PLC Lecture

Question 1

PLC:

Answer 1

Product Life Cycle, usually refers to a category or type of a product, not necessarily a single product.

Question 2

Introduction Stage:

Answer 2

• Demand is unproven and must be creative which is expensive
• Product attributes and functions may not be fully developed
• Sales: Low and slow
• Competition: Sparse
• Profitability: Not much
• Risk: High
• Unclear segmentation

Question 3

Growth Stage:

Answer 3

• Product differentiation begins
• Sales steadily increasing
• Competition: immense increase
• Profitability: Increasing
• Risk: Moderate
• Unclear Segmentation

Question 4

Mature Stage:

Answer 4

-Repeat/replacement sales are key
-Squeeze out profits however possible through:
Niche Branding
Differentiation on minor attributes
Cost-Cutting
-Market share is valued at least as much as profits
-Downward pricing pressure
-Clear, fairly static segmentation

Question 5

Decline Stage:

Answer 5

-Sales and profits declining
-Virtually no new customers
-Often due to dominant replacement technology
-Four basic strategies:
Withdraw
Harvest
Niche (Look for remaining pockets of strength and advertise to them
Market Leadership (Retooling category)

Question 6

Adopter’s Categories:

Answer 6

Innovators
Early Adopters
Early Majority
Late Majority
Laggards

Question 7

Trial Vs. Repeat Sales:

Answer 7

Even if one product has more trials, if repeat sales do not occur, the product will not do as well as one with fewer trials and more repeats.

Question 8

Trial-Repeat Decomposition:

Answer 8

The process of buying a new product is different for a first-time buyer versus a repeat buyer

• Becoming aware and choosing to try it
• Evaluating/purchasing it
• Using it
• Evaluating it

Question 9

Skim:

Answer 9

Start slow then grow:

• Follows “diffusion of innovation framework”
• Firm can extract maximum value from most interested customers
• Can be profitable from the start but big money comes later

Question 10

Penetration:

Answer 10

Big Bang:
-Mass market from the beginning
-Number of new adopters peaks early
Requires significant resources, but can yield high ROI

Question 11

ACCORD:

Answer 11

relative Advantage to what it replaces
Compatibility with current behaviors
Complexity of communicating the benefits
Observability of the products' benefits
Risk of product failure
Divisibility or trialability (if you can use it multiple times before committing or not)

Question 12

What is ACCORD for?

Answer 12

To demonstrate when and why products should released in a skim or penetration manner.

Question 13

ACCORD and Skim product characteristics:

Answer 13

Advantage: High
Compatibility: Low
Complexity: High
Observability: Low
Risk: High
Divisibility: Low

Question 14

ACCORD and Penetrate product characteristics:

Answer 14

Advantage: Medium
Compatibility: High
Complexity: Low
Observability: High
Risk: Low
Divisibility: High

Question 15

4Ps & Skim/Penetrate:

Answer 15

Skim: Selective place, focus on education for promotion

Penetrate: extensive placement, focus on awareness

Question 16

Skim Introduction and beyond:

Answer 16

High price in introduction stage and low selling effort, moves to a lower price and higher selling effort in growth stage. In mature stage becomes either lower priced and lower selling effort or higher priced and higher selling effort.

Question 17

Penetrate Introduction and Beyond:

Answer 17

Low price in introduction stage and high selling effort, moves to a higher price and lower selling effort in growth stage. In mature stage becomes either lower priced and lower selling effort or higher priced and higher selling effort.

Question 18

Strategies for Declining Industries:

Answer 18

LOOK AT SLIDE