Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

10. Product Management
    and New−Product
    Development

Text © The McGraw−Hill

Companies, 2002

Product Management and New-Product Development 279

for example, may never get any sales at all and suffer a quick death. Or it may reach

its peak and start to decline even before the market maturity stage begins. Market

leaders may enjoy high profits during the market maturity stage—even though

industry profits are declining. Weaker products, on the other hand, may not earn a

profit during any stage of the product life cycle. Sometimes the innovator brand

loses so much in the introduction stage that it has to drop out just as others are

reaping big profits in the growth stage.

Strategy planners who naively expect sales of an individual product to follow the

general product life-cycle pattern are likely to be rudely surprised. In fact, it might

be more sensible to think in terms of “product-market life cycles” rather than prod-

uct life cycles—but we will use the term product life cyclebecause it is commonly

accepted and widely used.

How we see product life cycles depends on how broadly we define a product-

market. For example, about 80 percent of all U.S. households own microwave ovens.

Although microwave ovens appear to be at the market maturity stage here, in many

other countries they’re still early in the growth stage. Even in European countries

like Switzerland, Denmark, Italy, and Spain, fewer than 20 percent of all households

own microwave ovens.^4 As this example suggests, a firm with a mature product can

sometimes turn back the clock by focusing on new growth opportunities in inter-

national markets.

How broadly we define the needs of customers in a product-market also affects

how we view product life cycles—and who the competitors are. For example, con-

sider the set of consumer needs related to storing and preparing foods. Wax paper

sales in the United States started to decline when Dow introduced Saran Wrap.

Then sales of Saran Wrap (and other similar products) fell sharply when small plas-

tic storage bags became popular. However, sales picked up again by the end of the

decade. The product didn’t change, but customers’ needs did. Saran Wrap filled a

new need—a wrap that would work well in microwave cooking. In the last few

years, resealable bags like those from Ziploc have taken over because they can be

used in both the freezer and the microwave.

If a market is defined broadly, there may be many competitors—and the market

may appear to be in market maturity. On the other hand, if we focus on a narrow

Marketing managers for

Kellogg and Nabisco have

found many opportunities for

new growth in international

markets.

Each market should be

carefully defined