Measures to extend the life cycle of products. Types of product life cycle curves. Methods for extending the product life cycle. Methodology for calculating the initial price
Life cycle time is the time of existence of a product on the market from the moment of its introduction until exit from the production program.
ZhCT is a concept that describes product sales, profits, customers, competitors and marketing strategy from the moment a product enters the market until it is withdrawn from the market.
Types of gastrointestinal tract vary greatly in both duration and form.
The life cycle cycle, or the curve describing it in “time – profit” coordinates, can be divided into the stages of introduction, growth, maturity, decline
Methods for prolonging life cycle and characteristics of each stage:
The stage of introducing a product to the market. The introduction stage begins from the moment the product is distributed and goes on sale. The process of bringing a product to market takes time, and sales tend to grow slowly during this period. Well-known products such as instant coffee, frozen orange juice, and coffee creamer powder had to wait many years before they entered a period of rapid growth. Slow growth may be explained by the following circumstances: 1) delays in expansion production capacity, 2) technical problems (eliminating hiccups), 3) delays in getting the product to consumers, especially in establishing proper distribution through various retailers outlets, 4) the reluctance of clients to give up their usual patterns of behavior 7 . In cases with expensive new products, sales growth is hampered by a number of other factors, such as a small number of buyers who are able to accept the product and afford to purchase it.
At this stage, the company either incurs losses or profits are very small due to insignificant sales and high costs of organizing the distribution of goods and stimulating their sales. Promotional costs reach their highest level at this time due to the need for concentrated efforts to promote a new product in order to: 1) inform potential consumers about a new product unknown to them, 2) encourage them to try the product, and 3) ensure that this product is distributed through retail enterprises.
There are few manufacturers at this stage, and they produce only basic versions of the product, since the market is not yet ready to accept its modifications. Firms focus their sales efforts on consumers who are most prepared to make a purchase, usually representatives of groups with high level income. Prices at this stage are usually increased.
Growth stage. If the new product satisfies the interests of the market, sales will begin to grow significantly. Early adopters will continue to buy the product. Ordinary consumers will begin to follow their example, especially if they have heard favorable reviews about the product. New competitors appear in the market, attracted by the opportunity. They will offer products with new properties, which will expand the market. The increase in the number of competitors will lead to a sharp increase in sales from factories to saturate distribution channels with goods.
Prices remain the same or decrease slightly as demand increases. Firms' sales promotion costs remain the same or increase slightly to counteract competitors and continue to educate the public about the product.
Profits at this stage increase, since sales promotion costs fall on a larger volume of sales while simultaneously reducing production costs. In order to maximize the period of rapid market growth, a company can use several strategic approaches,
1. Improve the quality of the new product, give it additional properties, and release new models.
2. Penetrate new market segments.
3.Use new distribution channels.
5. Reduce prices in a timely manner to attract additional consumers.
A company that resorts to the use of the mentioned strategic techniques to expand the market will certainly strengthen its competitive position.
Maturity stage. At some point, the growth rate of product sales will begin to slow down - the maturity stage will begin. In terms of time, this stage is usually longer than the previous ones and poses complex tasks in the field of marketing management. Most of the products available in the market are just at the maturity stage and, therefore, marketing management mainly deals with “mature” products.
The slowdown in sales growth means that many manufacturers are accumulating inventories of unsold goods. This leads to increased competition. Competitors are increasingly resorting to selling at discounted prices and below list prices. Advertising is growing, and the number of preferential deals with trade and consumers is increasing. R&D spending is increasing to create improved product variants. All this means lower profits. A number of the weakest competitors are beginning to drop out of the fight. In the end, only entrenched competitors remain in the industry.
A company must do more than just protect its product. The best defense is an attack. And it needs to constantly look for ways to modify the market, the product and the marketing mix.
MARKET MODIFICATION. The company seeks to increase consumption of an existing product. It is looking for new users and new market segments. At the same time, it is looking for ways to encourage more intensive consumption of the product by existing customers. The company may want to reposition the product so that it appeals to a larger or faster growing market segment.
MODIFICATION OF PRODUCT. A company may also modify the characteristics of its product, such as quality level, features or appearance, to attract new users and intensify consumption.
Strategy quality improvement aims to improve the functional characteristics of the product, such as durability, reliability, speed, taste. This approach is effective when: 1) quality can be improved, 2) customers believe claims about quality improvement, and 3) there is sufficient a large number of buyers want improved product quality.
Strategy improving properties aims to give the product new properties that make it more versatile, safer and more convenient. The strategy for improving properties is successfully used by Japanese manufacturers of watches, calculators, copying machines, etc.
Strategy improvement of external design aims to increase the attractiveness of the product. So, to attract buyers who need something new in appearance, automobile companies periodically change the external design of their models.
MODIFICATION OF THE MARKETING COMPLEX. Among other things, the company should strive to stimulate sales by modifying one or more elements of the marketing mix. To attract new customers and lure away the clientele of competitors, you can reduce the price. We can try to develop a more effective advertising campaign. You can resort to active sales promotion techniques, such as concluding preferential deals with sellers, issuing coupons giving the right to a small discount on the price, distributing souvenirs, and holding competitions. A firm may be able to take advantage of larger market channels, such as retail outlets, especially if these market channels are experiencing growth. The company may also offer customers new or improved types of services.
Decline stage. In the end, sales of a product variety or brand will still go down. The decline in sales can be slow or rapid. Sales may fall to zero, or they may drop to a low level and remain at this level for many years. The decline in sales is due to a number of reasons, including advances in technology, changing consumer tastes and increased competition from domestic and foreign rivals. As sales and profits fall, some firms leave the market. Those who remain may reduce their product offerings, divest from smaller market segments and less efficient sales channels, cut back on incentives, and cut prices even further.
Preserving a product that has entered the stage of decline in its range can be extremely costly for a company. The product may take up too much of management's time. In addition, it often requires price adjustments and inventory revaluations. The cost of its production is high, it requires both advertising and the attention of sellers, and funds or efforts might be better directed towards organizing the production of new, more profitable products. The very fact of its decline in success may cause confusion among consumers towards the manufacturing company as a whole. But the most significant troubles may await the company in the future. Not being discontinued in a timely manner, decrepit goods prevent the beginning of an energetic search for a replacement. Such products undermine profitability today and weaken the firm's position in the future.
The company should pay more attention to its decrepit products. The first step is to identify products that have entered the stage of decline through regular analysis of their sales figures, market shares, cost levels and profitability. For each of them, the company’s management must decide either to continue its production, or to “reap the fruits,” or to exclude it from the range. The decision to continue producing a brand may be made in the hope that competitors will leave a particular area of activity. Management may decide it’s time to reap the benefits,” i.e. dramatically reduce any costs associated with the product (by production equipment, logistics, R&D, advertising, sales staff, etc.) in the hope that sales will remain at a fairly decent level for some time. If successful, the reaping strategy will provide the company with short-term profit growth. Management may also decide to eliminate a product from the product line by selling it to another company or simply discontinuing its production.
Product labeling. Trademark and its essence. Basic concepts of trademark practice
Brand is a name, term, sign, design, or combination thereof, intended to identify the goods and services of one seller or group of them and differentiate them from the goods and services of competitors. Brand attributes: brand names, brand sign, trademark, Copyright.
Brand name¾ part of a brand that can be pronounced, for example “Avon”, “Mercedes”, “Disneyland”, “Rakhat”
Vintage sign (emblem)¾ part of a mark that is identifiable but cannot be pronounced, such as a symbol, image, distinctive coloring, or specific typeface design. Examples include the image of a rabbit in the symbols of the Playboy Corporation or the image of a lion in the symbols of the Metro-Golden-Mayer studio.
Trademark- a brand or part thereof, provided with legal protection. It protects the seller's exclusive rights to use the brand name or mark.
Quality- this is the estimated ability of a branded product to perform its functions: durability, maintainability, reliability, accuracy, ease of operation, etc. In marketing, quality is viewed from the perspective of consumer perceptions.
Decisions regarding brand designations appear to indicate that the product belongs to the manufacturer.
Recently, there has been a tendency to eliminate brand designations to reduce prices.
The decision of the brand owner can have three ways of transferring his product to the market: under the brand of the manufacturer himself; under the brand name of the intermediary selling this product; both under your own and under the intermediary’s brand.
There are four approaches to the problem of assigning brand names:
1. Individual brand name (not associated with the company name).
2. A single brand name for all products.
3. Collective brand name for product families.
4. Trade name of the company in combination with individual brands of goods.
There are several sources for choosing a brand name: abbreviation (IBM, PC, ABC), invented names (Epsson, Butya), numbers (Chanel No. 5, Century - 21), mythological images (Atlant tires), proper names (Ford) , geographical names (paints “Pittsburgh”, “Tula Samovar”), dictionary names (“San-beam” - sunbeam), foreign words (Lux, Foodmaster), combinations of words (shampoo “Head and Shoulders” - head and shoulders) .
There is a multi-brand approach of two or more brands in one product category. When developing a marketing strategy for specific products, the seller must decide whether he will offer them as branded products. Presenting a product as a brand can increase its value, and therefore such a decision is an important aspect product policy.
The brand name should not be random. It should help strengthen the idea of the product. The brand name must have the following qualities: 1. It must contain a hint of the benefits of the product, for example, “Beauty-rest” mattresses (wonderful rest), “Craftsman” hand tools (craftsman). 2. It should contain a hint about the qualities of the product, such as the nature of the action or color, for example, Sunkist oranges (bearing the kiss of the sun), Firebird cars (firebird). 3. It should be easy to pronounce, recognize and remember. This is best answered by short names, for example, Tide washing powder, Crest toothpaste. 4. It must be clearly distinguishable from others, for example, a Mustang car, Kodak photographic products.
Many companies strive to create a unique brand name, which will subsequently become associated with the entire product category.
A strategy for expanding the boundaries of a brand is any attempt to use a successful brand name when introducing product modifications or new products to the market.
Tasks of trademarks.
Building brand loyalty means maintaining a strong brand image and maximizing sales.
Maintaining the popularity of existing brands is one of the company's highest priorities.
Reasons for the importance of trademarks:
· identification of products is facilitated, the consumer can order goods by name instead of description (trademark as a kind of replacement for a standard or specification);
· a certain level of quality is constantly guaranteed;
· it is known which company is responsible for the product;
· price comparisons are decreasing as consumers become aware of brand differences;
· consumers feel they take less risk when they purchase a brand they are familiar with and feel good about;
· brand testing facilitates market segmentation and creates a distinctive image;
· well-known brands are more attractive to distribution channels;
· the brand can be used to sell an entire assortment group of products, such as, for example, various Sony cameras;
· the trademark can be used to enter a new product category (establish trademark for new products).
The product life cycle is viewed from the market and company perspective.
Phases life cycle product:
1) Product launch(market testing)
2) Increase in sales and demand
3) Demand saturation(growth slowdown) – obtaining basic profits
4) Stabilization of demand and sales– receiving basic profits
5) Sales decline
6) Product discontinuation
Stages 2 and 3 are often combined into stage Maturity- minimum investment costs, stable operating costs. The cash flow from sales is significant, the product goes through the payback period and makes a profit.
5 and 6 – combined into a stage Decline/degradation- cash flow from sales falls.
The duration of the life cycle as a whole and its individual phases depends both on the product itself and on the specific market. It is believed that raw materials have a longer life cycle, finished products have a shorter life cycle. In addition, the life cycle of the same product in different markets may be different.
Ways to extend the “product life cycle”:
1) Product Variations by size, packaging, color...
2) Improving product quality
3) Modification/improvement of the product (giving new properties): There is no need to “reinvent the wheel”; you just need to add a new part or function to it. At the same time, the innovation must be competitive, or better yet, unique in the market for similar products.
4) New design . A design change is not just a superficial change in a product, as it might seem at first glance. When the consumer is fed up with high technology performance (and in most cases, leading companies are keeping pace with each other in the speed of introducing new technologies), he begins to pay closer attention to appearance goods.
5) New packaging with the same content is an excellent reason to remember the quality and, at the same time, keep up with progress.
6) Regulation of pricing policy can be carried out both in the direction of decreasing the price and in the direction of increasing it. Accordingly, by setting certain prices, the company “masters new frontiers”, expanding its target audience.
7) Service / new service may turn out to be a significant accompaniment to the already existing range of services (restaurant business - happy hour).
8) Development of new segments or markets– release of a new product under the same brand. It's really good way approach the issue of consumer tastes more carefully and expand the range of your products
· Support of large-scale action
· Organizing your own event
10) Extreme situations. Oddly enough, extreme situations can also be useful for extending the life of a particular product/service. Such situations mean shortages, economic crises, food shortages, environmental problems... (For example, during the next economic decline in our country, the network mobile communications SONET released its famous Anti-Crisis tariff (unlimited for $25 per month), thereby significantly increasing the number of subscribers).
Along with the life cycle of the product, the life cycle of technologies influences the formation of product policy:
It is possible to produce new products based on the same technology
You can update the production technology of an old product
Life cycles can be:
Many other eqs are associated with the life cycle of a product. patterns: for example, the function of consumer adaptation to a new product:
5. Main pricing factors
From the point of view marketing:
Methodology for calculating the initial price:
1) Pricing tasks
2) Determination of demand
3) Cost estimation
4) Analysis of prices and products of competitors
5) Selecting the c/o method
6) Setting the final price
Classification of factors influencing price setting (Arenkov):
1. Main Factors
1) Production price: costs, average profit
2) The relationship between supply and demand
3) Direct price regulation: monopoly regulation, government regulation
2. Specific factors
1) Product quality
2) Scope of delivery
3) Relationship between buyer and seller
4) Terms of payment
5) Price franking
Basic methods for determining prices:
1) Focus on costs and marginal profits
2) Focus on demand
3) Focus on competition
4) Focus on average market prices
5) Leader orientation
Pricing factors (Minco):
1. State price regulators- these are taxes, subsidies, subsidies, excises, customs duties, restrictions, direct pricing. With the help of these measures, many states do not allow high prices for essential food products - bread, milk, sugar - in their domestic markets.
2. Demand factors– they determine the prices that consumers are willing to pay. These factors include:
– effective demand for a given product;
– level and trends of household savings;
– volume of demand, i.e. the amount of goods that a buyer is able to purchase at a certain price level;
– quality characteristics of the product and its consumer properties;
– the usefulness of the product from the consumer’s point of view, i.e. consumer assessment of a product's ability to satisfy a need. At the same time, the structure of needs is considered to be the factors of consumer choice; substitutability of goods with specific goods; the ability for the buyer to compare goods with interchangeable goods, as well as with complementary goods or goods for which this product is complementary.
3. Supply factors– they determine the price that the seller claims:
– the quantity of goods that will be offered on the market and that which a given seller can offer;
– stocks of this product;
– production and circulation costs when selling goods on the market;
– prices for resources used in the production of goods;
– taxes and excise duties;
– profit desired by the seller, payment of debts and dividends.
4. Factors arising from alternative production possibilities:
– maximum substitutability of products, taking into account available technologies and resources, opportunity costs;
– maximum substitutability of alternative technologies;
– marginal substitutability production factors;
– marginal substitutability of capital and labor.
5. Efficiency of goods production– these are the actual costs of its production.
The listed factors operate differently in different regions of the country, in different localities, for different groups of goods and segments of the population.
6. Main types of enterprise pricing strategies.
As part of the chosen strategy, the company can use one of the pricing policies. Among the main pricing policy the following can be mentioned:
· recovery of production costs (firm survival)– prices are set based on the costs incurred by the company, taking into account the desired profit.
· skimming policy (short-term profit maximization)– used, as a rule, in the short term in the absence of similar offers from competitors, with a subsequent reduction in prices when entering other segments.
· introduction of goods to the market (short-term maximization of turnover)– short-term use of low prices, with the aim of quickly increasing sales volumes when entering the market, followed by their gradual increase
· low price policy (maximizing sales)– the company strives to set the minimum low prices that are possible...
· stabilization of its position in the sales market– the company provides reliable justification for sales volumes and market share, the absence of sharp price increases, gradual development of markets and smooth replacement of the assortment
· elastic pricing policy– use of flexible prices that take into account the price elasticity of demand.
· price leadership– the company uses the highest possible prices that provide the desired sales volume, using its competitive advantages in any area.
· Leadership in product quality– to consolidate leadership in quality, the company appoints high price to reimburse increased costs
· Reducing consumer sensitivity to prices– a thorough analysis of market conditions is carried out, especially the price-quality ratio, a very large differentiation of their products in terms of quality and prices in order to “confuse” buyers with difficult-to-match price-quality ratios for a subsequent hidden price increase.
From the point of view Pricing:
1) Internal pricing factors.
2) Product specifics: the higher the quality of the product and the more unique it is, the higher the price (factor D - rarity).
3) Peculiarities production process : products of small-scale and individual production have a higher cost => the manufacturer charges a higher price. Mass produced goods – low costs (economies of scale).
4)Market strategy and tactics of the manufacturer: targeting one or more market segments, price differentiation strategy for different segments.
5) Product life cycle specifics: The shorter the product life cycle, the higher the price.
6) Mobility of the production process: flexibility, adaptability of the enterprise to changing conditions. The production of high-tech products has less mobility.
7) Duration of product promotion along the chain from manufacturer to consumer: The number of intermediaries increases the price.
8) Organization of service during sales and in the after-sales period: The consumer pays for the service.
9) Manufacturer’s image both in the domestic and foreign markets: trademark, trademark, etc.
2) External factors pricing.
1) The nature of the state’s economic policy and political stability in the country where the product is produced, as well as in the countries where the product is sold.
2) Lack of resources necessary for the economy on the free market(labor, financial, material, etc.). Absence => rise in price of products.
3) Presence and level of competition between manufacturers of similar products.
4) Scope and specific features of existing and future D.
5) Level and dynamics of inflation(about 3% in normal countries).
6) Market size.
7) Market segmentation.
As is known, almost anything can act as a product: from an innovative invention to food, from valuable information to a piece of art. But, whatever the product, it always goes through a certain life cycle. Just like any organism, the life of a product begins at birth. This is followed by “entering the public” (introduction to the market), then a period of active growth and maturity, after which the phase of product saturation inevitably begins. And then the recession phase, which can easily end in “death” - that is, irreversible disappearance from the market. Naturally, every “parent” company strives to extend the active part of the life of its “brainchild,” and therefore the question arises: how to delay the approach of the saturation phase? Or, if it has already arrived, how to revive the product and return the buyer’s interest in it?
The duration of the life cycle as a whole and its individual phases depends both on the product itself and on the specific market. It is believed that raw materials have a longer life cycle, finished products have a shorter life cycle. In addition, the life cycle of the same product in different markets may be different. There are several ways to extend the “life of a product,” the effectiveness of each of which depends on a number of factors that in one way or another affect a specific product.
Product modification/improvement
There is no need to “reinvent the wheel”; you just need to add a new part or function to it. At the same time, the innovation must be competitive, or better yet, unique in the market for similar products. For example, not long ago National Semiconductor, counting on a revival of interest in Internet set-top boxes, released a concept product that combines the functions of eight devices at once into one portable set-top box that “weighs less than a pound.” Origami - this is the name of the new product - can be turned into a video camera, videophone, Web tablet, terminal Email And so on.
New design
A design change is not just a superficial change in a product, as it might seem at first glance. When the consumer is fed up with high technical performance (and in most cases, leading companies do not lag behind each other in the speed of introducing new technologies), he begins to pay closer attention to the appearance of the product before making his choice. Let's remember the lineup Nokia mobile phones. Naturally, they differ technically and functional characteristics However, today Nokia attaches great importance to design. Advertising for the latest series of mobile phones largely exploits the attractive appearance of mini phones. It is the design, and not the capabilities of the phone itself, analogues of which can be found in other brands, that sets Nokia apart from other manufacturers.
New packaging
New packaging with the same contents is an excellent reason to remember quality and, at the same time, keep up with progress. The well-known Mentos dragees in the classic packaging are a cylindrical pack of round-shaped candies, Mentos in the new packaging are a cube-shaped dragee, blue in color (which no Mentos variety had before), and the pack itself is made in the form of a box with a “long-lasting” "lid. Same with the new wide pack of Orbit chewing gum. It is perhaps impossible to invent a completely new type of chewing gum, while changing a pack is a simple matter.
Support for large-scale action
Sponsorship of any interesting mass event may well restore lost interest in the brand. For example, the Swiss pharmaceutical concern Bayer sponsored the Kremlin Cup, a tennis championship, in 1990 and 1991. The Coca-Cola Company was the general sponsor of the fourth Assembly of Restaurant World Expo 2001 (this, of course, is not the only sponsorship project of Coca-Cola Refreshments), and Klinskoe Beer became the general sponsor of the X-Games competition in Volen Park.
Organizing your own event
Organizing your own event is a great way to remind yourself and your capabilities. An example of this is the show of world gymnastics stars "Galina Blanca-2001" or, for example, the show race in Krylatskoye with the participation of the strongest skiers on the planet "Miracle Yogurt - Ski Sprint" 2000. It is impossible not to mention the fact that for many years now Nescafe holds the Extreme Sports Festival "Nescafe - Clean Energy".
Extreme situations
Oddly enough, extreme situations can also be useful for extending the life of a particular product/service. Such situations mean shortages, economic crises, food shortages, environmental problems... For example, during the period of another economic decline in our country, the SONET mobile communication network released its famous “Anti-crisis” tariff (unlimited for $25 per month), especially significantly increasing the number of subscribers.
New service
A new service can be a significant support for an existing service package. Suppose a company engaged in restaurant business, introduces the so-called happy hour. It is usually carried out 1-2 times a week. A visitor can take two glasses of beer for a certain time (2-3 hours) for one price, or the restaurant will offer drinks corresponding to the food for free with certain dishes. This new service will certainly attract large quantity visitors.
Another example is a new service option. Mobile subscribers have the opportunity to order food at home from 6 thousand restaurants of the Food.com online network. Users of the created Motorola-Food.com system can place an order, naturally, with mobile phone Motorola, indicating your preferences, delivery address and payment method.
Also an option for reminding yourself. Any, even the most successful slogans and commercials become boring over time and begin to cause irritation, so they need to be changed even by those companies whose products have not yet entered the recession phase.
A striking example is the evolution of Snickers slogans. Popular chocolate has long been associated with the slogan “Eat it and it’s done!”, then it changed to the option “Don’t slow down - have a snickers!” and the latest find from advertisers “Stop the Nut Madness!” Accordingly, when the slogan changes, both the television and radio commercials change, and with them - outdoor advertising and everything else.
This is an expanded version of the previous point, when not just the slogan or video is changed, but the entire advertising campaign as a whole is transferred to another advertising agency or starts again.
Release of a new product under the same brand
This is a really good way to be more thoughtful about consumer tastes and expand your product range. Let's remember the giant company Wrigley's - a leading manufacturer of chewing gum. Initially, the company had only three varieties of its products - this is the well-known classic trio of "arrows". Today, Wrigley's product line consists of about ten varieties of Orbit chewing gum, each with its own original taste. Counting on the development of a new target audience, Wrigley's, gradually introducing various varieties of chewing gum to the market one after another, also produces children's Orbit. And this Wrigley's, apparently, was not enough, and soon chewing gum with “medicinal properties” appeared on the shelves. - Airwaves. At the same time, the classics of the genre - doublemint, spearmint and jucy fruit, still remain “on horseback”.
Regulation of pricing policy
Regulation of pricing policy can be carried out both in the direction of reducing prices and in the direction of increasing prices. Accordingly, by setting certain prices, the company “masters new frontiers”, expanding its target audience. The fast food restaurant chain McDonald's regularly changes its pricing policy: either by releasing new varieties of sandwiches at a price acceptable to all segments of the population, or by reducing prices for existing products.
Numerous McDonalds shares are also indicative. For example, the sale of two sandwiches for the price of one, a reduction in the price of the top-selling sandwich - Big Mac, as well as the introduction of numerous new products, such as: country-style potatoes (as an alternative to French fries), "Italian weeks" - two new a sandwich with Italian Mozzarella cheese, “Taste of the Season” - cocktails or pies sold at McDonalds exclusively during a given season and other marketing solutions.
The duration of the life cycle and individual phases depend both on the product itself and on the specific market. It is believed that raw materials have a longer life cycle, finished products have a shorter life cycle. In addition, the life cycle of the same product in different markets may be different. Despite the fact that the product life cycle is an objective reality, a company's marketing actions can have an impact on it. The main purpose of life cycle management specific product- extend the period of its existence on the market. The uniqueness of the situation at various stages of the life cycle determines the marketing actions used: the creation of innovative products, the creation of modifications of a product to extend its life cycle, the discontinuation of a product.
There are several methods for extending the life of a product, the effectiveness of each of which depends on a number of factors that one way or the other affect a particular product.
Market modification. Within the boundaries of creating a market modification, a search for new users of the product is carried out. New users may represent a new section of buyers not covered by the company in an old geographic market; in this case, it is permissible to metamorphose the positioning of the product in such a way that it would be attractive to the new segment; it can only target large or rapidly growing sections of the market.
The company can increase its offer by entering new geographic markets, and then metamorphosis is required.
Creation of a modified product. Any modification is the process of modification by a manufacturer of the characteristics of its existing product in order to extend its life cycle.
Creating a modification is permissible using 2 techniques. The first technique leads to a change in the presentation of the product on the market (creating variations), the second technique leads to the creation of several options for presenting the product at the same time (creating differentiation).
Creation of innovative products. Currently, a reduction in the average duration of the product life cycle is being monitored, therefore, manufacturers are required to spend significant funds on the creation of new products. It is difficult to come up with something ideal in everything, and as practice shows, buyers certainly demand this. A new product can be viewed from different points of view.
The tendency to shorten the life cycle is due to the influence of scientific and technological progress, which allows rivals to produce more ideal products.
Variation is a method of modifying a product, in which the market is offered a new version of the product instead of the existing old one.
The variation is applied by the manufacturer in cases where:
There are no satisfied sources for implementing two options for offering goods at the same time;
The old option has completely exhausted all the possibilities in the market;
Changes in the product are not so significant that the comparison of options would be advantageous for the manufacturer;
A top product variant can displace a worn-out product because it is better suited to solving customer problems.
Differentiation is a method of product modification in which the market is offered the newest version of the product at the same time as the old one, thereby achieving more variety in the product supply.
If there are no reasons prompting the manufacturer to resort to variation, then the company differentiates the offer of its product on the market, because this technique allows you to increase the composition of the market and create a wide and large selection.
Modification of the marketing mix. Modification of the marketing mix involves the metamorphosis of one or more of its elements in order to attract the attention of new customers and strengthen the commitment of those who have previously tried the product. To attract new customers, you can reduce the price or conduct a sales promotion campaign. It is permissible to try to develop a better working advertising company and measure the image of the product. The firm can use other market channels or offer additional types of services to customers.
Modification of a product involves changing the existing characteristics of a product, such as design, taste, quality or properties in order to attract new customers.
Quality improvement is meaningful in cases where the following data is met:
The quality of the product can be improved;
Customers believe claims about quality improvement;
A fairly large number of customers want product improvement.
Improving the properties of a product allows you to monitor its functioning more accurately and more comfortably. Changes in external design make the product attractive and modern.
Often it is the product design that determines the product's relevance to modern times, while the functional properties remain unshakable for a long time.
Discontinuation of goods from production. A drop in sales of a product at the last stage of the product’s life cycle is a signal for the manufacturer to resolve issues regarding the subsequent production of the product. As usual, the decision to discontinue a product affects other components marketing activities manufacturer. In particular, the characteristics of choice, relationships with customers, and relationships with internal contacts and audiences change. Therefore, a decision can only be made on the basis of a thorough review. Removal of a product from production is a set of marketing measures to remove a product from the market, which involves the discontinuous release of finished products, the reorientation of existing customers to other products of the company, ensuring the company’s obligations to service goods still in use. The decision to exclude a product from the product range can be implemented in 2 forms: either it will be sold to another company, or its production will be interrupted. In the latter case, the company carries out all activities to serve the remaining customers independently.
The life cycle of a product characterizes specific patterns of development of a company’s turnover and profit in a specific market over time, that is, the dynamics of the behavior of a competitive product on the market. The product life cycle in this case acts as an ideal model of the market reaction to the company’s product offering. The life cycle model illustrates that every product as a product of labor has a limited life span, during which it goes through several stages: development, implementation, growth, saturation and decline.
The life cycle of a product is the period during which a product finds its customers. The period of physical existence does not always coincide with the life cycle. The life cycle of an individual product is characterized by the period of sales of the product - from the first buyer to the last. For each product it is individual and in the age of scientific and technical progress is quite limited. However, for most products, the company seeks to extend its life cycle, using a typology of marketing and specific features product and market.
The International Organization for Standardization identifies eleven stages of the product life cycle (PLC):
marketing, searches and market research;
development technical requirements, product development;
logistics;
preparation and development of production (i.e. technological) processes;
production;
control, testing and inspections;
packaging and storage;
sales of products;
installation and operation;
technical assistance and service;
disposal after service.
At the first stages of creating a life cycle marketer, a marketer needs to decide for whom the product is intended, for which market segments it is intended, what is the number of possible consumers and what are their needs, both group and personal. However, in the future it is very important to know? What is the marketing typology for this product? At the same time, it is important to know that at certain stages of life cycle marketing is present, albeit in an implicit form. So, stage 2 ends with the creation of a prototype. Naturally, it needs to be assessed from the consumer’s perspective, and also, possibly, an advertising campaign should be launched. At stage 3, suppliers of raw materials and components are determined; the cost and consumer properties of the product depend on them. Stage 4, at which all technological operations and their sequence in the manufacture of the product are determined, the cost and consumer properties of the product are finally formed. The quality of workmanship at the production stage (5th) determines the attractiveness of the product for the consumer. Stage 6 aims to eliminate possible defects and take into account the interests of the consumer as much as possible.
All elements of the product are important. In particular, demand depends on packaging; packaging is one of the types of advertising - a “mute seller”, and therefore marketing at stage 7 is necessary. Sales of products (8th stage), i.e. concluding contracts for the supply and direct movement of goods from producer to consumer is impossible without studying and attracting consumers to their side, i.e. no marketing. Installation and operation (9th stage), technical assistance and maintenance (10th stage) must be carried out in the most convenient and timely manner for consumers - otherwise they will go to our competitors. This also applies to disposal (Stage 11) after servicing.
The duration of the product life cycle (LC) depends on:
technical complexity of the product: the more complex the product, the greater the life cycle;
volume of investment in product development and sales and marketing network;
the presence of competitors: the more of them there are, the more aggressive their policy in the market, the shorter the life cycle of the product;
quality marketing research and the degree to which they correspond to the interests of individual buyer groups.
The transition from stage to stage occurs without sudden jumps. Therefore, it is necessary to closely monitor changes in the pace of sales to recognize the boundaries and adjust the marketing program accordingly. It is especially important to catch the stage of maturity and even more so - decline. Keeping a “sick product” on the market is extremely unprofitable, and in terms of prestige it is simply harmful.
The shape of the life cycle curve and the duration of its stages most often depend on the most characteristic consumer properties of the product, in particular, on its technical complexity, the volume of new properties that distinguish it from similar products, the degree of compliance with consumer needs, the number of substitute products and their competitiveness , level of production costs. Second important factor is the state of the market and the nature of competition on it.
In addition to the classic shape of the product life cycle curve, when the stages of product introduction to the market, growth, maturity and decline are clearly defined, examples of its specific modifications can be identified. The curve called "boom" describes extremely popular product with stable sales over a long period of time. “Continuing Fad” suggests a rapid increase in sales of products, then a rapid decline, but with a residual average level of sales. The seasonal curve, or fashion curve, refers to the life cycle of products that experience periodic, spaced-out rises and falls in demand in the market. A failure curve usually reveals the behavior of a product that has no market success at all.
In relation to such goods, it is customary to distinguish two main stages: a sharp increase in sales in the first stage and an equally sharp decrease in sales in the second. This is due to the fact that the “peak” of fashion usually lasts a long time and ends suddenly. Demand also suddenly drops. It is no coincidence that the introduction of fashionable products to the market is associated with great commercial risk, and their prices at the first stage are very high, so that they can recoup costs and to some extent compensate for the drop in profits in the second stage.
A number of products are characterized by an extended life cycle (renewal or nostalgia curve). In this case, the constant growth in demand is interrupted for a short time by stabilization with a decline, after which its next increase is observed again. The reasons for extending the life cycle can be different: new areas of application of the product, new market segments, price reductions, etc.
The transition from one phase of the cycle to another usually occurs smoothly, without jumps. Because of this, the marketing service must closely monitor the dynamics of sales and profits in order to grasp the boundaries of the phases and, therefore, make changes to the marketing program, redistribute marketing efforts, and adjust the structure of the marketing mix. It is especially important to catch the stage of saturation and even more so of decline, since it is unprofitable to keep a “sick product” on the market.
In addition, we also note the following important points.
The duration of the life cycle as a whole and its individual phases depends both on the product itself and on the specific market. As a general rule, raw materials have a longer life cycle, finished goods have a shorter life cycle, and the most technically advanced goods have a very short life cycle (2-3 years).
The life cycle of the same product, but in different markets, is not the same. In the Russian undemanding market it is much longer than, for example, in the USA, Japan, Germany with their developed competitive market.
With the help of marketing means ZhCT on target market can be either extended or shortened.
