Product Marketing – What phases are required?
Product marketing is an essential component in the development of products, whether in their creation or in their growth phase, when a company is an established participant in the marketplace. In classical business terms, there are generally five phases that make up the product life cycle. The product marketing plan should strategically make sense in line with these phases.
The creation phase
All product development starts with an idea and a vision of a promising product or service that could address the needs of specific customers. In general, people are always looking for improvements in their everyday life and environment, so ideas for new product ideas can come from many different cultures around the world. Nikola Tesla was a visionary who saw the light of day in the Serbian cultural area in 1856, which is now Croatia. His visual ideas, developed out of scientific curiosity, brought innovation to the then fledgling electrical industry. In the process, his visual imagination was considered a particularly unique selling point and attracted the attention of enterprising developers such as Thomas Alva Edison, who focused on DC power lines in America. Tesla was not particularly interested in money, rather in the utility of the laws of nature for human needs, and so he took a job with Edison, the light bulb manufacturer in Manhattan. With the discovery of alternating current, Tesla developed dynamo generators, motors and transformers in the years before, the innovative content of which he tried to convey to Edison. Edison, on the other hand, stuck to his concept of direct current and later propagandized against Tesla's future developments in public. Tesla founded his own company, the Tesla Electric Light and Manufacturing Company, and managed to attract investors for his inventions. These, however, pushed him out of the corporate business. Until his death in 1943, Tesla was left only with his more than 700 counted patents, none of his inventions brought personal financial success. Nikola Tesla was not business-minded and had no sense for marketing his ideas and visions. Decades later, American Elon Musk capitalized on Tesla's innovative spirit and transformed his inventive legacy into a product that revolutionized the auto industry with battery-powered electric cars and would make him the second richest person in the world.
If Nikola Tesla had a product development and marketing consultant, he could have determined valuable insights by answering the following questions about his product ideas and using the prototypes he developed to test potential customers' relevance:
- Is the purpose and benefit clearly evident to the customer?
- Does the product idea take into account the needs of the customer?
- Does the product differentiate itself from the competition?
- Does the product design fit the company, the economic goals, the corporate identity and can a brand development take place based on this?
The introductory phase
The real kick-off in product development begins in the launch phase. The idea for the battery-powered electric cars did not originally come from Elon Musk, but from the two startup founders Martin Eberhard and Marc Tarpenning. Elon Musk was one of the first investors who provided the two founders with the necessary start-up capital for the actual development of the electric cars, however, due to the increasing company shares, he took over his role as boss more and more as a priority and ousted the idea givers from the company business in 2008. Musk had planned a marketing strategy for the electric cars and his product marketing was very successful.
Basically, the following questions must be clarified in the launch phase:
- Is the product addressed to B2B and / or B2C customers?
- How can the customers ideally be reached through communication?
- Are the customers also represented in other countries and if so, how does this affect the sales channels and marketing measures?
- What prices are acceptable to the customers?
- How does the customer react to price changes?
The growth phase
In the growth phase, a clear upward trend in sales can be observed. The beginning of this phase is heralded by the break-even point. At this point, the product only generates profits and the losses from the previous phases are covered. The product gains increasing awareness as its success increases demand, which greatly expands its reach. The product and brand leave lasting quality claims in the minds of customers, who in turn willingly make purchase recommendations to potential new customers. At this point of development, a company should be familiar enough with the marketing measures and constantly develop them with relevant and target group-specific advertising messages. Consequently, expenses also increase during the growth phase, which is why it is important that product marketing works efficiently and effectively. The Danish beer manufacturer Carlsberg owns the German beer brand Astra, which is an absolute professional in the field of product marketing. The company's headquarters have been in Hamburg since 1932, and since then the location and its humorous charm have been used in beer production for product marketing. Astra advertising is not only known in the Hamburg area, but throughout Germany. In 1997, even the World Astra Day was founded, which was celebrated annually with media power until 2013. In addition, Astra sponsors the regional soccer team St.Pauli. The beer brand also caused scandalous and sexist advertising messages against which legal action was taken. However, this did not have a particularly negative impact on demand for Astra, as the humorous brand communication associated with the popular sport of soccer is stored in customers' minds.
The maturity and saturation phase
In the penultimate phase of the product life cycle, a product or service has reached maximum sales. The product is established on the market and prices are aligned with the competition. As prices reach their peak, customer demand begins to wane. New competitors usually appear on the market, making the established product and its brand look old. Therefore, it is important at this stage to strategically consider how the product can continue to stay in the market. At this point in the lifecycle, it is worthwhile to develop product marketing in a targeted manner. With the help of a marketing mix, existing customers can be encouraged to continue to rely on existing customer loyalty. Technical innovations and visions can help to reinvigorate the customer's belief in a product or service. This fresh dynamic can in turn attract new customers to established products and ensure that the quality and new demands are communicated further. In this context, it can also be considered to let the product enter a new market area. Apple would not be the market leader in the manufacture of technical devices if it relied solely on the success of the iPhone. In the meantime, there are far more affordable models that are a first-rate competitor to the iPhone in terms of functionality and aesthetics. Apple's product marketing noticed this development in time and reacted to it by focusing on the increasing success of streaming services from Netflix, Amazon and Co. For a few years now, Apple has been producing smart TVs and selling matching service offers via apps and also advertises with its own movie productions in order to develop long-term customer relationships or to poach new customers from the competitors. Since summer 2021, the company has strategically deviated from its original principle of exclusive use of Apple devices in connection with the associated service offerings by enabling users of Android devices to stream Apple TV Plus.
The degeneration phase
The final phase in the product life cycle is the degeneration phase, which describes the decline in demand for the sale of products and services. Customer interest is in a constant state of flux, due to new technologies and changing needs, for example the desire for lower prices and better performance. One product that has little relevance in the market and is now meeting with little demand is the MP3 player. The abundance of smartphones and ever-faster mobile Internet connections makes it possible to play music anytime, anywhere, so even downloading and actually owning music files has become obsolete. Even one of the most successful companies in the world, Apple has gone through degeneration phases with products like the eMac or the iPod. Apple's initially innovative devices are now only in demand among enthusiasts and collectors, which means that ongoing production is no longer worthwhile. Once an entrepreneur has reached this phase with his product range, it is usually said that not much can be achieved with product marketing and that a new life cycle can generally be started. Established brands have the advantage at this point that they can relatively quickly gain the attention of customers and users. New developments and the opening up of new markets can certainly make for exciting corporate stories, such as the historical development of the Philips brand. Originally, Philips was a market leader in the manufacture of lighting products such as incandescent light bulbs, and later expanded its product range to include entertainment media. As Chinese companies have increasingly rapidly taken over this market, Philips has reoriented itself and put the skin focus on the medical sector by manufacturing electrical products that not only support individuals in their everyday health care, but also provide hospitals and other health care facilities with innovative devices and their digital connectivity capabilities.
Product marketing is a strategic decision of a company and deals with sustainable product development that achieves long-lasting success and constantly evolves with the changing times and changing needs of customers. In this context, the product marketing plan should be actively designed and adapted. Measures are based on the phases in which a product is in its life cycle and on potential investments. Evaluation data on sales, turnover and surveys on the future demand of the selected target group can reveal valuable trends, which in turn allow product marketing to act with appropriate marketing measures and campaigns. Success or failure can thus be determined in the short term and quickly enough to possibly take a different direction in product development so that the degeneration phase will take place as far away in the future as possible or, ideally, the company will have initiated a completely new development by then.