants Corp.
6 Toyota Toyota Motor
vehicles Corp.
7 Sears Sears,
department stores Roebuck & Co.
8 Sprint Sprint Corp
telephone services
9 Chrysler Daimler
vehicles Chrysler
10 Nissan Nissan Motor
vehicles Co.

11. Importance of Brands in Product Planning
The use of brands is important in product planning for several reasons. Branding:
builds customer loyalty
assures customers that products carrying the same brand are of a consistent quality
addresses new target markets
establishes an image for a product or company

12. BRAND EXPOSURE
Helps companies extend their products into new target markets, new product lines, and new categories
Customers are more willing to try new products that carry a name they are familiar with
Example: GLAD family of products
Started with trash bags and has now moved into food storage containers and baggies

13. Generating Brands
Seventy-five percent of companies introduce a new product name each year. Brand names are generated by:
company employees
specialized computer software programs
branding agencies, naming consultants, and public relations agencies
Half of all corporate name changes occur because of company mergers and acquisitions.

14. Types of Brands
Three classifications of brands are:
manufacturer brands (national or producer)
private distributor brands
generic brands

15. TYPES OF BRANDS National Brands
(producer brands) owned by national manufacturers
Generate the majority of sales for most categories
Examples: Hershey Foods, Whirlpool, Ford, Hilton, American Airlines, Kraft and Nestle
Internet based national brands
Amazon.com, eBay, Monster

16. Both are private distributor brands from SEARS
TYPES OF BRANDS
Private Distributor Brands
private brands, store brands, or dealer brands
Developed and owned by wholesalers and retailers
Examples: Arizona for JC Penney, George for Wal-Mart, Villager for Kohl's
Both are private distributor brands from SEARS

17. TYPES OF BRANDS Generic Brands Does not carry a company identity
Packaging usually features a description of the product
Example: Pancake Mix, Paper Towels
Usually sold in supermarkets and discount stores
Often sold for 30 – 50% less than name brands

18. BRAND STRATEGIES Brand Extension Brand Licensing Mixed Brands
Co-Branding

19. BRAND EXTENTION
A branding strategy that uses an existing brand name to promote a new or improved product in a company’s product line

20. BRAND LICENSING
Some companies allow other organizations to use their brand, brand mark, or trade character through brand licensing Licensing company gets a fee (royalty) in return for authorization
Has licensing agreements with

21. MIXED BRANDS
Offer a combination of manufacturer, private distributor, and generic brands
Their own National Brand tires
Private Brand for SEARS

22. Co-BRANDING
Combines one or more brands in the manufacture of a product or in the delivery of a service

23. Re-Branding
Rebranding
Rebranding - a change to the brand name, logo, or image of a product or company
brand owner revisits the brand with the purpose of updating or revising

26. Partial Rebrand
Situations when a brand has been firmly established yet is simply outdated or needs to be refreshed.
Tweaking is required
Not a full rebrand

27. Total Rebrand
Situations when a brand’s intent to erase any previous brand identity and replace it with completely new imagery

28. Why Rebrand? Rebranding can help change a businesses: Quality
Target Market
New Product Line
Repositioning and Image
Altered Public Image