BREAK FREE FROM THE PRODUCT LIFE CYCLE By: Youngme Moon , HBR May 2005

Presented By: Neha Rai - 10202144 Hina Tarey -

10202140 Suresh Kr. Sah-

10202173

BREAK FREE FROM THE PRODUCT LIFE CYCLE

Theodore Levitt introduced the concept of the product life cycle in 1965

Companies tend to adopt similar positioning approaches for products and services during each of the life cycle stages

Competitive relax to augment products as they mature

The augmented product becomes the expected product, so it must be further enhanced to remain competitive

By positioning or repositioning , companies can change how customers categories them, as a result, companies can rescue products foundering in the maturity phase of their life cycles and return them to the growth phase

Positioning Strategy

Reverse positionin

g

Breakaway

Positioning

Stealth Positionin

g

By stripping away attributes

consumers expect in a mature product and adding some

surprising new ones

By combining features of products in

distinctly different categories

By associating a tainted product with a category

consumers embrace

Reverse Positioning

Assumes that although consumers do want something more than the baseline product , they don’t necessarily want an endless parade of new features

Once a product is returned to its baseline state, reverse positioners supplement the stripped – down product with one or more carefully selected attributes that would typically found in a highly augmented product

This combination of attributes allow the product: a. to assume a new competitive position within the category b. move backwards from maturity into a growth position on

the life cycle curve

IKEA

IKEA has long been celebrated in the business press for its innovative marketing and phenomenal growth

Cheap and stylish inventory

Top stores compete by carrying enormous and varied inventories

Key factor in the stores high performance is its brilliant reverse positioning

IKEA STORE(before reverse

positioning)

No in- store sales assistance

Limited Variety

No Delivery Option

Most of the furniture require assembly

Durability is not to be expected

IKEA STORE(After

reverse positioning)

Stores have an airy, ultramodern look

Company operated day care center for children

Customers can stop for lunch at a delightful cafe

Customers can purchase items besides furniture like

toys and house wares

Benefits for IKEA

IKEA has become the 7th largest furniture stores in the U.S.

It has doubled its market share, and

tripled its U.S. sales from $600mn to $1.7 bn over the past 8 years

Commerce Bank

Serving New Jersey, Delaware, New York and Metropolitan Philadelphia

Pays the lowest interest rate in its market

Offers a limited product line- just for checking accounts

Hence Commerce bank reverse positioned itself as the most convenient bank in America

Growth between 1999 to 2004: a. Expanded branches from 120 to 319 b. deposits from $5.6 bn to $27.7 bn c. loans from $3 bn to $9.4 bn

Commerce Bank(After

reverse positioning)

Open 7 days in a week including evenings

Customers can get a debit card while waiting

An escort with an umbrella to car while raining

Free coffee and news papers

Free coin counting ‘penny arcade” machines that

customer loves

Benefits for Commerce Bank

In 2004, commerce bank opened 1.1 million new customer accounts.

JET BLUEIn December 2004 JetBlue celebrated its 16th

consecutive profitable quarterA 26.8% increase in operating revenue($1.27

billion) over previous year By offering : a. cheap seats and a lean value proposition b. no meals c. no round trip fares d. no first class seating

JetBlue(After

reverse positioning)

Leather seatsHigh- end personal

entertainment systems with satellite television

Extra leg room in the back two -thirds of the plane

Benefits for JetBlue

Establish a unique position in the market and steal shares from less creative competitors

Successfully appeals to customers among segments – from college students to business executives

Breakaway positioningThrough breakaway positioning ,a product escapes

its category by deliberately associating with a new one.

By manipulating the marketing mix a firm can change the way the customers frame a product , therefore the way they respond to it.

A breakaway product instead of being framed as simply an alternative to others in its category, customers perceive it as altogether different product.

This strategy allows the product to shift backward on the life cycle curve, moving from doldrums of maturity into a thriving growth opportunity.

SwatchEarlier strategy Breakaway change

1.Swiss watches were marketed as a form of jewelry2.They were serious, enduring, expensive and discreetly promoted.

1.Playful fashion accessories.

2.They were fun, ephemeral,inexpensive and showily promoted.

Customer bought it once and it lasted life time.

Inspired impulse buying: customer often purchased half a dozen in different designs

FROM:High end

jewelry

TO:Fashion Accessor

ies Categor

y

Swatch became

the best –selling

wristwatch of all time

The Simpsons

o The fox network has done a breakaway positioning when it launched its animated series The Simpsons in 1989.

o Although cartoons appeared in evening TV in the 1960s,no network had created a cartoon for adults and placed it in prime time.

o The Simpsons success was due to its ability to break away from its presumed category(cartoons) and associating itself with an entirely different category Adult prime time sitcom.

o The Simpsons’s breakaway positioning has had an important impact on its progress along the life cycle.

EZ Squirt ketchupIt came in spectrum of

unketchuppy hues-green,purple,orange,pink and teal and was sold in squeeze bottles with kid

friendly nozzles

Heinz advertising emphasized the product’s creative application and encouraged kids to write

their name on hot dogs and draw dinosaurs on burgers

Children immediately grasped that EZ Squirt is

more than a food , it was an edible art and craft product.

Started buying several different colors at once and polishing them off in days.

It was one of the most successful product launches in

the company’s history resulting in 10% leap in

market share.

Stealth PositioningStealth positioning conceal the true nature of their products by affiliating them with a different category.

Skeptical Thinking .

You may have a great product, but the category turns off potential customers.

By using stealth positioning, companies can, in effect, sneak products into the market and gain acceptance that might otherwise prove elusive.

stealth positioning and deceit.

EyeToy :PlaySony's goal is to make the PlayStation a broad platform for home entertainment and communications

Error of Perception.

A video camera (the EyeToy) and game software (called Play) that plugged into the new PlayStation 2 console.

Selling of more than 2.5 million units in its first seven months.

They wanted to establish the EyeToy hardware in people's minds as a plaything rather than a scary communications device

AIBOSimilar stealth strategy for household robot category.

Sony positioned the product as a lovable but otherwise useless pet.

Market test of a flawed technology.

Sony gathered invaluable consumer feedback to guide continued development of its robots.

Next-generation robot :QRIO.

Mac MiniThe Mini is a minimalist aluminum box, six inches square and two inches tall.

Downplaying its PC capability. Music server for car Dedicated Internet port for the kitchen. Mobile recording studio for the band. Backup device for photos. TiVo-like recorder. Digital entertainment hub for the living room.

Popularity of Windows-based PCs.

Overpriced Apple Computers

Apple Mac Mini Starting at $599

2X Faster Processor

2X Faster Graphics

Fast, Flexible Thunderbolt I/O

Connectivity B.Y.O.D.K.M. Storage & Memory

Thunderbolt Display

THANK YOU