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Product Lifecycles & Adoption Curve
Product Lifecycles & Adoption Curve
Presented by
Bob Perry
The Entrepreneur
One who:
organizes,
manages, and
assumes the risks of a business or enterprise
Risk TakersMarket Finders
The Marketing Mix
Product
Price
Place
Promo
C
Customers
Product
The needs satisfying agent that is offered.
Convenience Goods
Staples
Impulse
Emergency
Shopping Goods
Homogeneous Goods
Heterogeneous Goods
Specialty Goods
Product Life Cycle
Products (like customers) have a life cycle. Sometimes these life cycles can be short, but often the life cycle of a product can be longer.
Generally, a product will go through four stages during its life cycle:
Introduction/Development (Birth)
Growth
Maturity
Decline (Death)
Product Life Cycle
Development &
Introduction
Growth
Maturity
Decline
Sales / Profits
Introduction StageTypical Characteristics
Sales grow slowly
Few if any established customers
Frequent product modification
Skimming price strategy
High failure rate
Profit minimal to negative
Limited product models
Little competition
High Promotional Cost
Focus is on creating awareness of product
Promotion strategies need to create demand
Intensive personal selling to distribution channel common
Growth StageTypical Characteristics
Sales grow at an increasing rate
More customers are established
Profits increase as sales increase with more limited competition
Prices start falling as competitors are added
Large companies may acquire smaller, pioneering firms
Heavier brand advertising and focus on differentiation between brands
Economies of scale start to influence pricing
Maturity StageTypical Characteristics
Sales continue to increase as the market place grows with adapters
Profit margins begin to shrink as more competitors enter market place
Product lines are widened or extended
Emphasis on product style more than just function
Marginal competitors begin to drop out of marketplace
Heavy promotion to maintain market share
Maturity stage can last for an extended period of time.
Decline StageTypical Characteristics
Sales decline or disappear
Sometimes new products with more utility replace older products
Falling demand forces many and eventually most competitors out of the marketplace
Some specialty firms may stay in the market for a long time as competition leaves the marketplace.
Sales are generally low and the only way to survive is to find niches for the product that can support higher pricing
Adoption Curve
The Adoption Curve is adapted from a Everett Rogers Diffusion of Innovations and is used to show how quickly differing consumer groups adopt new products
The Adoption Curve segments include:
Innovators (3% to 5%)
Early Adopters (10% to 15%)
Early Majority (about 34%)
Late Majority (about 34%)
Laggards (5% to 16%)
Adoption Curve is basically a statistical Bell Curve
Innovators
Do not rely on norms or past standards
First to adopt any new product, service, or idea.
Tend to be younger with higher social or economic status
Rely less on group norms and like to get their information from technical sources and experts.
Generally 3% to 5% of the population
Early Adopters
Relatively high is social status and often opinion leaders.
Typically younger, more mobile, and more creative than majority
Rely on input from innovators and technical sales
Early Majority
Early Majority consumers collect more information about the product and will weigh the pros and cons before they make a decision.
They listen to their opinion leaders and will rely on their groups opinions instead of forming them for themselves.
Early Majority group members are positioned between the earlier and later adopters and are deliberate in their data collection process.
Late Majority
Late Majority consumers adopt a new product mainly because their friends have all adopted them and they feel the need to conform.
This group is typically older and may have below average income and social status.
They listen to word-of-mouth communication over mass media, since they trust their friends more.
Laggards
Laggards do not rely on group norms and values, just like Innovators, which makes them difficult to reach.
Their past heavily influences their current decision process.
By the time Laggards adopt an innovation it has been possibly outmoded and replaced by something new and flashy.
They are extremely suspicious and feel alienated from a rapidly changing society.
This group probably bought their first black-and-white TV after color television was already dominantly used.
Marketers and advertisers tend to ignore Laggards since they are not motivated by advertising or personal selling and will only purchase a new product when they absolutely have to.
Adoption Curve
Time
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Percent of adoption
5%
20%
50%
90%
Product Life Cycle
Development &
Introduction
Growth
Maturity
Decline
Shoes
Crocs
Oculus Rift
Tablets
Atari
Cassette players
VCR Players
Vinyl Records
MS Windows
Microsoft Surface Pro
Moccasins