Product Lifecycles & Adoption Curve

1. Product Lifecycles & Adoption Curve Presented by Bob Perry

2. The Entrepreneur • One who: • organizes, • manages, and • assumes the risks of a business or enterprise • Risk Takers…Market Finders

3. The Marketing Mix Product Price C Customers Place Promo

4. Product The needs satisfying agent that is offered. • Convenience Goods • Staples • Impulse • Emergency • Shopping Goods • Homogeneous Goods • Heterogeneous Goods • Specialty Goods

5. 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)

6. Product Life Cycle Maturity Development & Introduction Growth Decline Sales / Profits

8. 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

9. 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

10. 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.

11. 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

12. 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%)

13. Adoption Curve is basically a statistical Bell Curve

14. 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

15. 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

16. 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.

17. 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.

18. 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.

19. Adoption Curve Laggards Innovators Early Adopters Early Majority Late Majority 90% Percent of adoption 50% 20% 5% Time

20. Product Life Cycle Maturity Development & Introduction Growth Decline Moccasins Tablets Shoes Crocs MS Windows Oculus Rift Microsoft Surface Pro Atari Cassette players VCR Players Vinyl Records