MKT 650
1. The Product Life Cycle is a fundamental model of marketing. First what is the product life cycle? How do the marketing mix elements have to respond as the product moves through its lifecycle? What are some of the key strategic choices that must be made at each stage of the lifecycle? Based on this discussion discuss the crucial importance of new products and developing strong brands. Why are new products and strong brands so crucial to marketers? How do most firms identify new products for the marketplace? Using any of the cases from this semester discuss the how the new product development process was followed. Was this product an innovation or a redesign of an existing product?
As the text book says, “The product life cycle is concerned with the sales history of a product class which holds that a product’s sales change over time in a predictable way and that products go through a series of five distinct stages: introduction, growth, shakeout, maturity, and decline”(Mullins & Walker, 2010, p271). Each of these stages has opportunities and threats for the firm, and they can affect the strategy of the company. Thereby, the product life cycle is an important way for managers to make decisions in the future.
In the first stage, the introductory stage, mentions by the text book that “a new product’s purchase is limited because members of the stage market are insufficiently aware of its existence; also the product often lacks easy availability” (Mullins & Walker, 2010, p271). The company should shorten the product line to reduce production costs and hold down inventories, and because the pricing is affected by many factors, companies usually use skimming and penetration pricing strategies for their new products. Skimming is “designed to obtain as much margin per unit as possible” (Mullins & Walker, 2010, p272), which means setting a high price for the product in the beginning of the product life cycle. It allows the company to recover investment of the
As the text book says, “The product life cycle is concerned with the sales history of a product class which holds that a product’s sales change over time in a predictable way and that products go through a series of five distinct stages: introduction, growth, shakeout, maturity, and decline”(Mullins & Walker, 2010, p271). Each of these stages has opportunities and threats for the firm, and they can affect the strategy of the company. Thereby, the product life cycle is an important way for managers to make decisions in the future.
In the first stage, the introductory stage, mentions by the text book that “a new product’s purchase is limited because members of the stage market are insufficiently aware of its existence; also the product often lacks easy availability” (Mullins & Walker, 2010, p271). The company should shorten the product line to reduce production costs and hold down inventories, and because the pricing is affected by many factors, companies usually use skimming and penetration pricing strategies for their new products. Skimming is “designed to obtain as much margin per unit as possible” (Mullins & Walker, 2010, p272), which means setting a high price for the product in the beginning of the product life cycle. It allows the company to recover investment of the
References: Mullins, J.W., Walker, O.C. (2010). Marketing Management A Strategic Decision-Making Approach. New York: Mc Graw-Hill. Cotte, J. (2010). HANSON PRODUCTION: PRICING FOR OPENING DAY. Harvard Business School. Mankiw, N. G. (2003). Principles of Economics, 3rd Edition. New York: Thomson Learning.