Agriculture Reference
In-Depth Information
The
early majority
(about 34 percent of a market) form the third group of adopters.
Individuals in the early majority are deliberate people who see themselves as progressive,
but not generally as leaders. They form a large and important market for any product or
service. Following the early majority in the adoption process are the late majority. The
late
majority
(another 34 percent) tends to be skeptical in their view of new ideas, and adopt
them only after considerable evidence of performance and/or satisfaction has been shown.
This group follows the majority opinion. Finally,
laggards
(16 percent) are tradition-bound
individuals who take so long to adopt new ideas that by the time the ideas are adopted, they
are no longer new.
This pattern of new technology adoption holds for most new ideas, both within the
food and agricultural markets and outside these markets. Agrimarketers who introduce new
products can initially focus their total marketing program toward the innovators and early
adopters, gradually changing their marketing strategy as the product is accepted by the
other adopter categories over time.
Product life cycles
A fi nal concept that is important when developing a product strategy is the product life cycle
idea.
Product life cycles
relate to the sales and profi ts of a product or service over a period
of time. Product life cycles are the predictable way in which sales and profi ts of a product
unfold as a product is introduced, sales grow rapidly, the market matures, and the product
ultimately declines in the marketplace. There are several distinct phases in the life of a
product, from its development and initial introduction to its eventual removal from the
market (
Figure 7.5
)
.
The
development stage
is that period in which the market is analyzed, and both the prod-
uct and the broader marketing strategy are developed. During this time there is no revenue,
but there are signifi cant expenditures for product and market development. For example, this
is the period when a new rabbit feed is researched, formulated, and tested, while plans are
developed for its introduction into the market.
The
introductory stage
is that period in which the new product fi rst appears on the
market. Usually, there are high costs associated with introducing a new product. The new
rabbit feed may require a heavy promotional effort and special offers to dealers to stock the
product, both of which reduce the probability of early profi ts. At some time during the intro-
duction period, the product should begin to show a profi t, depending on the degree of its
success. A number of introductory strategies are possible. The fi rm might choose to make
heavy introductory expenditures to reduce the time for consumer acceptance. Or it might
introduce the product without fanfare, simply adding it to the product line at perhaps a low
initial price, in the hope of minimizing introductory costs.
The
growth stage
is a period of rapid expansion, during which sales gain momentum and
prices tend to hold steady or increase slightly, as fi rms try to develop customer loyalty. The
distribution system is expanded, which makes the product available to a larger market.
Profi ts expand rapidly because fi xed costs are spread over a larger sales base. However, at
some point during the growth stage, it is common for costs to begin to increase as the fi rm
attempts to reach increasingly diffi cult new markets. In addition, the visibility of increasing
profi ts often attracts new competitors to the market. As the fi rm attempts to reach new, less
familiar markets and the effects of competition begin to be felt, growth slows, and profi ts,
while still increasing, begin to increase at a decreasing rate.
