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. This is best illustrated by technology products. 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 again changes; over time, marketers lower the price. 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 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.
Developing an inexpensive and lower-quality vehicle to compete with cars in another class may dilute the brand and hurt sales. However, if BMW were to market the vehicle under a different brand, 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 important 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 7 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; and
- explain different considerations and models in setting a price.
4.1: Product Life Cycle
Read this chapter, which begins by discussing the functional areas of marketing. It discusses the product first, which is the impetus for the other marketing functions. Pay attention to the concepts of growth, maturity, and decline.
4.2: The Creation of an Offering
This chapter discusses what constitutes an "offer", including key aspects of benefits and price, the types of consumer and business-to-business offerings, and the important considerations of branding, labeling, and packaging in the development of new offerings.
4.3: Creating Customer Value through Supply Chains
This chapter discusses sourcing and procurement, outsourcing, demand planning and inventory control, warehousing and transportation, and tracking systems, all with an eye to maximizing customer value while minimizing operational costs.
Unit 4 Discussion and Assessment
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.
- Receive a grade Receive a pass grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.