THE LIFECYCLE IN 2011
Market introduction stage 1:
Costs are high, sales and profit are low
Little competition
Demand must be created
RAPP’S ADVICE:
"There are still lots of affordable opportunities in the area of social media that many firms still aren’t embracing.”
Growth stage 2:
Costs reduced due to economies of scale
Sales and profits rise
Competition increases and prices decrease
RAPP’S ADVICE:
“You need to make sure consumers understand what you are offering and why it is better than everything currently available in the marketplace,” Rapp emphasizes. “Then when low-cost copies enter the market, you can retain your market share by having a stronger brand name and consumer identification.”
Maturity stage 3:
Cost are lowered as a result of production volumes increasing and experience curve effects
Market saturation causes sales to peak
Lots of competition leads to price drops and lower industrial profits
RAPP’S ADVICE:
“Acquiring new customers is too costly at this stage. Instead, keep those that you have, and make sure you are in every available channel and outlet.”
Saturation and decline stage 4:
Costs become counter
Sales decline or stabilize
Prices diminish and profit becomes a product of production efficiency rather than sales
RAPP’S ADVICE:
“Define who you are. Understand and embrace your core competency rather than run away from it. This will lead to innovation.”