Marketing is the driving force behind every step in the product development cycle, from conception to manufacturing and distribution. Less strategic companies see marketing's role as limited, only bringing it in when a product is ready to go on the market – but innovation demands marketing's input from the very beginning.
The marketing department works hand-in-hand with research and development from the early stages of product development to help guide the process, determine what the market needs and what improvements will bring the greatest results. Long before the manufacturing cycle, marketing people play a vital role in the creation of a new product, determining whether it can fill a consumer need, and how that new market need will be filled. A well-known example of where marketing people could have avoided a costly mistake is the case of Smith and Wesson, famous for handguns. The company, which had also been producing specialty bicycles designed specifically for the law enforcement community, attempted to offer a consumer bike. While law enforcement proved to be a good market, the general public saw the Smith and Wesson brand as closely associated with handguns, and the consumer bike never caught on. Bringing in the marketing department prior to development might have avoided this costly misstep.
Once developed, a product goes through a life cycle, beginning with its introduction. The market may be small or undetermined and initial sales low, but during this introductory phase, marketing plays an essential role in ensuring growth. Costs may be skewed more towards strategy, branding and consumer testing. During this stage, there may be isolated incidences of immediately achieving a high sales level, but in most cases this takes time and constant marketing to achieve the demand needed to become profitable. Marketing costs may be very high compared to revenues in this early stage. Early marketing tactics may focus on determining the market or creating a market where none exists, with a heavy emphasis on building awareness through public relations.
The second stage of the product life cycle, the growth stage, builds on the demand established during the introduction stage. This is a period of rapid sales increase, and the character of the marketing campaign changes significantly. Competition is likely to have increased during this stage, so the marketing function will have to focus on competitive analysis and more aggressive advertising. Marketing tactics during the growth stage will emphasize maximizing market share. Market surveys to get customer feedback, introduction of new features and improvements on product quality will all be important marketing strategies. Also, early on in the product life cycle, prices are likely to be higher, and marketing during this stage will cater to the early adopter.
Once sales volumes peak and the product has reached a level of maturity, the marketing focus may shift away from gaining new customers to pleasing existing ones and ensuring recurring revenues through new products and services designed to augment the product.
During this stage, brand awareness has already been established, and advertising budgets may be reduced. The marketing strategy during this stage emphasizes differentiation to encourage new buyers to switch over from the competition, adds new distribution channels, introduces competitive pricing models and adds new product features. During this stage, early adopters have already signed on, and the focus is on bringing in more price-sensitive buyers. This can be achieved by using market research to introduce newer versions and tiered pricing models, and by introducing new geographic markets into the mix.
When the product life cycle nears an end, the market has become increasingly competitive. The unique nature of the product may be lost as more competitors come into the market with similar offerings, and prices will drop. Falling sales can be met with new marketing strategies to increase market share, but marketing will have to shift toward a "value priced" approach while returning to the research and development cycle to introduce new products into the market.