Unit 4: Life Cycles, Offers, Supply Chains, and Pricing
Products do not last forever. New products typically cost more than existing products due to the high costs associated with production and development. Technology products best illustrate this. The fact that initial customers will be early adopters of a new product affects the marketing strategy. As the product grows and matures, the strategy changes; marketers lower the price over time. When a product is in the declining stage, most competitors leave the market, and prices are very low. At each stage, the marketing of the product is different.
When a new product is developed and offered, a company must consider what will create the product's value to the customer, whether the customer is a consumer or another business. Marketers must always ask where a new product will fit in their current lineup and how the new product will serve as an extension of an existing brand. Take the car manufacturer BMW. They make sporty luxury vehicles aimed at the upper-middle and wealthy classes.
Developing an inexpensive, lower-quality vehicle to compete with cars in another class may dilute the brand and hurt sales. However, suppose BMW were to market the vehicle under a different brand. In that case, they could diversify their product portfolio, avoid the risk of diluting the BMW brand and be able to reach new customers all at the same time. Some firms go to great lengths to disassociate their brands from one another, while others embrace a family of brands model. Appropriate decisions vary by industry and strategy. Equally crucial in delivering value to the customer through an offering is how a company sources the goods and services necessary for production and delivers the end product for customers to purchase. This process is known as the supply chain.
Finally, in this unit, we will examine issues in pricing, including the costs of delivering a product, customer and societal perspectives, the impacts of competition, and ultimately the revenues a company may generate.
Completing this unit should take you approximately 2 hours.
Upon successful completion of this unit, you will be able to:
- explain the product life cycle;
- explain how offerings are created;
- explain how supply chains create value;
- explain different considerations and models used when setting a price; and
- calculate the future value and present value of an amount using one period and multiple periods.
4.1: Product Life Cycle
- When a new product is developed and offered, a company must consider what will develop the product's value to the customer, whether the customer is a consumer or another business. Marketers must always ask where a new product will fit in their current lineup and how the new product will serve as an extension of an existing brand. Take the car manufacturer BMW. They make sporty luxury vehicles aimed at the upper-middle and wealthy classes.
4.2: The Creation of an Offering
Think about why you purchase things. In this section you will read material on offerings and distinguish between the three major components of an offering: product, price, and service. Summarize the points for both sides of a product-dominant and a service-dominant approach, Review how each component composes different types of offerings. Then distinguish between technology platforms and product lines.
4.3: Creating Customer Value through Supply Chains
Read this chapter. Think about the processes and key components involved such as costs, outsourcing, social responsibility, environment, planning, and inventory control. Watch the video clips for Who Ya Gonna Call and Amazon Fullfillment. Answer the review questions at the end of each section.
Unit 4 Discussion
After reviewing the unit materials, post and respond to the following topics on the course discussion forum. Feel free to start your own post and respond to other students' posts as well.
As we consider how a life cycle might apply to products and services, how might it also apply from a perspective of consumer interest and purchasing patterns? Pick a release of any company's new product, and describe it in terms of its target audience, its place within the existing company brand, and supply chain issues that might need to be considered. Think of a product or service you might launch your own marketing campaign for. Describe it in terms of its target audience, its place within any existing brand, and supply chain issues that might need to be considered.