Product life-cycle strategies

It is not a surprise that we talk about the product life cycle. It describes the story of a product, from the development to the decline. For some product, the lifecycle can be determined in advance. For a company to launch a new product, the company must first be sure that the product is going to sell in order to hope for a good margin. We can find 5 different steps.

The first step is product development. It starts when a new company arrives and develops a new product idea. Sales are null and costs are already beginning to appear.
The second step is the introduction. It represents a period of slow sales growth. The product is introduced to the market. You may encounter heavy expenses at this stage, and no income.
The third is a period of growth, with a rapid market acceptance and increasing profits.
After this growth, generally, the product reaches its maturity. There is a slowdown in sales growth. The product has been accepted by most buyers. Depending on the competition profits, level may increase or decrease.
Finally, at the end of the product lifecycle, the decline sets the decrease of sales and profits.
Another way to describe a product life cycle is to define the type of trend that the product is defining. A new product can be following a style, a fashion, or can describe fads. A style is a long life cycle, it has different period of renewed interest. As a result the style doesn’t die. It can be applied to important products, day to day product, for example the architecture, furniture, or clothing.
A Fashion grows slowly, remains on top for a while, and decreases slowly. A fashion will be accepted during a set period of time, then will be disappearing little by little.
Fads are specials. They describe very short life cycles, with very high sales. This is driven by an unusual customer enthusiasm for the product, which doesn’t last long. Products in fads are products that attract the attention, but are not sufficiently solid to live longer.

How to design a new product?

When a company is designing a new product, it has to go through eight phases which will help it launch a successful product. In order to launch a product, the firm must know its customers, and deliver superior value to customers.

The first point is the idea generation. Before finding the right idea, the company has to go through lots of ideas. These are internal idea sources, when they come from the employees of the company, external, when they come from distributors, suppliers or another company, and ideas can be crowdsource, when it comes from the customer itself. In crowdsourcing, the more people are involved, the better the project.

After that you must be able to visualize all your ideas in order to reduce the amount. At this point, marketers have to write a summary about the idea. This write-up describes the product, the customer value proposition, the target market, and the competition. In this document, you also find estimation of market size, product price, development time and costs, manufacturing costs and rate of return. This goes in front of a committee who will assess the RWW. The real- win- worth doing. Is the value real, what will the company be able to sustain the product, and does the product shows enough potential. The idea that answers yes to these questions have more chances to be received.

Then the firm must work on the idea and develop a product concept which will be a detailed version of the product. Here the concept should be able to define every aspect of the product and propose multiple versions of it which will be soon tested to see if their reliability on the market is verified. Groups of target customers are chosen and will give their first impression of the concept.

During the next phase, which is the marketing strategy development, will design a simple marketing strategy for the product which will introduce it to the market. All this is described in the marketing strategy statement.

Once the product marketing statement has been ratified, the business analysis can be conducted. During the business analysis every financial aspect is being forecasted in order to find out if the product is valid.

During the product development, the investments are being made, and the product will soon be developed by the R&D teams. This will create a first prototype. As a matter of fact, tests a conducted to be sure that the product remains viable to the consumers.

After this phase comes the test marketing phase, when the whole product is test, from the starting point to the whole marketing process. This can take years before a company is definitely sure about the new product it is launching.

Finally, at the commercialization phase, the company decides on the timing to when to launch the new product. The company will face high cost so the product must be launched at time, depending on competitors, suppliers, distributors.

Product line and product mix

Two major point are important in Marketing. When we talk about a product, there’s a need for a definition, a way to say how the product will be, and how it will be placed compared to other products. As a result, we talk about the product line and the product mix.

The product line is a way to refer to products when they are similar on different factors. Product can have a similar function, they target the same customers, the can have the same marketing or they follow the same price range. The product line length defines the number of items in the product line. The global performance of the product line is impacted by each and every item. Sometimes marketing strategist have to define a product line strategy by adding products to the line or by removing a product from the line.

We can figure out two different strategies for the product line. Product line filling and product line stretching. When you fill the product line, you add product within the range of your current product line. This way you can prevent competition and find profit. The product line stretching happens when the company decides whether to add a product at the upper or at the lower end of the range. This is a good away to attract t new competitors or to respond to a competitor’s attack.

We talk about the product mix when a company has different types of product. The product mix will define the whole panel that the company is offering in store. We can define it in terms of width, length, depth and consistency. We can also call it a product portfolio.

A product width will define the number of lines a company is carrying. The company can sell a whole product mix, and in it different kinds of products.

The product length expresses the number of product that we have within a specific line of product. For example a line can have many brands selling the same product.

The depth is when you sell different version of your product within the same line. It’s the same product but the features you are selling with the product are not the same.

The consistency is the coherence of the product mix. If the product inside the product mix are closely related to one another, the product mix is consistent or coherent. If the products of the product mix differ from one another, the product mix is incoherent, inconsistent.

How to develop a product

In order to define the specificities of the products, we have to define four important factors that will explain what the product is. We have to give the product quality, its features, the style and the design. By giving these attributes, we will talk about the benefits that I can bring to the consumer.
The quality of the product has a direct impact on product or service performance. Quality can be used to describe the value of the product, if it’s going to break or not. But we can explain it by saying that it describes whether the product is capable to satisfy the customer needs and the customer satisfaction, it can be stated or implied needs.
There is two way to express the quality of a product. There is the performance quality and the conformance quality. Performance quality expresses the ability of a product to perform its functions. Conformance quality expresses the freedom form defects, and the product must deliver a certain level of performance.
The features of a product a being used when a product is delivered with the possibility to add more to it. This can be a way to differentiate you products from the competitors. You can add value to a product by giving it new features.
Finally, a distinctive product style and design can often make the difference between your products and the others. Style simply describes the appearance of a product, design is more at the core of the product. It determines how the product will be used, and how the user will interact with the object or service.

Market segmentation

With marketing, finding the proper customer has become easier. Marketer have tools for determining the customers they are dealing with. It is possible to evaluate what is your preferred customer base and develop it. As a result market segmentation is the best way to define the markets. The segments differs in wants and needs. They dont have the same buying behaviors. Depending on what you sell, you don’t usually have the same market segments as other companies. We might be able to figure out some important market segments yet.

First the location of a customer is an important factor to take into account. The area can be wide or narrow. A company can decide wether it will be present in a single area or in many areas. For example the blue ocean strategy takes this into account. Following this strategy, a company can take action on one specific area, with a lot of value, or on a large area, with a more spread out value.

A demographic segmentation, makes a marketer thinks in terms of age, gender, family, family life cycle, income, occupation, education, religion, nationality. This is the most popular way to divide customer. Needs and wants often vary depending on the demographic segment. If you are a male or a female you don’t go to the same brand, you don’t buy the same amount.

Another segmentation that marketers can do is the psychographic segmentation. In this segmentation the market is divided considering social class, lifestyle, or personnality characteristics.
The behavioral segmentation divides buyers according to their attitudes. It is possible to monitor the buying behavior of the customer and get in return the way they are buyin products. You can find loyal customers, and analyse their out and abouts of why they are buying your products. This will help you define what you can accomplish for them and what you can do to acquire new customers and retain the other ones.

The decision buying process

The decision buying process is an important part of the customer’s journey. It is where marketers should focus on in order to gain the best results. Major companies have to study and research the consumer buying decisions. Understanding this process is really hard as it is most of the time locked in the consumer’s mind. The important question is « how do consumers respond to the stimuli of the marketers ? ». The stimuli enters the customers « black box » and produces certain responses. As a result, depending on the product, the decision buying process is not the same.

There is the complex buying behavior, the dissonance reducing buying behavior, the habitual buying behavior, and the variety seeking buying behavior. The complex buying behavior is called like that because the consumer has to go through a learning process before acquiring the product itself. Sometimes, when the product is specific or technical, the customer, in order to buy the good quality product, has to find details about the product in order to understand what he is buying better.

The dissonance reducing buying behavior takes place in an expensive, frequent or risky purchase. The brands and the products look the same, but the customers needs a global vision of the market before buying the product.

The habitual buying behavior is under conditions of low involvement and little significant brand differenece, in other words, we are talking about the most common products, grocery shopping for example is a place for habitual buying behavior.

The variety seeking buying behavior happens when there is low customers involvement, and significant perceived brand difference. In this situation, the customer will buy a common product but will change regularly the brand to try something else.

Customer relationship management

Around 2000 a new category of worker arrived on the market. Basically, marketers realized soon that they gathered too much information. As companies often searches for data at every moment possible through customer purchase, sales force contacts, service and support calls, web site visits, satisfaction survey, credit and payment interactions, market research studies- thus making data management an issue at hand.

Indeed, these information are provided by different department within the company. Each department collect information through their own way of doing, and might be reluctant to give them to anyone at first contact. To face this problem, Customer relationship management has been in some companies the best department to handle this. The department is able to manage precise details about individual customers and manage customer touch points to maximize customer loyalty.

Main companies providing this service are Oracle, Microsoft, Salesforce and SAS. They provide simplified information system where to gather customer data. These information systems consist of software and anlytical tools. Part of the customer relationship management consist of using data warehouse to stock information for example, or datamining to search for deep customer data.

To have the software integrated is only a step in CRM. It is not enough. Once you have the information, another job is important, it is to get to the relationship with the customers. This is the most important part because information with no implementation is plain information. Marketers often make the mistake of only talking about the tools, the software. Yet it is just a part of a more important customer relationship management strategy.

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