| New Product Development and Product Life-Cycle Strategies 279

Chapter 9 | New Product Development and Product Life-Cycle Strategies 279

force attention that might be better used to make “healthy” products more profitable. A product’s failing reputation can cause customer concerns about the company and its other products. The biggest cost may well lie in the future. Keeping weak products delays the search for replacements, creates a lopsided product mix, hurts current profits, and weakens the company’s foothold on the future.

For these reasons, companies need to pay more attention to their aging products. A firm’s first task is to identify those products in the decline stage by regularly reviewing sales, market shares, costs, and profit trends. Then management must decide whether to maintain, harvest, or drop each of these declining products.

Management may decide to maintain its brand, repositioning or reinvigorating it in hopes of moving it back into the growth stage of the PLC. P&G has done this with several brands, including Mr. Clean and Old Spice. Management may decide to harvest the product, which means reducing various costs (plant and equipment, maintenance, R&D, advertising, sales force), hoping that sales hold up. If successful, harvesting will increase the company’s profits in the short run.

Finally, management may decide to drop the product from its line. It can sell it to an- other firm or simply liquidate it at salvage value. In recent years, P&G has sold off several lesser or declining brands, such as Folgers coffee, Crisco oil, Comet cleanser, Sure deodor- ant, Duncan Hines cake mixes, and Jif peanut butter. If the company plans to find a buyer, it will not want to run down the product through harvesting.

Table 9.2 summarizes the key characteristics of each stage of the PLC. The table also

lists the marketing objectives and strategies for each stage. 33

TABLE | 9.2 Summary of Product Life-Cycle Characteristics, Objectives, and Strategies

Decline Characteristics Sales

Introduction

Growth

Maturity

Declining sales Costs

Low sales

Rapidly rising sales

Peak sales

Low cost per customer Profits

High cost per customer

Average cost per customer

Low cost per customer

Declining profits Customers

Negative

Rising profits

High profits

Laggards Competitors

Innovators

Early adopters

Middle majority

Few

Growing number

Stable number

Declining number

beginning to decline

Marketing Objectives Create product

Reduce expenditure awareness and trial

Maximize market share

Maximize profit while

and milk the brand Strategies

defending market share

Product Offer a basic product

Offer product extensions,

Diversify brand

Phase out weak items

service, warranty

and models

Price Use cost-plus

Price to penetrate market

Price to match or beat

Cut price

competitors

Distribution Build selective distribution

Build intensive distribution

Build more intensive

Go selective: phase out

unprofitable outlets Advertising

distribution

Build product awareness

Reduce to level needed among early adopters

Build awareness and interest

Stress brand differences

to retain hard-core loyals and dealers

in the mass market

and benefits

Sales Promotion Use heavy sales promotion

Reduce to minimal level to entice trial

Reduce to take advantage

Increase to encourage

of heavy consumer demand

brand switching

Source: Philip Kotler and Kevin Lane Keller, Marketing Management, 13th ed. (Upper Saddle River, NJ: Prentice Hall, 2009), p. 288. © 2009. Printed and Electronically reproduced by permission of Pearson Education, Inc., Upper Saddle River, New Jersey.

280 Part Three | Designing a Customer-Driven Strategy and Mix

Additional Product and Service

Author Let’s look at just a few Comment more product topics,

including regulatory and social responsibility issues and the special

Considerations (pp 280–282)

challenges of marketing products We wrap up our discussion of products and services with two additional considerations: so- internationally. cial responsibility in product decisions and issues of international product and services

marketing.