Product development and product lifestyles

Question 1

What stages does the Product Life Cycle contain?

Answer 1

1. Pre-launch
2. Intro
3. Growth
4. Maturity
5. Decline

Question 2

What does pre-launch contain?

Answer 2

creates buzz

Question 3

What does introduction contain?

Answer 3

creates awareness - product (offer a basic product), price (charge cost plus), place (builds selective distribution) and promotion (builds awareness)

Question 4

What does growth contain?

Answer 4

builds market share - product (offers extensions, services, warranties), price (price to penetrate), place (build intensive distribution), promotion (build interest in mass market)

Question 5

What does maturity contain?

Answer 5

Maximise profits - product (diversifies brands and models), price (price to match competitors), place (build even more intensive distribution), promotion (stress brand benefits to encourage switching)

Question 6

What does decline contain?

Answer 6

Milks the product - product (phases out weak brands and models), price (cut price), place (phase out unprofitable outlets), promotion (reduced to minimal)

Question 7

What are the pro’s of the PLC?

Answer 7

• One of the most popular and enduring marketing frameworks.
• Simple, helps with planning (prepare for the inevitable decline)
• Induces managers to look beyond the current market situation
• Can provide insights about appropriate marketing strategies.

Question 8

What are the con’s of the PLC?

Answer 8

• Sometimes its difficult to determine in which stage a product is.
• Difficult to forecast - shape of PLC, length of each stage, sales level in each stage, can be a self-fulfilling prophecy

Question 9

Why do the types of PLC shapes vary?

Answer 9

Products may be able to be revived, such as the selling of vintage shops, this gives levels of nostalgia to consumers that may make them more inclined to buy more.

Question 10

What is the new product development tunnel?

Answer 10

involves stages that a product will go through in order to make it a successful product

Question 11

What are the stages of new product development?

Answer 11

• idea generation - is the product worth considering?
• idea screening - is the product idea compatible with company objectives, strategies and resources?
• business and market analysis - can we find a good concept consumers say they would try? Can we fins a cost effective affordable marketing strategy? Will product meet out profit goal?
• Development - have we got a technically and commercially sound product?
• Market testing - have products sales met expectations?
• Commercialisation - are product sales meeting expectations?
• Launch - lay future plans or products may be modified, or market program may be changed if product is not meeting expectations.

Question 12

Who is involved in generating ideas?

Answer 12

Employees, crowd sourcing (e.g. Fire Fox), competitors (copy or make knock-off products) and lead users(biggest fans of the product) are often involved.

Question 13

What is adoption?

Answer 13

adoption is an individuals decision to become a regular user of a product. Stages in the adoption process include - awareness, interest, evaluation, trial and adoption

Question 14

What are the characteristics of innovation?

Answer 14

relative advantage, compatibility, divisibility, complexity, communicability.

Question 15

What are the different adopter categories on relative time of adoption?

Answer 15

21.5% are innovators
13.5% are early adopters
34% are early majority
34% late majority
16% laggards

Question 16

Why do 95% of all new product launches fail?

Answer 16

• insignificant ‘point of difference’
• overestimation of market size
• poor execution of the marketing mix
• product design problems
• product may have been pushed despite poor marketing research findings
• cost of product development
• competitive actions

Question 17

What is a example of a failed new product launch?

Answer 17

Mid 1990s General Mills introduced Fingos: sweetened cereal flake about the size of a corn chip. To be snacked on dry.
This product failed because there was poor execution of the marketing mix, product was poorly designed, dry cereal flakes didn’t appeal to man people and its lack of mainstream marketing could have contributed to its market failure.

Question 18

What is the product mix?

Answer 18

All the product lines and items offered.
- Width - number of different product lines
- Length - total number of items in product lines
- Depth - number of versions of each product

Question 19

What is the product line length?

Answer 19

stretching = lengthen beyond current range (downward and upward.
filling = lengthen with current range.
contraction = discounting products

Question 20

What is upward and downward stretching?

Answer 20

• trading up = adding a higher priced, prestige product to a line in the hope of increasing sales of existing lower priced products.
• trading down = adding a lower priced item to a line of prestige products in the hopes that people who cannot afford the original product will want to buy the new one, because it carries some of the status of the higher priced goods.

Question 21

What problems occur with upward and downward stretching?

Answer 21

problems may occur such as confusing the buyers, sales are of the expense of older products and it may permanently harm company reputation.
Firms must consider discounting product lines when they are not successful, they reach the decline stage of the PLC and the product line marketing costs become too high.

Question 22

What does the Ansoff Matrix contain?

Answer 22

Existing markets, existing products = market penetration.
Existing products, new products = product development
New markets, existing products = market development
New markets, new products = diversification