Page 352 - Introduction to Business

326 PART 3 Marketing

losses—and increase rapidly during the growth phase, reaching their peak during
the latter portion, and dropping throughout the maturity and decline stages.
Two factors determine a company’s marketing mixes over the PLC: the market
and competition. During the introduction phase, purchasers come chiefly from the
primary market The segment of the primary market, those purchasers whose needs and desires are the most compat-
market for new products whose needs ible with the offering’s features and benefits. These individuals view the product or
and desires are the most compatible service as satisfying their needs and desires and tend to be relatively insensitive to
with a new product’s features and
benefits efforts by competitors to change their purchasing habits. Thus, the primary market
can also be viewed as that market segment that exhibits very strong brand loyalty
over the entire cycle.
In the growth period, the product or service begins to make significant inroads
secondary market The market for a new into the secondary market—that market segment in which the features and bene-
product whose needs and desires are fits of the product or service are not quite as congruent with the purchaser’s needs
not as congruent with the new product’s and desires as they are in the primary market. It is very critical for the offering’s suc-
features and benefits as those of the
primary market cess that it gain acceptance in the secondary market, since this segment tends to be
much larger than the primary market.
Because there is not a 100 percent compatibility of needs and desires with the
offering’s features and benefits, the secondary market can be persuaded to pur-
chase the offering only if it is made more attractive in some way. This may involve
either a modification in the product or service, or some change in the marketing
mix, such as lower price for lower quality, increased advertising expenditures, and
so on. During the maturity period, purchases are made up of continued repeat pur-
chases by the loyal primary market, first-time purchases by the balance of the sec-
ondary market, and repeat purchases on the part of the secondary market that has
already tried the product or service.
A significant aspect of the maturity period is that the primary market accounts
for a relatively small percentage of total purchases. The great majority of purchases

Technology and Business

Electric Toy Trains Make a Comeback

Electric model trains used to be one of locomotive, will be offered. A wireless remote control
the United States’ most popular toys. is available; it can control the sounds and speeds of
And Lionel was the largest toy electric up to 99 trains at the same time. Whistle sounds and
train company in the world, selling 3 million engines commands from engineers have been created.
and freight cars annually during the 1950s. Then, the Owners will be able to hook up their trains to the
company changed hands, lost its focus, and began Internet in order to have problems diagnosed and
producing plastic trains instead of the heavy, metal can have new sounds and functions downloaded.
ones enthusiasts were used to owning. For over 30
Source: Jeff Green, “The Toy-Train Company That Thinks It Can,”
years, the company just barely stayed in business as Business Week, December 4, 2000, pp. 64–69.
kids switched their affection to slot cars and space
toys. In 1995, Wellspring Associates LLC, in Questions
partnership with rock star Neil Young, purchased 1. Do you believe that the technology strategy of
Lionel and hired Richard N. Maddox, a lifelong train Lionel will be effective?
enthusiast, as CEO. The total market for toy trains is 2. Do you believe that producing plastic trains
about $1 billion a year, but Lionel competes only in instead of metal ones was the only reason Lionel
the large train segment, worth $250 million annually. barely managed to stay in business?
In an effort to get as much of this market as 3. Does a price of $1800 for Challenger steam
possible, Lionel has decided to emphasize technology. locomotive appear to be a price that will be
New models, like the $1800 Challenger steam acceptable to many potential buyers?

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.