S31 PLC and Diffusion of Innovation

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diffusion of innovation

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Product Life-Cycle Strategies & Diffusion of Innovation:

Product Life-Cycle Strategies & Diffusion of Innovation Session-31

Product Life-Cycle Strategies:

10 - 1 The Typical Product Life Cycle (PLC) Has Five Stages Product Development, Introduction, Growth, Maturity, Decline Not all products follow this cycle: Fads Styles Fashions Product Life-Cycle Strategies

Product Life-Cycle Strategies:

10 - 2 The product life cycle concept can be applied to a: Product class (soft drinks) Product form (diet colas) Brand (Diet Dr. Pepper) Using the PLC to forecast brand performance or to develop marketing strategies is problematic Product Life-Cycle Strategies

Product Life-Cycle Strategies:

10 - 3 Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Begins when the company develops a new-product idea Sales are zero Investment costs are high Profits are negative PLC Stages

Product Life-Cycle Strategies:

10 - 4 Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Low sales High cost per customer acquired Negative profits Innovators are targeted Little competition PLC Stages

Marketing Strategies: Introduction Stage:

10 - 5 Product – Offer a basic product Price – Use cost-plus basis to set Distribution – Build selective distribution Advertising – Build awareness among early adopters and dealers/resellers Sales Promotion – Heavy expenditures to create trial Marketing Strategies: Introduction Stage

Product Life-Cycle Strategies:

10 - 6 Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Rapidly rising sales Average cost per customer Rising profits Early adopters are targeted Growing competition PLC Stages

Marketing Strategies: Growth Stage:

10 - 7 Product – Offer product extensions, service, warranty Price – Penetration pricing Distribution – Build intensive distribution Advertising – Build awareness and interest in the mass market Sales Promotion – Reduce expenditures to take advantage of consumer demand Marketing Strategies: Growth Stage

Product Life-Cycle Strategies:

10 - 8 Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Sales peak Low cost per customer High profits Middle majority are targeted Competition begins to decline PLC Stages

Marketing Strategies: Maturity Stage:

10 - 9 Product – Diversify brand and models Price – Set to match or beat competition Distribution – Build more intensive distribution Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching Marketing Strategies: Maturity Stage

Product Life-Cycle Strategies:

10 - 10 Product Life-Cycle Strategies Product development Introduction Growth Maturity Decline Declining sales Low cost per customer Declining profits Laggards are targeted Declining competition PLC Stages

Marketing Strategies: Decline Stage:

10 - 11 Product – Phase out weak items Price – Cut price Distribution – Use selective distribution: phase out unprofitable outlets Advertising – Reduce to level needed to retain hard-core loyalists Sales Promotion – Reduce to minimal level Marketing Strategies: Decline Stage

Diffusion of Innovation:

12 Diffusion of Innovation Innovators : They are venturesome & risk takers They are highly resourceful They buy the product at the Introduction Stage

Diffusion of Innovation:

13 Diffusion of Innovation Early adopters : They are the opinion leaders They are likely to transmit word –of –mouth influence and, due to this reason they are the most important group in determining the success of the product. They contribute very much to the growth of the product since it has been accepted by innovators and early majority

Diffusion of Innovation:

14 Diffusion of Innovation Late majority : They are conservative ,rely on tradition and generally adopt innovations in response to group norms and social pressure ,or due to decreased availability of the previous product . 4. Laggards : They are tradition bound and by the time they adopt an innovation ,it is old and has been superseded by something else.

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