The Product Life Cycle and New Products

Instructor:
Dr. Ravi Shanker
 Objectives
 Introduce the product life cycle
 Introduce the marketing Objectives at each stage
of the life cycle.
 Identify the Marketing Mix options for each stage.
 Strategies to operationalize PLC.
 New Products: Concepts and Strategies
 Product Life Cycle

S
a
l
e
s

Introduction Growth Maturity Decline

Time
 Product Life Cycle
Sales and Profits Over the Product’s Life From
Introduction to Decline
Sales and
Profits (Rs)

Sales

Profits

Time
Product Introduction Growth Maturity Decline
Develop-
ment

Losses/
Investments (Rs)
 Product Life Cycle
 Products tend to go through different stages, each stage is affected
by different competitive conditions.

 The length of a product's life cycle is

in no way a fixed period of time. It
can last from weeks to years
depending on the type of product.

1894
 Product Life Cycle
 The degree of adjustment to the competitive
environment, determines the success of its life.

 Different marketing, financial manufacturing,

purchasing, HRM strategies are required in each stage of
the life cycle.

 Elements of MM need to be adjusted at various stages of

PLC.
 Product Life Cycle: Introductory Stage

Characteristics
Sales Low Sales
Costs High cost per
customer
Profit Negative
Customers Innovators
Competitors Few
 Product Life Cycle: Introductory Stage

Marketing Objectives
Create Product Awareness & Trail
 Product Life Cycle: Introductory Stage
Strategies
Product Offer a basic product

Price Use cost plus

Distribution Build selective
distribution
Advertising Build product
awareness in early
adaptors & dealers
Sales Use Heavy sales
Promotion promotion to entice
trail
 Strategies at Introductory Stage

Marketing Objectives: Create Awareness and

trial

a. Rapid-skimming strategy (high price/high promotion).

b. Slow-skimming strategy (high price/low promotion).
c. Rapid-penetration strategy (low price/high
promotion).
d. Slow-penetration strategy (low price/low promotion).
 Product Life Cycle: Growth Stage

Characteristics
Sales Rapidly Rising Sales

Costs Average Cost Per

Customer
Profit Rising Profits

Customers Early Adapters

Competitors Growing Number

 Product Life Cycle: Growth Stage

Marketing Objectives
Maximize Market Share
 Product Life Cycle: Growth Stage
Strategies

Product Offer product extensions, service,

warranty

Price Price to penetrate market

Distribution Build intensive distribution

Advertising Build awareness & interest in the

mass market

Sales promotion Reduce to take advantage of heavy

consumer demand
 Strategies at Growth Stage

Marketing Objectives: Maximize Market Share

a. Improve quality and add new features / elements
b. Pursue new target markets
c. Use new channels of distribution
d. Lower prices to attract more price-sensitive customers
e. Shift some advertising emphasis away from building
awareness to creating desire and action
 Product Life Cycle: Maturity Stage
Characteristics
Sales Peak Sales

Costs Low Cost Per

Customer
Profit High Profits

Customers Middle Majority

Competitors Stable Number
Beginning To
Decline
 Product Life Cycle: Maturity Stage

Marketing Objectives
Maximize Profits While Defending Market Share
 Product Life Cycle: Maturity Stage
Strategies
Product Diversify Brands &
Models
Price Price To Match Or Beat
Competitors
Distribution Build More Intensive
Distribution
Advertising Stress Brand Differences
& Benefits

Sales Promotion Increase To Discourage

Brand Switching
 Strategies at Maturity Stage

Marketing Objectives: Maximize Profits

a. Market-modification strategy
b. Product-modification strategy
c. Marketing-mix modification strategy
 Product Life Cycle: Decline Stage
Characteristics
Sales Declining Sales

Costs Low Cost per

Customer
Profit Declining Profits

Customers Laggards

Competitors Declining Number

 Product Life Cycle: Decline Stage

Marketing Objectives
Reduce Expenditure and Milk the Cow
 Strategies at Decline Stage

Marketing Objectives: Milk the Cow

• Reduce costs and milk the company

• Sell off or get out of the business
 Product Life Cycle: Decline Stage
Strategies

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
Sales Promotion Reduce To Minimal
Level
 Operationalizing PLC
1. Units Of Analysis: Product Class or Product Line
- Form
- Brand
2. Market Segment: Aggregate or Segmented

3. Shape Of The Curve

4. Identify The Stage

5. Unit Of Measurement Sales (Vol.) or Time

(Year/Quarter/Month)
 Mobile Phones in India 2011
657 mobile devices were launched in India in 2011.

The 881 million mobile subscribers in India, in 2011,

had numerous mobile devices to choose from with
models varying from the cheapest tablet of the
world, Aakash, for Rs 2,500, to the latest sensation
iPhone 4S which is available for around Rs 50,000.

The year 2011 saw the launch of 657 mobile devices

( mobile phones and tablets) by Indian as well as
MNC handset players in the country.
 Brands
Max Mobiles: 52 LG: 17
Fly Mobiles: 40 + 1 Onida: 16
tablet Nokia: 15 +dual SIM
Samsung: 39 including segment
Galaxy series Huawei: 15
Spice: 39 + a dual SIM G'Five: 14
Android smartphone Red: 14
Videocon: 35 Sony Ericsson Xperia: 13
Karbonn Mobiles: 35 HTC: 12
Intex: 26 + India’s first Airphone: 12
projector phone Motorola 11
Micromax: 20 + 3 Maxphone: 11
Android Philips: 10
Beetel: 23
Strategies for New Products
Strategies for New Products
HT: Dec. 27, 2019
 ESSENTIAL FEATURES OF
MARKETING:

1. STARTS WITH THE CUSTOMER

2. A LONG-RUN PERSPECTIVE
3. FULL USE OF ALL THE CO’S
RESOURCES
4. INNOVATION
 NPD&L SOME REMARKS
 New products are a way of getting new &
keeping old customers.

 New products are an effective way of obtaining a

competitive advantage

 New products are a source of both growth & hope

in the perceptions of employees & stakeholders
as an innovative organization is more exciting
than the conservative one.
 NPD&L SOME REMARKS
 Good marketing research and ongoing marketing
intelligence are a prime source of new product ideas, as
generated from consumers in the market place.

– MR is about diagnosis,
– it helps to understand what makes consumer tick,
– what motivates consumers,
– how they think about their problems for which your product may
provide a solution.

 MR should give information about what your

competitors are doing & what your customer think
about them.
 NPD&L: SOME REMARKS
 Technical & marketing development should move
along. One should never lead the other for very long.
The market place is dynamic, a good opportunity
defined yesterday needs to be retested tomorrow.

 Never lose sight of the target market, your defined

competitive advantage, the customer benefit you intend
to provide & promote.

 Therefore, Positioning is critical.

 NPD&L: SOME REMARKS
 The ultimate test is repeat purchase rate, not one
time trials.

 Test marketing is an attractive insurance policy.

Test marketing exposure means that your
competitors will know exactly what you are up
to.
 NPD&L: SOME REMARKS
 Implementation is crucial.

 A good idea can be ruined by poor implementation.

 The opportunity created by implementation is

significant as it may not be created again.

 Attention to each detail in launch make it harder for

competitors to jump in – leave them no opportunity
that you could have exploited
 Product & Market Planning
Existing New Products
Products

Existing
Market
Segments

New
Market
Segments
 Product & Market Planning
Existing New Products
Products

Core Product Focus Product Development

Existing
Market maintain, expand, improve products;
or harvest current add to product
Segments products line

Market Development Diversification

New
Market add new market add new product
segments lines; expand into
Segments
unrelated
businesses
Consumers’ Perspectives on “New” Products

Dynamically
Discontinuous Continuous
Continuous
Innovation Innovation
Innovation

Ongoing
Breakthrough Major change
alteration
 CATEGORIES OF NEW PRODUCTS
1. New-to-the-world products: new
products that create an entirely new
market.
 CATEGORIES OF NEW PRODUCTS
2. New-product lines: new products that
allow a company to enter an
established market for the first time
3. Additions to existing product lines:
new products that supplement a
company’s established product lines.
3. Additions to existing product lines:
new products that supplement a
company’s established product lines.
4. Improvements in/revisions to existing
products: new products that provide
improved performance or greater perceived
value & replace existing products.
 Techno- No Improved New
logy Technological Technology Technology
Change
Market
No Market Existing Reformulation Replacement
Change Product / Redesign

Strengthened Re-launch Improved Product Line

Market Product With
Wider Appeal

New Market New Uses For Market Total

Same Product Extension Diversification
With Minor
Product
Change
5. Re-positioning: existing products that
are targeted to new markets or market
segments.

Versa Family car V/s ECCO Multi Utility Vehicle

6. Cost reductions: new products that
provide similar performance at lower
cost.
 New Product Failures

New Products New Products

That Succeed That Fail
After Introduction

80%: New Product Ideas

Fail
 Reasons for
New Product Failures
1. Poor Technology
Sipani Cars
Established in 1973
Spaini Automobiles Limited was
an Indian car manufacturer.
First product - Sipani Badal
Launched in 1975
Country's first three-wheeled
car.
Subsequently brought a four-
wheeled version: Dolphin,
Montana and Montego
the company couldn't make a
mark in the Indian market and
soon went obsolete.
Samsung Galaxy Note 7
Launched & Shelved: Aug 2016 & Sept
2016
Cost: Was priced ₹59,990 onwards in
India
Plans vs Reality: Strong pre-orders of
the phablet suggested a looming hit for
Samsung. Pre-orders topped 200,000
units in the US. But exploding batteries
compelled the company to recall every
device sold
Flop fact: Samsung faced massive
losses, with some analysts estimating a
$16-billion hole for the South Korean
giant from this device’s failure
Jawbone
Launched & Shelved: Founded as Aliph in
1998 & under liquidation since 2017
Cost: $180 at launch
Plans vs Reality: Planned to compete with
Apple, Fitbit and Xiaomi in wearable tech
space. Despite ambitious plans and a mountain
of funding, Jawbone’s products failed to gain
traction. Poor product quality gave fitness
enthusiasts little reason to buy this device

Flop fact: Company’s founder and CEO Hosain

Rahman tried to pivot the business into a
healthcare venture, with little success
2. Market Changed
Tato Nano
Launched & Shelved: 2008 & 2018
Cost: Marketed as a ₹1 lakh car, but final bill was higher
Plans vs Reality: The Tata Group ambitiously packaged this vehicle as "the people’s
car" and pegged it as a crossover for two-wheeler users. But the tag of “cheapest car
in the world” apparently did not go down well with the aspirational target group.
There were some complaints about quality too
Flop fact:
The Sanand plant set up for
Nano now makes Tiago and Tigor
 
A380
Launched & Shelved: 2007 (first delivery)
& 2019
Cost: Listed at $445.6 million each
Plans vs Reality: Expected to sell up to 800
units but only 317 was sold. Airlines realised
that the massive plane might not be
economical, as the market shifted sharply
towards smaller, more fuel efficient aircraft.
Airlines have also pivoted from a hub-and-
spoke model to a point-to-point model
Flop fact: It could not outlive the 50-year
Boeing 747, which it was meant to
challenge
 3. Poor Publicity
Segway
Launched: 2001 at a Cost: $5,000
Plans vs Reality: The personal transporter was
expected to sell 10,000 units a week but sold
barely 30,000 units six years after its launch.
The product was too heavy, clumsy and
struggled to find wider adoption
Flop fact:
US President George W Bush's accident in 2003
British journalist Piers Morgan's breaking three
ribs in a 2007 fall
Segway owner James Heselden's fall off a 30-
foot cliff to his death in 2010 sealed the fate of
the transporter.
Google Glass
Launched & Shelved: 2013 & 2015

Cost: $1,500 (around ₹80,000)

Plans vs Reality: Augmented reality

eyewear was supposed to display
information hands-free. But people
found few uses and more concerns over
privacy and safety. Early adopters earned
the unwanted "Glassholes" moniker

Flop fact: Google says the product

hasn’t been completely shelved, but there
has been little indication of an updated
offering.
 4. Competition
Pagers Were Introduced in 1921

March 1995: India's first

licensed paging service started., the
market has grown to 200,000
subscribers

Feb. 2013: India became the first

country in the world to witness a
total wipe-out of the radio paging
industry.
Microsoft Zune
Launched & Shelved : 2006 & 2012
Cost : $ 249.95 at launch
Plans vs Reality : Roaring sales of Apple’s
iPod made Microsoft launch a line of digital
media products and services. But cut-throat
market and product glitches under mined any
chance of competing with the incumbents
Flop fact : Zune product sales ended in 2011,
but the music streaming service dragged on
until November 2015, when the firm finally
pulled the plug on the music down load and
streaming service also
 5. Price
Amazon Fire Phone
Launched & Shelved: 2014 &
2015
Cost: $199
Plans vs Reality:
Was expected to compete with
iPhone and Samsung Galaxy. But it
was too costly and there were too
few apps.
Flop fact: Amazon took a $170
million write-down for this ill-fated
foray and has since steered clear of
the mobile handset space
 6. Poor Positioning
 Close up: the Gel Toothpaste
was launched in India in 1975.
 Failed to make a mark
 Relaunched in 1988, targeting at youth
in age group 15-35 and Positioned on
Freshness, good breath, as against
“Healthy teeth.
 6. Poor Distribution
May examples:
 Fiat in India
 The entire SME sector
 Patanjali
Characteristics of Success
 Relative advantage
– Lower costs
– Faster
– Easier
– Longer lasting
– More fun
 Characteristics of Success
 Compatibility with existing habits and
behaviors
 Characteristics of Success
 Trialability
– Easily tested
– Low risk
– Inexpensive
– No special equipment
– Free samples or coupons

Demo days
Sample size
Characteristics of Success
 Observability
– Visible cues
– Communicate hidden qualities
Characteristics of Success
 Simplicity
– User friendly
– Understandable
– Logical extension
– Easy to grasp
 Characteristics of Success
 Level of perceived risk
– Performance risk
– Financial risk
– Physical risk
– Social risk
– Time-loss risk
REASONS FOR ABANDONMENT OF
INNOVATIVE PROJECTS
(A) Environmental Factors
– Market Too Small
– Very Few Buyers
– Severe Competition
– Supplier Uncertainty Fall of A380
– Obsolescence

Rise of A200
REASONS FOR ABANDONMENT OF
INNOVATIVE PROJECTS
(B) Organizational Factors
– Lack Of Skills
– Lack Of Production Capacity/Skills
– Faulty Communications
– R&D Cost Escalations and shortage Of resources
New Product Development Process

New Product Strategy

Idea Generation

Idea Screening

Business Analysis

Prototype Product Development

Market Test

Commercialization
New Product Development

IDEA GENERATION
SCREENING
BUSINESS ANALYSIS
DEVELOPMENT
COMMERCIALIZATION

NEW PRODUCT
A product idea is an idea for a possible product that the
company can see offering to the market

A product concept is an elaborated version of the idea

expressed in meaningful consumer terms

A product image is the particular picture that the

consumer acquire of an actual or potential product
 New Product Development
 Idea generation
– Ongoing
– ID target market needs
– Technology driven
– Marketing research
– Global vision
 New Product Development

 Screening
– Reasonable
– Pertinent
– Appropriate
– Real consumer need
– Magnitude of potential
– Corporate criteria / hurdle rates
 New Product Development
 Business analysis
– Qualitative evaluation
 Features
 Resource needs
 Basic marketing plan
– Quantitative evaluation
 Market demand
 Costs
 Investment
 Competitive activity
 Break-even analysis
 New Product Development
 Product development

– Prototype
– Total product (packaging, branding, etc.)
– Preliminary testing
– Concept Testing
 Present product to potential customers
– Test Marketing
 Field testing
 Laboratory testing
 New Product Development
 Commercialization
– Launch decision
– Marketing mix
– Establish production capacity
– Supply chain & partner
relationships
 New Product Failure
 Insufficient superiority or
uniqueness
 Inadequate/inferior planning
 Poor execution
 Technical problems
 Poor timing
Strategies to Modify Existing Products

Product Modification

Cost Repositioning Total Quality

Reductions Management
 Product Line Strategies

Full Line Strategy

Limited Line Strategy

Single-Product Strategy

What WSL did when launched Charms and thereafter King and Mini-king
 PRODUCT CATEGORY
Existing New

e i on

n
Existing i n ns

si o
Ex and
L te
Ex

ten
BRAND NAME

Br
New d s d s
b r an
B ran
lt i - w
Mu Ne
Modifying Products for International
Markets

Standardization Adaptation

Globalization Customization
Strategy Strategy
•McDonalds •Consumer goods
 Sales Excellent Launch the Product

Sales Ex.
Organise New Mkt. Sales Fair
Test Test
Marketing
Fair Sales Sales Poor

Modify Product Mkt. Test

Poor Sales Modify Product Mkt. Test

Drop the Product

 Right to Safety

Product Product Right to be

Obsolescence Ethics Informed

Quality of Life and Ecology

 Review
 Introduce the product life cycle
 Introduce the marketing Characteristics, Objectives and
strategies at each stage of the life cycle.
 Strategies to operationalize PLC.
 New Products: Concepts and Strategies
 ID elements of successful new products
 Overview stages of new product development
 Understand possible reasons for new product failure
 Review product line management