Page 562 - Business Principles and Management

Chapter 20 • Nature and Scope of Marketing

brands from which to choose. Profits usually fall even though sales may still rise.
Products in the maturity stage include automobiles, desktop computers, per-
sonal-care products such as toothpaste and deodorant, and many other products
that you use regularly and purchase without a great deal of thought.
One way that businesses respond to the maturity stage of the life cycle is to
look for new markets. Businesses often move into international markets as compe-
tition increases in their home countries. As several fast-food companies found
fewer and fewer attractive locations for new stores in the United States, they
began to open outlets in Canada, Europe, and Mexico. Now they are expand-
ing into South America and even into Russia and China.

DECLINE
Many products stay in the maturity stage of the life cycle for a long time. How-
ever, sooner or later products move into a decline stage. The decline stage occurs
when a new product is introduced that is much better or easier to use and cus-
tomers begin to switch from the old product to the new product. As more and
more customers are attracted to the new product, the companies selling the old
product see declines in profits and sales. The companies may not be able to im-
prove the older products enough to compete with the new products, so they drop
them from the market when declining profits no longer support their existence.
Some companies have been able to move old products out of the decline stage
by finding new uses for them. For example, petroleum vapor rubs are being used
for fungus infections, and baking soda is used to remove odors from refrigerators
and cat litter boxes. If companies cannot save a product from the decline stage,
they attempt to sell their remaining inventory to the customers who still prefer it.
However, they spend as little money as possible on marketing the product and do
not produce any more.

CHECKPOINT

Identify the stages of a product life cycle.

Product Categories
Technology tip
When making marketing decisions, marketers need to understand how customers
shop for and use products. Products can be classified as either industrial goods or
consumer goods. Industrial goods are products designed for use by another busi-
ness. Frequently, industrial goods are purchased in large quantities, are made to The Internet is changing the
special order for a specific customer, or are sold to a selected group of buyers way individuals shop for spe-
within a limited geographic area. Examples of industrial goods include bricks pur- cialty goods. The Internet
chased by a building contractor, aluminum purchased by an aircraft manufacturer, allows a person to shop at
and computers and computer supplies purchased by accounting firms. Many, but many stores in a very short
not all, industrial goods are used to produce other products or are incorporated period of time. Even luxury
into the products being produced. Some are used in the operation of the business. items such as diamonds are
Consumer goods are products designed for personal or home use. Jewelry, fur- sold online. Individuals can
niture, magazines, soft drinks, and computer games are some of the many prod- check many sites, compare
ucts used by consumers. Consumer goods require careful marketing attention, prices, and buy as if a luxury
because there are so many products and brands available and so many possible specialty item were a more
customers throughout the world. common consumer good.

549