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understand the changes, in the revenue that is made, as you go through the different stages of selling a product, from the beginning, to the end.
Digital cameras
Mini-disc
Electric cars
DVD VR*
*= virtual reality
Introduction The seller tries to stimulate demand Promotion campaigns to get increase public awareness Explain how the product is used,
Features Advantages
Benefits
You will lose money, but you expect to make profits in the future
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Introduction Sales are low, and profits are below the line because your costs are greater than the amount of money you make you have negative profit
Growth A lot is sold - The seller tries to sell as much as possible Other competitor companies watch, and decide about joining in with a competitor product
Growth At the end of the growth stage, profits start to decline when competition means you have to spend more money on promotion to keep sales going. Spending money on promotion cuts into your profit
Growth
Maturity
Decline
Decline Newer products are now more attractive - even a low low price does not make consumers want to buy. Profit margin declines - and so the only way to make money is to sell a high volume
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Decline To increase volume you try to 1. Increase the number of customers - get new customers 2. Increase the amount each customer uses
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Market Modification
Product Modification
modify the market MARKET MODIFICATION you look for new consumers by changing the product so it has new users - and then new customers (Baking soda, vinegar, Q-tips, Avon
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examples Windex for cleaning jewelry Javex bleach for toilets Lemons for hair colouring beer for hair Bounce for in the garbage, gym bag etc.
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modify the product PRODUCT MODIFICATION adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users
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WINDOWS 3.1
WINDOWS 95
1991
1995
1996
1997
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Most people have a problems thinking this theory is relevant because they apply it to specific product brands - it should be applied only to a general product category
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short, depending on how easy it is for the public to understand the F.A.B. Not all products follow the same pattern
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new and have no competition so the intro stage is short, and they go direct to growth stage.
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sometimes the Growth Stage doesnt last too long (because competitors move in) companies must continually come up with new products You can tell when they are in the growth stage because this is when they introduce new model variations, and some improvements to the product
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information in the later stages, focus is on brand promotion use market segmentation in maturity stage to maintain strong core customer basis
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Digital cameras
Mini-disc
Electric cars
Monopoly
*= virtual reality
Monopolistic
Oligopoly
Pure Competition
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