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Marketing StrategyMarketing Strategies

In Market Life Cycles Phases

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Product Life Cycle Market Life Cycle

Development Stage

Introduction Stage New Market Entries

Growth Stage Growth Markets

Maturity Stage Mature Markets

Decline Stage Declining Markets

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PRODUCT LIFE CYCLE

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Stages of Product Life Cycle

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How do opportunities evolve over time?

Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West

Publishing Company. All rights reserved.

Time (years)

Pro

du

ct

cate

go

ry s

ale

s

(real d

oll

ars

)

Pro

fit

per

un

it

(real

do

llars

)

Profit/unitSales

Life cycle

extension

GrowthCompetitive

turbulence

Maturity Decline or

extension

Introduction

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MARKET LIFE CYCLE

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Marketing Strategies During The Development Stage

McGraw-Hill/Irwin © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

Marketing Strategy During The Development Stage

• As Exhibit 7.8 indicates, a firm has no sales revenue during the development stage. In fact, the firm experiences a net cash outflow due to the expenses involved in product innovation and development. For most innovations, the firm assumes a great deal of financial, market, and opportunity risk due to the uncertainty involved in developing new products and brands. For example, the pharmaceutical industry understands the challenges of new product development like no other industry. Firms such as Merck, Pfizer, and AstraZeneca spend millions each year developing new drugs. Upon identifying a new drug, it takes years of testing before earning FDA approval. Then, once the new drug is on the market, the firm has only a few years to recoup their investment before patent protection expires and the market opens to generic competition. In this highly competitive industry, pharmaceutical firms live or die based on the umber and quality of drugs they have in their development pipelines.

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Marketing Strategy During The Development Stage (cont’d)

• The development stage usually begins with a concept, which has several components: (1) an understanding of the specific uses and benefits that target customers seek in a new product, (2) a description of the product, including its potential uses and benefits, (3) the potential for creating a complete product line that can create synergy in sales, distribution, and promotion, and (4) an analysis of the feasibility of the product concept, including such issues as anticipated sales, required return on investment, time of market introduction, and length of time to recoup the investment. Given the odds stacked against most new products, it is not surprising that over 80 percent of all new products fail. This unfortunate fact of life underscores the need to correctly identify target customer needs before developing the product strategy. Through effective test marketing, the firm can gauge customer response to a new product before the full-scale launch.

• New products that closely match customers’ needs and have strong advantages overncompeting products are much easier to market as the new product enters the introduction stage of its life cycle.

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