Exam 11: Product and Promotion: Creating and Communicating Value

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The four basic stages of the product life cycle are:Introduction. This is a time of low sales and nonexistent profits as companies invest in raising awareness about the product and the product category. Some categories, such as the microwave, languish in this phase for years, while other categories, such as computer memory sticks, zoom through this phase. And some categories, of course, never get beyond introduction (think clear beers).Growth. Growth is a period of rising sales and profits. Typically, competitors begin to notice categories in the growth phase. They enter the market-often with new variations of existing products-which further fuels the growth. Portable MP3 players, for example, are currently in the growth phase, and a number of competitors are challenging Apple's hold on the market. Marketers focus on reinforcing brand positioning, often through extensive use of advertising.Maturity. During maturity, sales and profits usually peak. Interestingly, profits tend to peak before sales, as competition intensifies. Once a market is mature, the only way to gain more users is to steal them from competitors, rather than bringing new users into the category. Weaker players begin to drop out of the category. Gasoline-powered cars and network TV are in maturity in Canada. Marketers may use competitive advertising, promotion, price cuts, and improvement in product features to protect their brands and attract business from competitors.Decline. During this period, sales and profits begin to decline, sometimes quite rapidly. The reasons usually relate to either technological change or change in consumer needs. For instance, the introduction of word processing pushed typewriters into decline, and a change in consumer taste and habits pushed hot cereal into decline. Competitors continue to drop out of the category. Marketers are likely to put less emphasis on the product, perhaps even phasing it out.