Intro Growth Maturity Decline

DOLLARS

TIME

Sales

Introduction

Profit

Companies Focus is on Promotion and Production. Product Awareness #1 concern.

Pricing Strategies:Skimming and Penetration

Setting a high price in the intro. Stage: large Profit Margin•Trendsetters – willing to pay the high price to own 1st

•Disadvantages•High profits attract competition •Profit maximization is short term•Problematic if initial price is way to high

Setting a low price in the into. Stage: Goal create demand•Most effective for products w/ elastic demand•Advantage

•Large amount of product is sold to a wide range of customers (demo, geo, and psychographic)

Intro Growth Maturity Decline

DOLLARS

TIME

Sales

GROWTHCharacterized by:• Increasing

sales and Profits

• Focus on consumer satisfaction

• Competition increases

• Modifications begin

Profit

Sales increase quickly (marketers want to keep the product at this stage for a long time)

Cost per item drops due to increased sales

Price changes depend on how the price was set in the introductory stage

If skimming pricing was used in the introductory stage, the price and sales should be closely monitored for a decline in sales; then price will fall

When penetration pricing is used, the price usually remains unchanged but promotion is used to continue the high sales

Intro Growth Maturity Decline

DOLLARS

TIME

Sales

MaturityCharacterized By: •Sales level off •Profits drop•Competition heavy•Target market owns •Marketing dollars used fighting off competition •Do you continue to Modify product

Profit

Sales begin to fall

Marketers search for other target markets by introducing new uses for products, trying to stretch the life of the product

Marketers look for psychologicalPricing methods to stimulate salesFrom the competitors

For example, when a large portion of consumers have CD players. Marketers will use modify product to maintain price or have sales.

Intro Growth Maturity Decline

DOLLARS

TIME

Sales

Decline Characterized by:•Profits could be Smaller than costChoices:Drop product Sell / license prdtRegionalize prdtModernize prdt

Profit

Sales decrease and profit margins decline

Price Discounts evident for the product to compete in discount stores.

Example: Lever brother discountedPepsodent toothpaste and LifeboySoap and advertised the products with phases, such as “compare and save”. .

Intro Growth Maturity Decline

DOLLARS

TIME

Sales

Profit

How does this Compare to the Family life cycle?