[MUSIC] Hi welcome back, in the last lecture we discussed the product mix. The focus of this lesson is for you to learn the concept of the product lifecycle. Products are like human beings. They are born, they grow, they reach maturity and then they enter their old age, the declining stage and they die. The best way to picture this is through a curve in the product's life cycle. On the x axis we have time and on the y axis we have demand which can be expressed in sales volume. It is important to understand and even try to predict each phase so you can act on them in an offensive fashion with a well thought product strategy. Let's begin by discussing each of these phases. First, let's talk about the market development or introductory phase. Generally bringing a new product to the market is filled with unknown risk. Because demand has to be created. How long does it take to pick up or for a customer adoption depends on the product's complexity units, but most of all in how well does it solve potential customer needs better than substitute products or even does it satisfy a new need? For example, when the first versions of smart phone were introduced in some markets between 200 and 2001 by a company called Kyocera, it took a while before people began to buy them. The duration of this phase will vary in every particular situation. And it will be determined by various internal and external factors such as recognition of the product's benefit, switch in cost from the current solution, competitive pressure, etc. Your objective is to create awareness of the product to capture as much market share as feasible before competitors come in. The interest of competitors will grow the market and then take you to the next phase, the growth phase. In this phase, sales grow rapidly. Early adopters repeat their purchases and influence the rest of the potential customers. Also, distribution has grown and thus the product is more easily accessible to the customer. In this phase, other companies have realized the potential benefits of your growth market, and they launch competitor products. Why have they waited to launch? Because almost all of the risk of a failure was assumed by the first entrant. As competition increases the price of a product would normally decrease. Your objective as a marketer is to maximize sales and market share by insuring that your product is differentiated from the rest through branding and achieving loyalty. In this phase there are many competitors that despite having a temporary success might run out of feel and stay in the market place and drop out. For example, in our phone example pawn pilots came and capitalize the growth of demand as a market group Blackberry launched their first version of smartphone. Notice how in the first phase, our projective was to get trial. In this phase, it was all about preferring our brand. Maturity phase. In this phase, the none of your product stabilizes. Almost everybody of your target customers have tried or used regularly the product. And growth only comes from substitution or new customers coming in to your target customer group. Sales grow at par with population. One of the key features of this market is that companies use segmentation to try to cover the different needs of the marketplace through different models and brands. Competitive attempts to achieve and hold brand preference now involve making finer and finer differentiation in product. For example, a toothpaste that freshens breath. That fights cavities. That removes plaque, etc. In customer service also and in promotional practices. This stage also forces the manufacturer to concentrate on holding space in distribution outlets also many company begin to compete on price, forced by their access capacity. The number of competitors tends to decrease. Our objective is to try to keep our high market share in the segment or segments so that we compete, while maintaining high margins. This phase could last a long time. But there will come a time when demand will begin to disappear and thus, we will find ourself in the next phase. There are many reasons for your product to enter the declining stage. It can be changes in technology. For example, the fax, Changes in consumption or purchase habit. For example, your fixed telephone line at home. Changes in the environment, whether political, society or economic, for example, and see what is the global impact of Uber in the taxi industry. In this phase, your objective as a marketeer is to rebenefit. It is possible that your company will be able to keep a residual demand that could be very profitable. But, it's crucial to maintain a balanced part of portfolio. In this phase we normally see mergers or buyouts as production gets concentrated into few hands. The product lifecycle tool is a conceptual reference that will allow us to envisualize our products and competitors position in the market, and plan ahead to take advantage of the opportunities and avoid the threats. The key question you might be asking yourself is what to do to break free from the product life cycle. We'll talk more about that in Module 2. Now that you know how product has a lifecycle just like humans, let's discuss how to grow your brand offering. That is the topic of our next lecture. See you there. [MUSIC]
