Product Lifecycles & Adoption Curve

Product Lifecycles & Adoption Curve

Presented by

Bob Perry

The Entrepreneur

One who:

organizes,

manages, and

assumes the risks of a business or enterprise

Risk TakersMarket Finders

The Marketing Mix

Product

Price

Place

Promo

C

Customers

Product

The needs satisfying agent that is offered.

Convenience Goods

Staples

Impulse

Emergency

Shopping Goods

Homogeneous Goods

Heterogeneous Goods

Specialty Goods

Product Life Cycle

Products (like customers) have a life cycle. Sometimes these life cycles can be short, but often the life cycle of a product can be longer.

Generally, a product will go through four stages during its life cycle:

Introduction/Development (Birth)

Growth

Maturity

Decline (Death)

Product Life Cycle

Development &

Introduction

Growth

Maturity

Decline

Sales / Profits

Introduction StageTypical Characteristics

Sales grow slowly

Few if any established customers

Frequent product modification

Skimming price strategy

High failure rate

Profit minimal to negative

Limited product models

Little competition

High Promotional Cost

Focus is on creating awareness of product

Promotion strategies need to create demand

Intensive personal selling to distribution channel common

Growth StageTypical Characteristics

Sales grow at an increasing rate

More customers are established

Profits increase as sales increase with more limited competition

Prices start falling as competitors are added

Large companies may acquire smaller, pioneering firms

Heavier brand advertising and focus on differentiation between brands

Economies of scale start to influence pricing

Maturity StageTypical Characteristics

Sales continue to increase as the market place grows with adapters

Profit margins begin to shrink as more competitors enter market place

Product lines are widened or extended

Emphasis on product style more than just function

Marginal competitors begin to drop out of marketplace

Heavy promotion to maintain market share

Maturity stage can last for an extended period of time.

Decline StageTypical Characteristics

Sales decline or disappear

Sometimes new products with more utility replace older products

Falling demand forces many and eventually most competitors out of the marketplace

Some specialty firms may stay in the market for a long time as competition leaves the marketplace.

Sales are generally low and the only way to survive is to find niches for the product that can support higher pricing

Adoption Curve

The Adoption Curve is adapted from a Everett Rogers Diffusion of Innovations and is used to show how quickly differing consumer groups adopt new products

The Adoption Curve segments include:

Innovators (3% to 5%)

Early Adopters (10% to 15%)

Early Majority (about 34%)

Late Majority (about 34%)

Laggards (5% to 16%)

Adoption Curve is basically a statistical Bell Curve

Innovators

Do not rely on norms or past standards

First to adopt any new product, service, or idea.

Tend to be younger with higher social or economic status

Rely less on group norms and like to get their information from technical sources and experts.

Generally 3% to 5% of the population

Early Adopters

Relatively high is social status and often opinion leaders.

Typically younger, more mobile, and more creative than majority

Rely on input from innovators and technical sales

Early Majority

Early Majority consumers collect more information about the product and will weigh the pros and cons before they make a decision.

They listen to their opinion leaders and will rely on their groups opinions instead of forming them for themselves.

Early Majority group members are positioned between the earlier and later adopters and are deliberate in their data collection process.

Late Majority

Late Majority consumers adopt a new product mainly because their friends have all adopted them and they feel the need to conform.

This group is typically older and may have below average income and social status.

They listen to word-of-mouth communication over mass media, since they trust their friends more.

Laggards

Laggards do not rely on group norms and values, just like Innovators, which makes them difficult to reach.

Their past heavily influences their current decision process.

By the time Laggards adopt an innovation it has been possibly outmoded and replaced by something new and flashy.

They are extremely suspicious and feel alienated from a rapidly changing society.

This group probably bought their first black-and-white TV after color television was already dominantly used.

Marketers and advertisers tend to ignore Laggards since they are not motivated by advertising or personal selling and will only purchase a new product when they absolutely have to.

Adoption Curve

Time

Innovators

Early Adopters

Early Majority

Late Majority

Laggards

Percent of adoption

5%

20%

50%

90%

Product Life Cycle

Development &

Introduction

Growth

Maturity

Decline

Shoes

Crocs

Oculus Rift

Tablets

Atari

Cassette players

VCR Players

Vinyl Records

MS Windows

Microsoft Surface Pro

Moccasins