Need help marketing your business? Bring out more products and services and watch yourself beat any competition
First, let us consider why new products are needed. Why should a company, which already has a range of good selling ‘lines’, spend time and effort on innovation and thereby run the risk of an expensive failure? The answer lies in what has been called the ‘product life cycle’.
The theory of the product life cycle is that, from the time it is launched on the market until it is finally withdrawn, a product passes through four main stages. The first stage covers the period of introduction of the product to the market.
The process before selling
Before initial sales can be achieved, stocks must be created, special advertising and promotions launched and a high proportion of the time of salesmen and senior management personnel devoted to the new product.
All of this represents a considerable investment, whereas the profits which are likely to be derived from the product at this stage will be minimal.
The second part of the process
Passing to the second stage, we shall probably find that sales are now growing rapidly in a market in which there is, possibly, little competition. It is during this period of its life that the product can achieve its greatest impact on the market and its greatest profitability.
By the third stage, the fully established product will undoubtedly be faced with competition from other contenders for a share in the market. Sales may still rise; but so will costs.
The presence of competition may necessitate a considerable increase in advertising to retain market share. Furthermore, there is likely to be a reduction in prices in the face of competitive price pressure.
The power of online marketing
For the online marketing manager, who is responsible for a range of products and who is operating in several different markets, there is a distinct advantage in having each product at a different stage in its life cycle.
The company will be able to avoid major fluctuation in its profit level. The problem of seasonal fluctuation can also be eased if one has more than one product, each with a different seasonal peak of sales.