{"id":4311,"date":"2016-01-23T03:12:37","date_gmt":"2016-01-23T03:12:37","guid":{"rendered":"https:\/\/courses.candelalearning.com\/marketingxwaymakerxspring2016\/?post_type=chapter&p=4311"},"modified":"2016-02-25T19:38:12","modified_gmt":"2016-02-25T19:38:12","slug":"reading-challenges-in-the-product-life-cycle","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/clinton-marketing\/chapter\/reading-challenges-in-the-product-life-cycle\/","title":{"raw":"Reading: Challenges in the Product Life Cycle","rendered":"Reading: Challenges in the Product Life Cycle"},"content":{"raw":"

Introduction<\/h2>\r\nIn theory, the product life cycle follows a predictable path that is easy to understand. This might suggest that the marketer just needs to gear up for the ride and be ready to adjust tactics as the product moves through its life cycle. To the contrary, a marketer's job is much less passive\u2014instead, the marketer's goal is\u00a0to influence<\/em> the life cycle. An effective marketer tries to extend the growth stage in order to maximize revenue and profits and to extend the maturity stage in order to fund the development and introduction\u00a0of new products.\r\n

Apple's iPod Life-Cycle Strategies<\/h2>\r\nIt is easier to understand the complexity of the product life cycle in the context of a real-life example. The total sales of Apple's iPod across all models follow a classic product life-cycle curve (see Figure 1, below).\r\n\r\n[caption id=\"attachment_4767\" align=\"aligncenter\" width=\"701\"]\"Worldwide<\/a> Figure 1[\/caption]\r\n\r\nRemember, these data include all models of iPods. One strategy that Apple employed to increase growth was to introduce new models often. The new models had\u00a0fairly similar functions but offered significantly different styling. This drove multiple sales to the same buyer. A buyer was less likely to say, \"I already have an iPod,\" than to say, \"I have an iPod Classic but I want an iPod Nano.\" From the initial launch in October 2002 through 2007, Apple introduced five major iPod models, with multiple versions of each. The graph below shows the sequence of releases, with large dots representing the initial release of each new model. In September of 2008 and 2010, Apple released new versions of three different iPod models at the same time.\r\n\r\n[caption id=\"attachment_4778\" align=\"aligncenter\" width=\"700\"]\"iPod<\/a> Figure 2[\/caption]\r\n\r\nApple's rapid product releases kept it on the cutting edge\u00a0of design and made it difficult for competitors to take market share during\u00a0the product's\u00a0growth stage. In September 2006, Apple CEO Steve Jobs reported\u00a0that iPods held\u00a075.6 percent market share.\r\n\r\nThroughout the growth period Apple chose not to sell old versions of new devices. Once the company introduced the third\u00a0generation of the iPod Nano, it stopped selling new second-generation iPod Nanos (though it did still offer refurbished versions of the older products). This allowed the company to quickly make the older versions obsolete, which drove new sales and reduced the ongoing support costs for older models.\r\n\r\nWhen companies talk about \"cannibalizing\" their market, they\u00a0mean that one product takes market share from another. In effect, one of the company's products is eating the other product's market share. Each new model of the iPod took market share from its predecessors, but collectively the iPod products dominated their market. The greatest cannibal of all in the Apple story is the iPhone, which was\u00a0first released in June 2007.\r\n

The Smartphone Product Life Cycle<\/h2>\r\nA smartphone is a mobile phone that performs many of the same functions as a computer. Prior to the introduction of the smartphone, most people used cell phones\u2014which are now referred to as \"feature phones.\" Feature phones provide phone and text capabilities but lack\u00a0an operating system that can\u00a0support the more advanced capabilities of today's smartphones.\r\n\r\nEarly smartphones saw broad adoption in Japan in 2001, but mass adoption of smartphones did not reach the U.S. until business users fell in love with the Blackberry in 2003. Today, smartphones from a range of providers use primarily Google's Android operating system, Apple's iOS, or Microsoft Mobile.\r\n\r\nGlobal sales of smartphones have grown rapidly, as shown in Figure 3, below.\r\n\r\n[caption id=\"attachment_4779\" align=\"aligncenter\" width=\"700\"]\"Worldwide<\/a> Figure 3[\/caption]\r\n\r\nMarketers are using many different strategies to drive the growth of smartphones, but perhaps the greatest impact has been the opening of the technology platform to allow other vendors to offer\u00a0applications for them. Apple, Samsung, Microsoft, and other players have not tried to imagine every possible use for a smartphone and build it themselves. Instead they have created the technology infrastructure and an open marketplace for applications. Programmers can develop applications that can run on any phone, and smartphone owners can select and buy the apps that are of interest.\r\n\r\nThrough this broad range of applications,\u00a0the smartphone brings together a number of different functions on one device. Before\u00a0the first release of the smartphone, many people carried a feature phone to answer calls and a personal digital assistant to manage email and calendars. With the smartphone, these two functions came together, and as the device has matured, it has taken over many other tasks that were formerly performed\u00a0on a separate\u00a0device.\r\n\r\nAdoption of smartphones has had tremendous impact on the product life cycle of\u00a0a range of other products. When Apple introduced the iPhone in 2007, the company was cannibalizing its market for iPods. Today, most Apple customers play their media on a phone rather than on a separate media-dedicated device. There are still sales of iPods, but the company, in effect, initiated the decline of the market with its own\u00a0introduction of the iPhone\u2014a market in which it had more than\u00a075 percent market share.\r\n\r\nThe markets for digital cameras (especially the low-end models) and personal navigation systems (GPS systems) have also been impacted. The product life-cycle graph for digital camera purchases, shown in Figure 4, below, shows a striking resemblance to that of the iPod.\r\n\r\n[caption id=\"attachment_4781\" align=\"aligncenter\" width=\"700\"]\"Worldwide<\/a> Figure 4[\/caption]\r\n\r\nWhile smartphone cameras have lagged behind digital cameras in terms of features and performance, they provide two distinct\u00a0benefits:\r\n
    \r\n\t
  1. The smartphone adds the camera to an existing device that the user already carries with him<\/li>\r\n\t
  2. The smartphone makes it easier to use and share photos through other applications on the phone<\/li>\r\n<\/ol>\r\nSmartphones\u00a0are a dominant factor in the product life cycle of digital cameras, iPods, and a number of other products.\u00a0If we overlay the three graphs, as in Figure 5, below, then it is easy to see the impact.\r\n\r\n[caption id=\"attachment_4799\" align=\"aligncenter\" width=\"700\"]\"Impact<\/a> Figure 5[\/caption]\r\n

    Lessons from the Smartphone Life Cycle<\/h2>\r\nThis example shows some benefits of considering the product life cycle in marketing strategies but also some significant limitations.\r\n\r\nThe product life cycle is not forward looking. At any point on the graph, a marketer can see what has already occurred but not what is ahead. In planning a product strategy, it is important to understand the past sales performance of the product and the industry broadly, but the role of marketing is to shape future performance, and the product life cycle doesn't offer\u00a0many tools to inform that proactive work.\r\n\r\nThe product life cycle can focus a marketer on a defined set of products and competitors in the current market\u2014but miss broad trends or innovations in adjacent markets and products. A marketer looking for the next feature to add to a digital camera to extend the maturity phase could easily miss the impact that the smartphone would have on the digital camera market. We can learn from Apple's description of a product marketing manager position in its own company: One of the product marketing manager's responsibilities is to \"closely follow emerging technology, consumer, and societal trends and make recommendations for how products will leverage or fit into those emerging trends.\" This broad view is critical to successful marketing.\r\n\r\nFinally, this example demonstrates the importance of creating a diverse set of products. When the iPod lost market share to the iPhone, Apple won. Other companies that have lost market on account of\u00a0the transition to smartphones\u2014Nikon and Canon in cameras, Garmin in navigation devices, etc.\u2014have not fared as well.\r\n

    Check Your Understanding<\/h2>\r\nAnswer the question(s) below to see how well you understand the topics covered in this outcome. This short quiz does\u00a0not<\/strong>\u00a0count toward your grade in the class, and you can retake it an unlimited number of times.\r\n\r\nUse this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.\r\n\r\nhttps:\/\/assessments.lumenlearning.com\/assessments\/794","rendered":"

    Introduction<\/h2>\n

    In theory, the product life cycle follows a predictable path that is easy to understand. This might suggest that the marketer just needs to gear up for the ride and be ready to adjust tactics as the product moves through its life cycle. To the contrary, a marketer’s job is much less passive\u2014instead, the marketer’s goal is\u00a0to influence<\/em> the life cycle. An effective marketer tries to extend the growth stage in order to maximize revenue and profits and to extend the maturity stage in order to fund the development and introduction\u00a0of new products.<\/p>\n

    Apple’s iPod Life-Cycle Strategies<\/h2>\n

    It is easier to understand the complexity of the product life cycle in the context of a real-life example. The total sales of Apple’s iPod across all models follow a classic product life-cycle curve (see Figure 1, below).<\/p>\n

    \"Worldwide<\/a><\/p>\n

    Figure 1<\/p>\n<\/div>\n

    Remember, these data include all models of iPods. One strategy that Apple employed to increase growth was to introduce new models often. The new models had\u00a0fairly similar functions but offered significantly different styling. This drove multiple sales to the same buyer. A buyer was less likely to say, “I already have an iPod,” than to say, “I have an iPod Classic but I want an iPod Nano.” From the initial launch in October 2002 through 2007, Apple introduced five major iPod models, with multiple versions of each. The graph below shows the sequence of releases, with large dots representing the initial release of each new model. In September of 2008 and 2010, Apple released new versions of three different iPod models at the same time.<\/p>\n

    \"iPod<\/a><\/p>\n

    Figure 2<\/p>\n<\/div>\n

    Apple’s rapid product releases kept it on the cutting edge\u00a0of design and made it difficult for competitors to take market share during\u00a0the product’s\u00a0growth stage. In September 2006, Apple CEO Steve Jobs reported\u00a0that iPods held\u00a075.6 percent market share.<\/p>\n

    Throughout the growth period Apple chose not to sell old versions of new devices. Once the company introduced the third\u00a0generation of the iPod Nano, it stopped selling new second-generation iPod Nanos (though it did still offer refurbished versions of the older products). This allowed the company to quickly make the older versions obsolete, which drove new sales and reduced the ongoing support costs for older models.<\/p>\n

    When companies talk about “cannibalizing” their market, they\u00a0mean that one product takes market share from another. In effect, one of the company’s products is eating the other product’s market share. Each new model of the iPod took market share from its predecessors, but collectively the iPod products dominated their market. The greatest cannibal of all in the Apple story is the iPhone, which was\u00a0first released in June 2007.<\/p>\n

    The Smartphone Product Life Cycle<\/h2>\n

    A smartphone is a mobile phone that performs many of the same functions as a computer. Prior to the introduction of the smartphone, most people used cell phones\u2014which are now referred to as “feature phones.” Feature phones provide phone and text capabilities but lack\u00a0an operating system that can\u00a0support the more advanced capabilities of today’s smartphones.<\/p>\n

    Early smartphones saw broad adoption in Japan in 2001, but mass adoption of smartphones did not reach the U.S. until business users fell in love with the Blackberry in 2003. Today, smartphones from a range of providers use primarily Google’s Android operating system, Apple’s iOS, or Microsoft Mobile.<\/p>\n

    Global sales of smartphones have grown rapidly, as shown in Figure 3, below.<\/p>\n

    \"Worldwide<\/a><\/p>\n

    Figure 3<\/p>\n<\/div>\n

    Marketers are using many different strategies to drive the growth of smartphones, but perhaps the greatest impact has been the opening of the technology platform to allow other vendors to offer\u00a0applications for them. Apple, Samsung, Microsoft, and other players have not tried to imagine every possible use for a smartphone and build it themselves. Instead they have created the technology infrastructure and an open marketplace for applications. Programmers can develop applications that can run on any phone, and smartphone owners can select and buy the apps that are of interest.<\/p>\n

    Through this broad range of applications,\u00a0the smartphone brings together a number of different functions on one device. Before\u00a0the first release of the smartphone, many people carried a feature phone to answer calls and a personal digital assistant to manage email and calendars. With the smartphone, these two functions came together, and as the device has matured, it has taken over many other tasks that were formerly performed\u00a0on a separate\u00a0device.<\/p>\n

    Adoption of smartphones has had tremendous impact on the product life cycle of\u00a0a range of other products. When Apple introduced the iPhone in 2007, the company was cannibalizing its market for iPods. Today, most Apple customers play their media on a phone rather than on a separate media-dedicated device. There are still sales of iPods, but the company, in effect, initiated the decline of the market with its own\u00a0introduction of the iPhone\u2014a market in which it had more than\u00a075 percent market share.<\/p>\n

    The markets for digital cameras (especially the low-end models) and personal navigation systems (GPS systems) have also been impacted. The product life-cycle graph for digital camera purchases, shown in Figure 4, below, shows a striking resemblance to that of the iPod.<\/p>\n

    \"Worldwide<\/a><\/p>\n

    Figure 4<\/p>\n<\/div>\n

    While smartphone cameras have lagged behind digital cameras in terms of features and performance, they provide two distinct\u00a0benefits:<\/p>\n

      \n
    1. The smartphone adds the camera to an existing device that the user already carries with him<\/li>\n
    2. The smartphone makes it easier to use and share photos through other applications on the phone<\/li>\n<\/ol>\n

      Smartphones\u00a0are a dominant factor in the product life cycle of digital cameras, iPods, and a number of other products.\u00a0If we overlay the three graphs, as in Figure 5, below, then it is easy to see the impact.<\/p>\n

      \"Impact<\/a><\/p>\n

      Figure 5<\/p>\n<\/div>\n

      Lessons from the Smartphone Life Cycle<\/h2>\n

      This example shows some benefits of considering the product life cycle in marketing strategies but also some significant limitations.<\/p>\n

      The product life cycle is not forward looking. At any point on the graph, a marketer can see what has already occurred but not what is ahead. In planning a product strategy, it is important to understand the past sales performance of the product and the industry broadly, but the role of marketing is to shape future performance, and the product life cycle doesn’t offer\u00a0many tools to inform that proactive work.<\/p>\n

      The product life cycle can focus a marketer on a defined set of products and competitors in the current market\u2014but miss broad trends or innovations in adjacent markets and products. A marketer looking for the next feature to add to a digital camera to extend the maturity phase could easily miss the impact that the smartphone would have on the digital camera market. We can learn from Apple’s description of a product marketing manager position in its own company: One of the product marketing manager’s responsibilities is to “closely follow emerging technology, consumer, and societal trends and make recommendations for how products will leverage or fit into those emerging trends.” This broad view is critical to successful marketing.<\/p>\n

      Finally, this example demonstrates the importance of creating a diverse set of products. When the iPod lost market share to the iPhone, Apple won. Other companies that have lost market on account of\u00a0the transition to smartphones\u2014Nikon and Canon in cameras, Garmin in navigation devices, etc.\u2014have not fared as well.<\/p>\n

      Check Your Understanding<\/h2>\n

      Answer the question(s) below to see how well you understand the topics covered in this outcome. This short quiz does\u00a0not<\/strong>\u00a0count toward your grade in the class, and you can retake it an unlimited number of times.<\/p>\n

      Use this quiz to check your understanding and decide whether to (1) study the previous section further or (2) move on to the next section.<\/p>\n

      \t