Question

Discuss the differences between the product life cycle and the diffusion (adoption of innovations concepts). How does the marketing mix change with each stage of these processes?

Answer 1

Product Life Cycle and Diffusion (adoption of innovation concepts)

Both are the two different marketing theories which are inter related in several circumstances. Understanding of these theories gives us a chance to see the big picture from both customer, and product perspective.

Product Life Cycle

A product life cycle is the typical stages a product goes through during its lifetime. Every single product has a life. It starts, and it ends. What matters is how long and how successfully will it lust.According to this theory Product Life Cycle consists of 4 stages

1. Introduction - It has just launched and very few people have information about it. Customers have to be informed. You wait very first signals from initial users and you are flexible to the market reaction. No discounts, no low prices, no mass promotional campaigns are needed. Generally you experience slow sales and high expenses. Profit? Forget.
2. Growth - Life is colorful. A period of rapid market acceptance and substantial profit improvement. You work on product development by increasing quality, adding new features, improving processes, tuning design and what not in order to sustain the growth. New segments? Why not. Also you don’t forget about price-sensitive consumers.
3. Maturity - Sounds like a “red ocean”. Sales growth slows down or simply stagnates. The product has achieved acceptance by most potential buyers. Profits stabilize or decline because of increased competition. Product modification? Seems plausible. Abracadabra on marketing mix? Go ahead! Here you really need a 5-star Marketing Manager.
4. Decline - A heartbreaking picture of a doctor, a patient and defibrillation. Sales show a downward drift and profits erode. You use your final bullets to keep it up.

Product Life Cycle varies depending on industries and products. But in most cases it draws the same above-mentioned trajectory.

Diffusion of Innovation

Long story short, this theory explains how and at what rate new ideas & technology spread. Everett Rogers, a professor of communication studies, popularized the theory in his book "Diffusion of Innovations" in 1962.

First we need to understand the consumer-adoption process, the mental steps through which an individual passes from first hearing about an innovation to final adoption.

consumer-adoption process

1.Awareness - The consumer become aware of innovation but lack of information about it.

2.Interest - The consumer is stimulated to seek information about the innovation.

3.Evaluation - The consumer consider whether to try the innovation.

4.Trial - The consumer tries the innovation to improve his or her estimate of its value.

5.Adoptation - The consumer decide to make full and regular use of the innovation.

Based on consumer-adoption process there are five adopter groups differ in their value orientations and their motives for adopting or resisting the new product:

1. Innovators are technology enthusiasts and they enjoy having new products before others. In return for low prices, they are happy to conduct alpha and beta testing and report on early weaknesses.
2. Early adopters are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage. They are less price sensitive and willing to adopt the product if given personalized solutions and good service support.
3. Early majority are deliberate pragmatists who adopt the new technology when its benefits are proven and a lot of adoption has already taken place. They make up the mainstream market.
4. Late majority are skeptical conservatives who are risk averse, technology shy, and price sensitive.
5. Laggards are tradition-bound and resist the innovation until the status quo is no longer defensible.

These two theories are different but interrelated in the following ways;

Innovators start to get a product at the introduction stage. When early adopters show up, the product starts its growth phase and continues until capturing a big portion of early majority. Maturity stage is finalizing by the presence of late majority and witnessing some of the laggards. The latter group mainly purchase your product during the decline stage.so we can conclude that Product Life Cycle and Diffusion (adoption of innovation concepts) are two sides of the same coin.

2.How does the marketing mix change with each stage of these processes?

A product life cycle is the typical stages a product goes through during its lifetime. The product life cycle is broken down into five different stages, which include the development, introduction, growth, maturity and decline stages of the product. Characteristics for each stage differ and in response to the different needs of the product as it moves through its life cycle, the market mix (various marketing tactics) used during these stages differ as well. Understanding the product life cycle can help business owners and marketing managers plan a marketing mix to address each stage fully.

Development Stage - During the development stage, the product may still be just an idea, in the process of being manufactured or not yet for sale. In this stage, the marketing mix is in the planning phase, so rather than implementing marketing strategies, the product producer is researching marketing methods and planning on which efforts the company intends on using to launch the product. The marketing mix for this stage includes ways to bring awareness of the product to potential customers through marketing campaigns and special promotions.

Introduction Stage - As the product hits the market, it enters the introduction stage of the product life cycle. Because it is a new product that customers are not yet aware of, the product sales during the introduction stage are generally low. At this time, marketing expenses are generally high because it requires a lot of effort to bring awareness to the product. The marketing mix during this stage of the product life cycle entails strategies to establish a market and create a demand for the product.

Growth Stage - As customers become aware of the product and sales increase, the product enters into the growth stage of the product life cycle. Marketing tactics during the growth stage requires branding that differentiates the product from other products in the market. Marketing the product involves showing customers how this product benefits them over the products sold by the competition—also known as building a brand preference.

Maturity Stage - As the product gains over its competition, the product enters the maturity stage of the product life cycle. The marketing mix during this stage involves efforts to build customer loyalty, typically accomplished with special promotions and incentives to customers who switch from a competitor’s brand.

Decline Stage - Once a product market is over saturated, the product enters into the decline stage of the product life cycle. This is the stage where the marketing mix and marketing efforts decline. If the product generated loyalty from customers, the company can retain customers during this stage, but does not attract new sales from new customers. For the marketing mix that remains during the decline stage, the focus is generally on reinforcing the brand image of the product to stay in a positive light in the eyes of the product's loyal customers.

Thank you for your question.All the best.