Lecture 5
Products, services and innovation
What is a product
- Is anything which is capable of satisfying customer needs
Product line: group of closely related products in terms of function or benefits
Product mix: total sum of brands marketed by a firm.
The augmented product:
Product life cycle:
-fairly simple
tool
-changes over
time
-
, Demands/sales growth:
- Introductory stage
o Low sales and market growth
o the product is little known,
o costs and prices are high
o Quality low
o Distribution channels are poorly developed
- Growth stage
o Fast market growth
o Increased consumer familiarity
o Lower costs and prices
o Improved quality
o Improved distribution channels
- Mature stage
o Slow market growth
o Market saturation occurs
o Replacement demand displaces new demand
- Decline stage
o Negative market growth
o Due to technological change
o Social and demographic factors
o International competition
Limitations of PLC:
- Some brands do not follow the classical s shaped curve
- Rejuvenated demand for a nostalgia brand
- Historical sales data does not help managers to identify when an offering moves
from one stage to another
- It has also been criticised for giving managers a tunnel vision as they assume that a
brand will follow a preordained advance along the curve when a product could fail at
an stage
- Scale and time vary considerably
Products, services and innovation
What is a product
- Is anything which is capable of satisfying customer needs
Product line: group of closely related products in terms of function or benefits
Product mix: total sum of brands marketed by a firm.
The augmented product:
Product life cycle:
-fairly simple
tool
-changes over
time
-
, Demands/sales growth:
- Introductory stage
o Low sales and market growth
o the product is little known,
o costs and prices are high
o Quality low
o Distribution channels are poorly developed
- Growth stage
o Fast market growth
o Increased consumer familiarity
o Lower costs and prices
o Improved quality
o Improved distribution channels
- Mature stage
o Slow market growth
o Market saturation occurs
o Replacement demand displaces new demand
- Decline stage
o Negative market growth
o Due to technological change
o Social and demographic factors
o International competition
Limitations of PLC:
- Some brands do not follow the classical s shaped curve
- Rejuvenated demand for a nostalgia brand
- Historical sales data does not help managers to identify when an offering moves
from one stage to another
- It has also been criticised for giving managers a tunnel vision as they assume that a
brand will follow a preordained advance along the curve when a product could fail at
an stage
- Scale and time vary considerably
