a product is introduced it will go through a number of phases, these can be
shown on the diagram overleaf.
can be seen from the diagram above that firms will experience a period of
decline in sales. Firms will
attempt to use extension strategies to prevent the product from going into
decline. Firms will try to
retain the period of saturation for as long as possible in order to maximise
revenue. There are various
strategies that a firm could employ:
- Finding new uses for
the product, e.g., the basic technology in hot hair strippers is no
different from that of a hairdryer.
- Targeting new market
segments with the existing product, e.g., when sales of Johnson and
Johnsonís baby products started to fall, they repositioned the product
and aimed it at adults or when sports clothes manufacturers successfully
aimed their products at the fashion market.
- If the product is
marketed as a new brand with a different use, e.g., Lucozade was
originally sold as a product to assist those recovering from illness, by
selling it as a sports drink a huge increase in sales has been achieved.
- By changing elements
of the marketing mix, e.g., new promotional ideas and special offers can
be used, Coca-Cola and Kellogs have successfully maintained high levels of
sales through competitions and advertising campaigns.
effect of extension strategies can be shown on the diagram below.
is possible that decline is inevitable in certain markets as new technology
makes existing products obsolete. It
is possible that with a creative marketing mix a firm will be able to
maintain a high level of sales.
How Nestle have made use of extension strategies