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observed a bell…shaped pa。。ern for the sales of individual cars。 Over the
following four decades various practitioners and researchers； adding；
substituting and renaming the stages in the life cycle to arrive at the five
steps in Figure 3。4； carried out further work。 The length of a product’s
lifetime can be weeks or months in the case of fads such as the hula…hoop
or the Rubic cube：
Figure 3。4 The product life cycle
。 Product development： This stage is typified by cash outlays only； and
can last from decades in the case of medical products down to a few
months or even weeks to launch a simple consumer product。
。 Introduction： Here the product is brought to market； perhaps just to one
initial segment； and it may prise li。。le more than a test marketing
activity。 Once again costs are high； advertising and selling costs have to
be borne up front and sales revenues will be minimal。
Introduction Decline
Development Growth Saturation Maturity
Sales
Sales
Time
96 The Thirty…Day MBA
。 Growth： This stage sees the product sold across the whole range of a
pany’s market segments； gaining market acceptance and being
profitable。
。 Maturity and saturation： Sales peak as the limit of customers’ capacity
to consume is reached and petitors or substitute products enter the
market。 Profits start to tail off as prices drop and advertising is stepped
up to beat off petitors。
。 Decline： Sales and profits fall away as petition bees heavy and
be。。er and more petitive or technologically advanced products
e into the market。
The usefulness of the product life cycle as a marketing tool is as an aid to
deciding on the appropriate strategy to adopt。 For example； at the introduction
stage the goal for advertising and promotion may be to inform and
educate； during the growth stage differences need to be stressed to keep
petitors at bay； and during maturity customers need to be reminded
that you are still around and it’s time to buy again。 During decline it’s
probable that advertising budgets could be cut and prices lowered。 As all
major costs associated with the product will have been covered at this stage；
this should still be a profitable stage。
These； of course； are only examples of possible strategies rather than rules
to be followed。 For example； many products are successfully relaunched
during the decline stage by changing an element of the marketing mix or
by repositioning into a different marketplace。 Cigare。。e manufacturers are
responding to declining markets in the developed economies by targeting
markets such as Africa and China； even se。。ing up production there and
buying up local brands to extend their range of products。
Unique positioning proposition
This used to be known as the unique selling proposition （USP） and still is
in the sales field。 For marketers the term is synonymous with the idea of a
slogan or strap line that captures the value of the product in the mind of
the user。 It should position your product against petitors in a manner
that is hard to emulate or dislodge。 John Lewis； for example； has ‘never
knowingly undersold’ as its powerful message to consumers that they can
safely set price considerations to one side when they e to making their
choice。
Another strategy is to set out to own the word and turn it into an adjective。
Hoover with vacuum cleaners and FedEx with overnight delivery
are examples of this approach。
Product range
Being a single…product business is generally considered too dangerous a
position except for very small or start…up businesses。 The two options to
consider are：
Marketing 97
。 Depth of line： This is the situation when a pany has many products
within a particular category。 Washing powders and breakfast cereals
are classic examples of businesses that offer scores of products into the
same marketplace。 The benefit to the pany is that the same channels
of distribution and buyers are being used。 The weakness is that all
these products are subject to similar threats and dangers。 However
‘deep’ your beers and spirits range； for example； you will always face
the threat of higher taxes or the opprobrium of those who think you are
damaging people’s health。
。 Breadth of line： This is where a pany has a variety of products of
different types such as Marlboro with cigare。。es and fashion clothing；
or 3M with its extensive variety of adhesives extending out to the Post…
It Note。
Branding
This is considered the holy grail of the product/service aspect of the marketing
mix。 A brand enpasses not just what a product is or does but all
the elements such as logo； symbols； image； reputation and associations。
McDonald’s arches represent its brand as a weling beacon drawing
customers in。 Branding is an intangible way of differentiating a product in a
way that captures and retains markets through loyalty to that brand。 Coca…
Cola tastes li。。le different from a supermarket brand； but the promotion
that supports the brand confers on the consumer the chance to share the
a。。ractive lifestyle of those ‘cool’ people in the adverts。 Apple’s iPod is differentiated
from just any old MP3 player in much the same way。 Intel and Audi
are examples of branding designed to reassure consumers in unfamiliar
territory that a product will deliver。 Body Shop International exudes ethics
and concern for the environment； where other cosmetics concentrate on
how they will make the wearer look beautiful。
Building a brand takes time and a considerable advertising budget to
build。 But by creating brand value； that is； the price premium manded
by that product over its unbranded or less appealing petitors； a business
can end up with a valuable asset。 Superbrands （superbrands） has
a listing of the top brands by country； o。。en with a case study supporting
the top brands in any country。
Price
Seemingly the simplest of the marketing choices； it is o。。en the most agonizing
decision that MBAs are faced with。 The subject transcends almost
every area of a business。 The economists get the ball rolling with ideas
around the elasticity of demand。 Set too high a price and no one es
to the dance； too low and your budget for bouncers will go off the Richter
scale。 The accounts and production teams are concerned that sales will at
98 The Thirty…Day MBA
least be sufficient to reach break…even in reasonable time。 The strategists
are worried about the signals in terms of corporate positioning that prices
can send。 However profitable a certain price may be for the business； it
may just be so low that it devalues other products in your range。 Apple；
for example； has a position fairly and squarely at the innovator end of the
product adoption cycle。 Their customers expect to pay high prices for the
privilege of being the first users of a new product。 The iPod was positioned
above the Walkman in price terms； though as the market for pocket sound
devices was already mature there was scope to e into the market lower
down the price spectrum。
Skim vs penetrate
You need to decide between two generic pricing strategies before you can
fine…tune your plans。 Skimming involves se。。ing a price at the high end of
what you believe the market will bear。 This would be a strategy to pursue
if you have a very limited amount of product available for sale and would
rather ‘ration’ than disappoint customers。 It is also a way to target the
‘innovators’ in your market who are happy to pay a premium to be among
the first to have a new product。 To be successful with this strategy you
would need to be sure that petitors can’t just step in and soak up the
demand that you have created。
Penetration pricing is the mirror image； prices are set at the low end；
while being above your costs。 Prices are petitive； with the deliberate
intention of eliminating your customers’ need to shop around。 Slogans such
as ‘everyday low prices’ are used to emphasize this policy。 The aim here is
to grab as much of the market as you can before petitors arrive on the
scene and hopefully lock them out。 The danger here is that you need a lot
of volume either of product or hours sold before you can make a decent
profit。 This in turn means tying up more money for longer before you break
even。
Dragon Lock （the executive puzzle makers）； who were Cranfield enterprise
programme participants； adopted a skim strategy when they launched
their new product。 Their product was easy to copy and impossible to patent；
so they chose a low price as a strategy to discourage petitors and to
swallow up the market quickly。
Danger of low pricing
Aside from the obvious possible problems of the cash…flow implications
of stretching out the break…even horizon and quality/image issues； it is an
immutable law that raising prices is a whole lot more difficult than lowering
them。 It is less of a problem if the market as a whole is moving up； but
raising a price because you set it too low in the first place is a challenge to
say the least。
Marketing 99
Value pricing
Another consideration when se。。ing your prices is the value of the product
or service in the customer’s mind。 His or her opinion of price may have li。。le
or no relation to the cost； and he or she may be ignorant of the price charged
by the petition； especially if the product or service is a new one。 In fact；
many consumers perceive price as a reliable guide to the value they can
expect to receive。 The more you pay； the more you get。 With this in mind；
had Dyson launched its revolutionary vacuum cleaner； with its claims of
superior performance； at a price below that of its peers； then some potential
customers might have questioned those claims。 In its literature Dyson cites
as the inspiration for the new vacuum cleaner the inferior performance of
existing products in the same price band。 A product at six times the Dyson
price is the one whose performance Dyson seeks to emulate。 The image
created is that； although the price is at the high end of general run…of…themill
products； the performance is disproportionately greater。 The runaway
success of Dyson’s vacuum cleaner would tend to endorse this argument。
Real…time pricing
The stock market works by gathering information on supply and demand。
If more people want to buy a share than sell it； the price goes up until
supply and demand are matched。 If the information is perfect （that is；
every buyer and seller knows what is going on）； the price is optimized。 For
most businesses this is not a practical proposition。 Their customers expect
the same price every time for the same product or service – they have no
accurate idea what the demand is at any given moment。
However； for businesses selling on the internet； puter networks
have made it possible to see how much consumer demand exists for a
given product at any time。 Anyone with a point…of…sale till could do the
same； but the reports might e in weeks later。 This means that online
panies could change their prices hundreds of times each day； tailoring
them to certain circumstances or certain markets； and so improve
profits dramatically。 easyJet； a budget airline； does just this。 It prices
to fill its planes； and you could pay anything from ￡30 to ￡200 （including
airport taxes） for the same trip； depending on the demand for that flight。
Ryanair and Eurotunnel have similar price ranges based on the basic rule
– discounted low fares for early reservations and full fares for desperate
late callers！
Internet auction pricing
Once the prerogative of the fine art and antiques markets； auctioning is
a fast…growing pricing strategy for a whole host of very different types
of business。 The theory of auctioning is simple。 Have as many interested
potential buyers as possible see an item； set a time limit for the transaction
100 The Thirty…Day MBA
to be pleted and let them fight it out。 The highest bidder wins and；
in general； you can get higher prices than by selling through traditional
pricing strategies。 eBay was a pioneer in the new auction house sector and
is still perhaps the best known。 But there are dozens of others covering this
area and other auction houses you can plug into：
。 eBay （ebay。uk/university） has its own ‘university’ training
160；000 or so people in the UK； PowerSellers as they are known； in the
art of successful auctioning。
。 IBidFree （ibidfree）； set up by Shane McCormack； a
former eBay seller； with the proposition that you can have all the features
of eBay but for free。 IBidFree was created as a perfect opportunity
for the person working from home trying to market their products
without all of their profits being swallowed up by charges and fees。 The
rules are few and； unlike eBay； sellers are encouraged to place a link in
their auctions back to their own websites。 They are also allowed to email
each other directly to allow for be。。er munication。
。 UBid （ubid）； founded in 1997； went public in 2005。
Its online marketplace provides merchants with an efficient and economical
channel for selling on their surplus merchandise。 UBid currently
carries over 200；000 items for auction/sale each day。 You h