The Price is NOT Right

In Ottawa on December 18th, 2009 the Competition Bureau announced that the Ontario Superior Court imposed a record $15,000,000 fine against DataCom Marketing Inc. for operating a business directory scam targeting Canadian and U.S businesses. From 1994 to 2005 a Toronto based DataCom tricked many businesses into believing that they had already ordered a business directory listing and using deceptive scripts and agressive tactics. Victim businesses lost hundreds of dollars each while the scam netted $12.9 million dollars in profit. The founder and former president of DataCom, Bernard Fromstein, was previously sentenced to two years in jail, three years probation and a 10-year ban on telemarketing activities. Another senior manager, Paul Barnard, received a two-year conditional sentence after cooperating in the investigation. The fine represents a record amount under the deceptive marketing provisions of the Competition Act.

Extension Strategies

Re-Packaging

Re-packaging provides a way for the company to give a mature product a new image, particularly if the product and previous image has limited its target audience. Fresh packaging can draw in a new part of the market by tapping into that market and visual preferences. For example, a laundry detergent company might decide to re-package a brand of detergent that the company has been selling for decades. A laundry detergent that was popular in the 1950s, is now going to be associated with a younger generation & grandparents. So, re-packaging the product for the younger generation let young people know that and can reach out to and reel in that new audience.

Discounting

Designing a new pricing strategy does not have to be a short-term option for a mature product. In some cases, re-pricing the product by discounting it can reach out to a target market that has typically seen the product as being just out of reach. For instance, the laundry detergent manufacturer might decide that it needs to make the product available to a certain price demographic. By lowering the price of the product even 50 cents to $1 per sale, the manufacturer can appeal to the new market and expand sales.

Re-Branding

Re-branding a mature product can be a somewhat extreme approach to extending its life cycle, but it can also be an effective method. Re-branding results in changing not only the packaging but also the name and total appearance of the product. Returning to the example of the laundry detergent, the company might decide that the image of the product as something from the 1950s is too established. Re-branding the product would mean giving the product a fresh new name and overall image, and thus reaching out to a different audience that will extend the life cycle of the product. Re-branding can even involve developing television spots that reflect on the previous name and image, and show how those are no longer relevant.

 

Expanding Abroad

In some cases, a product life cycle can only go so far in one place. Expanding the product abroad to reach out to a completely untapped market can extend the product life cycle on a different level. Expanding abroad can be costly, because the product has to be introduced completely in a new market, but if the move is effective the company can bring in profits that give the product new life

Product Life Cycles

1. A fad that only lasted in the year of 1975 till Christmas that same year. This fad was "My Pet Rock."  My Pet Rock sold for $3.95, and creator Gary Dahl unloaded more than five million of the "pets" in six months. He walked away with a significant $15 million.  Popularity for the rock thinned out after the 1975 Christmas season.
 

2. A long lasting product that has been around for more than 20 years is Advil. Advil has been on the market since 1984. Advil is able to produce 32,400,000 tablets per year. This product is very popular and is usually the best seller when it comes to NSAID (non-sterodial anti-inflammatory drug).
 

3. A technological product that has only lasted about 3-5 years would be the CD walkman. When they first came out they were very popular and everyone had one. But about 5 years later technology was starting to build and MP3's were just starting to come out and everyone was getting rid of their CD walkmans.

Product Development

Example of a product mix would be the company Coca Cola. Not only does Coca Cola make Coke, they make Fanta, Sprite, Powerade, Fuze, Vitamin Water, Full Throttle, Odwalla and all the Simply Juices.

Coca Cola's product line, Vitamin Water, includes 17 different flavours from Dragon Fruit to Lemon Tea.



Coca Cola's product item, Coca Cola, has many different kinds and sizes of soft drinks.
 
Coca Cola's product width includes 500 brands. Within these 500 brands there are over 3500 different types of drinks.