ECON344 Lecture 3: CH 11 NOTES

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rubycrocodile336

1 Dec 2017

School

University of Waterloo

Department

Economics

Course

ECON344

Professor

Bharat Sud

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Document Summary

Introduction stage: sales grow slowly and profit is minimal. Due to large investment costs in product development. Stimulate trial (the initial purchase of a product by a consumer). Goal is to first create primary demand and later stimulate selective demand for a specific brand: skimming pricing strategy: help the company recover the costs of development as well as capitalize on the price intensively of early buyers. Growth stage: characterized by rapid increases in sales. Competitors appear and more aggressive pricing results: ales i(cid:374)(cid:272)(cid:396)ease due to (cid:862)(cid:396)epeat pu(cid:396)(cid:272)hases(cid:863) people who tried the product, were satisfied and bought again, changes start to appear in the product. Maturity stage: characterized by a slowing of total industry sales or product class revenue. Decline stage: sales and profits begin to drop. Technological innovation often precedes: deletion: d(cid:396)oppi(cid:374)g a p(cid:396)odu(cid:272)t f(cid:396)o(cid:373) a (cid:272)o(cid:373)pa(cid:374)(cid:455)"s p(cid:396)odu(cid:272)t li(cid:374)e, harvesting: when a company retains the product, but reduces marketing support costs.

Related Questions

The sales and profits of an individual product may not follow the life cycle pattern.

True

False

During the sales decline stage of the product life cycle, no firm can earn a profit.

True

False

During the introduction stage of the product life cycle:

none of the above.

most products achieve intensive distribution.

promotion is likely to be needed to increase primary demand.

"me too" products quickly take market share away from the innovator.

industry profits are at their highest.

During the introduction stage, what would hinder acceptance of a new product?

consumers may not see the new product as offering a superior alternative to whatever they are currently using.

risk in buying something for the first time.

all of the above.

the new product may not be compatible with the buyer's values.

problems communicating or demonstrating the new product's benefits.

During the market growth stage of the product life cycle:

industry sales grow slowly.

industry profits fall, then rise.

the market begins to fragment into sub-markets or segments.

all of the above.

the industry experiences the smallest profits

What is the most important reason why industry sales level off in the market maturity stage of the product life cycle?

persuasive promotion.

pool of potential users is exhausted.

aggressive competitors entering the markets.

less efficient firms leaving the market.

price cutting.

Gerhard Company has seen most of its competitors drop out of its product market due to declining sales and profits. However Gerhard still has much demand for its products from a small group of loyal customers. In which stage of the product life cycle is this product market?

The length of a product's life cycle:

depends on the ease of entry to the market for competitors.

may be as short as 90 days.

may be as long as 100 years.

varies widely across products.

all of the above.

Regarding product life cycles, a good marketing manager knows that: