skim/penetrate later trends
Skim: starts out as high price, low promotion. Will lower price and increase promotion to beat out new competitors.
Penetrate: starts out low price, high promotion. Will decrease promotion b/c most customers already attained, end introductory prices and raise them (less coupons).
Final, sustainable positions: LOW, LOW for basic commodities. HIGH, HIGH for luxury items.
Penetrate: starts out low price, high promotion. Will decrease promotion b/c most customers already attained, end introductory prices and raise them (less coupons).
Final, sustainable positions: LOW, LOW for basic commodities. HIGH, HIGH for luxury items.
decline strategies (4)
1. withdraw/divest (leave market)
2. harvest (reduce investments, let sales go on)
3. niche (resegment to focus on whoever is still buying them)
4. market leadership (reinvigorate product into new markets)
- can also introduce variations (cherry coke), new uses (baking soda), new markets (overseas, DIY), product variations (jello to puddings)
2. harvest (reduce investments, let sales go on)
3. niche (resegment to focus on whoever is still buying them)
4. market leadership (reinvigorate product into new markets)
- can also introduce variations (cherry coke), new uses (baking soda), new markets (overseas, DIY), product variations (jello to puddings)
factors for skim v. penetrate
- perceived relative advantage (if very apparent, penetrate)
- compatability w/ existing practices (if new/radical, skim)
- complexity (complex: skim)
- ability to try innovation (hard to get done: skim)
- observability of benefits (very apparent: penetrate)
- limitations of company's ability to cover costs of skimming or penetrating
- compatability w/ existing practices (if new/radical, skim)
- complexity (complex: skim)
- ability to try innovation (hard to get done: skim)
- observability of benefits (very apparent: penetrate)
- limitations of company's ability to cover costs of skimming or penetrating
introduction strategies
- trial sales lead to repeat sales (cheaper to keep repeat than to attain)
- skim
- penetrate
- skim
- penetrate
plc: introduction
- Mostly market pioneers. Risky and costly.
- Little competition.
- Often unprofitable (need to be the first one to promote this new product)
- Aimed towards early adopters: often highly innovative customers who keep up with new tech
- Intro strategies: skim or penetrate
- Little competition.
- Often unprofitable (need to be the first one to promote this new product)
- Aimed towards early adopters: often highly innovative customers who keep up with new tech
- Intro strategies: skim or penetrate
various plc shapes
plc applies to..?
For an entire *industry* or *product category*, not a brand.
ex. cd players, mp3 players (not just iPod)
ex. cd players, mp3 players (not just iPod)
penetrate
- "Big Bang", mass market from the beginning
- maximize number of early adopters
- requires more starting resources
- target to everyone at a low price
- maximize number of early adopters
- requires more starting resources
- target to everyone at a low price
customer acquisition distribution
Bell curve distribution; similar to diseases, ideas.
stategy for declining industries
plc: decline
- sales and profits decreasing
- no new customers, more competitors dropping out
- often caused by replacement technology (e.g. CDs to mp3s)
- use one of four basic strategies
- no new customers, more competitors dropping out
- often caused by replacement technology (e.g. CDs to mp3s)
- use one of four basic strategies
entering PLC market
Your product may not follow curve, because you're entering the market mid-curve.
(ex. entering @ maturity phase will result in different profits than entering in growth phase)
(ex. entering @ maturity phase will result in different profits than entering in growth phase)
plc curve: sales & profits
product life cycle stages (5)
1. product development
2. introduction
3. growth
4. maturity
5. decline
2. introduction
3. growth
4. maturity
5. decline
time-length of PLC phases
Can vary. For example, refrigerators and microwaves have very long maturity phase.
plc: growth
- rapid increase in sales
- many entrant competitors
- many new customers (intro companies can reap repeat sales from early adopters)
- gains in profitability
- increasing product differentiation due to competitors
- many entrant competitors
- many new customers (intro companies can reap repeat sales from early adopters)
- gains in profitability
- increasing product differentiation due to competitors
divest
total withdrawal from marketing expenses
skim vs. penetrate
SKIM: high price, low promotion, selective place
- for complex, riskier, education-necessary products
PENETRATE: low price, high promotion, high variety of place
- easy to use, "small leap", understandable products
- for complex, riskier, education-necessary products
PENETRATE: low price, high promotion, high variety of place
- easy to use, "small leap", understandable products
plc: maturity
- intense competition on all 4 Ps
- clear segmentation: experience buyers, slowdown in customer acquisition, no technological breakthroughs
- repeat sales are key now
- squeeze out profits through: niche branding, small differentiations (size, color), cost cutting
- clear segmentation: experience buyers, slowdown in customer acquisition, no technological breakthroughs
- repeat sales are key now
- squeeze out profits through: niche branding, small differentiations (size, color), cost cutting
skimming
- start slow, then grow
- extract maximum value from group that already wants product the most (minimal attainment costs)
- can make the most profit at the beginning
- early adopters can then educate others, "trickle down"
- HIGH STARTING PRICE
- extract maximum value from group that already wants product the most (minimal attainment costs)
- can make the most profit at the beginning
- early adopters can then educate others, "trickle down"
- HIGH STARTING PRICE