let's continue with our discussion of market value creation;
specifically, product management. products have
life cycle stages that they go through.
when a product is first introduced to a market, at some point it
has no sales and eventually, hopefully very soon,
your product will start to sell on the market.
during this introduction phase of the
the product life cycle, basically, you're simply trying to build awareness
of your product category or your brand
so that people will start buying more and more of your
particular product. typically, you wouldn't have that many competitors
in the introduction stage of the product life cycle, because they're watching to
see how popular this brand will become..,
typically, you would not have any profits during
introduction, because you've had a lot of costs in developing your product,
promoting your product, distributing your product,
bringing that product to market, and the sales revenue you generate
does not offset these costs. hopefully however,
the sales of your product or brand will hopefully catch on
and you'll move into what's called the growth phase of the product life cycle.
here, people are beginning to buy more and more of
your product category and or brand and therefore you're getting new competitors
entering into the market, instead of simply trying to build awareness here,
your promotion is going to focus on differentiating your
product so that you can maintain your market share
even though the product category is growing,
you're also having more competitors; so maintaining that market share might be
difficult. typically during growth, your profits would peak
here because you have such rapid sales
growth, and you still can charge a fair price for your product -
even though you have many competitors, your
sales are going offset all of those
bringing the product to market costs and so your
profitability will probably peak sometime
in growth. at some point, though, people can't
really use much more of this product category -
unless you come up with new uses for that product category -
and your sales will peak, and we call that product life cycle stage the stage of
maturity. typically here, your profits begin to decline,
because consumers are very savvy
and very knowledgeable buyers; there are many many competitors and so
what you need to do here
is to reduce your costs so that you can maintain profitability;
and also keep top-of-mind awareness
of your product within the consumer's mind.
you may have heard the expression
"out of sight, out of mind" - if you forget to promote your product during
maturity, it might mean that the sales
of your brand decline while other products continue to -
while other products continue to sell their brand.
another thing that you do here in maturity,
is to reintroduce an
adaptation of your products like
the Swiffer Wet Jet instead of just the Swiffer mop
to keep the sales and demand more stable
for your product category.
sometimes, changes in the marketing environment, whether they would be
demographic changes, or changing values
or social trends or
changes in technology or regulations
cause the demand for your product or service category to go into decline.
and here you have to make judgment decisions about
whether to keep your product on the market and if so, how to do that at the
lowest-cost possible so that you can continue to sell
your particular brand but still keep
some profitability with the market declining.
so, the point of understanding the product life cycle
is that, if you understand which stage you are,
your marketing strategies in terms of
how you promote, how you price, how you distribute,
might change based upon your product life cycle stage.
a good resource to read about this further
is product life cycle stages dot com
which is where I got this particular chart from.
another concept I want to discuss with
you is the concept of product mix
and product lines. your product mix
is all the products your company makes available
for sale and what we can do is look at all
those products and to help organize our marketing
efforts, we can group them into what's called
product lines. based upon a variety of factors
it my be that you put products of a similar nature together,
while where you might put household products in one product line,
personal care products in another product line,
you might put technology products in a
third product line. one way then that you can
look at your product mix and separate it into product line
is by the types of products they are.
another way might be by the type of buyer it is.
you might have men's versus a women's product line,
or geographically, or there might be a variety of ways
that you would look at that. so, when we talk about
our product mix width, we're
actually talking about the number of product
lines we have in our product mix.
you may remember earlier when we were talking about ways
to sell more, one way to sell more was
what we would call product development -
so what you might do is to develop a new
product line targeted to an existing target market for example,
and this would allow you to sell
more. another way to analyze product lines
is to look at the depth or the number
product items you have in a given product line.
Procter & Gamble for example,
and many brands of detergent within their one detergent product line.
and so why does it have competing products within the same product line?
Well, maybe these different brands are targeted to different
segments; so therefore it would allow them to sell more
than if they only offered one product in that
product line. so I hope this had helped you understand a little bit
the concepts of product mix (all the
products your company makes available for sale)
product mix width (the number of product lines you
have), and product line depth
(the number of product items you have within a product line).
let's actually visit Johnson & Johnson
here. we're going to visit Johnson & Johnson to look
at their product line offerings; we're going to look
at their consumer products here,
and as you can see , we can
basically see how Johnson & Johnson has
a baby care product line, a skin and hair care product line,
a wound care and topical product line,
an oral health care and over-the-counter medicine,
nutritionals, and vision care - in other words (counting)
seven different product lines.
so the product mix width
for Johnson & Johnson based upon this
would be 7. if we were to look at
the depth of the product lines, and which product line has the greatest
depth, we can see that baby care, skin and hair care,
wound care and topicals and over-the-counter medicine
have greater depth than oral healthcare,
nutritionals, or vision care. we could count specifically how many
product items are in each product line,
but we won't do that - I hope that
it does illustrate, however, to you Johnson & Johnson's
consumer product mix,
product lines, and product items, in other words,
the depth within the particular product line.