FUNDAMENTALS OF MARKETING

(MKT243)
SUMMARY OF CHAPTER 6
DEVELOPING AND MANAGING PRODUCT

Prepared by :
NUR INDAH WAIDA BINTI OTHMAN
(2018446264)
A4AC1204E

Due Date :
4 MAY 2020
 New products are defined as a-new-to-the-world, to the market, to the producer or seller, or
some combination of these. (Lamb (2013))
There are seven steps in the new product development process , which are :
 Product life cycle is a biological metaphor that traces the stages of a product’s acceptance from its
introduction to decline. The life cycle does not predict how long a product category remains in any one
stage, instead, it help the marketers to understand where their product is, what may happen to it and
which strategies are appropriate. Product life cycle has four major stages :

1. Introductory stage

Introduction stage starts when the new product is first launched into the marketplace. This stage is
represent by high of failure rate, little competition, frequent modification and limited distribution. In
this stage, profits are negative or low as sales increase slowly because the company need to spend a
lot of money in order to promote the product to educate the consumers about new product’s
benefit. Therefore, the company wil increase the price due to the low output rate and high cost of
production.

2. Growth stage

Growth stage is characterized by sales growing at an increasing rate. Profits rise rapidly, reach their
peak and begin declining as competition intensifies. During the growth stage, the product is offered
in more sizes, flavours and models. Prices usually remain or slightly fall and profits reach the peak.
The firm uses several strategies to sustain rapid market growth as long as possible :

a) It improves product quality and adds new product features and models
b) It enters new market segment
c) It enters new distribution channels
d) It shifts some advertising from building product awareness to building product conviction and
purchase.
e) It lowers prices at the right time to attract more buyers.
3. Maturity stage

Maturity stage is characterized by declining sales growth rates, markets approaching saturation,
and a move toward the widening or extension of the product line. During this stage, marginal
competitors begin dropping out of the market. Prices and profits begin to fall. Product managers
should consider several strategies in this stage :

a) Modifying the market

- Company tries to increase the consumption of the current product by finding new users and
new market segments for its brands. Example, Panadol produced another type of Panadol
for children.

- Increase usage among present customers by using heavy promotion to maintain market
share.

b) Modifying the product

- Company tries changing characteristics such as quality, features, style or packaging to
attract new users and inspire more usage.

One of the example of modify the product, changing to a new packaging that look more
attractive .
 c) Modifying the marketing mix
- Company tries to change one or more marketing mix elements
- Can cut prices to attract new users and sompetitor’ customers.
- Can launch a better advertising campaign or use aggressive sales promotion
- Move into new marketing channels to helps serve new users.

4. Decline stage

Decline stage is signalled by a long-run drop in sales. Sales decline for many reasons including
technological advances, a shift in consumer tastes and increased competition.
At this stage, the management must decide :
i) To maintain its brand, repositioning it in hopes that competitors will leave the industry.
ii) To harvest the product, which means reducing various costs and hoping that sales hold up .
iii) To drop the product from the line.

A classic example of the scope of the product life cycle is the typewriter.

When first introduced in the late 19th century, typewriters grew in popularity
as a technology that improved the ease and efficiency of writing. However,
new electronic technology like computers, laptops and even smartphones
have quickly replaced typewriters - causing their revenues and demand to
drop off. Overtaken by the likes of companies like Microsoft (MSFT) - Get
Report , typewriters could be considered at the very tail end of their decline
phase  - with minimal (if existent) sales and drastically decreased demand.
Now, the modern world almost exclusively uses desktop computers,
laptops or smartphones to type - which in turn are experiencing a growth or
maturity phase of the product life cycle.  ( (Sraders, 2019)
References
Sraders, A. (2019, March 4). What is the product life cycle ? Stages and Examples. Retrieved from
TheStreet: https://www.thestreet.com/markets/commodities/product-life-cycle-14882534